TRADE DEADLINE: Newcastle United disagree with the big six’ gap decreasing by a £43.9 million number.
Newcastle United’s dissatisfaction with the ‘big six’ gap decreasing is explained by a £43.9 million number.
The goal of Newcastle United is to upend the cozy dynamic among the Premier League’s traditional “big six.”
The team qualified for this year’s Champions League and finished fourth last season ahead of schedule. However, despite earning more than £30 million from playing in Europe’s top club competition, Eddie Howe and his team found it difficult to repeat last season’s success with a small squad that was fighting on two fronts.
More than £70 million has been added to the team’s budget as a result of the Champions League, the extra games played at St. James’ Park, and placing fourth in the previous season. However, not all of that money has come in during the current fiscal year. Merit payments increased by £37.6 million on an annual basis for the 2022–2023 accounting year; Champions League funds will be factored in for the 2023–2024 season.
One of the few teams to release their annual financial statements is Newcastle. Although much attention was focused on the £73.4 million post-tax loss, which was primarily caused by the club’s increased spending on better players and thus had an adverse effect on its profit and sustainability rules position, the overall picture shows that the club is improving in a number of areas as a business.
Under the ownership of the Saudi Arabian Public Investment Fund (PIF), all of this serves as the foundation for the club’s success. The only way the club can hope to comply with the current PSR regulations—or even adopt the squad cost ratio rule already implemented by UEFA—is through revenue growth.
Revenue increased by 39% from £180 million in 2022–2023 to £250.3 million in 2022–2023. The club’s tour of Saudi Arabia was one of the main drivers of the rise, as seen by the £17.4 million (66%) increase in commercial revenues from £26.5 million to £43.9 million. In the 2023–24 accounts, which will see the likes of Adidas and Sela included in the stats for the first time, that is an area that Newcastle will continue to expand.
But in terms of top flight commercial revenues, is it an equal playing field? One of the items on the agenda for a Premier League meeting earlier this month was a vote to tighten regulations regarding associated party transactions (APRs), which are business agreements club owners enter into with companies they already own, invest in, or have some other connection to. The vote was narrowly approved.
After Newcastle was acquired by the PIF, the Premier League’s larger clubs became agitated, fearing that the team would be able to use its connections to Middle Eastern companies to spend their way to success. Newcastle was the club that brought the issue into sharp relief for the league. Following that, the “fair market value” criterion was enforced more strictly, with the Premier League evaluating every business agreement to ascertain what constitutes fair market value.
