What do Antoine Griezmann, Edinson Cavani, Timo Werner, Dries Mertens, Mauricio Pochettino and Massimiliano Allegri all have in common? Over the past week, all have been linked with moves to Newcastle United once owner Mike Ashley completes his proposed sale of the Premier League club to a consortium backed by Saudi Arabia‘s Public Investment Fund, which has estimated assets around £320 billion ($395bn).
The deal, which has attracted criticism, has yet to be sanctioned by the Premier League, with the prospective new owners due to be assessed under the league’s Fit and Proper Persons Test. If the Saudi-backed takeover gets the green light, Newcastle would automatically find themselves with the financial resources to transform the club and muscle their way back into the elite in England and Europe.
Well, that’s the theory, at least. After 13 years of stagnation, drift and underwhelming investment since Ashley took control in 2007, Newcastle could become another Manchester City or Paris Saint-Germain, two clubs whose incredibly wealthy owners have ambitions to take on the world. That’s why the likes of Griezmann, Cavani and Werner, and star-name coaches such as Pochettino and Allegri, are being linked with moves to St James’ Park.
Newcastle has suddenly become the No. 1 destination for players, coaches and agents who fancy being on the ground floor of an exciting new (and lucrative) project, but it’s not quite as simple as all that.
The days of clubs being bankrolled to the top — as happened under Roman Abramovich at Chelsea, at City thanks to the billions of Abu Dhabi’s Sheikh Mansour bin Zayed al Nahyan and thanks to Qatari owners at PSG — are over. The drawbridge was pulled up by the football authorities as a result of those finance-fuelled transformations, and Financial Fair Play regulations (FFP) introduced by UEFA and the Premier League mean it will be so much more difficult, if not impossible, for Newcastle to make the same leap as Chelsea, City and PSG.
Thanks to FFP, clubs are now restricted to spending what they earn as a sporting entity, rather than simply lavishing millions on signings and wages thanks to the bottomless pockets of their owners. PSG and City have both previously fallen foul of UEFA’s strictures, with City currently attempting to overturn a two-season ban from the Champions League for their failure to comply. UEFA’s FFP regulations are so complex that they amount to a 116-page document, but in a nutshell, the measures are aimed at limiting losses made by clubs, so they can only report annual losses up to a maximum of €30m ($32.3m). UEFA’s “acceptable deviation,” or loss, is €5m.
This is the problem that will face Newcastle’s new owners, if or when they assume control of the club. If they are going to sign the likes of Griezmann and Werner and hire Pochettino or Allegri, they will have to find a way to rapidly increase Newcastle’s revenue streams, because they simply will not be allowed to spend hundreds of millions of pounds without first proving that the money has come through legitimate sporting and commercial income.
The good news for Newcastle is that they have plenty of room for growth from a commercial perspective. When Ashley bought the club in 2007, Newcastle’s commercial income amounted to £27.6m ($34m) a year. In their most recently published accounts, for the year ending June 2018, it had decreased to £26.7m. Over the same period, Manchester United‘s annual commercial revenue has gone from £58.1m to £276m.
Back in 1999, Deloitte & Touche listed Newcastle at fifth in the table of the world’s richest clubs, with their £49.2m turnover placing them ahead of Barcelona (£48.57m), AC Milan (£48.55m) and Liverpool (£45.5m). They are the definition of a sleeping giant and Newcastle’s new owners could quickly improve their present-day numbers with more lucrative sponsorship deals and tap into the club’s huge fan base. With a population of just 268,000, Newcastle is a relatively small city, but the club’s average home attendance this season is 48,248 — almost a fifth of the city — and in better times, the 52,405 capacity of St James’s has proved to be too small.
But even with a rapid growth in off-field income, it will take time and astute management to make Newcastle United competitive again. The financial problems can be overcome in time, but attracting the best players to Newcastle is a long-term issue that may never go away.
Former manager Kevin Keegan, who was in charge when Newcastle broke the world-record transfer fee by paying £15m for Alan Shearer in 1996, tells a story in his autobiography, “My Life in Football,” about having to tell London-born midfielder Robert Lee in 1992 that he should reject a move from Charlton to Middlesbrough and join Newcastle because “the city is closer to London.” Middlesbrough is actually 30 miles closer to the capital than Newcastle, but Keegan’s misdirection was required in order to dispel the notion that the city is isolated, far from the cultural heartbeat of the country.
Newcastle is a historic city surrounded by stunning countryside, but throughout the Premier League era, the club has struggled to attract and keep its best players for a number of reasons. Its geographical location in the north of England, and the desire of many top players and their families to either live in London or be close enough to enjoy its attractions and take advantage of its travel connections, had made it a traditionally tough sell. Still, most problems can be overcome with money, and players and managers will always be attracted to a club that pays big wages and wins trophies.
Newcastle may be able to offer both in the years ahead, but no matter how wealthy their new owners may be, there are no shortcuts to the top anymore.