Newcastle United are set to announce their first profit in five years alongside record commercial revenue as their position in terms of the Premier League’s Profitability and Sustainability Rules (PSR) is thrown into sharp focus.
After recording sizeable losses in their previous two accounting periods, the Magpies were required to submit their latest accounts by midnight on 31 December. They will now be assessed by the league under new rules introduced last year intended to fast-track PSR cases.
Thanks to the sales of Yankuba Minteh and Elliot Anderson in June Newcastle are not at risk of breaching the limit of £105m rolling losses, which would have probably brought a significant points deduction.
But the new financials will reveal the true picture of the club’s battle to improve the squad while staying inside PSR limits. It has not been an easy task.
After significant spending in the transfer market Newcastle recorded losses after tax of £73.4m in 2022-23 and £70.7m in 2021-22, so needed to show a healthy profit to avoid a breach.
The i Paper has seen an in-depth analysis of the club’s likely financial position by Off The Pitch, a football business intelligence service, which predicts Newcastle will record a £27.8m profit when the accounts are revealed later this month.
While commercial revenues have also ballooned thanks to Adidas deals and Champions League participation, that is largely driven by a huge profit on player trading.
If that is the case it illustrates just how close Newcastle were to the £105m PSR limit and why there continues to be caution around spending in January.
Some expenditure – such as on the academy, women’s team and infrastructure – is allowable under PSR rules, but one club insider characterised the last year as “paying the piper” after successive transfer windows with record levels of spending.
That continues to apply now, with Newcastle sources suggesting any incomings will need to be offset by some outgoings to ensure they don’t face another scramble at the start of the summer to comply with PSR.
The club have been busy on that front and want £5m for Miguel Almiron, who has drawn interest from Leicester City, Greek side Olympiacos, MLS side Charlotte FC and two Brazilian sides, and are also open to allowing Kieran Trippier and Sean Longstaff to leave if clubs meet their valuation.
Martin Dubravka is in talks with Saudi Pro League club Al-Shabab but his situation is “complicated” according to Eddie Howe. He is the current first-choice goalkeeper due to Nick Pope’s injury.
If they do generate revenue it will make it easier to do deals. Otherwise any significant recruitment in January would likely require sales in the summer – making them potentially vulnerable to big offers for key men like Alexander Isak, Anthony Gordon and Bruno Guimaraes.
The new accounts will highlight how difficult it is for aspiring clubs to grow in the Premier League’s PSR regime, with even Newcastle’s participation in Europe’s elite competition not fully offsetting the cost of investing in players like Sandro Tonali while also increasing the wage bill with contract extensions for the likes of Guimares.
Off the Pitch’s analysis shows that Newcastle’s first round exit in the 2023 Champions League was costly, with the club only predicted to rake in £28m from that. That’s the lowest of any Premier League club and 25th out of the 32 clubs involved in the competition.
They project commercial revenue – which is driven by a new sponsorship deal with Sela and the tie-ups with Adidas, Fenwicks and In Post – to rise to £64.3m from £46m.
That is a record high but, for comparison, Manchester United’s most recent commercial revenue was £302.9m – which shows just how far Newcastle have to go to catch them up.
Matchday revenue, meanwhile, is predicted to be £40m – again, a new high but also less than half of the Red Devils’ £100m plus figure.
That shows why getting the decision on the new stadium is so important, with insiders believing it holds the key to unlocking new revenue streams worth millions.
Brad Miller, the club’s chief operating officer, suggested in November a new stadium could “double” their match-day and non match-day revenue.
There is brighter news on the horizon for the Magpies, where the feeling is that they have weathered the potential financial storm of 2024 and are in a strong position to retain their best talent like Isak.
As well as the £73.4m loss “dropping” out of PSR calculations for next year – opening up the possibility of more significant spending in the summer – the club are pivoting to a new approach when it comes to recruitment, targeting younger, global talent on the watch of director of football Paul Mitchell.
That includes Lens defender Abdukodir Khusanov, the hugely promising 20-year-old, right-sided centre-back. It is understood that Manchester City are also now pursuing the defender, though, which complicates Newcastle’s pursuit.
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