Newcastle United and Aston Villa on brink of £105m breakthrough
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Newcastle United and Aston Villa are part of an alliance of clubs angling for the relaxation of Premier League spending rules.
With the richest owners in world football in the Saudi Public Investment Fund, Newcastle’s spending power has been curbed by Profit and Sustainability Rules (PSR), formerly known as FFP.
Under billionaire duo Wes Edens and Nassef Sawiris meanwhile, Villa have rolled the dice financially to break into the Champions League, only to have to sell the likes of Douglas Luiz to comply with PSR.
Faith in the PSR system has been heavily shaken in recent months and years, with Leicester City’s escape from punishment on a technicality despite having admitted a breach the final straw for many.
The Premier League – whose legal costs last season exceeded £45m, up from £20m the previous campaign – are now fighting on several fronts when it comes to its regulatory agenda and mandate.
The blockbuster case is their case against Man City for 115 alleged financial breaches, but another hearing with significant implications has also filled many column inches this week.
In what is widely perceived as a counterpunch in the 115 charges saga, City have challenged the Premier League’s associated party transaction (APT) rules in the arbitration courts.
They argue that the APT rules, which ensure that commercial deals signed with companies with whom club owners have a link are scrutinised for fair market value, are anti-competitive.
And in news that is of great significance to both Newcastle and Aston Villa, a decision may have been reached in that case.
Newcastle and Aston Villa get APT update
Under the Premier League’s current system, clubs are allowed to lose £105m over a rolling three-year period so long as the bulk of those losses are underwritten by an owner.
Both Villa and Newcastle flirted with the upper limit of that threshold for the 2023-24 assessment period, throttling their ambition in the transfer market.
However, if the APT rules were overthrown it would essentially allow Edens, Sawiris and PIF to circumvent PSR by increasing revenue through owner-funded sponsorship.
On Thursday, The Times reported that the removal of a vote on the APT rules from the agenda of a Premier League meeting signalled that Man City may have had scored a victory in the case.
That claim has since been heavily disputed, with other stories suggesting that the outcome is unlikely to be a binary win or loss.
In any case, the Premier League has not revealed the outcome, if indeed there has even been one.
Aston Villa have publicly challenged the APT rules and have sided with City on several matters in terms of the Premier League spending rules.
Newcastle meanwhile have kept their heads down but privately would be delighted if the system was overthrown.
Newcastle, Villa and the future of PSR
From next season, Villa and Newcastle will have to comply with a new PSR system that is expected to be implemented by the Premier League.
The new model, which is being trialled on a shadow basis this term, will see spending on wages, transfers and agent fees capped at 85 per cent of annual revenue.
Villa and Newcastle are well versed in the intricacies of the system given that a similar model is being phased in by UEFA at present.
If the cap is indeed set at 85 per cent, both Newcastle and Villa will be forced to either raise revenue or reduce player costs in order to comply.
