It is not yet known how much Eddie Howe is expected to spend at the end of this year. Credit: Reuters/Craig Brough
Newcastle United are planning to make a big splash in the summer and are expected to spend big again under their new Saudi Arabian owners.
But, warning that they risk violating financial rules Fair Play, when they signed Anthony Gordon from Everton for £45m in January, why is the club in a position to spend big money before the start of next season?
In 2022, UEFA approved rules stating that by 2025, a club's total spending on transfers, salaries and agents' fees must not exceed 70 per cent of their total income.
Clubs will be allowed to lose €60. million (£53.6m) over a three-year period with an additional €10m annual loss if the club is deemed to be in 'good financial health'.
Spending on infrastructure, training facilities and Youth development is not included in the FFP formula.
In Newcastle's most recent accounts for the period June 2021 to July 2022, first published by a consortium controlled by the Saudi Arabian Public Investment Fund, since they bought the club in October 2021, Newcastle have lost 70.7 million pounds sterling despite a £40m increase in turnover since then. former owner Mike Ashley sold them.
Where does the money go?
Wages were over 90 per cent of turnover, although this included a substantial compensation payment to former manager Steve Bruce and his coaching staff, as well as payments to players no longer with the club.
Newcastle pay around £200,000 in week, subsidizing the wages of players on loan, as well as Dwight Gale, who joined Stoke City last summer on a permanent contract.
They have spent around £250m on new players across the three transfer windows combined, but plan to sign at least four elite players to bolster manager Eddie Howe's team ahead of their return to European football. It won't be cheap, and while sources have been careful not to give an exact figure for their budget, Telegraph Sport can reveal how they intend to abide by the FFP rules.
Why Champions League qualification will determine their next shirt sponsor?
The club intends to introduce a new shirt sponsor before the start of next season and is negotiating a fair market value for the deal. The pause in naming new partners is largely due to the fact that fair market value will depend on which European competition, if any, Newcastle will play in next season.
If they are in the Champions League, the deals could seem fair for Chelsea, Tottenham, Liverpool and Arsenal, who earn around £40m a year. Newcastle's existing deal with betting firm Fun88 is believed to net the club less than £10m a year.
The fair market value of Newcastle's new shirt sponsors will be determined by which European competitions, if any, the club enters. Commercial director #39, Peter Silverstone, would argue that such a deal is reasonable. His case will be bolstered by the fact that Newcastle were one of the most popular Premier League teams to watch on television this season.
If you add the possibility of many other business deals (Saudi Airlines sponsored Newcastle's winter break at the World Cup in Saudi Arabia for an undisclosed amount), Silverstone is confident that revenues will rise rapidly over the next 24 months.
This presence to increase the number of live games is another reason why the club's income will increase from July 2022, as will the additional games and ticket income generated from their participation in the Carabao Cup final.
Expenses next winter&# 39 ;with an early budget
The fact that FFP losses are calculated over a three-year period will also help Newcastle by allowing them to spread the cost of deals, encouraging them to advance their spending plans to launch an ambitious summer recruiting campaign.
The business model when the takeover happened was to have a budget of around £50m in each transfer window. By this point, Newcastle have overcome that amount by at least £100m, but if they combine the January budget with the summer budget next season, it will give them more flexibility. Plans to buy in the summer, not in the winter, next season.
If Howe takes his side to the Champions League, Newcastle are guaranteed an extra £40m. If they qualify for the Europa League, it would add at least £10m to the revenue stream. Both will help, although it is clear that the Champions League is a game-changer.
So, who can leave?
Newcastle will also look to get rid of players this summer. They received £12m (possibly rising to £15m) from the sale of Chris Wood to Nottingham Forest and also received one of their highest paid employees, Jonjo Shelvey (£80,000 a week), from wages in January. .
The likes of Javier Manquillo, Karl Darlow, Martin Dubravka, Isaac Hayden (on loan from Norwich City), Jamal Lewis, Jeff Hendrick and Ryan Fraser will be available for purchase this summer. Matt Ritchie, another of the club's highest-paid players, will also terminate his contract in June, freeing up another portion of his salary for a promotion.
A young prospect on the Continent, for example, will overwhelmingly earn less than 20,000 pounds sterling a week, so they could still be offered a big raise if they moved to Tyneside.
After all, Newcastle know what they'll have to sell to buy, but it's not a must this summer. Telegraph Sport have been assured that none of the club's star players will be sold this year, but depending on how many new sponsors they can bring in ahead of time, this could change in 2024 or 2025.
That, however, it is designed for the medium and long term. Newcastle's goal is to dramatically change their short-term fortunes.
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