There will be a few wry smiles at St James’ Park if – as is being whispered in football circles – Elliot Anderson graduates into the England senior squad this week.
Anderson’s potential excited Eddie Howe to the extent that he saw a midfielder capable of rivalling big money signings Bruno Guimaraes and Sandro Tonali for years to come when he initially broke into the first team.
Howe marvelled at his bravery on the ball and willingness to learn, telling colleagues he was the perfect fit for his game plan. A bespoke strength and conditioning programme was devised after he returned from a loan at League Two Bristol Rovers in 2022 with the intention of adding an explosive burst of pace to his repertoire.
It was a feeling shared throughout the club’s hierarchy. “He can do a bit of everything,” one senior source cooed to The i Paper as they predicted a breakthrough season 12 months ago. Unfortunately for Newcastle United he is now proving that fact in the red of Nottingham Forest.
Of all the frustrations around Profitability and Sustainability Regulations (PSR), it is the fact that the rules actively incentivise trading of academy graduates that feels the most insidious.
Because players who come through the academy have a “book value” of zero in the PSR world, any money banked for them is viewed as “pure profit”. Hence why Newcastle, panicked at the prospect of a points deduction for a PSR breach, sold Anderson to duck under the £150m limit.
This accounting quirk is creating a culture which is worrying some in the academy world. Premier League clubs denied access to the European market by Brexit are now ploughing many millions into youth football at home because it is being viewed as a PSR “cheat code”.
There is no top flight club or aspiring Championship side that doesn’t have full-time scouting roles in regions many hundreds of miles outside their own catchment areas.
That creates competition for players aged just 14 or 15 and some in youth football worry about the impact the associated inflated transfer fees and wages will have on the boys at the centre of these recruitment battles, some of whom are moving a long way from home, friends and support systems.
The i was told last year that the Premier League had contacted academy directors throughout the top flight to consult on how some of these issues could be tackled but – somewhat predictably, given they are currently fighting multiple simultaneous legal battles – the issue is now on the back-burner.
So what we are left with are situations like Anderson’s, where a player who never really wanted to leave his boyhood team is sacrificed by a club who desperately wanted to keep him to satisfy a fake notion of profit. Just like PSR itself in its current form it makes no sense whatsoever.
The whole Financial Fair Play (FFP) facade is based on sustainability. If you lose too much money, its proponents say, you are putting the long-term future of your club at risk. But reducing the whole thing to an arbitrary set of numbers leaves aspiring clubs with nowhere to go and no margin for error.
Take Newcastle, for example. If you speak to those who have devised the club’s strategy since the 2021 takeover, there is no sense of recklessness about the money invested. You can make a moral case against the involvement of the Saudi Public Investment Fund (PIF) but when it comes to a financial one, what have they really done wrong since buying the club?
Money has been poured into the academy, the commercial team, the data department and building a senior management team that was non-existent in the Mike Ashley era. Alongside that – because this is the bit that really matters – money has been invested in players to take them away from the lower reaches of the Premier League and make them competitive.
It was not a get-rich-quick scheme. Guimaraes was 24 when he was signed, Alexander Isak 22. Last summer they bought Lewis Hall and Tino Livramento, two young English full-backs, to develop, which is what Howe has done.
But now the spending taps have been turned off, not because they can’t afford to maintain a transfer policy of spotting and signing elite potential – and having a manager who can improve them – but because there is an arbitrary limit to investment in the Premier League.
There are alternatives, of course. Raising the PSR limit from its current ceiling of allowing £150m of losses across three years is one. As football finance expert Kieran Maguire points out, if it was index-linked to the revenues of Premier League clubs it would now be closer to £249m.
Other, more creative, solutions have been raised in Premier League meetings. One, proposed by a well-run club that have hovered around mid-table, was to auction off their PSR headroom to the highest bidder.
The idea was to reward clubs complying with the rules, rather than just punishing those breaching, but there were no takers.
Newcastle are now scrambling to devise a new strategy under director of football Paul Mitchell that will allow them to comply with tighter PSR but 2024 has been a painfully sobering year. No one inside the club is ruling out having to take further difficult decisions in the future.
It is a warning shot for other clubs who challenge the top four. Aston Villa may be riding the crest of a Champions League wave at the moment but sustaining it – as Newcastle found out – is desperately difficult.
And if a resurgent Forest, powered by Anderson, do make it into Europe will their PSR balance sheet allow them to build on what they’ve achieved? Don’t bet on it.
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