‘It’s hard to see how’ Newcastle United dodge UEFA £273m FFP breach as ‘financial penalty’ looming

It has been galling in the extreme for Newcastle United to watch the likes of Chelsea and Manchester United rack up gigantic losses without incurring the wrath of the Premier League’s PSR enforcers.

PSR, or Profit and Sustainability Rules, limit clubs to losing £105m over a rolling three-year cycle. On face value, both Man United and Chelsea were well above that figure in the last monitoring period.

However, through a combination of accounting sleights of hand, intra-company asset trading and the sales of academy graduates, both clubs have escaped punishment so far. Newcastle United have cut their cloth according to the rules and, unlike Everton and Nottingham Forest, have also not breached PSR.

If the Saudi Public Investment Fund (PIF) had not been anchored by the Premier League’s spending controls, it’s entirely possible to imagine a scenario wherein they would be challenging for the title. Manchester City did within four years of their own state-backed takeover, back when PSR – or Financial Fair play, as it was called then – had not yet been introduced at the domestic level.

In terms of league position, Eddie Howe’s side aren’t a million miles off that station already, but there is a quantum leap between finishing in the top four or five and actually winning the title.

In the current PSR climate, it’s bizarre to remember a time when the transfer market was essentially the Wild West. The only limit to how much a club could spend on wages and new signings was how deep their owner’s pockets were. Had PIF bought Newcastle in that era, we’d likely have seen Saudi Pro League levels of spending.

It isn’t as though the Saudis have not invested heavily on Tyneside. Amortisation, which is how clubs account for transfer fees over a set period, is almost triple what it was in the Mike Ashley era, while wages have nearly doubled. Newcastle and Aston Villa are now challenging the so-called Big Six in that respect.

They are flexing their muscles financially in other departments too. Plans to build a new stadium next to St James’ Park are gathering pace, while around £200m has been ringfenced for a new training ground. While those blueprints are developed, they are continuing to invest in the existing Darsley Park complex.

But generally speaking, supporters are more excited by silverware and progress on the pitch than they are by infrastructure upgrades, which are exempt from the PSR calculation. The League Cup triumph was a joyous, historic moment but PIF have made no secret that their ambitions are far grander than that.

A review of recent seasons shows Newcastle are in a boom-and-bust cycle. One window of big spending is followed by one of budgetary restraint.

They have ended 2024-25 with a positive net spend and the emphasis has been on top-class retaining talents like Alexander Isak and Bruno Guimaraes as opposed to signing oven-ready superstars.

The Magpies have massively overperformed and, ahead of Sunday’s meeting with Brighton, have their Champions League destiny in their own hands with four matches to play.

Position	Team	Played MP	Won W	Drawn D	Lost L	For GF	Against GA	Diff GD	Points Pts
1	LiverpoolLiverpool	34	25	7	2	80	32	48	82
2	ArsenalArsenal	34	18	13	3	63	29	34	67
3	NewcastleNewcastle	34	19	5	10	65	44	21	62
4	Man CityManchester City	34	18	7	9	66	43	23	61
5	ChelseaChelsea	34	17	9	8	59	40	19	60
6	Nottm ForestNottingham Forest	33	18	6	9	53	39	14	60
7	Aston VillaAston Villa	34	16	9	9	54	49	5	57

However, qualifying for Europe’s top competition for the second time in the PIF brings its own set of problems. Could Newcastle be a victim of their own success?

• READ MORE: Newcastle now ready to meet £17m asking price to sign player who is just ‘so good’

Newcastle United braced for UEFA FFP breach, says expert

UEFA have their own distinct set up of Financial Fair Play rules, which are distinct from the Premier League’s model.

Under the European system, clubs playing in the Champions League, Europa League or Conference League must limit their financial losses over a three-season period to around £50m, with an extra £25m of headroom for clubs deemed to be in good financial health.

On top of that, clubs must limit their spending on player and key staff wages, transfers and agents’ fees within 70 per cent of turnover plus profit on player sales.

Based on Newcastle’s 2023-24 figures, this would ostensibly give the club £273m to spend. Their actual spend across the relevant areas was £316m, so significantly over the current cap.

However, the squad cost control element of UEFA FFP is a calendar-year test and the governing body had not yet finished phasing in this element of the system. The cap was set at 80 per cent in 2023, which brought them in line with the quota.

But new analysis from football finance expert and former advisor to Manchester City Stefan Borson does not paint a comfortable picture for Newcastle’s compliance with UEFA FFP next season.

Though Borson writes that Newcastle are likely safe as far as Premier League PSR for the three years up until the end of 2024-25 is concerned, he says that UEFA compliance next season will far trickier.

‘It is hard to see how Newcastle would not breach the UEFA football earnings test for 25/26. Newcastle will watch with interest as to how UEFA deal with Chelsea and Villa for breaches to that test in 24/25. That news is expected next month.

‘It is harder to estimate the precise position under the squad cost control element as this is a calendar year test (ie to 31 December 2025) but the UEFA adjustments will hurt Newcastle here too.

‘It may be close but Newcastle will prepare to breach the 70% cap and will take a financial penalty for this element of FFP.

‘It may also be wrapped up into an overarching settlement. Again, the Villa and Chelsea situations will provide a good insight into UEFA’s approach to breaches of multiple branches of FFP.’

• READ MORE: Ian Wright says Newcastle fans have been way too harsh with £12m player

PIF can’t use Chelsea-style PSR trick to escape UEFA FFP punishment

Chelsea have made a habit of selling company assets to companies within their ownership structure, creating an artificial accounting profit, reducing their losses and complying with Premier League PSR.

But this doesn’t fly with UEFA, who do not include intra-group asset sales in their calculations.

That means Newcastle will be unable to sell their women’s team or any physical assets to escape a financial punishment from UEFA.

If the situation demanded it, however, they could theoretically take this approach if they were to find themselves at risk of breaching Premier League PSR.

Amid Manchester City’s ongoing legal challenge to the Premier League’s Associated Party Transaction rules, clubs have voted not to close this particular loophole.

Aston Villa are now reportedly considering doing the same.

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