Financial rules keep teams like Newcastle United quiet in January window

England’s top clubs splashed out 815 million pounds ($1.03 billion) on players in January last year - almost double the amount in the same month in 2022.

Newcastle United’s Miguel Almiron with manager Eddie Howe. | Photo Credit: REUTERS

Newcastle United has been quiet in the January transfer window despite its desire to sign a midfielder, but having to sell to buy amid tighter financial regulations and trepidation over the threat of points deductions has limited activity for most teams.

England’s top clubs splashed out 815 million pounds ($1.03 billion) on players in January last year - almost double the amount in the same month in 2022. This January, clubs had laid out just over 50 million pounds by the eve of the deadline.

“The war chest days are gone,” Newcastle manager Eddie Howe said recently. “Every club is doing what we’re doing. The summer may well be the same in the sense that it’s a different way of doing transfer business now for football clubs.”

The climate has changed because of the Premier League’s clampdown via its Profitability and Sustainability Rules (PSR).

PSR was introduced in 2013 to level the playing field and prevent clubs with rich ownership groups, such as Newcastle, spending vast sums on players. It means clubs are permitted to lose a maximum of 105 million pounds over a three-year period.

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Newcastle, which has been decimated by injuries this season, could have used an infusion of talent before the window closes at 2300GMT on Thursday, as it languishes at seventh place in the Premier League after its fourth-place finish last season.

The wealth of Newcastle’s Saudi-backed Public Investment Fund owners puts the north-east club among the world’s richest soccer outfits and it has spent big since the ownership change in 2021, leaving it near their PSR limit.

“We don’t want to breach FFP (Financial Fair Play),” said Howe. “That is where I will support the decisions that are made for the long term and that will benefit the club. It’s a complex situation. I don’t think anything is clear-cut. All eventualities can happen.”

Newcastle United manager Eddie Howe explained why his club could not spend during the January transfer window. | Photo Credit: REUTERS

While Newcastle benefited financially from playing in this season’s Champions League group stage before its exit, it looks unlikely to be back among Europe’s elite next term.

Dan Plumley, a football finance expert at Sheffield Hallam University, told Reuters that the Magpies may have to offload players before they can strengthen their squad.

“It’s not beyond the realm of possibility that Newcastle could be looking to sell a couple of players to then free up the funds to do something else, maybe in the summer perhaps as a longer-term plan to invest in the squad, which we’ve seen them do (since) the new owners took over,” he said.

Al-Shabab has been linked with Newcastle’s Paraguay midfielder Miguel Almiron but the Saudi club reportedly failed to meet his 30 million pounds ($38.01 million) price tag.

POINTS PENALTIES

The spectre of points penalties, Plumley said, has had teams treading carefully in this window.

Everton got a 10-point deduction for breaking PSR limits — its appeal hearing began on Wednesday — and was charged this month, along with Nottingham Forest, for another breach.

“With the Premier League that’s the first time we’ve seen points deductions and charges against these regulations,” Plumley added.

“So there’s a lot going on in the industry at the minute, meaning that clubs are being a little bit more cautious against those regulations than perhaps they have been in the past. Newcastle, despite the financial power of the owners, are not in a position where they can just throw cash at players left, right and centre, because of the regulations at league level,” he added.

Newcastle has posted a cumulative loss of 155 million pounds over the last three years, although investments in infrastructure, the academy, charity foundation and women’s football can be deducted so they are compliant with PSR rules.

Last season’s treble winner Manchester City is facing charges of over 100 alleged breaches of finance rules since the club was acquired by the Abu Dhabi-based City Football Group in 2008. No verdict has yet been reached.

“Everyone’s sort of on alert and the way that plays out, when we finally get that verdict, could be a real change in the dynamics of English football, and of course the (UK Government’s) independent regulator and what that may or may not look like,” Plumley said.

“There are going to be plenty more conversations in this space I think.”