Newcastle are now into a new three-year PSR cycle that sees historic £145m losses disappear
Alexander Isak before a Newcastle United game
Alexander Isak is Newcastle's top asset(Image: Serena Taylor/Newcastle United via Getty Images)
In recent seasons, the issues around Newcastle United’s position when it came to the Premier League’s profit and sustainability rules (PSR) has impacted transfer business.
Magpies boss Eddie Howe has been vocal many times on how PSR constraints have effectively put the handbrake on the club’s ability to try and build from a position of strength and close the gap on the so-called ‘big six’ when it came to finances.
That will take some time given that the financial success of those clubs has been predicated on regular qualification for European football and access to the huge pots of cash that come with it.
When Newcastle competed in the UEFA Champions League in 2023/24, the club’s exit at the league phase, a season before the competition reformed and expanded, meant that they took less than £30 million in prize money and had access to three guaranteed home games instead of the four that there now is.
It meant that, while a superb achievement for the club to disrupt the top four, there wasn’t the kind of financial boost gained that others have seen. Aston Villa, for example, took over £90m from their run to the quarter finals last season.
Newcastle managed to see off the challenge of Villa on the final day of last season to secure Champions League football for 2025/26 and it will be significantly more impactful from a financial perspective. The club knows they can rely on more than £50m even with an ultra-conservative state of mind, but the target will be to achieve the kind of returns that Villa were able to - and why not?
The Magpies now appear to finally have shaken off their PSR issues. The heavier spending at the start of the current ownership's tenure to bring in the likes of Alexander Isak, Bruno Guimaraes, Sandro Tonali and Sven Botman was always going to put the squeeze on given that commercial revenues couldn’t keep pace with amortisation costs and wage rises. But the lack of Champions League football last season meant that some cloth cutting was in order, hence the end of financial year player trading that ensued between the club and Nottingham Forest.
The path to being able to invest in the first team in a stronger way to help solidify success and tap into Champions League revenues regularly to drive financial gains, much in the same way that Arsenal have in recent years after spending a period of time in the European wilderness, is much clearer now.
The lack of urgency to player trade before June 30, the end of Newcastle’s financial year, should be instructive. They didn’t need to sell the women’s team or other club assets to themselves and they head into the 2025/26 financial period in a much stronger position.
In 2021/22 the club lost £73m. That figure dropped off the assessment period for the latest PSR three-year cycle, which will take into account the £72m loss in 2022/23, the £11m loss in 2023/24 and whatever was posted in 2024/25.
Estimates from football finance expert Swiss Ramble predict that the Magpies, assuming allowable deductions of £22m for 2024/25 against the £105m allowed losses over three years, would mean that the club could lose £84m and still be compliant.
They won’t lose that much, not even close, having had one eye on the coming 2025/26 campaign knowing a solid financial performance would set them up to be able to participate in the transfer market in a more meaningful way.
Now into 2025/26, the £72m will drop off the three-year assessment period for Newcastle, meaning the £11m loss from 2023/24, whatever is posted for 2024/25 and the results for 2025/26, a season where the club expects far higher revenues thanks to the Champions League and improved commercial activity, will form the three-year cycle. The 2021/22 and 2022/23 financial lossess add up to £145m and they will soon be a distant memory as the PSR cycle continues.
That provides the club with headroom that they have not had before under the ownership of the PIF.
Back in May, Howe told reporters: “The ability financially to compete in the last few years has been hampered by PSR, but those issues aren’t there for the coming window. So I don’t see any reason why we can’t strengthen, not weaken ourselves.”
He’s not wrong. The work in recent times to stay compliant yet still achieve some success has meant that the club has found itself in a position to not only keep its star players like Isak and not be picked off, but give them a greater financial incentive to stick around for the long-term project.
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