'Expect big investment' as Newcastle go head to head with big six for 'wonderkids' - Kieran Maguire view
'Wonderkids' ????
The Saudi Public Investment Fund (PIF) era at Newcastle United has been so far been defined more by their PSR compliance strategy than their transfer spending.
Granted, Newcastle‘s Gulf state paymasters have only been outspend on a net basis by Arsenal, Tottenham, Man United, Chelsea since the takeover in October 2021.
But the cost of bringing the likes of Alexander Isak, Sandro Tonali and Anthony Gordon to St James’ Park is catching up with them.
To Eddie Howe‘s great frustration, they were forced to sell two of their best young prospects before the 30th June PSR cut-off in order to get within the Premier League‘s allowable threshold.
To make matters worse, Elliott Anderson and Yankubah Minteh – who occupy two of the top three spots in Newcastle biggest ever sales – have hit the ground running at Nottingham Forest and Brighton.
PSR, or Profit and Sustainability Rules, currently limit Newcastle to financial losses of £105m over a rolling three-year period.
However, certain costs are exempt from PSR. And it appears that Newcastle’s strategy under PIF is being guided by how they can work around the system.
Speaking exclusively to TBR Football, finance expert, author and podcaster Kieran Maguire explained how Newcastle are looking to exploit every loophole, as well as exploring the wider financial picture at NE1.
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Academy investment – the new frontier for Newcastle?
After years of chronic underinvestment, Newcastle are increasingly pumping money into their academy.
Under PSR, investment in youth development does not count towards a club’s final calculation. And reports this week have suggested a renewed focus on this area is being steered directly from PIF HQ.
It’s a smart move, says Maguire, but one that will take time to come into full flower.
“The challenge for Newcastle is that they are playing catch up when it comes to academy development.
“They have to build a network around the country. Some clubs are far ahead of Newcastle in terms of talent spotting and know how to use the Elite Player Performance Plan to their advantage.
“For Newcastle to turn that around, it’s like building an oil rig. You have to do a lot of work before you get your first barrel of oil. It’s very time consuming.
“PIF will be aware that this is an opportunity for the club which effectively comes at zero cost. Expect to see significant investment in this area from Newcastle.
“However, the market share from the Big Six is huge and trying to be a disruptor in that market, going for the wonderkids against those established names, will be a challenge.”
PIF’s media ambitions
Last week, PIF were reliably linked with a significant minority investment in the media company DAZN.
Given DAZN’s status as a Premier League broadcaster, it would have been a controversial move and one that – although entirely above board – would have raised questions among Newcastle’s direct rivals.
Could PIF be waiting for a bigger fish to make their first major equity investment in a football broadcasting titan? After all, they have entered nearly every other element of the sport.
“As far as PIF are concerned, they are waiting for consolidation in terms of the global market,” said Maguire.
“At present, there are too many organisations asking for too many subscriptions. Expect to see some sort of shake-up.
“By the time you have paid all your subscriptions, you realise there are too many direct debits going out.
“From PIF’s point of view, you have the issue of BeIn being not too far away.
“What they will not want to appear to have as direct a link as Qatar do with BeIn Sports. That means there are relatively few companies who are big enough to satisfy that, especially at the right price.
“PIF don’t throw money at things. They are smart investors and they don’t overpay. They probably don’t feel like the time is right at present, especially when you don’t need to have an equity stake to exert influence.”
Darren Eales’ successor
In September, Newcastle announced that Darren Eales, their highly rated CEO, was due to step down following his diagnosis with blood cancer.
Admirably, Eales will remain in situ until his successor is appointed.
Eales joined from Atlanta United, where he has earned a reputation as an authority on the commercial side of the sport.
Commercial income will remain a major focus for whoever is named the new CEO.
However, they will also be expected to juggle that focus with the club’s vision for St James’ Park, with Newcastle eyeing either a complete redevelopment or a potentially even a new stadium entirely.
Maguire outlined what he believes Newcastle will be looking for in Eales’ successor.
“I think they will be looking for someone with broad industry experience. It doesn’t have to be specifically with football.
“They will want want someone who can show leadership under crisis, someone who is a good communicator.
“We are starting to see a few grumbles from the Newcastle fanbase. You need to understand the expectations of the fanbase while also delivering.
“Doing all that within PSR is a tightrope act. You need diplomatic skills to be able to conduct that particular role.”
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