In 1998, ageing Catholic prelate and Newcastle United fan Cardinal Basil Hume offered his resignation as Archbishop of Westminster, hoping to devote his last years partly to the highly penitential exercise of following his beloved team.
If someone had told the cardinal (who died in office a year later) that, a quarter of a century on, the Toon would have the richest owners in world football yet still be flattering to deceive, due largely to severe spending restraints, the old Benedictine monk might have thought his interlocutor had been at the Buckfast Tonic Wine.
Yet here we are today, with the departure of manager Eddie Howe the latest in a long line of setbacks to befall the club since the end of that magical 2024/25 season.
His Eminence would undoubtedly also have been familiar with the saying, “Capitalism without bankruptcy is like Christianity without hell,” attributed to American astronaut-turned-businessman Frank Borman.
It is hard to imagine a more powerful example of how hellish a capitalist system becomes when companies are prevented from spending themselves into bankruptcy, than the Toon’s present plight – with the fire-sale of star players continuing – and indeed the pitiful state of the entire Premier League.
The dreaded Profitability and Sustainability Rules (PSRs) were introduced at the start of the 2015/16 season, which culminated with lowly Leicester City (preparing for life in League One at time of writing) stunning the world by being crowned Champions of England. Since these regulations would effectively nullify the benefits of wealthy owners for less established clubs aspiring to greater success, one is tempted to wonder if the League would have dared to introduce them a year later, following that ultimate footballing fairytale.
Defenders of the PSR regime might point to historically successful clubs having come close to insolvency by borrowing and spending above their means, notably Leeds in the 2000s. But preventing a club from spending significantly more on signings than it takes in commercial and matchday revenues, even if its owner is willing to cover the losses indefinitely, is analogous to a government banning citizens who inherit money from spending more of their inheritance in a year than they earn in salaries.
Obviously, one needs no reminders of how, following Toon’s majority buyout by PIF in 2021, and after an initial spending splurge, we have had to tread so carefully in the transfer market, preventing us from mounting a serious challenge for the top. The present rut began immediately after the history-making League Cup win last year: Alexander Isak quickly wanted out, leading to a dip in form followed by a strike to force his move to Liverpool, then Yoane Wissa almost downed tools at Brentford to force his move up Toon, resulting in the footballing equivalent of a convoluted property chain.
The ruthless efficiency with which Anthony Gordon, Sandro Tonali and (most likely) Bruno Guimaraes have been sold this summer suggests a more streamlined transfer operation; but the young, unproven players brought into replace them hardly inspire great confidence for the coming season.
More revealing, however, in terms of the arbitrary and uneven enforcement of the rules by the Premier League, was the way Everton lost points in the 2023/24 season for breaches which, in the opinion of football finance experts, amounted to mere accounting technicalities concerning their new stadium, which they badly needed to bolster revenues and improve their fortunes on the pitch.
The main thrust of the case against Everton was probably beyond the full grasp of anyone lacking an accountancy qualification. In simple terms, they were effectively accused of disguising player transfer debt as stadium debt, which, if capitalised for accounting purposes, was not factored into PSR calculations. Yet since their then-owner was offering zero-interest rates, they would have had little choice but to borrow from him to fund the stadium’s construction, paradoxically preventing them from capitalising the costs and thereby tipping them over the edge of permissible losses.
Attempting to capitalise a private interest-free loan as one would a commercial loan, or cooking the books to conceal the true nature of corporate debt, would be a statutory offence warranting scrutiny by HM Revenue & Customs, and possibly criminal sanctions. But the Toffees came under no such censure. Instead, they were apparently punished by the football authorities for spending less money rather than more on their stadium. For any non-statutory organisation to wield that sort of power, playing financial regulator without a trace of accountability to the government and thereby (indirectly) the electorate, sets a very dangerous precedent.
Manchester City, meanwhile, having spent their way to a litany of trophies since 2008, are still officially under investigation for over 100 alleged breaches of domestic and European regulations, but the saga has now dragged on for three years. Conversely, local rivals Manchester United, despite failing to recapture the glory of the Fergie years, still have one of the most glamorous brands in the game, meaning their revenues enable them to trump other clubs in the transfer market even after missing out on Europe, hence they could top Newcastle’s bid for Benjamin Sesko last summer. To say nothing of Tottenham being able to spend £100m on Tonali after narrowly avoiding relegation – so much for meritocracy.
Why this obsession with preventing any top-flight club from spending itself into bankruptcy, when only one has ever entered administration (Portsmouth in 2010) and none have been liquidated? Without the ultimate threat of oblivion, where is the incentive for middling clubs to aspire to better things, challenge for silverware and increase their revenues? That element of risk is quite literally part of the game in a capitalist system.
Granted, fans of Toon, Everton and Nottingham Forest may have shed few tears over Leicester’s ignominious relegation to the third tier, since they appeared to have previously avoided censure by alternating between the Premier League and the Championship. Yet how can it be good for the game if clubs longing to punch above their weight are no longer permitted to take even the prudent, manageable risks which paid such handsome dividends for the Foxes 10 years ago? Are the likes of Man City, Arsenal and Liverpool to be elevated to the status of deities, whom no mere mortal can challenge?
As we know, the League has now replaced PSRs with a ‘Squad-cost Ratio’ system, whereby flat maximum losses give way to limits on what proportion of a club’s revenue can be spent on player costs. But this will still heavily favour clubs with historically high revenues over those which fought their way into the big time, and only a blind optimist would predict that it will result in more equitable enforcement of the regulations.
The Government had the perfect opportunity, with last year’s Football Governance Act, to rein in or streamline these regulations and prevent the game’s administration becoming a law unto itself. Alas, it missed a sitter. To instead bury the game in yet more regulation, driven by an ever-increasing fixation on the nebulous concept of financial sustainability, might prove an eternal own goal. One which would leave Newcastle United fans to rue the misfortune of having been taken over too late, fearful of forever singing a sorrowful Toon.