Newcastle are playing ‘poker game’ in January with £35m PSR wiggle room ...Middle East

In retrospect, the signs were always there that this would be another opaque transfer window for Newcastle United.

Back in November, Eddie Howe warned of a “complex” January for the club, with incomings dictated by player trading. By mid-December it had been downgraded to almost certainly a quiet one.

Earlier this week, The i Paper was told that there were “no guarantees” of incomings even if Miguel Almiron’s £10m return to former club Atlanta United is rubber-stamped in time for next month’s deadline.

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Things can change in football – and Newcastle famously left it late with Anthony Gordon two years ago – but even the most optimistic forecast from the club’s recruitment department isn’t allowing for one of their key targets to suddenly become available for the right price in little over a week.

For director of football Paul Mitchell, it is now a case of holding the line. The optics of a second transfer window on his watch that Newcastle have not strengthened in are not great but Mitchell has always seen this as a long-term play at St James’ Park. He sees himself as little more than six months into a five-year plan.

Mitchell told colleagues in the autumn that the club’s assessment of their position in relation to Profitability and Sustainability Rules (PSR) would be the major driver of January transfer plans.

The assessment in the corridors of power – and everyone is pretty much united on this point – is that to move now would have major implications for the club’s position in relation to PSR.

“We absolutely still have ambition but whether we like it or not, it’s a continuing factor in everything we do,” one insider said.

And while much-needed incomings now look unlikely, it has been noted that no club has felt emboldened to even enquire about one of their “crown jewels” this month.

“You can tell the clubs that others think might have a more pressing PSR need by the sort of bids that are starting to go in now,” one recruitment source – not employed by Newcastle – said.

“It’s been very quiet but there’s going to be jostling for position in the final few days because there’s big clubs with capability to spend still looking at the market,

“The message seems to have got out there about Newcastle’s stance. The fans might not like it right now but it’s of paramount importance they don’t do something that puts the pressure on to sell an [Alexander] Isak, an [Anthony] Gordon or a [Bruno] Guimaraes.”

For supporters much of this will feel like cold comfort.

PSR has been the dominant narrative at Newcastle for more than a year now and fans are weary of it.

A perception, not without some merit, is growing that they aren’t dynamic enough in the market and a third transfer window without signing a first-team player perhaps erodes the idea that Newcastle are on an upward trajectory.

It also puts pressure on Howe and the players to maintain the overachievement of the last six weeks.

Those niggling questions about the club’s direction under majority owners the Public Investment Fund (PIF) aren’t going to be answered by a transfer window in which they bank £10m for Almiron’s sale.

While Howe is understood to be aligned with the club’s thinking on recruitment – and has spoken publicly about “business needs” trumping football demands – he was right to fret about his squad becoming “stale” the longer it goes without an emphatic statement of intent in the transfer market.

So could they – indeed should they – be doing more?

The mantra from inside St James’ Park, repeated this week, remains the same – Newcastle are committed to spending the maximum they can under the current rules.

Sources point out that the club “front-loaded” the squad with quality in those early transfer windows, breaking their transfer record within a year of taking over and investing heavily with few significant outgoings.

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Even last summer – perceived as a failed window – Newcastle invested 28m converting the loan of left-back Lewis Hall into a permanent deal.

That sum now looks like a real bargain given he is now an England international.

Their current PSR stance is cute but not a smokescreen.

“Newcastle aren’t pressed right up against the PSR limit,” Professor Rob Wilson, a football finance expert and programme director at the University Campus of Football Business, tells The i Paper.

“There is wiggle room for them in January but I think that the club saying they are guided by PSR and it is a limiting factor on their spending is a fair assessment.

“When you take the three-year weighted average, Newcastle are one of those clubs I would consider to be in the amber zone. That means there could be a potential breach in the future without careful management of the situation.”

