NUFC specific FFP/PSR discussion

[Unbelievable]

Hi all,

 

Checked with @Rich before starting this topic.

 

Seeing as a few posters, including me, like to discuss the club's FFP/PSR discussion and others don't like this spilling over to transfer and player topics, let's use this thread for the financial side of our transfer business and keep the transfer and player threads reserved to footballing merits. This way the existing FFP thread can be reserved for general and other club related FFP discussion.

 

To start things off, looking at our transfer business so far since 1/7 (2024/25 reporting period for FFP/PSR), using transfermarket and Capology numbers, we've:

 

• brought in Lewis Hall for a reported 28.3m on 7k/week (seems low?)

 

Before 30/6 but still in this transfer window we did the following business (2023.24 reporting period for FFP/PSR in which we were compliant), which will affect PSR/FFP the coming years through amortisation (of transfer fees and signing on fees) and wages:

 

• sold Minteh for 30m (4,2k/week)
• sold Anderson for 35.4m (30k/week)
• Released Ritchie (45k/week), Karius (10k/week), Dummett (35k/week) and Hendrick (45k/week; did we really release him?) on frees
• brought in Vlachodimos for a reported 20,2m (no salary reported; player exchange with Anderson going for 35.4m)
• bought in Osula for a reported 10m (plus 5m in potential add-ons; wage not yet reported)
• brought in Kelly (for 150k/week) and Ruddy (no salary reported) on a "free" (signing on fee)

 

Also relevant for the club's FFP/PSR position going forward, we've given Joelinton a new contract raising his salary from 85k/week to 150k/week, offset by lower amortisation due to extending the contract period by which his residual amortisation is divided.

 

For reference, @timeEd32 did an excellent post on this topic earlier this window which explains that before the post 1/7 business our operational loss was looking like approximately 52m for the upcoming year 2024/25, that we need to stay below 105m combined losses for every 3 year consecutive period and below 70% of player cost/revenue for European competitions, which can be found below:
 

Spoiler

  

On 26/07/2024 at 17:45, timeEd32 said:

This post is obnoxiously long and it has so many guesses and disclaimers that I didn’t really want to post it, but we’re losing our collective minds in the transfer thread so here’s my attempt at backing in to where we stand financially. I said awhile back I think selling more players will be a priority right now and here’s the longer version of why I think that…

 

The last three years

We needed to make a profit of somewhere between £2m and £15m in 2023/24 to be PSR compliant for the three year cycle that just ended. £2m was Swiss Ramble's estimate based on allowable deductions, but it's all a bit of a guess since those deductions aren't published.

 

Here are the three years of that cycle:

2021/22 - £73m actual loss / £61m after allowable PSR deductions

2022/23 - £73m loss / £60m PSR loss

2023/24 - £2m(ish) PSR profit target

 

Our 2022/23 accounts break down as follows (this isn't everything - just the headline figures):

 

Revenue: £250m

Player sales profit: £3m

Wages: £187m

Amortisation: £87m

Other costs: £40m

 

Here are 2023/24 estimates from Swiss Ramble back in June. At the time he said we needed to generate about £44m in sales in the last couple weeks, I said he was wrong by up to £30m, and he was clearly not wrong so I am done questioning him.

 

Revenue: £300m

Player sales profit: £85m

Wages: £201m

Amortisation: £106m

Other costs: £46m

 

So, based on his estimates, we would have only needed about £15m of the Anderson sale to meet the requirements. If we accept that as true then we needed £65m of player sale profits to turn a £2m profit. It would also mean we added about £20m of additional headroom for this season (or next).

 

The £60m+ loss from 2021/22 now drops out, so that means we can go back to losing around £60-70m in each of the next two seasons if we’re willing to push it to the limit again (which I’d say is definitely not certain given how tenuously that ended). This sounds great on the surface, but the June PSR scramble has made me concerned about our costs.

 

This season and this window

Now let's look at 2024/25. If you want to read a bunch of waffle about how I landed on these numbers it's in the spoiler. For the most part I have not changed them just to get a sense of where we are today.

