Author: Don Obrien

Finance expert explains why Newcastle have £205m transfer cushion to make major signings

The new owners of Newcastle United are understood to be in favour of a prudent approach to the club’s rebuild despite the wealth at the consortium’s disposal.

However, Mike Ashley’s frugal approach in recent seasons means the Magpies would be able to quickly spend approximately £205m in the transfer market without falling foul of Financial Fair Play (FFP).

Amanda Staveley outlined the step-by-step plans for a rebuild in an exclusive interview with ChronicleLive, stressing the rules and regulations which will prevent the lavish outlay many Toon fans are likely dreaming of.

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The Kylian Mbappe joke has resurfaced, while moves for Burnley defender James Tarkowski and Manchester United attacker Jesse Lingard have already been mooted.

Free from the constraints of FFP, Sheikh Mansour was able to splurge £123.5m in his first spending spree after completing the takeover of Manchester City in September 2008.

While there are doubts as to whether Newcastle will aim to replicate this approach, University of Liverpool football finance lecturer and Price of Football podcast host Kieran Maguire has explained why there is the scope for rapid investment.

The conservative spending of Ashley’s final three seasons at the helm means that in the current FFP three-year cycle, United’s new owners are in a position to attack the upcoming transfer windows.

Maguire told ChronicleLive: “When it comes to the playing side of things, I estimate Newcastle in the last three years has probably made an FFP profit in the region of £100m.

“You’re allowed to lose £105m, so they can go from plus £100m to negative £105m relatively quickly. This gives scope in the next few windows for significant investment in talent.”

However, Newcastle’s new owners have been warned about the perils of immediately spending this newfound allowance in the first window available.

Robinho proved to be City’s superstar signing in their opening foray in the transfer market, but there were a host of expensive flops who were quickly forgotten about.

Maguire explains that in the pre-FFP era, City were simply able to cut their losses and move on, but this is not a luxury available to the Magpies.

The football finance expert said: “They can really spend a lot in January if they so choose, but I think there’s a cautionary tale if you take a look at what happened at the Etihad.

“They made a load of duff signings, they overpaid and landed them on four or five-year contracts and you can’t shift him.

“If you think about players like Jo, I thought he was gone after six months but he was still on the payroll for four years. City made quite a few duff signings and that wasn’t so much of a problem because FFP didn’t exist then.

“It was a pain because they had to absorb the losses, but City lost around about £197m in one year and that was pre-FFP. Newcastle are operating in an FFP market.”

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Oliver Bolt

Oliver Bolt

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