DARREN EALES is confident Newcastle United successfully resolved their PSR issues last month, and claims the club are now in a “new financial cycle” that will enable them to invest.

With the deadline for the Premier League’s PSR calculations falling at the end of last month, Newcastle were facing a significant shortfall that could have resulted in a points penalty.

However, the £35m sale of Elliot Anderson to Nottingham Forest and £33m departure of Yankuba Minteh to Brighton transformed the club’s financial outlook, with the compensation received from Dan Ashworth’s departure to Manchester United also helping to rebalance the books.

While the Premier League will not announce whether any clubs failed to adhere to the PSR rules until well into next season, Eales is confident Newcastle were compliant, and with the regulations applying to a three-year rolling window, the Magpies have now been able to wipe off the debts that were incurred during the first year of the current ownership.

As a result, there is much greater scope to invest over the course of the next 12 months, and with new sporting director Paul Mitchell now in place, attention has switched to the pursuit of potential incomings.

“If you do it at a basic level, we had lost over £70m in the two previous cycles and that meant that we needed to hit the target that we did,” said Eales, who is Newcastle’s chief executive. “The good news is that £70m now drops off going into the new cycle, so we have got that chance to know what our available headroom is.

“We still have to be smart, we can’t just spend what we want, every penny that we spend is important because it is money we can’t then spend elsewhere. But I think we are in a good position to deal with that going forwards.

“We are compliant, we did what we needed to do, and going forward we are into a new cycle and we do not want to be leaving ourselves in that situation again in such tight circumstances.

“We did not want to lose those players, but again we had to do the deals we had to do to leave the squad in the best place possible for Eddie (Howe) moving forward. In that respect, with Bruno (Guimaraes), (Alexander) Isak, (Anthony) Gordon, Joelinton and (Sandro) Tonali to come back, we've got Lloyd Kelly coming in as an addition already, Lewis Hall and Tino Livramento, we've got the squad to kick on.

“We are always looking to add to that, and that is the challenge now, that is what we need to do, we need to find ways to improve and that is what we are doing with Eddie and Paul.”

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Newcastle’s two main priorities for the remainder of the transfer window are the signing of a right-side attacker and a right-sided centre-half. Jarrod Bowen remains a leading target in the former position, although West Ham are determined to do all they can to hold on to the England international.

The Magpies could also look to sign a new striker, although Eales concedes that the scope for investment will continue to be limited by the club’s revenue streams, which flatlined during Mike Ashley’s period as owner. That said, however, major strides have been made when it comes to increasing the club’s commercial activity in the last couple of years.

“Our revenues have been rising, and it’s been incredible to see,” said Eales. “Turnover from £140m to £180m to £250m, this past financial year will be north of £300m, so that’s over 30 per cent compound annual growth, which is a phenomenal rate.

“We’re still behind the big six, so we know that if we’re going to be competing and punching above our weight, how we use our resources is really important. That’s why it is not as simple as saying, ‘Well, you’ve got X amount so you’re going to go and spend it on one, two or three players’. The job now with Paul and Eddie working together is, ‘How can we use those resources to strengthen the squad going forwards?’”

Newcastle have always insisted they intend to remain compliant with PSR regulations, even though they are clearly restricting their ability to compete at the top of the Premier League, but wit Manchester City having launched a legal challenge over associated party transactions, there is a growing sense that the current rules are not fit for purpose.

“From my perspective, PSR needs to be looked at because incentivising the selling of homegrown players is not good protocol to have,” said Eales. “I also liken it to when I was out in the States and we had a strict salary cap.

“In effect, FFP now has created a salary cap and what I mean by that is there is a certain maximum allowance of headroom that you can spend based on your revenues over a three-year projection and that includes things like player sales on profit and disposal, so actually, every decision you make has a knock-on impact.”