  Reveal hidden contents

The loss of CL money (including the match day boost) is roughly offset by the addition of Adidas. I’m assuming there will be some events at SJP to replace things like Fender, Saudi, and England friendlies we’ve seen in the last couple years and I’m calling the Japan tour equal to the US one. The Amazon doc goes away, but let’s call that a wash from smaller deals we've done in 2024 that will now have a full 12 months as well as SELA Stack. A lot of words to say keeping revenue flat for now. There are clearly some new deals coming but just picking a baseline.

 

Wages are the trickiest part. The big downside to cashing in on Minteh and Anderson is it barely changed our costs. Dummett and Ritchie going will have done more for decreasing wages. I think Dummett + Ritchie + Anderson = Kelly, though it’s hard to fully trust what’s out there. Vlachodimos for Dubravka is also basically even (I’m assuming we’ll give him away at some point). Joelinton got an increase and Bruno now has a full year of his new contract. There are likely other increases, but also a drop from no European bonus. We’ll decrease by £5m, but that may be a kind guess.

 

Minteh removes £1m in amortization but that’s likely offset (or exceeded) by Kelly’s sign on bonus. Vlachodimos adds ~£3m, though that is probably offset by Joelinton’s extension. Hall is already included since his loan fee was essentially just another year of amortization.

 

I’m not including Isak or Gordon contract extensions, which will increase wages and decrease amortization.

 

I’ve decreased ‘other costs’ slightly since these are typically higher when in Europe.

 

Revenue: £300m

Player sales profit: £5m*

Wages: £196m

Amortisation: £106m

Other costs: £42m

* This is Ashworth. It’s not clear to me if this happened by June 30 or was done on July 1, but it doesn’t really matter right now as it helps regardless in the current period. It’s also not clear what the fee was so I’m hedging a bit.

 

So that’s £305m of money in and £344m out. In 2022/23 we also had about £10m in interest payments and depreciation. Swiss Ramble estimated essentially the same for 2023/24, so carrying that forward again. That means our starting point for this financial year is around a £52m loss.

 

If the Anderson sale gave us an extra £20m cushion then we can lose around £80m this season if we go to the limit. If we just barely made the £2m profit we needed then we can max out around a £60m loss. That’s an £8-£28m cushion from where we are now. For context, Tonali added about £18m in annual costs.

 

These numbers aren’t meant to be exact and are a starting point for this season, but hopefully illustrative of why it’s unfortunately not as pretty a picture as “well now we can lose £60-70m again.”

 

We need to get revenue up but there almost certainly isn’t £50m+ of revenue gains coming this season, so we also really need to get costs under control.

 

If we are able to sell Trippier and Almiron that would remove ~£15m from our costs this season, plus whatever fees they bring in. Add a training shirt sponsor and whatever else to boost revenue and then we’re creating some breathing room.

 

Even without Europe, UEFA’s rules are relevant to this window

One other factor in my mind is UEFA’s requirements, which include two parts most relevant to us – Stability (similar to PSR) and Cost Control.

 

For Stability, it’s much of the same calculations as above except the max limit will be €90m (roughly £76m) over the preceding three years, though it could be less based on a dizzying number of factors. If we’re planning for this it could mean that our target for 2024/25 needs to be a ~£30-40m loss at most.

 

For Cost Control, we had to have been under 90% wages & amortization for calendar year 2023, but we were likely between 85-90%. If we qualify for Europe this season then we’ll need to be under 70% for 2025/26, which is the first year of the fully phased in regulations. And the important note there is UEFA works on calendar years, so beginning January 1 our costs matter for next season (if we qualify, of course).

 

If we use 80% of the published wages to estimate 1st team/coaching wages (this is essentially what Swiss Ramble does) and use £30m as our player sales profit (average of 3 years, which we can increase with more sales this summer and next) then we are currently at 79.6%.

 

To get under 70% we need a net gain of about £45m (increased revenue and/or decreased costs). We may be ok drifting a bit above this number since there’s a fairly small monetary fine if you’re within 10% and a first time offender, but presumably it’s part of our planning.

 

 

 

Also, this is a useful infograph on how player amortisation works, especially in the context of contract extensions:

 

Spoiler

 

We look like bringing in Guehi for a reported 60m and probably a >100k/week wage and hopefully a quality RW of similar stature. There is also talk of a Gordon contract extension (wage rise).

 

 

What does all the above means for our FFP/PSR statement for the current period? Hard to know exactly, but what seems clear is that we need a major increase in commercial revenue over the next year and/or significant outgoing transfer business.

