Newcastle United's PSR problems led to mad scramble to sell players

Initially introduced as a safeguard against clubs bankrupting themselves, and touted as a way of preventing rampant inequalities from developing, the rules increasingly look like a thinly-disguised means of maintaining the status quo and stifling ambition. While the established elite plough on regardless, the clubs who are striving to replace them at the top of the table are being constrained at every turn. Surely, that is wrong.

Yet for all that the regulations might not be fit for purpose, that shouldn’t get Newcastle United off the hook when it comes to the farcical scenes that have played out over the weekend. A club that purports to have strategic long-term plans, and ambitions of becoming a global leader, effectively morphed into a dodgy market trader, desperately hawking around unwanted goods to whoever might be willing to pay for them. Buy a 21-year-old midfielder, and we’ll throw in a deal to take a Greek goalkeeper off your hands for free.

It felt chaotic, panicked and more than a little grubby, in other words everything that the Newcastle hierarchy have insisted they were not going to be in the wake of the Saudi Arabia-backed takeover that removed Mike Ashley from the boardroom at St James’ Park. Ashley would have been in his element flogging off teenage wingers. Things were supposed to have moved on.

Last weekend’s fire sale was a problem of Newcastle’s own making, and one that should have been anticipated and avoided. The rules are hardly new, and as recently as January, chief executive Darren Eales was speaking on the record about the club’s determination to “always comply” with PSR.

At the same time, Eales would have known about the gaping hole that existed on the club’s balance sheet. Ashley’s lack of investment caused a myriad of problems at St James’ Park, but the one benefit was that when Newcastle’s new owners took over, they effectively had carte blanche to spend while knowing they would remain within the Premier League’s permitted Financial Fair Play parameters of £105m worth of losses over a rolling three-year period.

Newcastle could spend, and with the team in danger of dropping into the Championship during the PIF’s first season as majority owners, that is exactly what they did. During their first four transfer windows, the current ownership group spent around £415m, a sum that was always going to be way out of kilter with revenue, which had flatlined for more than half-a-decade under Ashley.

Compliance with PSR was never really going to be a problem in 2022 and 2023 because the three-year rolling figures included Ashley-era accounts. This year was always going to be the first year in which all three years relating to PSR involved post-takeover spending. Publicly-available accounts show that in 2021-22, Newcastle’s annual loss was £70.7m. In 2022-23, the figure rose to £73.4m. Not all of those figures equate to PSR, but given that Newcastle spent the best part of £100m last summer on Sandro Tonali, Harvey Barnes and Tino Livramento, and also committed themselves to buying Lewis Hall, it was obvious that the sums did not add up.

The hierarchy knew that, hence the refusal to make signings in January and the attempts to ship players out. If Miguel Almiron had gone to Saudi Arabia at the start of the year, the problem would not have been so acute. When he didn’t, Newcastle knew they were in a potentially-catastrophic situation.

How bad? Because the PSR rules are so opaque, it’s hard to know exactly. But sources claim the gap Newcastle needed to plug before the end of June was bigger than the shortfall that resulted in Everton receiving back-to-back punishments. A deduction of ten points or more? It was regarded as a distinct possibility.

Yet while the messaging from those on high began to change from January onwards, with talk of ‘needing to sell to buy’ becoming increasingly common and Howe laying the groundwork for a ‘difficult summer window’, the close season still began with precious little indication of just how bad things had become.

It was only when stories began emerging detailing the discussions Newcastle were having that the scale of the potential issue became clear. Suddenly, nothing was off limits. Chelsea want Alexander Isak? We’ll have that discussion. Liverpool might be interested in Anthony Gordon? Get in touch.

Sources claim the loss of neither player was ever particularly close, but it still created a sense of chaos that has the potential to cause long-term damage. It is claimed that when Gordon and Trent Alexander-Arnold boarded the team bus after England’s win over Slovakia at the Euros, the latter was jokingly singing ‘He’s coming home’ at the former, who was desperately trying to shush him up.

If Newcastle fail to qualify for the Champions League next season, will Gordon start agitating for a move to Liverpool, knowing his current employers were willing to consider selling this summer? If Eddie Howe is offered the England job in a week or two’s time, will he reflect on the last couple of weeks and question just what Newcastle are capable of achieving in the short to medium term?

One irony in all of this is that provided Newcastle have not breached PSR rules – and that will not be definitively confirmed for a number of months – they should be able to invest relatively strongly in the remainder of the summer. The 2021-22 accounts, when they were spending heavily to remain in the Premier League, have dropped off the PSR cycle and the income from new deals involving the likes of Sela and Adidas have been added on.

Even so, the last week or so has been an embarrassment. Serious questions still exist, and it will be interesting to see if a senior backroom figure opts to speak publicly in the next few days. Assuming, as looks likely, the PSR rules remain in place in some form or other, Newcastle cannot have a repeat of last weekend’s scenes every final week in June.