Newcastle United want to copy Liverpool as Paul Mitchell cites £52.5m double deal
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Imitation is the greatest form of flattery, and the Saudi Public Investment Fund now want Newcastle United to mirror one aspect of Liverpool’s player trading strategy.
PIF want Newcastle to one day be on Liverpool’s level both in terms of their prestige and their consistent status as challengers for the biggest titles.
But the Premier League’s Profit and Sustainability Rules (PSR), which limit financial losses to £105m over a rolling three-year period, mean they are unable to simply plough their near-limitless wealth into the club.
From next season, the Premier League is expected to introduce a new system that will cap Newcastle’s spending on player wages, transfers and agent fees at 85 per cent of annual revenue.
That means Newcastle will need to strategically outsmart their rivals like Liverpool in the so-called Big Six if they are to match their success on the pitch.
So far, the Magpies have focused heavily on raising commercial revenue. That income stream has soared, from £28m in 2019 to a forecasted £70m in 2024.
Expanding St James’ Park is another key aim, albeit more of a long-term one. It has emerged this week that PIF could spend £1bn to achieve that.
But one area that Liverpool University football finance lecturer Kieran Maguire has previously told TBR Football that Newcastle need to give greater attention to is their player trading model.
Newcastle were begrudgingly forced into the last-minute sales of Elliott Anderson and Yankuba Minteh before the PSR cut-off on 30th June, but spending has outstripped sales in the PIF era by some margin.
Paul Mitchell, the club’s new sporting director, recognises that must change if they are to ever smash the glass ceiling in the Premier League and Europe.
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Newcastle want to mirror Liverpool’s PSR-busting strategy
In a report from iNews detailing how Newcastle are revamping their loans department, several elements of the club’s plan of action in terms of PSR have been mapped out.
As well as hiring a psychologist to safeguard loan players’ wellbeing, Newcastle also intend to make more ‘development signings’ in the coming years.
The report highlights Mitchell’s admiration of Liverpool’s strategy in this area, citing the sale of Sepp van den Berg and Fabio Carvalho to Brentford over the summer for a combined fee of £52.5m as a case study.
Neither Van den Berg nor Carvalho made a substantial impact on the first team but have generated major profits for Liverpool, which is exactly what Newcastle are aiming for.
Rather than selling one of the crown jewels in Alexander Isak, Bruno Guimaraes or Anthony Gordon, the Magpies are keen to generate profits on player sales without taking quality out of their starting XI.
Will Newcastle breach PSR this season? Can they sign players in January?
Newcastle only narrowly avoided a PSR breach in 2023-24, and their £70m financial loss in 2022-23 – now the last year in the three-year PSR monitoring period – may mean things are tight again this season.
Champions League income will have helped last season, and the club are forecasted by the likes of world-renowned football finance expert Swiss Ramble to have more or less broken even for the campaign.
That means they will need to limit their losses to around £35m this season to remain compliant.
Their positive net spend over the summer will be a major boost, especially given that player sale profit is booked immediately while paid fees are amortised over five years.
But the absence of European football and a amortisation bill of around £105m will take their toll.
That may mean Newcastle are forced to offload a player in January, or before 30th June after next summer’s transfer window has opened.