 

Alternatively we may be gambling on the whole PSR/related parties nonsense getting binned due to the City case outcome, but this seems as yet uncertain.

 

So let's discuss here, how are Newcastle Unites going to stay FFP/PSR compliant while progressing on the pitch?

 

P.S. If this topic is not of interest to you and you have nothing meaningful to contribute, please stay out of this thread. Thanks in advance!

 

 

 

Edited August 7 by Unbelievable
Currency conversion EUR to GBP for transfer fees

[Kid Icarus]

Fucks sake, another Man United thread

[Slim]

[NG32]

[Turnbull2000]

Can't see us counting on the City case. That would be reckless.

 

If there's no significant increase in commercial income or the Premier League blocks our sponsorships for being 'above value', it's looking certain one of the trio of Bruno, Isak or Gordon will need sold in the next 12 months.

[AyeDubbleYoo]

Even the OP says ‘it’s hard to know’ which is basically my view on PSR. 

 

We don’t know what the club considers it can do, so my approach is to leave it to them. 

[Ben]

It would be handy if someone could put a tracker as to how far we are under/over the threshold to avoid points deduction

[Unbelievable]

4 minutes ago, AyeDubbleYoo said:

Even the OP says ‘it’s hard to know’ which is basically my view on PSR. 

 

We don’t know what the club considers it can do, so my approach is to leave it to them. 

The fact we don't know everything is true for a lot of things, including player transfers and injuries. Doesn't stop us discussing them.

[Unbelievable]

2 minutes ago, Ben said:

It would be handy if someone could put a tracker as to how far we are under/over the threshold to avoid points deduction

I think this would be useful to have a stab at after the window closes

[McCormick]

Good post. 150k a week for Kelly seems ridiculously high though. Not having a go but where did you get that figure from?

[Unbelievable]

3 minutes ago, McCormick said:

Good post. 150k a week for Kelly seems ridiculously high though. Not having a go but where did you get that figure from?

 

https://www.capology.com/club/newcastle/salaries/

 

 

 

 

Edited August 7 by Unbelievable

[McCormick]

You’d imagine he’d have to start for us if he’s on that kind of money then (if that site is reliable).

[timeEd32]

34 minutes ago, AyeDubbleYoo said:

Even the OP says ‘it’s hard to know’ which is basically my view on PSR. 

 

We don’t know what the club considers it can do, so my approach is to leave it to them. 

It is hard to know exactly, especially as we drift further from the last official release of accounts. 
 

But we know a great deal more than nothing, so it’s possible to paint a reasonable picture.

 

I’m pretty sure this thread only exists because that picture isn’t too great at the moment. If the estimated numbers said we had £200m to spend then financial discussions would be very welcome in the transfer thread.

[McCormick]

@timeEd32 quick summary, how much would you expect us to spend on transfers this financial year?   . I’m sure that’s all people really care about.

 

 

Edited August 7 by McCormick

[Unbelievable]

Trying to estimate the impact of our business so far since the closing of the last PSR period 30/6 or impacting the upcoming periods:

 

IN:

- Lewis hall for 28.3m on 5+ year contract at 7k/week wages (again, seems low but we'll go with Capology): +5.66m per year amortisation and .36 per year in wages => + 6m cost per year

- Vlachodimos for 20.2m on 5 (?) year deal on 45k wages (wages he was on at Forest according to Capology): + 4m per year amortisation and 2.3m per year in wages => +6.3m cost per year

- Osula for 10m on 5+ year deal (ignoring add-ons) on 12,5k/week wages (wages he was on at Sheffield United according to Capology): +2m per year in amortisation and +.65m per year in wages => +2.65m cost per year

- Kelly for free (assumption no signing on fee, but high wages as per Capology) and 150k/week wages: 7.8m wages per year => +7.8m cost per year

 

Total cost increase per year for incomings: 22.75m

 

OUT:

- Lewis Hall loan fee reported as 4m => -4m cost per year

- Minteh for a one-off profit of 30m -8m original fee = 22m in the previous PSR period (so no impact on current), 1.6m amortisation per year and 4,.k/wages per week off the books: 1.6m amortisation and -0.21m saved in wages => -1.81m cost per year

