Newcastle United have had multiple transfer windows ruined by the Premier League’s financial rules.
Despite the immense wealth of Newcastle United’s Saudi Arabian owners, the Magpies have been forced to work with a strict budget.
That is because the Premier League Profit and Sustainability Rules have shackled Newcastle’s spending and threaten a points deduction if they are breached.
The current regulations state that top-flight clubs can only lose a maximum of £105million over a rolling three-year basis. Ultimately, the best way to navigate the spending rules is to increase revenue.
However, rules were introduced directly after the PIF takeover in 2021 that were designed to stop clubs from striking inflated commercial deals with parties associated with their owners.
Manchester City successfully challenged those rules in court and finance expert Adam Williams explained how Newcastle will benefit from City’s legal battle.
Newcastle are still limited by Premier League financial rules
PSR is the reason why Newcastle were unable to splash the cash over the summer transfer window, with the club ending the window with a net profit.
Newcastle were forced to sell Elliot Anderson and Yankuba Minteh to balance their books and avoid a points deduction and Eddie Howe has warned that Newcastle still need to sell as we approach the January window.
The hierarchy at St James’ Park have been working hard to find ways to navigate the financial rules with Newcastle hatching a plan to “bust PSR”.
That plan included focusing on the recruitment and development of youth players that will soar in value if they reach their potential at St James’ Park.
Additionally, plans to expand St James’ Park to 60,000 capacity or to build an entirely new stadium will provide a huge lift to the club’s matchday revenue.
Sponsorship revenue has also increased under PIF thanks to lucrative deals with Adidas and Sela, but the new rules being proposed in the Premier League could help Newcastle in their battle against PSR.
Kieran Maguire explains how APT rule change impacts Newcastle
After City’s successful challenge against the associated party transaction rules (APT), the Premier League have been forced to rework those regulations which were brought in after the PIF takeover.
Premier League clubs are set to meet on Friday to vote on the proposed rule changes, and football finance expert Kieran Maguire has explained the impact it may have on Newcastle.
Speaking on his Price of Football podcast, Maguire said: “The reason why that’s interesting is that what could be of value to a potential sponsor might be greater than what it would be worth to other sponsors.”
READ MORE: Finance expert reveals how Premier League rule change will benefit Newcastle and ‘huge’ PIF deals
He continues: “Let’s take Manchester City and Abu Dhabi-based sponsors and Newcastle United and Saudi-based sponsors.
“It could be worth more to a Saudi-based sponsor to pay what might be seen to be a premium fee because they feel they would get additional benefit within Saudi Arabia itself in terms of the local market, in terms of attracting buyers to their products, than on a more global basis. That’s the first thing.”
Ultimately, the rule change would allow Saudi Arabian sponsors to pay “premium fees” for commercial deals in what would be a major boost to the club’s PSR calculations.
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