Around this time last year, Newcastle United bean counters were becoming increasingly anxious about the end of financial year.
A few days from the end of June, there remained a roughly £70m PSR hole in the finances, which would have led to a points deduction for 2024-25 if not fixed.
No club had matched Bruno Guimaraes’ release clause, which would have solved the financial problem in one go, so Newcastle were forced to cash in on two of their brightest young talents, Elliot Anderson and Yankuba Minteh. Even then, it took finally agreeing to Manchester United’s compensation offer for Dan Ashworth to ensure PSR safety, at which point there was seemingly a resolve at St James’ Park never to get into such a mess again.
No matter how much we as fans dislike talking about PSR, and regardless of the (perhaps unintended) consequences it has had in terms of restricting overall transfer business, it is still a significant factor when it comes to the recruitment behaviour of clubs. We can’t analyse the transfer window without the context of PSR, although there are plans to replace it in its current form with a different system based on a squad cost to revenue ratio from 2026/27 onwards.
As part of a detailed analysis of all Premier League clubs’ PSR situations heading to the end of the financial year, the excellent [Swiss Ramble](https://swissramble.substack.com/p/are-any-premier-league-clubs-restricted) has reviewed Newcastle’s finances over the last three accounting periods and modelled their current position. Here are some key takeaways:
By banking a £11m profit in the 2023/24 accounts, Newcastle came in at £102m losses (just £3m headroom in the £105m allowable losses) over the three accounting periods from 1 July 2021 – 30 June 2024. It was an extremely close call, and Newcastle can thank Nottingham Forest and Brighton for helping dig them out of the hole, albeit they got two excellent young players in exchange.
The £59m loss (after allowable deductions for things like youth development and infrastructure) from 2021/22 dropped out of the three-year rolling period ending at the end of this month (2022 – 2025). This, along with the lack of incoming transfer business across the last two transfer windows (Hall, Vlachodimos and Osula being the only transfer fee outlays) and the sales of Almiron and Kelly, mean that Swiss Ramble estimates Newcastle are not in the kind of PSR strife this time which led to such panic 12 months ago.
In fact, their assessment is that Newcastle could afford to post a loss in the region of £84m for 2024/25 and still be compliant. In reality they shouldn’t be anywhere near that, even if they look to turn the tables from last summer and take advantage of some other clubs’ PSR woes before next Tuesday.
In even better news, the £54m loss from 2022/23 drops off from next week (1 July), at which point the £11m profit from 2023/24 will become PSR year 1 and 2024/25 will become PSR year 2. Speculating that this is a small loss or roughly breakeven, it should mean there is plenty of money available to do the squad strengthening for the 2025/26 season that is so needed, although clubs are no longer in a position to allocate a headline grabbing transfer ‘budget’ in the traditional sense due to other costs such as agent fees and wages which add up to the total financial package.
Those heavy financial losses for Newcastle from 2021 – 2023 came at a time when, as well as spending significantly and quickly on new players, commercial revenue was still low, there was no Europe income and player sales were almost non-existent.
Newcastle’s income from player sales from 2021 – 2024 has been abject at just £78m (6th lowest of current Premier League teams), and this is entirely down to the panicked, reluctant sales of Anderson and Minteh. Selling Almiron and Kelly in January 2025 points to some progress here but this has to improve further moving forward. For comparison, ten Premier League clubs had over £100m of player sales in the same period with Chelsea and Manchester City both making more than £300m from sales. It’s a tough balance for Newcastle to try and keep their best players while extracting value for the disposable squad players, and the academy should soon be producing first-team players or talent that can be sold for a significant fee.
Another area for improvement is commercial revenue, although the criticism Peter Silverstone receives here is unjustified as he has overseen a more than threefold increase in commercial revenue in three years from £28m in 2021/22 up to £86m in 2023/24. The 2024/25 accounts should see this break the £100m mark with ongoing Adidas money and some income from The Stack, but this is clearly an area that can and will be stretched further as the club’s profile grows. In the longer term, the anticipated new stadium will be a game-changer in this regard.
The gap across the three-year PSR period in total commercial revenue from Newcastle with 7th highest in the Premier League (£162m) to Arsenal with the 6th highest (£529m) was an enormous £367m, which is roughly equivalent to Manchester United’s annual wage bill (more on that later). Chelsea and Spurs made more than £600m in commercial revenue while Manchester United and Liverpool made more than £800m and Manchester City just shy of £1b. This provides clear evidence for why these clubs can continue to spend with impunity while ambitious clubs like Newcastle and Villa are restricted by PSR and can afford fewer recruitment mistakes.
The gargantuan revenues of the Premier League’s highest profile clubs of course means that they can afford to pay higher wages, giving them an edge when it comes to recruitment. The wage bills of Chelsea, Man Utd, Liverpool and Man City over the three-year PSR reporting period from 2021 – 2024 averaged between £360m – 396m per annum. Spurs came in at £227m per annum average and Arsenal at £258m. Newcastle’s £191m average wage bill over that period was even below Villa’s £194m and again demonstrates the challenges for the upwardly mobile clubs when compared with the established ‘elite’.
Wages are just as big a consideration as transfer fees when it comes to PSR. A £50m signing would cost £10m per annum amortised over a 5-year contract, but that same player on a base salary of £150k per week would cost £7.8m per annum in wages over the same 5-year period, bringing the total package over 5-years to £89m (£17.8m per annum) without extras like agent fees and performance bonuses. It is clear to see why Newcastle must take a more cautious and risk-averse approach in the transfer market compared with clubs whose revenue is double or more what the Magpies make.
Despite the gap that Newcastle have still to bridge, the club is in a much stronger position both on and off the pitch now than it was even 12 months ago. Qualifying for the Champions League again was enormously important for the club profile as well as the finances. Newcastle are in an exciting position where progress has been made but there is also so much potential for further growth and development.
While they will always have an eye on PSR and remaining compliant with whatever restrictive financial rules are enforced to try and check their ambition, the Magpies are out of the PSR woods now and are set for a transformative summer and beyond. If the expected incomings don’t materialise it will be because of failings elsewhere, with PSR no longer a valid excuse.
HWTL!