Much has been said and written about Newcastle United since the club was controversially taken over by their Saudi Arabian state-funded new owners in 2021.
Despite protests by the likes of Amnesty International – who raised concerns over Saudi involvement due to the country’s human rights record and the murder of journalist Jamal Khashoggi in 2018 after he was critical of the regime – the Saudi takeover was given the green light by the English Premier League (EPL).
Given the seemingly bottomless pot of cash that the Saudi group could invest in Newcastle, it was widely believed that the club would splash out on some big-name signings.
And while the likes of Messi, Mbappé and Neymar have failed to arrive on Tyneside, manager Eddie Howe has spent around £250 million over three transfer windows thanks to the Saudi investment.
So can the Magpies continue to spend big to attract top earners to the north-east of England, or will the EPL’s Financial Fair Play (FFP) rules hamstring the club’s mega-wealthy owners? Let’s investigate.
Newcastle FFP Report
Newcastle’s most recently released accounts – covering the period from July 1, 2021 to June 30, 2022 – showed a loss of £70.7 million, a turnover of £180 million and a wages-to-turnover ratio of 94.6%, well above the previous year’s figure of 76.2%.
This sort of financial report, if repeated, would almost certainly see them fall foul of the EPL’s FFP rules, where teams cannot make a loss that exceeds £105 million over three seasons.
If the loss is between £15 and £105 million, the deficit must be covered by the club’s owners – which would not be a problem for the wealthy Saudi backers of Newcastle.
However, UEFA also has its own version of FFP regulations, where clubs can only spend five million euros more than what they earn over a three-year assessment period, or 30 million euros if it is covered by owners of third parties.
Given that Newcastle have qualified for the Champions League, they must now abide with financial rules both at home and on the continent.
Are Newcastle in Trouble with FFP?
Newcastle are not in trouble with FFP, yet. Providing they stay within the rules’ losses limit then they can avoid the sanctions that can be used against teams that operate outside their means, which can include points deductions or even expulsion from the EPL.
According to football finance expert Kieran Maguire, Newcastle are actually in a relatively strong position from a FFP perspective, as although previous Newcastle owner Mike Ashley was unpopular with fans, the Saudi buyers actually inherited a club with a FFP profit of £100 million.
The FFP rules are based on a club’s pre-tax losses, but some costs are exempt, including those relating to the club’s infrastructure, youth academy, women’s team and community projects, which means not all of Newcastle latest reported losses of £70.7 million will be considered as part of the three-year rolling FFP calculations.
How Much Can Newcastle Spend in 2023/24?
Despite having spent around £250 million since taking over, and their seemingly unlimited wealth, Newcastle’s Saudi Arabian owners have told boss Eddie Howe he can ‘only’ spend £75 million preparing for the 2023/24 season.
This figure could increase if the club sells players, or banks on selling players in the coming transfer windows.
Newcastle Finances
Newcastle’s finances – as you might expect given their ownership – are healthy, but the Saudi owners are intent on making huge strides forward in the coming years to consolidate their position near the top of English football while remaining FFP compliant.
Their most recently reported turnover of £180 million is dwarfed even by the likes of Spurs, who reported a turnover of over £440 million for the same period.
This means the owners have laid out a new “strategic plan” that includes establishing commercial partnerships and forming new revenue streams with big-name and big-money companies.
However, the club’s wage bill of £170 million, and more importantly the wage-to-turnover ratio of 94.6%, remain a major problem, hence the need to massively increase revenue to avoid falling foul of the FFP rules in future.
Newcastle P+L (Profit and Loss)
The table in this section reveals the profits and losses registered by Newcastle in the six previous campaigns.
| Season | Profit and Loss (£) |
|---|---|
| 2016/17 | +18.6 million |
| 2017/18 | +34.6 million |
| 2018/19 | -22.5 million |
| 2019/20 | -26 million |
| 2020/21 | +77.4 million |
| 2021/22 | -70.7 million |
As we can see, Newcastle has registered a mixed bag of profits and losses, with profitable seasons such as 2020/21 largely cancelled out by the most recent loss of £70.7 million.
However, with new sponsorships and commercial deals on the horizon, and a guaranteed Champions League windfall for at least one season, it is fair to expect revenue to increase and losses to be reduced if the Magpies continue to prosper on and off the pitch.
Newcastle Transfer Net Spend Year-by-Year
In this section we will take a closer look at Newcastle’s net spend over the past six seasons, as calculated by Transfermarkt. This shows us the sum of all transfer dealings conducted by the club during each campaign, including both buys and sales.
If a club spends more on new signings than it collects in transfer fees, the net spend will be positive. The figure is negative if the club’s income from transfers exceeds what it spends on new players. The figures below are in euros.
| Season | Buys (€) | Sales (€) | Net Spend (€) |
|---|---|---|---|
| 2017/18 | 46.5 million | 21.2 million | 25.3 million |
| 2018/19 | 59.7 million | 51 million | 8.7 million |
| 2019/20 | 72.9 million | 35.5 million | 37.4 million |
| 2020/21 | 39 million | 0.27 million | 38.73 million |
| 2021/22 | 130.5 million | 0 million | 130.5 million |
| 2022/23 | 185.3 million | 13.3 million | 172 million |
| Total | 533.9 million | 121.27 million | 412.63 million |
Newcastle’s losses in the transfer market of 412.63 million euros were largely accrued in the past two seasons, which saw them make big-money signings like Alexander Isak from Real Sociedad and Anthony Gordon from Everton, funded by the Saudi owners.
What is the Financial Situation with Newcastle?
Despite the losses registered in the transfer market and the most recent operating loss of £70.7 million in 2021/22, it is fair to say that the overall financial situation at Newcastle is relatively stable, largely thanks to the backing of the Saudi owners.
If their attempts to increase revenue streams are successful, and the club can continue to perform well on the pitch and play regular European football, the Magpies have the potential to truly establish themselves as a powerhouse in domestic and European football.
However, despite the big-money backing, the club must still be mindful of the FFP regulations, which means Newcastle have to tread carefully as they go forward.
