Can’t really see this. I wouldn’t pretend to know their motivation but would be surprised if they wanted to wash any dirty linen in public. That doesn’t come across as the way the PIF work.
Newcastle United Newcastle United posted losses of around £73m in each of the 2021/22 and 2022/23 seasons , which has given the Geordies some PSR headaches. In fact, both chief executive Darren Eales and manager Eddie Howe have frequently mentioned that the club will have to sell players to stay within the PSR targets The good news is that I am forecasting a significant improvement in 2023/24 with a £7m pre-tax profit, partly thanks to profit from player sales surging from £3m to £84m. This includes a couple of large last minute deals in June 2024, which was a fairly clear sign that Newcastle were close to the edge. They sold Yankuba Minteh to Brighton and Elliot Anderson to Nottingham Forest as part of a “player swap” deal with Odysseas Vlachodimos. Indeed, only this week Howe explained, “We had to lose two highly promising young players in June because of PSR. We were forced to, we had no choice.” They also made around £21m from the sales of Allan Saint-Maximin to Al-Ahli and Chris Wood to Nottingham Forest. In addition, I have assumed a £47m increase in their revenue from £250m to £297m. That is driven by qualifying for the Champions League, which was worth around £30m TV money, though this was partly offset by lower Premier League TV distribution after dropping from 4th to 7th place. There is also a big increase in commercial income after Sela replaced Fun88 as shirt sponsor, plus a boost from Amazon’s “We are Newcastle United” documentary. The new Adidas kit supplier agreement only started in 2024/25. There will have been increases in wages and player amortisation following further investment in the squad in 2023/24, while other expenses are assumed to have grown by 15%, mainly due to the European adventure.
PIF inherited a pretty solid FFP position from Ashley, as the former owner’s tightfisted approach to spending meant that they had a fair amount of wriggle room. However, the PSR monitoring period is a moving target, so things have moved on. In this way, the aggregate losses over the 3 years to 2023/24 add up to £139m, though the adjusted PSR loss is only £98m after making £41m of allowable deductions. This is £7m better than the maximum allowed loss of £105m, so I believe that Newcastle were compliant, but only thanks to the frantic player trading in June.
As the £73m loss in 2021/22 drops out of the monitoring period this season, Newcastle should have a little more flexibility going forward. In fact, I think that they could afford to lose £84m in 2024/25 and still meet the PSR target.
As a result of the PSR restrictions, Newcastle really cut back on transfer spending this summer, having averaged around £150m in each of the previous three seasons. Their outlay was just £59m, including making Lewis Hall’s loan from Chelsea permanent, the cost of the Vlachodimos deal and buying William Osula from Sheffield United, which increased amortisation by £13m. The downside of accelerating the sales of Anderson and Minteh iis that Newcastle made nothing from other player departures this summer, at least in terms of the 2024/25 accounts. Given that Newcastle’s hierarchy has underlined the importance of player trading to the business model, it would not be a major surprise if they sold one or more of their players before the end of the accounting year.
TLDR - He reckons we can lose about 84m this year (amortised transfers, wages, fees etc included) and still be OK.
Overview Having looked at the PSR position of each of the 20 Premier League clubs, let’s summarise the numbers in a handy overview. Operating Profit/(Loss) In total, the clubs playing in the 2024/25 Premier League generated £17.0 bln revenue over the 3-year PSR monitoring period up to 2023/24, but used almost all of this on £16.2 bln of staff costs (£11.2 bln wages plus £5.0 bln player amortisation) and paid £4.5 bln other expenses, leading to a sizeable £3.7 bln operating loss. In fact, not a single club in the Premier League managed to generate an operating profit, though Brentford and West Ham came mighty close, only losing £3m and £21m respectively. No fewer than six clubs lost more than £200m at the operating level, led by Chelsea’s staggering £694m, followed by Aston Villa £412m, Leicester City £312m, Everton £300m, Wolves £246m and Newcastle United £217m.
Interest Payable Interest payable can be a big burden for football clubs with high third party debt, especially Manchester United and Tottenham, who were charged £145m and £130m respectively. These two clubs account for nearly half of the total £597m in the Premier League in the last three years. Tottenham’s high interest payable is due to the loans they took out to fund their new stadium, while United’s is linked to the Glazers’ leveraged buy-out. United’s interest payable is also impacted by forex movements, because much of their debt is denominated in USD, even if the cash payment is unchanged.
