Short-term pain but looking at this now more closely…the outlook for Newcastle United looking very good

It’s been a busy old week and no mistake. New lettering on the East stand at St James’ Park eh?

And how about the club finally (FINALLY) releasing details of the Sela Cup, with very reasonable prices for a Friday night booze up against Girona, followed by what seems like half a Sela Cup against Brest? Still, not a bad pair…

There has been some other stuff transpiring of course, as the very pleasant surprise of Paul Mitchell being installed as Newcastle United Sporting Director came out of nowhere.

There are some magnificent scenes online of Man Utd fans who had touted for Mitchell months ago, seemingly claiming it as a win that we now have him and some of their money, with the Ashworth situation now of course resolved.

Those same Man U fans are desperately claiming that we’ve caved at less than £3m, with similarly reactive Newcastle fans quoting some unreliable report that we’ve scored for the full £20m. The reliable reports in the middle seem to settle around £10m.

The Ashworth news came at the culmination of a weekend scramble of PSR-related urgency. Of course, there has been a lot said about this, but the fundamental fact is that the whole business is a bit baffling to get your head around. I’m going to try and break it all down a bit into something that makes sense, so please bear with me a bit.

First off, I would counter a suggestion in a recent article on here by ‘Matt Busby said to Joe Harvey’, that the recent sales leave Newcastle breaking even and, as such, unable to spend before they sell this summer. While this would be true in pure banking terms, NUFC are (in case you’ve missed it) cash-rich by virtue of our ownership but need to stick to budgets only for PSR reasons.

Current PSR rules consist of a net loss that shouldn’t exceed £105m over the last three accounting years. The sales of Yankuba Minteh and Elliot Anderson last Sunday were necessary to meet the requirements for the period from 1 July 2021 to 30 June 24. However, as of Monday gone, we are in the 2022-25 period, which will apply for the coming season as the same PSR rules remain applicable.

However, the revolutionary 2012/22 season has fallen off the accounts. This was a season when Joe Willock, Bruno Guimaraes, Dan Burn, Chris Wood and Kieran Trippier were all signed, not to mention the cost of jettisoning Steve Bruce and cronies.

Literally, nobody was sold that season to offset this spend and I am assuming Willock at least was paid for in full up front as ‘twere the Ashley regime’s modus operandi.

The accounts for that period reported total losses for 2021/22 in excess of £70m, so theoretically a large proportion of that amount should be available again. There are deductibles such as infrastructure and the women’s team that don’t count towards PSR, but for example, I don’t remember any ground improvements or anything that would particularly bloat the 21/22 figure. If we are losing more than we were in 21/22 for day to day running of the club, this would need to be offset from the £70m, but while wages and transfer instalments have increased, so has commercial income (considerably) with the growth of both potentially evening each other out. Furthermore, any sales made from now on would indeed increase this amount as we look to offload those on the fringes of the squad or in need of an upgrade.

This is where it could get good. Everyone knows the craic with amortisation by now surely, where a fee is spread over the years of its contract, so a signing for £50m on a five-year deal would only take a £10m bite out of the PSR allowance. I’ll let you do your own maths for how far that best part of £70m+ could stretch in these terms.

This must be adhered to for the season ahead, the final year of PSR in its current form. After this, we move to the ‘anchoring’ system, whereby everyone has the same spending limit. This will be a multiple (possibly 5x) the broadcast income of the poorest earner of the 20 PL clubs. In just about every case this would offer a lot more breathing room than the three-year losses of £105m, with spending of up to £400m per year possible.

So PSR is pretty much going away next year then? Yay! Not exactly though. Alongside the anchoring rule, the Premier League might yet adopt a version of UEFA’s squad cost rule, which basically dictates that annual spending on transfers and wages can only add up to 70% of the club’s income. The Prem’s bar will almost certainly be higher, but it’s sort of a moot point because if you want to play in Europe you need to abide by the UEFA rules. However, if it’s a regulation that impacts the entire Premier League, they will no doubt put their scheming heads together in search of a loophole they will doubtless find, exploit, and eviscerate.

So, things are good then eh? One year of relative balance then the threat of points deductions go away. Hopefully, the court cases on this subject only serve to strengthen the NUFC position and we can quietly start our world domination. There’s just the need to adjust to the Europe thing and we’re on the gravy train.

So, here’s the thing that worries me.

The day after the glut of last-minute sales, Chris Waugh of The Athletic published an excellent deep dive on the situation with the benefit of insider information that the Athletic’s lofty standing allows access to. It’s clear from this piece that there was indeed panic setting in last weekend. Using that and other sources, this is my surmise of exactly what happened this summer:

Newcastle knew they needed to sell to stay within PSR, so reluctantly arranged the transfers of Minteh to Lyon and Anderson to Forest in advance of the June 30th cut-off. However, they would have liked to retain both so kept these deals on ice to see if anyone came in to trigger Bruno’s release clause, which would have totally changed the situation. When this didn’t happen the moves were pushed ahead but Minteh didn’t want to go to France. This has led to some unsavoury rumours about the lad being threatened with exile to the reserves but ultimately the situation was resolved (after some hysterical considerations including pitching Anthony Gordon to Liverpool apparently) by Minteh being sold to Brighton and Anderson’s deal with Forest going through. Annoyingly, Brighton got away with £7 million less than Lyon was willing to offer, meaning there was a potential hole to be filled. This was done by securing around £10m for Ashworth in a deal that was always going to be settled around this time anyway.

The problem I have is that some reports seem to indicate that people at the club weren’t certain if the sales of the two players would cover the shortfall or not, with a Sunday evening emergency meeting apparently held to consider the sale of, among others, Kieran Trippier, who was at that time trotting out onto the pitch at Gelsenkirchen to prepare for a knockout match in a major international tournament. The situation was resolved by the Ashworth deal and we can all move on, at least until the accounts come out.

It’s this uncertainty that concerns me. With a penalty like a points deduction at stake, I would have assumed that someone at NUFC had the accounts calculated to the penny and would have entered the summer negotiations with an exact number in mind. I also assumed that brilliant minds would be turned to the forthcoming different sets of financial regulations and be planning ways for Newcastle to safely negotiate them.

The fact that these sales were quickly cleared in time for a relatively happy ending adds reassurance. Although we’ll keep an eye on our two sacrificial lambs with chagrin as they set about proving themselves at their new homes, they were sales outside of the immediate first team that has to be considered tolerable under the circumstances.

The arrival of (pictured above) Mitchell, with rumours that Chelsea’s excellent academy masterminds are set to follow, suggests the plan was in place all along, and we can await playing arrivals with bated breath.

I’ve written this in the hope that anyone (who stuck with it) can get a bit of an understanding of where things are, as the changing financial landscape is getting impossible for the man on the street to follow.

Sometimes I miss the days of jumpers for goalposts, when my Mag articles were about Craig Bellamy’s hair, seeing Nobby Solano in Baja Beach Club and, on the odd occasion, football. Memories.

You can follow the author on Twitter @Mr_Dolf