According to his calculations – which he admits are estimates – Newcastle’s PSR wiggle room for the next reporting cycle is “somewhere between £30m and £40m”. In theory that sum could be committed to new signings.

Although estimates vary, analysts are coalescing around the idea that the club’s position is maybe not quite as bad as the spin suggests.

Football finance expert Kieran Maguire believes it is partly a message to ensure no “Newcastle tax” is applied to incoming deals while the influential Swiss Ramble blog believes the club have capacity to lose a shade more than £80m the next accounting cycle and still stay within the PSR limit.

“Newcastle are like the rest of the Premier League, they’re playing a game of poker when it comes to PSR,” Wilson says.

“It’s sensible for them to send the market the message that they’re worried about PSR and have to be cautious about what they’re doing.

“The prices they go and pay will be market value rather than market value plus 20 per cent, which is what will happen if people know they have money to spend.”

A clearer picture will emerge next month when Newcastle announce their latest set of financial results, which will give a deeper insight into their true PSR state of play.

As revealed by The i Paper earlier this month, the accounts will show a profit for the first time under the new ownership group as well as another record set of revenue figures – which are partly driven by the club’s return to the Champions League.

The latest profit has been driven by player trading – namely the sales of Elliot Anderson and Yankuba Minteh.

Estimates for the size of the profit range from just under £30m to around £10m and they will be one of only a handful of Premier League clubs in profit for the last financial year.

But there will be no back-slapping at St James’ Park at that fact.

Huge revenue targets remain with the club understood to be intent on doubling commercial revenue every two years to try and catch up with Premier League rivals like Tottenham Hotspur and Manchester United, who record turnover multiples better than theirs.

Newcastle are perhaps not helped by the fact that they committed significantly to “front-load” the squad with quality players who are on long-term deals in the first two years post-takeover.

Key to PSR is the amortised value of the players on their books: valuations go down with every year of their contract that passes.

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Having a lot of expensive players on big contracts means it is harder to sell for profit, which is why Gordon and Bruno Guimaraes would now need to go for mega money to make it even worth thinking about including them in any player trading model.

In the world of PSR and squad cost controls, that is a consideration.

“It’s a complex picture,” Wilson says.

“The amortised value of the squad is high because of the value of some of the business they have done, some of the fees they have paid and the length of contracts they have given out.

“So for Paul Mitchell, Eddie and Steve [Nickson] there’s a lot of work to be done around which players do they really want to keep – and extend their contracts by a number of years to amortise their values over a number of years – versus the limitations that places on them in terms of moving that player on.”

It’s almost a catch-22 for Newcastle. With no “crown jewel” sales to put on the books – and absolutely no desire to sell Isak, a £150m-rated player who could see them bank a massive “profit” – waiting until the next window is a frustrating but sensible Plan B.

“The reality is that the more windows go past without them spending, the more flexibility they will have in the next window,” Wilson says.

Fans point to the £50m offer for Crystal Palace defender Marc Guehi last summer as evidence of Newcastle’s capacity to spend but submitting that offer was a calculated risk, partly motivated by a feeling that the England international ticked so many boxes he was worth moving for and sacrificing in other areas.

But had that gone through, the pressure would have been right on to sell – either this month or before the “soft” PSR deadline of 30 June, when the accounting period ends.

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Going into a transfer window with pressure to sell is not where Newcastle want to be anytime soon.

It is not that targets haven’t been identified heading into this month.

Matheus Cunha, Johan Bakayoko, Tyler Dibling and James Trafford are among those Newcastle retain an interest in – and could still move for this summer – but with the market static, there is little expectation that they could do a deal for a price that wouldn’t leave Newcastle in a similar position to last June.

Clearly that experience spooked executives at St James’ Park.

Facing a substantial points deduction if they breached PSR, Newcastle had to consider selling top players before eventually parting with Anderson and Minteh.

It was a stressful, fractious period that strained relationships and led to the sale of two outstanding young players.