Profit from Player Sales Clubs have managed to partially offset operating losses by profits from player sales, with four of them generating more than £200m in the last three years, namely Brighton £335m, Manchester City £328m, Chelsea £302m and Aston Villa £228m. The nature of player trading accounting, whereby profits are booked immediately, has encouraged clubs to get creative here, hence the spate of “player swap” agreements carried out this summer. As an indicator of which clubs were up against the wall, those that booked such deals in June was as good as any.
Other Once-Off Transactions Chelsea have only managed to comply with the PSR target with the help of some innovative deals, e.g. they made £77m in 2022/23 after selling two hotels on the Stamford Bridge site to another group company, while it has been reported that they have repeated this trick in 2023/24 by selling the women’s football team for £175m (but this will only be confirmed when their accounts are published). Bournemouth’s £71m is from the write-off of a shareholder loan as part of Bill Foley’s acquisition of the club. It’s not all good news here, as Manchester United booked £72m of exceptional charges, including £37m payments to outgoing managers and executives plus £35m related to the strategic review and share sale agreement with Sir Jim.
Profit/(Loss) before Tax Four clubs have made a pre-tax profit over the last three years (including the estimate for 2023/24 in most cases), namely Brighton £277m, Manchester City £196m, West Ham £51m and Brentford £11m. On the other hand, ten clubs lost more than £100m, led by Manchester United £313m, Aston Villa £201m, Chelsea £198m and Tottenham £198m.
PSR Adjustments However, these are not the figures used in the PSR calculation, as Premier League clubs could deduct around £1.6 bln from the losses reported over the last three years. Unsurprisingly, this presents a much better picture than the bottom line shown in the published accounts. These deductions comprised £574m depreciation, £14m other amortisation, £594m youth development, £132m community, £152m women’s football, £56m financial costs (mainly share sale), £77m COVID and £61m 13th month impact. In addition, £71m of owner loan write-offs were excluded. Tottenham have by far the highest deductions of £281m, mainly due to their substantial depreciation charges for the new stadium, followed by Manchester United £210m, which included much larger adjustments than other clubs for COVID and the share sale. The other members of the Big Six (plus Aston Villa) can also deduct more than £100m, while at the other end of the spectrum the allowable deductions at newly promoted Ipswich Town were just £18m. Bournemouth’s £33m net addition is the result of £38m of allowable deductions, offset by the exclusion of the £71m owner loan write-off.
Allowable Losses As we saw in yesterday’s article, most Premier League clubs are allowed to lose up to £105m over the 3-year monitoring period (£35m a year), so any loss below that figure would be fine for PSR. However, the maximum loss in the EFL is lower at £13m a year, so five clubs only have a threshold of £83m, as they have spent one year in the Championship during the monitoring period, namely Bournemouth, Fulham, Leicester City, Nottingham Forest and Southampton. Finally, Ipswich Town’s limit up to 2023/24 is just £39m, as their 3-year monitoring period includes two years in League One and one year in the Championship.
PSR Capacity Looking at the overall result for the Premier League, the £1.6 bln pre-tax loss is covered by a similar amount in allowable deductions, giving a small adjusted PSR profit of £14m. In total, the maximum allowed loss is £1.9 bln, so there is a lot of headroom for the league - as a whole. However, it should be appreciated that there is a wide divergence between individual clubs in the Premier League. Half of them have plenty of headroom, especially Brighton, Manchester City, West Ham, Liverpool and Tottenham, while Brentford and Arsenal are also pretty comfortable. In contrast, the other half of the league faces some PSR challenges. I reckon that the club most at risk is Leicester City, which is no great surprise, as they only avoided a sanction in 2022/23 thanks to their lawyers. In addition, I have five clubs only just meeting the target, namely Nottingham Forest, Bournemouth, Ipswich Town, Manchester United and Newcastle United. They will all have to box clever in the transfer market to stay on the safe side. This doesn’t necessarily mean that they are unable to buy players, but it might be a case of “one in, one out”. Once again, I should point out that this assessment includes a forecast for 2023/24 for most of the clubs, so the conclusion is not rock solid, merely indicative, though it shouldn’t be too far off. In any case, we won’t have to wait too long for confirmation (or otherwise), as the Premier League is due to announce next week whether any clubs have actually breached the PSR limit.
Conclusion There is little doubt that some clubs have been restricted by PSR, as can be seen by their behaviour in recent transfer windows, though it looks like a few others are protesting too much, as they have a lot of scope even under these rules. That said, just because a club is not limited by the regulations does not mean that it will automatically spend big in the transfer market. Leaving aside the hit and miss nature of player purchases, it has to be remembered that in the real world, clubs are constrained by their own financial budgets, just as much as the rule book.
... and there endeth the financial spam - read what you like. Believe what you like. All credit goes to SwissRamble over on Substack.
