Newcastle have made significant strides financially but still have a way to go to catch up with the Premier League's 'big six'
Sean McCormick is a football writer covering Newcastle United for ChronicleLive. After starting his career covering North East sport, he has had a spell working as an editor on the Manchester Evening News. He also writes about darts and boxing. He joined us in 2016.
Djordje Petrovic was one of many players Chelsea sold for huge profits this summer
Djordje Petrovic was one of many players Chelsea sold for huge profits this summer
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Tuesday marked the four-year anniversary of the Newcastle United takeover by a consortium backed by the Saudi Public Investment Fund.
The Magpies have made giant strides both on and off the pitch in that time but still have a way to go on both fronts to firmly break up the Premier League's big six clubs.
On the pitch, there is an argument Newcastle already have done. After all, they have won a trophy and finished fourth, seventh and fifth in the last three seasons. For context, Chelsea, Manchester United and Tottenham have not managed to finish in the top seven in all three of those seasons.
However, there is a giant gap when it comes to the revenue those teams produce.
Commercially, Newcastle are the best of the rest in the Premier League but are still €168million short of the lowest ranked of the big six clubs (Arsenal). Similarly, Newcastle are the seventh highest grossing Premier League club in terms of overall revenue (€371.8m) but are still almost €200million short of Chelsea (€545.5m) who are the sixth ranked Premier League side.
And one way to bridge that gap is to become better sellers.
Now that sounds a lot more simple to implement than it is in reality but it is a major reason why those clubs not only bring in extra revenue but also have more scope to buy players when it comes to profit and sustainability rules.
The key when it comes to player sales is making pure profit on a player sale or by making a profit on the amortised fee paid for that player.
In every three-season period, a Premier League club can sustain £105m of losses before tax before they are in breach of PSR.
Pure profit comes from either selling an academy graduate, a player that arrived on a free transfer or a player whose initial contract after signing for a club amortises. For example, if a player signs on a five-year deal for £20million, that fee is amortised across the next five years. If the player is still at the club beyond those five years then any sale is classed as pure profit.
Clubs can also make profits on 'flipping' players they buy for a low fee and then sell on for a larger fee despite many of them not really playing for them.
Three of the best clubs at both of these methods are Man City, Chelsea and Liverpool.
City brought in just shy of £100million worth of transfer fees this summer and these included £30million for James McAtee, an academy graduate that was restricted to just 15 Premier League appearances last season.
Yan Couto joined Borussia Dortmund for £26million based purely on the strength of loan moves away from the Etihad Stadium. He joined from Brazilian side Coritiba for around £5million and didn't make a single appearance for the club. Maximo Perrone also joined Como for a £3million profit on the fee City paid to sign him from Velez Sarsfield
Academy graduates Callum Doyle, Jacob Wright and Farid Alfra-Ruprecht brought in £15million between them in their moves to Wrexham and Norwich City respectively despite never really being close to breaking into the first team.
Liverpool brought in £93million this summer on players they blooded through their academy. Jarell Quansah, Caoimhin Kelleher, Ben Doak and Tyler Morton all left for significant fees with none of those players considered a significant loss to their first team.
Meanwhile, Chelsea brought in around £288million in transfer fees this summer meaning their net spend was only around £6million.
Of those sales, Chelsea flipped huge profits on the likes of Noni Madueke, Djordje Petrovic, Renato Veiga and Carney Chukwuemeka and sold Bashir Humphreys, Armando Broja and Alfie Gilchrist for pure profit.
By contrast, aside from the British record fee Newcastle received for Alexander Isak, the sales of Sean Longstaff (admittedly, for pure profit) and Lloyd Kelly were the only two other significant fees the club banked this summer.
Unlike those three clubs, there isn't the same level of academy talent coming through the ranks at Newcastle to bank significant fees.
There are opportunities to perhaps flip profits on players who won't quite make it in Newcastle's first team but first of all they have to get that sort of recruitment right and then a lot depends on how they develop under Newcastle's care - whether that is at the club or away on loan.
Garang Kuol, for example, arrived at Newcastle for a minimal fee and appeared for Australia in the World Cup knockout stages. But he didn't make the cut at Newcastle, struggled in loan spells in Scotland and the Netherlands and left the club for a paltry fee to join Sparta Prague this summer.
Garang Kuol of Newcastle United
Garang Kuol of Newcastle United(Image: Newcastle United via Getty Images)
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Newcastle almost flipped a profit on William Osula this summer and that is perhaps an avenue to revisit if he fails to fight his way above Nick Woltemade and Yoane Wissa in the forward pecking order.
Alex Murphy is another player who is currently around the first team having arrived for a small fee from Galway United and still has just under three years remaining on his contract. With the right development path, he could bring in a healthy profit for Newcastle. Antonio Cordero, who signed in the summer, could also fall into this bracket.
It, of course, takes time to develop the infrastructure at academy level and to get the recruitment model up to scratch to be able to compete with these clubs. It is not something that will happen overnight but there is a template there for Newcastle to follow and aspire towards.