Howe remains cautious about departures, as evident by his reluctance to let Martin Dubravka – who was unsettled and up for sale last summer – go this month.

The i Paper also understands that there have been offers from Al-Shabab and clubs in Germany, Greece and Portugal for Odysseas Vlachodimos.

Those range from a permanent deal to a loan with an obligation to buy but the Greece goalkeeper is resisting any exit.

The club’s Saudi owners remain committed to the Magpies (Photo: Getty)

In Riyadh the message is consistent: this is a long-term plan for sustainable growth into a club that is consistently challenging for honours.

Part of that, PIF sources say, is ignoring the noise and being strategic.

Mitchell is there to shape football strategy but improvements in data, scouting, systems and workflows won’t be an overnight formula for success.

After the stagnation of the Mike Ashley years, Newcastle are now a fixture in the top 20 of Deloitte’s football money league (DFML).

This year they sit in 15th place, with revenue having grown by 29 per cent to £314m over the last 12 months.

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Commercial revenue has gone from £45m to £76m, partly off the back of Champions League participation but also through securing blue chip “sponsorship” partners like InPost, Red Bull and Fenwicks.

The Stack fan zone has been a big success, and The i Paper understands that has encouraged the owners to look at other “exciting” projects.

But there are clear areas where the juice can be squeezed more relentlessly, including securing training ground and training kit sponsorship deals.

Then there is the potential “big bang” moment for the club – a decision on the stadium that is due “within weeks”.

“Stadium infrastructure is pretty much top of the minds for most football clubs today,” Kunal Sajdeh, manager in the Deloitte Sports Business Group, told The i Paper.

“I think 50 per cent of the clubs in the top 20 of the DFML are in the process of renovating or upgrading their stadiums.

“That is very, very reflective of clubs wanting to take control of their revenues and seeing this as a way to sort of push that even further.”

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A return to the Champions League this season would be a potential game-changer, too.

“In order to get in and stay in that top 10 continued sporting success would be required for Newcastle to continue to punch within that top category,” Sajdeh says.

“I think that also gives them an ability to take their brand onto a global profile and say ‘Okay, well, this is what we can leverage as a brand, whether that’s on a sponsorship stream or merchandising stream’.

“This year, particularly on the commercial side, Newcastle have made a start for certain. Some of their commercial revenue’s driven from their documentary, some it is from live events, mostly at their stadiums, but even a lot of that is from commercial sponsorships that have come in because of the Champions League.”

Could the owners do more? While Chelsea have pushed the envelope of the rules, selling land and a stake in their women’s team to give them more access to funds, Newcastle’s position is that they will comply with Financial Fair Play (FFP).

There is no “special treatment” for Newcastle and fears from rivals that the Saudi Pro League could be used to hothouse talent never materialised.

PIF sources point out that newly appeared advertising hoardings bearing the fund’s name are a visible sign of their commitment.

They are paying for those and there have been substantial cash injections – most recently £15m through issuing new shares – to cover running costs and the continued strengthening of infrastructure like the academy.

PSR pressure should ease but ‘there’s no magic wand’

The good news for Newcastle fans is that the summer should be different.

One source admitted that the club’s caution in January leaves them well-placed to pounce if any rivals are sailing close to their PSR limit before 30 June.

It is a distinct possibility.

There will be capacity to invest – a right winger and defender remain at the top of their priority list – and if the club can secure European football they are an attractive prospect.

Few inside Newcastle expect them to sit on their hands in the close season.

Running alongside first-team recruitment is an ongoing drive to bring in players of potential.

Mitchell was notably prominent as Newcastle gave a guided tour to Georgian prospect Vakhtang Salia, who will join the club in the summer after signing last season.

But sources also say there is “no magic wand” for Newcastle in the PSR era.

Eye-watering revenue growth, smart recruitment and a brilliant manager are the club’s formula for cracking the FFP code.

Time will tell whether January’s caution proves to be a canny strategy.

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