Major new £84m PSR update today as Newcastle United fight to keep Alexander Isak from Arsenal

Yesterday at 03:00 PM

If the Premier League’s Profit and Sustainability Rules (PSR) died tomorrow, Newcastle United – who are attempting to cling on to prize asset Alexander Isak among others – would dance on their grave.

Isak, with 10 goals in his last seven Premier League matches, is in the kind of form that causes the world’s biggest and best clubs to sit up and take notice.

Arsenal, who consider themselves in that bracket, were the latest victims of the 25-year-old’s stunning goalscoring run in Newcastle’s 2-0 League Cup semi-final first leg victory at the Emirates last night.

The Gunners are long-time admirers of Isak and almost triggered his £75m release clause before his move to St James’ Park from Real Sociedad in 2022, before deciding there was better value in the market.

The North Londoners will be ruing that now, with Newcastle valuing the Swede at around twice that figure.

For Arsenal and his other admirers, one hope has been that the Magpies are simply forced into selling Isak because of the strain of PSR.

The Premier League’s – and, to a lesser extent, UEFA’s – spending rules have meant that the Saudi Public Investment Fund (PIF) have not been able to divert as many petrodollars to Tyneside as they want to.

Granted, the Saudis have invested at a scale that would have been unthinkable during the tight-fisted premiership of Mike Ashley, with amortisation and wages soaring to record levels.

But PIF have ambitions which are far, far grander than what they have achieved in the north east so far – and Newcastle’s battles with Profit and Sustainability are an acting as an anchor.

Ahead of 30th June 2024, when PSR ticked over to the next rolling three-year assessment window, the club were forced to sell two talented youngsters, Elliot Anderson and Yankuba Minteh, to satisfy PSR.

Eddie Howe, who is overseeing a remarkable run of form at present, was seething. Six months on, the manager is no less bitter – and understandable so.

“We had to lose two highly promising young players – we were forced to, we had no choice,” he said ahead of the Arsenal clash. "That is very much the business taking over from the football.” 

The perception at St James’ Park is that the house always wins, with the existing elite ringfencing wealth and success through PSR and the mechanics of football’s financial distribution system.

And with the January transfer window underway, could Howe once again be effectively ‘forced’ to sell Isak, Bruno Guimaraes, Anthony Gordon or another star?

• READ MORE: PIF secure £5.6bn investment deal as Newcastle United target 65,000 St James' Park rebuild

Newcastle United poised for £84m finance boost

In PIF’s first two seasons on Tyneside, Newcastle posted combined financial losses of £143m.

We don’t yet have access to their 2023-24 accounts, but the scramble to get within the PSR threshold via the quasi-swap deals involving Anderson and Minteh didn’t inspire much optimism at the time.

This, however, is a high-wire balancing act that Newcastle fans can expect to see more of in the coming years, with CEO Darren Eales saying the club will always spend the very maximum allowed under PSR.

But leading football finance analyst Swiss Ramble forecasts that the Magpies will have more flexibility this season, which bodes well for their chances of retaining Isak and potentially making new signings too.

In a new analysis published today, Swiss Ramble projects Newcastle will post a £7m pre-tax profit for 2023-24 when they release their accounts for season in the next few months.

That, in turn, would mean they can afford for losses to widen to £84m this season without exceeding the PSR threshold, with deductible expenses such as youth and infrastructure spending factored in.

However, the piece also suggests “it would not be a major surprise if they sold one or more of their players before the end of the accounting year” because of a new focus on player trading.

This is a point that Price of Football author and Liverpool University football finance lecturer Kieran Maguire has stressed to TBR Football before.

Speaking exclusively to TBR in 2024, Maguire said: “For fans, the focus is on purchases. But the club has to start thinking about the exit door.

"They sold Minteh to Brighton, which is a good piece of business and a fantastic return. That is the way the club is going to have to go forwards.“

• READ MORE: Former Newcastle United chief Amanda Staveley in talks with PIF over new role amid Tottenham link

How can PIF unlock more PSR spending room at St James’ Park?

For Newcastle to be able to spend more, they need to earn more.

Failing the collapse of PSR altogether – which is improbable despite growing disgruntlement towards the system among fans – that demands an increased commercial focus at St James’ Park.

Newcastle generated £47m from commercial streams in 2022-23, the last financial year on record. That figure encompasses sponsorship, merchandise sales and events.

Several new commercial deals, including the £40m-a-year arrangement with Adidas, will see that figure rise in the coming years. Indeed, Swiss Ramble forecast £75m commercial income for 2023-24.

The other growth area, the one which will affect the very soul of Newcastle as a club, is the future of St James’ Park.

Newcastle either want to increase capacity to 60-65,000 on the existing site or move to a new stadium altogether in order to supersize matchday income.

Either way, it would light the touch paper for a commercial boom at the club as well as a huge swell in ticketing revenue, with opportunities for naming rights and other sponsors aplenty.