- Anderson for a one-off profit of 35.3m as youth product in the previous PSR period (so no impact on current) and 30k/wages per week off the books: -1.56m saved in wages => -1.56m cost per year

- Released Ritchie (45k/week), Karius (10k/week), Dummett (35k/week) and Hendrick (45k/week) on frees and assuming no more amortisation on their contracts as all signed on frees or eons ago: -7m saved in combined wages => -7m cost per year

 

Total cost decrease per year for outgoings: 14.37m

 

So I reckon that we've increased our cost base by about 8m per year,or we've added Osula's 2.65m to timeEd32's 52m loss base, making our current projected loss around 54.65m. We have the 2021/22 70m loss dropping off, so we're within compliancy range for now but this loss level is unsustainable as on average we're only allowed a 35m yearly loss. Any further incomings (Guehi at estimated 20m annual cost, right winger?) would need their amortisation and wage cost covered by increased revenue, be it from player trading or commercial deals.

 

Not undoable, but certainly feels like we're building a pyramid scheme of sorts for ourselves here with ever increasing rolling costs that need to be covered by significant and permanent revenue increases. A lot will hinge on Silverstone delivering the ambition of 30% commercial revenue increases year on year. Barring that we will become like Brighton in that we'd always be at risk of having to sell our best players and gamble on prospects.

 

 

Edited August 7 by Unbelievable
EUR to GBP conversion and correction based on timeEd32's statement that he included transfers up to Osula in his earlier calculation

[tarie4]

8 minutes ago, Unbelievable said:

Trying to estimate the impact of our business so far since the closing of the last PSR period 30/6 or impacting the upcoming periods:

 

IN:

- Lewis hall for 33m on 5+ year contract at 7k/week wages (again, seems low but we'll go with Capology): +6,6m per year amortisation and ,36 per year in wages => + 7m cost per year

- Vlachodimos for 23,6m on 5 (?) year deal on 45k wages (wages he was on at Forest according to Capology): + 4,7m per year amortisation and 2,3m per year in wages => +7m cost per year

- Osula for 10m on 5+ year deal (ignoring add-ons) on 12,5k/week wages (wages he was on at Sheffield United according to Capology): +2m per year in amortisation and +,65m per year in wages => +2,65m cost per year

- Kelly for free (assumption no signing on fee, but high wages as per Capology) and 150k/week wages: 7,8m wages per year => +7,8m cost per year

 

Total cost increase per year for incomings: 24,45m

 

OUT:

- Lewis Hall loan fee reported as 4m => -4m cost per year

- Minteh for a one-off profit of 35m -8m original fee = 27m in the previous PSR period (so no impact on current), 1,6m amortisation per year and 4,2k/wages per week off the books: 1,6m amortisation and -0,21m saved in wages => -1,81m cost per year

- Anderson for a one-off profit of 41,2m as youth product in the previous PSR period (so no impact on current) and 30k/wages per week off the books: -1,56m saved in wages => -1,56m cost per year

- Released Ritchie (45k/week), Karius (10k/week), Dummett (35k/week) and Hendrick (45k/week) on frees and assuming no more amortisation on their contracts as all signed on frees or eons ago: -7m saved in combined wages => -7m cost per year

 

Total cost decrease per year for outgoings: 10,37m

 

So I reckon that we've increased our cost base by about 14m per year. That goes on top of the operational yearly loss of about 50m timeEd32 already projected. So based on the 2021/22 70m loss dropping off, we're basically within a few million of where we should be, and any further incomings (Guehi at estimated 20m annual cost, right winger?) would need their amortisation and wage cost covered by increased revenue, be it from player trading or commercial deals.

 

Not undoable, but certainly feels like we're building a pyramid scheme of sorts for ourselves here with ever increasing rolling costs that need to be covered by significant and permanent revenue increases. A lot will hinge on Silverstone delivering the ambition of 30% commercial revenue increases year on year. Barring that we will become like Brighton in that we'd always be at risk of having to sell our best players and gamble on prospects.

Didn't his previous club have a sell-on clause inserted? Re Minteh 

 

 

Edited August 7 by tarie4

[Unbelievable]

1 minute ago, tarie4 said:

Didn't his previous club have a sell-on clause inserted? Re Minteh 

 

 

 

Potentially. Can't find it having been reported though.

