Newcastle United have been encouraged to break their wage structure by fans after missing out on deals for Bryan Mbeumo and Joao Pedro to Manchester United and Chelsea.
The transfer window has been open for less than a month, but it must feel like an eternity for some fans who are desperate to see the Magpies sign someone.
Hopefully, that first major deal will come soon, with James Trafford having already agreeing personal terms with Newcastle United. In the meantime, Newcastle and Burnley remain locked in negotiations for Trafford, although the feeling is that deal could be close.
Elsewhere, Newcastle missed out on Joao Pedro to Chelsea after it was revealed he always wanted to join the west-London side from Brighton this summer. That deal breaking down means Newcastle manager Eddie Howe has gone back to the drawing board to look at other targets.
Wage demands appear to be a problem for Newcastle at this point in time. The Magpies had to back out of a deal for Brentford’s Bryan Mbeumo after he asked for £250,000-a-week to join.
To learn more about whether Newcastle are able to break their wage structure, Geordie Boot Boys spoke to Adam Williams, head of football finance and governance at GRV Media.
Darren Eales and Bob Moncur present the Carabao Cup trophy during a Women's Championship game between Newcastle United and Sunderland.
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Newcastle United expected to slow down commercially in the next few years
As fans will know, Newcastle have been working hard behind the scenes to push the club’s reputation around the world and bring in as much money as possible from a commercial standpoint.
More success with the commercial side of things means more money for the transfer budget. However, Williams believes that Newcastle’s commercial growth could slow down in the next few years.
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Comparing Newcastle’s financial stature to the likes of Chelsea and Man United, Williams told Geordie Boot Boys: “While PSR is still a factor, Newcastle aren’t ever going to have the same spending capacity as Man United or Chelsea.
“Those two clubs are international brands and, if you look at how they segment their revenue, a huge portion of their income is coming from overseas merchandise and sponsorship sales.
“Newcastle have scaled their commercial operation brilliantly since PIF bought the club – and the owners have helped out with a few cosy deals too, of course.
“But the Premier League screens every sponsorship deal for fair market value, so they can’t inflate their commercial income endlessly.
“With Man United and Chelsea, they’re expecting to set big new commercial records every year. With Newcastle, I’d expect to see their growth start to slow in the next few years.
“It’s the same with matchday income to an extent. Man United and Chelsea can charge whatever they want, especially with hospitality and premium experiences. So it’s incredibly tough for Newcastle to compete when PSR ties your capacity to spend to your profit-and-loss account and, by extension, your revenue.”
Newcastle United could afford one player on a large salary this summer
Breaking the wage structure is a huge thing to do at most Premier League clubs. Newcastle have taken a sensible approach to wages so far, but could look to break it if the deal is right.
For example, Newcastle are prepared to break the wage structure for Alexander Isak to give him a new deal on Tyneside. However, that could come at the price of a new addition this summer.
On Newcastle breaking the wage structure, Williams told Geordie Boot Boys: “On a one-off basis, there’s no reason that Newcastle couldn’t stretch to £250,000 per week. It’s a commitment of about £13m per year, plus national insurance and other benefits.
“That’s not much in the grand scheme of things when their total wage bill was £219m last year. But it’s about the precedent it sets – if you break your wage structure, it’s probably going to lead to a spiral, and that’s when you start to have more PSR issues.
In terms of transfer fees, Newcastle have tonnes of PSR headroom this summer. With wages, however, it’s a more nuanced situation because your wage bill sticks with you pretty much in perpetuity. That’s why well-run clubs are so disciplined with their wage structure.”