Football finance expert – Newcastle United owners should be allowed £500m losses over 3 years?


 
 
 
 
 
 

The question is, should the Newcastle United owners be allowed to make losses at the football club of £500m+ over a three year period?

That question posed today (4 November 2024) by football finance expert Kieran Maguire.

As things stand, Premier League clubs are allowed £105m losses over three seasons.

However, as our football finance friend points out, this was a figure arrived at over a decade ago!

So what about when you take ‘football inflation’ (rise in revenues, wages, transfer fees etc) into account, then what is the modern day equivalent of that 2013 allowed losses of £105m figure over three years?

Football finance expert Kieran Maguire making a great point – 4 November 2024:

‘If PSR limits, which were set at £105m over three years in 2013 and have not moved since, were index linked to 2023 (last year for which we have full accounts) they would now be:

£249.7m if linked to PL revenues

£239.1m if linked to PL wages

£504.0m if linked to PL transfer spend

I fully understand that for some owners (but not all) the aim is to reduce losses, but it does mean that for those clubs with aspirational/ambitious owners they are being held back, relatively, to what clubs could do in 2013.’

So basically, Kieran Maguire is saying that what £105m would have bought you in the transfer market in 2013, ten years later the equivalent buying power was £504m in 2023.

You would almost think that the owners of certain Premier League clubs didn’t want the likes of the Newcastle United owners having any chance, ever, of closing the gaping financial gap to a ‘certain’ six PL clubs.

United are not alone of course.

The likes of Aston Villa, Everton , Leicester, Nottingham Forest and so on, also impacted by these never increasing allowed losses.

Indeed, Aston Villa put forward a proposal to the other 19 Premier League clubs in June 2024.

That proposal was to increase the allowable losses over any three seasons period from £105m to £135m.

Even that relatively meagre increase was voted down by the usual suspects and certain others.

Surely if there are to be FFP/PSR limits and allowed losses, they absolutely should be reflecting what is happening in the world of football.

I am not necessarily saying that owners of a Premier League club should be allowed to lose as much as half a billion pounds over three years, but for sure, the refusal to increase the 2013 figure of £105m is only due to one major reason.

To stop the likes of Newcastle United, Aston Villa and others, from in the long-term competing on an equal financial footing.

Due to the crazy football inflation, that figure of allowed losses should be constantly adjusted and increased each year, in line with an agreed football inflation measurement. Whether linked to transfer fee levels, wage levels, revenue levels, or a combination of any two, or all three of them.

If it doesn’t, then the reality is that those who are already in the strongest positions in terms of ability to spend, will only increase that advantage year on year. Which is of course, what is happening!