[timeEd32]

1 hour ago, Unbelievable said:

Trying to estimate the impact of our business so far since the closing of the last PSR period 30/6 or impacting the upcoming periods:

 

IN:

- Lewis hall for 33m on 5+ year contract at 7k/week wages (again, seems low but we'll go with Capology): +6,6m per year amortisation and ,36 per year in wages => + 7m cost per year

- Vlachodimos for 23,6m on 5 (?) year deal on 45k wages (wages he was on at Forest according to Capology): + 4,7m per year amortisation and 2,3m per year in wages => +7m cost per year

- Osula for 10m on 5+ year deal (ignoring add-ons) on 12,5k/week wages (wages he was on at Sheffield United according to Capology): +2m per year in amortisation and +,65m per year in wages => +2,65m cost per year

- Kelly for free (assumption no signing on fee, but high wages as per Capology) and 150k/week wages: 7,8m wages per year => +7,8m cost per year

 

Total cost increase per year for incomings: 24,45m

 

OUT:

- Lewis Hall loan fee reported as 4m => -4m cost per year

- Minteh for a one-off profit of 35m -8m original fee = 27m in the previous PSR period (so no impact on current), 1,6m amortisation per year and 4,2k/wages per week off the books: 1,6m amortisation and -0,21m saved in wages => -1,81m cost per year

- Anderson for a one-off profit of 41,2m as youth product in the previous PSR period (so no impact on current) and 30k/wages per week off the books: -1,56m saved in wages => -1,56m cost per year

- Released Ritchie (45k/week), Karius (10k/week), Dummett (35k/week) and Hendrick (45k/week) on frees and assuming no more amortisation on their contracts as all signed on frees or eons ago: -7m saved in combined wages => -7m cost per year

 

Total cost decrease per year for outgoings: 10,37m

 

So I reckon that we've increased our cost base by about 14m per year. That goes on top of the operational yearly loss of about 50m timeEd32 already projected. So based on the 2021/22 70m loss dropping off, we're basically within a few million of where we should be*, and any further incomings (Guehi at estimated 20m annual cost, right winger?) would need their amortisation and wage cost covered by increased revenue, be it from player trading or commercial deals.

 

Not undoable, but certainly feels like we're building a pyramid scheme of sorts for ourselves here with ever increasing rolling costs that need to be covered by significant and permanent revenue increases. A lot will hinge on Silverstone delivering the ambition of 30% commercial revenue increases year on year. Barring that we will become like Brighton in that we'd always be at risk of having to sell our best players and gamble on prospects.

 

* important to note on average we cannot afford to make such high losses. We'd need to be around 35m, or in other words as things stand with no further transfers in or out we'd be about 30m over where we should be on average.

 

 

 

 

The numbers I used included Hall, Minteh, Anderson, Kelly, Vlachodimos, and the expiring contracts, though I may have been generous on a couple things. Osula would be the only change since that post.

[Unbelievable]

9 minutes ago, timeEd32 said:

 

The numbers I used included Hall, Minteh, Anderson, Kelly, Vlachodimos, and the expiring contracts, though I may have been generous on a couple things. Osula would be the only change since that post.

Cheers, at least that gives us a decent "current starting position" of an approximate 55m loss if nothing else changes this PSR year (unlikely).

[Rich]

How helpful would it be to work out the differences in amortisation for those who've signed new deals? Happy to have a bash if it's useful.

 

Feels like it's just being glossed over a bit at the moment.

[r0cafella]

4 minutes ago, Rich said:

How helpful would it be to work out the differences in amortisation for those who've signed new deals? Happy to have a bash if it's useful.

 

Feels like it's just being glossed over a bit at the moment.

In big joes case most of the fee is already amortised lazy to do the numbers but his new contract might work out to be more expensive ;73 to the salary bump. 

[timeEd32]

1 hour ago, McCormick said:

@timeEd32 quick summary, how much would you expect us to spend on transfers this financial year?   . I’m sure that’s all people really care about.

 

 

 

 

With all the caveats that we're dealing with ranges, etc. etc., I thought the pessimistic case was we couldn't really sign anyone without additional money* and the optimistic case was we could add £20-25m in annual costs. If Guehi happens then my assumption is we're either at or over the limit.

