Newcastle United look set to find themselves in a tough position moving forward as the club works to meet the Premier League's Profitability and Sustainability Rules (PSR).
On Thursday, losses of £73.4 million for the 2022/2023 season were reported by Newcastle, which is an increase from the £70.7 million figure for the season prior. The latest loss takes the club's combined losses over the past three seasons to £155 million.
However, these results do not take into account the revenue which Newcastle would have earned from competing in this season's UEFA Champions League, as that will be included in the next release of financial results.
The results also revealed that the club's income for the 2022/2023 season was £250.3 million, an increase of 40 per cent from the previous season. Also, the club's commercial revenue shot up by 66 per cent to £43.9 million.
Since the club was taken over by a consortium led by Saudi Arabia's Public Investment Fund (PIF) in October 2021, Newcastle have spent over £400 million on transfers. Big signings since the takeover include Alexander Isak for £63 million, Sandro Tonali for £55 million, Anthony Gordon for £45 million and Bruno Guimaraes for £40 million.
Now, it appears that in order for Newcastle to continue avoiding any breaches of PSR, the club may have to let some of their top stars depart in the near future.
After Thursday's financial results dropped, the club's CEO, Darren Eales, addressed the potential of players such as Guimaraes, Isak and Sven Botman having to be sold down the line.
He said: "Any decision we make will always be against the backdrop of the medium to long-term benefit for the club. It's difficult to say specifically on certain players, but I can say that if we're going to get to where we want to get to, at times, it's necessary to trade your players."
Guimaraes, Isak and Botman would certainly be of interest to a number of clubs in the Premier League and it has been proven that one big sale can allow a club to move forward successfully.
Philippe Coutinho, Jack Grealish and Declan Rice departed from Liverpool, Aston Villa and West Ham United, respectively, all for fees of over £100 million. The selling clubs in these instances went on to use the large funds they received wisely.
Rice, the most recent of these big sales, was sold for £105 million to Arsenal last summer. To rebuild, West Ham brought in Mohammed Kudus, James Ward-Prowse and Edson Alvarez for just over £100 million and the club is now sitting sixth in the Premier League, with all three additions having settled in well.
Due to Newcastle having to closely monitor its finances and that potentially affecting the state of the first team, the club must look to generate larger sums from non-football avenues. That includes the club's stadium, St. James' Park, which is set for a feasibility study to determine possible expansions to the ground.
Eales touched on the importance of a possible expansion of St. James' Park, saying: "We feel that if there's an ability to be able to increase the capacity, that gives us an opportunity to grow those matchday revenues by the virtue of having more people in the stadium."
However, Eales stressed that whilst the club would ideally remain at St. James' Park, a move to another location is not out of the question. He explained: "I don't want to second guess our process. St James' Park is a great location and if we can expand then clearly that would make sense. But we have to know what's possible."
The latest financial losses come at a tough period for Newcastle on the pitch, as Eddie Howe's side have struggled to replicate their form from last season. The Magpies currently sit ninth in the Premier League table, were knocked out of the Champions League in the group stages and exited the Carabao Cup.
A large portion of Newcastle's struggles can be attributed to the mass number of injuries that the team has had to put up with. Howe would ideally like to add to his squad in the January transfer window, however, that appears unlikely due to the restrictions put on the club in assuring that they comply with PSR.
Manchester City midfielder Kalvin Phillips has been rumoured as a potential loan signing for Newcastle this month, but his current club are reportedly demanding a loan fee of at least £5 million, which will likely steer Newcastle away from making a move.
Midfield options are becoming limited for Howe, as Joelinton is set for at least six weeks on the sidelines with a thigh issue whilst Joe Willock remains out with an Achilles problem. Tonali remains unavailable due to the fact that he is currently serving a long-term ban from football for betting breaches.
