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Opinion

Why wage constraints may be hampering Newcastle United in transfer market

4 years ago
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My last article on The Mag asked the Newcastle United supporters to consider buying the football club off Mike Ashley. Why not club together and between the 150,000 fanatics, surely we could invest ourselves in the club?

Well, as soon as the ink was dry, things changed and in came interest from Amanda Staveley and the article was almost irrelevant.

In the early days of the transfer window, it was claimed that our illustrious owner and the prospective new owner have got their heads together and given Rafa a budget. This article may again become irrelevant again as we’ve purchased a new squad in time for Swansea at home…

Now, there has been much said on Newcastle United’s lack of transfer activity.

The lazy argument is because Mike Ashley is fat, greedy, has drunken conversations with fireplaces, or a combination of all three. Although I’d argue that Mike Ashley does not HAVE to continually put money into the club, I have wondered why he risks leaving the club under-powered when he’s already suffered financially by seeing the club relegated in the past.

It’s often pointed out in these Mag articles that fellow promoted clubs Huddersfield and Brighton have spent more than ourselves once promoted and the question is why these little clubs did everything to try and build on their momentum with higher net spends than Rafa in the summer.

The answer is perhaps in the Premier League regulations which were introduced in recent years, here’s a cut and paste of the relevant rules:

E.18. If in a Contract Year 2017/18, the sum of a Club’s Player Services Costs and Image Contract Payments exceeds £74m, the relevant Club must elect to either: (a) be assessed by the Board on the ‘Prior Year Basis’ (in which case, Rule E.19 applies); or (b) be assessed by the board on the ‘2012/13 Base Year Basis’ (in which case, Rule E.20 applies).

E.19.1. that the sum of the Club’s Player Services Costs and Image Contract Payments has not increased by more than £7m when compared to the previous Contract Year.

Basically, this means that in 2017/18, all clubs are free to pay total wages of up to £74m. Should the total wages exceed £74m, this figure must not be more than £7m more than the club spent in the previous year or not more than £26m over that spent by the club in 2012/13.

There are other income streams  allowed to be bought into the mix (ED: The Premier League wage rules only apply to TV money, so cash from Matchday and Commercial revenues can be used on increased wages, such as the money FUN88 are paying as main sponsor, as well as sleeve sponsor MRF) but for reasons of brevity, I’ll keep this explanation to work just within these rules. I’ve also used figures from the club’s 2016 accounts as the basis for this article, this is because these are the figures that are universally available.

Last season, visiting fans would make much of the fact our squad was worth more than every other club. Our wage bill was also far bigger than any rival, this may have been fun last year but it hampers us this season. We have the fellow promoted clubs in Brighton who had a wage bill of somewhere around £30m and then Huddersfield’s which was far lower. Both these clubs, under Premier League rules are able to increase their wage bill significantly up to £74m without recourse.  Not so good for Newcastle United.

At the end of the 2016 season, we were able to trim a couple of wages off the payroll when we went down, Wijnaldum was on a reported £4m a year and Townsend £3.5m but didn’t move a lot of big earners (ED: Newcastle actually cleared a lot of big earners out of the club in summer 2016, with Sissoko, Wijnaldum, Coloccini, Townsend, Steven Taylor, Obertan, Marveaux, Cisse, Janmaat all leaving permanently, whilst de Jong, Thauvin, Krul, Saivet and Riviere went out on loan) and added a number of decent wage earners to the pot, so our wage in 2017 was unlikely to be a lot less (ED: Debatable) than the £74m we paid out in 2016.

Under Premier League rules, we can pay wages up to £81m in 2017/18 which restricts us to around £14m extra in this season. Given an average premier league player costs £3m in wages, that’s five average players at best when Huddersfield could spend £63m.

Mike Ashley may still be a fat so and so but this does give an indication as to what we are up against, moreover, why we may not be adding to the squad as readily as we’d like. It may also explain why we might just be a little more active in January than the summer as the additional wages would be payable for just six months and there are two chances of getting rid of the big earners Rafa does not rate, speaking of which, it explains why players like Mitrovic, Colback and Saivet have found themselves not just 2nd/3rd choice but forced out in the cold.

Additionally, a look at the table below suggests just why certain clubs like Chelsea could not spend last summer in comparison to Man City:

(*Some figures are sourced from the Guardian so don’t blame me if they are wrong.)
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