 

* This can come in any form (increased revenue / player sales / saved wages)

 

[r0cafella]

4 minutes ago, timeEd32 said:

 

With all the caveats that we're dealing with ranges, etc. etc., I thought the pessimistic case was we couldn't really sign anyone without additional money* and the optimistic case was we could add £20-25m in annual costs. If Guehi happens then my assumption is we're either at or over the limit.

 

* This can come in any form (increased revenue / player sales / saved wages)

 

These are really important points; obviously we can only estimate but despite the big loss dropping off from the takeover we still face challenges due to our increased costs (namely wages and amortisation). As the leagues rules have us locked up tight we have to player trade so we should expect someone big to leave in the next 12 month sadly. 
 

We are in a very tough place because in order to raise our revenues we need some degree of success (champions league minimally) but in other to get to the champions league we need our investment to be on the same footing as the competition. It’s often repeated but the rules truly are absurd. 

[Checko]

2 hours ago, Unbelievable said:

Hi all,

 

Checked with @Rich before starting this topic.

 

Seeing as a few posters, including me, like to discuss the club's FFP/PSR discussion and others don't like this spilling over to transfer and player topics, let's use this thread for the financial side of our transfer business and keep the transfer and player threads reserved to footballing merits. This way the existing FFP thread can be reserved for general and other club related FFP discussion.

 

To start things off, looking at our transfer business so far since 1/7 (2024/25 reporting period for FFP/PSR), using transfermarket and Capology numbers, we've:

 

• brought in Lewis Hall for a reported 33m on 7k/week (seems low?)

 

Before 30/6 but still in this transfer window we did the following business (2023.24 reporting period for FFP/PSR in which we were compliant), which will affect PSR/FFP the coming years through amortisation (of transfer fees and signing on fees) and wages:

 

• sold Minteh for 35m (4,2k/week)
• sold Anderson for 41,2m (30k/week)
• Released Ritchie (45k/week), Karius (10k/week), Dummett (35k/week) and Hendrick (45k/week; did we really release him?) on frees
• brought in Vlachodimos for a reported 23,6m (no salary reported; player exchange with Anderson going for 41,2m)
• bought in Osula for a reported 10m (plus 5m in potential add-ons; wage not yet reported)
• brought in Kelly (for 150k/week) and Ruddy (no salary reported) on a "free" (signing on fee)

 

Also relevant for the club's FFP/PSR position going forward, we've given Joelinton a new contract raising his salary from 85k/week to 150k/week, offset by lower amortisation due to extending the contract period by which his residual amortisation is divided.

 

For reference, @timeEd32 did an excellent post on this topic earlier this window which explains that before the post 1/7 business our operational loss was looking like approximately 52m for the upcoming year 2024/25, that we need to stay below 105m combined losses for every 3 year consecutive period and below 70% of player cost/revenue for European competitions, which can be found below:
 

  Reveal hidden contents

  

 

 

 

 

Also, this is a useful infograph on how player amortisation works, especially in the context of contract extensions:

 

  Reveal hidden contents

 

We look like bringing in Guehi for a reported 60m and probably a >100k/week wage and hopefully a quality RW of similar stature. There is also talk of a Gordon contract extension (wage rise).

 

 

What does all the above means for our FFP/PSR statement for the current period? Hard to know exactly, but what seems clear is that we need a major increase in commercial revenue over the next year and/or significant outgoing transfer business.

 

Alternatively we may be gambling on the whole PSR/related parties nonsense getting binned due to the City case outcome, but this seems as yet uncertain.

 

So let's discuss here, how are Newcastle Unites going to stay FFP/PSR compliant while progressing on the pitch?

 

P.S. If this topic is not of interest to you and you have nothing meaningful to contribute, please stay out of this thread. Thanks in advance!

 

Could I ask that the currency is quoted in these figures? Lots of the figures there seem to be in Euros (Eg transfermarkt gives the Lewis Hall figure as being 33million euros, Minteh and Anderson sales are in Euros as well) but some of the PSR figures, wage estmates, Guehi transfer estimate etc seems to be in £s. Probably easier to keep everything to one currency.

[80]

Appreciate the intentions of the thread, although I don't think people should be too optimistic about PSR talk no longer turning up in other threads as it's too integral.

 

PSR IS football now. Not much off pitch stuff can be understood without it. I certainly understand why people are pissed off all conversations end in the same place. It's the fault of the authorities, and PSR needs to go.