- St James’ Park sold to company owned by PIF
- Money allowed Newcastle to remain compliant
- A breach of UEFA FFP rules still on the cards
It has today been revealed that Newcastle United no longer own their stadium or the adjacent land. Both were sold to another company owned by the club’s shareholders last season.
On the surface, it may sound scary, but it has allowed the club to record their first profit since coming under the PIF majority ownership in 2021.
Sales generated a large sum of £176.2m, with an accounting profit of £133.1m. That fee gained Newcastle a pre-tax profit of around £35m for their 24/25 books.
If the club had not made these sales, it would have incurred a loss of £98.4m over the period mentioned.
The sales and buying company
PZ Newco Holdings Limited (PZNH) was incorporated last year and is wholly owned by PZ Newco Limited, the company that owns Newcastle United.
It was three days before the filing of last year’s profit/loss that the ‘leasehold improvements’ at St James’ Park were purchased, adding £129m in profit. That sale included the entire stadium structure, which is no longer owned by the club.
PZNH also purchased Newcastle United Projects Limited, which includes assets such as leased land at Strawberry Place.
Newcastle United Promotions Limited remains a club-owned company, meaning any profits from activities such as the STACK fan park can still be logged as club profits.
Prior to the release of these accounts, financial officer Simon Capper said that the decisions were made with a view to “going forward with our potential development, either at St James’ Park or for a new stadium.”
It is the first sign of movement on that front for a good while. Many were concerned that any plans had stagnated, but this does give some new hope.
The changing rules
These sales ensured last year’s compliance, which is the last year Newcastle really has to worry about, given the rules are changing.
At the end of this season, the Premier League will stop assessing based on the three-year rolling period as has been the case previously.
Instead, the rules will shift to a squad-cost rule, which will remove the scrutiny on fixed asset sales. This will restrict clubs to spending no more than 70% of their revenue on players and agent fees.
The Magpies have no worries regarding the 25/26 compliance. The sale of Alexander Isak for a record fee of £125m last summer has made sure of that.
UEFA FFP is still a problem
Whilst the sales ensure Newcastle are financially compliant domestically, it has no bearing on the European compliance.
UEFA already employs a squad-cost rule, which is still assessed over a three-year period. But they do not allow the inclusion of asset sales in the profit/loss sum.
As it currently appears, Newcastle are almost certain to be in breach of the European body’s financial rules. UEFA allows losses of £52m; Newcastle’s rolling three-year loss sat at £181.2m.
The club is also in a decidedly precarious position with the squad-cost rule. Having seen the wage-to-revenue percentage rise from 68% to 73% over the last year. This position has been helped by the most recent Champions League campaign. But a fine could well be on the cards if it does not take the club under the threshold.
Record high revenue
Despite some of the issues faced in financial compliance, it isn’t all bad for Newcastle.
That is because the Magpies recorded their highest revenue ever, even with the absence of European competition last season.
The clubs’ turnover increased by £15m, and the revenue total has now reached over £100m. This means Newcastle are now the first club outside of the ‘big six’ to accumulate that total.
This increase was largely helped by the Adidas shirt sponsor and merchandising deal. This tripled the sum of the Castore one previously.
Despite those record numbers, the operating loss at the club also reached an all-time high and £109.4m was lost across the 24/25 season. The cost increases outweighed the generation of new funds in a big way.
Ownership investment & future aspirations
Last year, the funding pumped in by the Saudi ownership since their arrival reached £490m. This counts to roughly 9m per month from October 2021 to now.
With a new stadium, or redevelopment of St James’ Park reportedly on the cards. Alongside the sale of assets positioning the club to be able to do exactly that. The invested figures could dramatically rise again in the coming years.
Not only that, but the all but confirmed possibility of missing out on Champions League football could pose a rather uncharted problem for Newcastle.
Given the ambitions of being a regular Champions League-occupying club, ignoring UEFA rules even when not in the competition is impossible.
Meaning that the club will, in principle, still be tied to the 70% squad-cost rules next season. The issue is that broadcast revenue will take a significant dip, making that cap increasingly difficult to comply with.
Without Champions League football, Newcastle will likely fall below the threshold of 85% squad-cost cap in the Premier League. Meaning the temptation to spend is there, but it would likely come with future consequences for the club’s upward trajectory.
That said, the financial side of the club is looking up. Most significantly in the revenue the Magpies are beginning to generate. Continuing to put sponsors and deals in place beyond that TV money is key to mitigating any potential on-pitch dips.
