Transfer Budgets 2025/26 - NUFC (and SAFC)

Andy crunches the numbers to work out what our likely transfer budget will be this summer

It’s been a memorable season for both NUFC and SAFC. Newcastle managed to win their first major trophy in 56 years whilst qualifying for the European Champions League and SAFC returned to the top-flight after an absence of 8 years.

As the dust settles, attention is already beginning to turn to next season. What will the summer hold for both teams? What can we expect them to spend?

By now, I think just about everybody is familiar with the Premier League’s Profit & Sustainability Rules (PSR). Just a brief reminder. Clubs are not permitted to exceed a £105m loss over a rolling three-year monitoring period. In the Championship, the figure is £39m. To complicate matters further, UEFA have their own sustainability rules but that will be the subject for another article.

We need to disaggregate the summer into two separate periods. Before and after 1/7/25. Why? The PSR monitoring period ends on 30th June 2025 and a new one starts on the 1st July 2025. This means that completely different financial pressures can apply to clubs within 24 hours.

One of those clubs is Newcastle. I’ll attempt to explain how and why in this article.

Do Newcastle need to repeat last season and sell players before 1st July?

No. I reckon that NUFC are close to their PSR limit for the three-year monitoring period ending 30th June 2025 but will not breach their allowable loss. After crunching the numbers (in other words, pinching the figures off better-informed experts on the internet!), I think they have wiggle room of about £8m.

How did you work that out?

Essentially with a lot of guess work!

The current three-year monitoring is for the years 22/23, 23/24 and 24/25. We have the accounts for 22/23 and 23/24 but not yet for 24/25. That has to be estimated. To do so, we take the 23/24 operating loss (£69m) as our starting point and estimate any financial changes that have impacted since 1/7/24.

So we lost our Champions League income, flogged Almiron & Kelly, bought Osula, changed our kit manufacturer, gained some additional income through our higher league placing & Carabao Cup win, cashed in on three sold out Sam Fender gigs at SJP, signed new commercial deals (with VT Markets, Red Bull and Bet365) and adjusted our wage bill (presumably contracts are flexed according to whether Champions League qualification is achieved). There’s probably a dozen further changes that I’ve not considered.

The position is best reflected in the table below.

So effectively we can’t buy anybody before 1/7/25?

Not necessarily. £8m might not seem like a lot but the costs of buying a player are not immediately brought to account in the accounts for the buying club so they could still possibly do some business if the right deal presents itself. This is particularly the case if a club is desperate to sell in order to comply with PSR.

Eh? I don’t understand!?

One of the peculiarities of football accounting is that whilst transfer costs for the buying club are brought to account over the length of the player’s contract (i.e. kicked into the future), the profit on selling a player is brought to account immediately. This has been used by clubs, including NUFC, to comply with PSR.

Can you give me a simple example to help explain?

In June 2024, Newcastle sold Elliot Anderson to Nottingham Forest for a reported £35m and bought Odysseas Vlachodimos for £20m. The full £35m from the sale of Anderson registered in NUFC’s 23/24 accounts (profit on player sales). However, little if any of the Vlachodimos purchase registered in the same set of accounts. This would be amortised over the length of the contract (£4m per year for 5 years from 24/25).

This was the reason NUFC and Nottingham Forest were able to comply with PSR for the three-year period ending 23/24. The downside of this, of course, is that NUFC now have a cost of £4m per year for the next 5 years that could undoubtedly be better spent elsewhere!

What about Sunderland?

Things are slightly different for SAFC. The Championship has their own rules on allowable losses.

Sunderland made financial losses of £9m in each of the years 22/23 and 23/24. However, when costs for youth development etc are taken into account, the PSR losses are effectively zero.

As well as promotion, they will undoubtedly make a profit in 24/25 for the first time since 2006 (following the sale of Jobe Bellingham). Accordingly, they have substantial PSR room to buy players should they wish to do so prior to 1/7/25.

Ok, that covers the transfer window up to 30th June. What about after that?

Things change radically for NUFC from 1/7/25 as they get a number of PSR boosts. This should hugely inflate the money they have to spend on new players.

What are these PSR boosts?

Firstly, the three-year monitoring period moves to 23/24 to 25/26 as the 22/23 loss of £72m drops off. This means, if my back of a fag packet calculations for 24/25 are correct, the club can afford an allowable loss of £63m in 25/26.

Secondly, Champions League qualification provides a significant opportunity. In 23/24, Newcastle received about £30m in additional broadcasting income. Under the new format, Aston Villa were reported to have received total income of about £75m for reaching last season’s quarter finals. This income is of course dependent on how far NUFC progress but even if they don’t win a game, they can still expect a significant chunk of additional income.

Thirdly, a few players are out of contract in the summer (Jamal Lewis, Callum Wilson and John Ruddy). Not a huge amount but the amortisation for Lewis (about £3m per season), and wages for all three, will be saved. There’s speculation that there may be further sales for other players which would obviously further boost the coffers.

Fourthly, season ticket price rises (5% for three consecutive seasons), although not universally welcomed, will produce an increase in match day income (as will fans coming off the ten-year price freeze).

And finally (and I think potentially most importantly), Man City are challenging the validity of the Premier League’s Associated Party Transaction rules. If the Tribunal find in Man City’s favour, expect some bumper PIF related commercial deals in 25/26. At the moment, two thirds of our commercial income is from non-PIF related companies. This could change significantly depending on the outcome of this decision.

So what does that all mean in terms of what we can spend?

All of this will provide a significant transfer kitty for NUFC in 25/26, probably similar to the budget they had to spend ahead of the 22/23 season. As Football finance expert, Kieran Maguire, notes “Newcastle will be in a much stronger position to compete in the market than they were 12 months ago”.

And Sunderland?

Sunderland can pretty much spend what they like (within reason!) from 1/7/25 without risking PSR non-compliance. They will get a huge boost in their income as a result of their promotion and are starting from a very low-cost base.

Like all promoted clubs to the Premier League, the judgment call they face is how far the owners are prepared to gamble. In each of the last two seasons, all the promoted clubs have been relegated. Spending heavily is no guarantee of survival. Ipswich spent about £130m in the summer but were still relegated. They now have to face the reality of a huge drop in income (albeit softened by parachute payments) and attempting to cut their cloth in the Championship. Presumably the new players that Ipswich bought all had relegation clauses in their contracts with regard to wages. If they didn’t, they could be in trouble.

Summary

The Website Football365 has helpfully provided a breakdown of the PL net transfer spend over the last 5 years (since 21/22). Newcastle rank 7th in this league table which is broadly in line with their income / wages / amortisation costs.

Considering the position Eddie Howe inherited in 21/22 (2nd bottom of the league with no games won), he continues to have NUFC punching well above their weight. There is nobody more important to the club.

But it feels that this summer is a crossroads for NUFC. They haven’t made a major signing in three windows. After the departures of Mitchell and Eales, the club must back Howe this summer. This squad has done remarkably well to win our first silverware in over half a century and qualify for the Champions League but it undoubtedly needs strengthening. We learned that in our previous Champions League experience two years ago.

Andy Trobe

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