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Newcastle United player churning – How it would work

1 month ago
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Player churning, how does it work and most importantly, how would / could it work for Newcastle United?

Following on from transfer windows and football club accounts, the notion of player churning has come to the fore.

For NUFC supporters, Chief Exec Darren Eales has highlighted that current Financial Fair Play (FFP) rules encourage the practice.

In this instance, to anybody not totally clear what ‘player churning’ is, we are talking about Newcastle United maybe selling a valued player in order to be able potentially strengthen the squad far beyond what they would lose. The way FFP works, meaning Newcastle United could sell a player at a certain price BUT then be able to spend far more on incoming players, over and above the transfer fee for the player sold.

Even before the transfer window opened, Newcastle United highlighted the need to be creative if the squad were to be strengthened. Explanations have been sought by some not entirely conversant with the principle so the challenge has been laid down to make the process understandable. As financial accounts are released for football clubs, it becomes apparent how many clubs dice with their FFP position.

Often the best way to explain is to make simplifying assumptions to use as examples, so for those who want an explanation, here is an attempt, with a focus on Newcastle United.

Of course, NUFC have been going through an injury crisis. There have been weaknesses in a few areas of the pitch. How could these be addressed?

Let’s start with a huge miss, possibly for the rest of the season, Nick Pope. There have been suggestions of De Gea as a free agent. In the longer term, given a bias to recruiting “home grown” players, particularly English, an alternative solution put forward has been Aaron Ramsdale, who is among those seeking to make a claim for the Euros in summer.

In turn, regular listeners to BBC Radio 5 606 and Talksport will be bored with talk of Arsenal’s need for a dedicated striker. Could Callum Wilson be the answer?

Ramsdale was signed for an alleged £30 million in 2021. If the cost of his transfer is spread over a 5 year period, his book value would be amortised over 5 years, so £6 million per year. Over the following 3 seasons, valuing him on Arsenal’s books at £12 million.

Wilson is a prolific hit man. NUFC allegedly paid £20 million on a 4 year contract in September 2021, possibly since extended but if not, due to end in 2025 (ED: Wilson actually signed a four year deal in 2020, then last year (2023) extended that to 2025 but Rex was just using this as a hypothetical to explain how layer churning works, so please just follow the explanation / logic). His book value would be amortised at £5 million per year, making him worth £5 million now for accounting purposes. Arsenal could afford to amortise his contract over a mere 2 years at £10 million per year.

Were the players to swap clubs at their previous transfer fees, excluding differences in wages, NUFC would make a profit on Wilson’s book value of £15 million. Arsenal would make a paper profit of £18 million. Both clubs would be able to offset that profit against FFP, even if it meant that NUFC were a striker light.

Let’s complicate the issue further.

NUFC are a striker light. Injuries and a long term suspension can be argued to have left us short in midfield. McTominay has been floated as a long term target. Dubravka has been on loan and Manchester United, where he gained a League Cup medal, who have the prospect of a cash injection from a new source.

Dubravka’s book value is perhaps around the £1 million mark. A £11 million fee would give NUFC a paper profit of £10 million. In turn, McTominay has been valued in some quarters as being around £50 million. As a “home grown” player, Manchester United would show the whole transfer fee as a profit on his disposal. As for Newcastle United, his cost would be £10 million per year over 5 years.

Manchester United would have the capacity to invest the new funds from Ratcliffe on other new players, assuming on 5 year contracts, for players worth 5 times the profit (minus a fifth of the cost of Dubravka at £2 million) on new talent, giving Manchester United £242 million spending power this season under FFP.

To complete that cycle, NUFC are still short of a striker but we still have £15 million of profit on Wilson, affording NUFC the opportunity to sign someone new at 5 times £15 million, i.e. £75 million, without breaching FFP.

Of course, all those situations are hypothetical. However, substituting in a few alternatives gives a big clue as to how clubs close to the FFP limits, in countries across Europe, could work through agents to achieve win / win / win situations all round.

Yes, fault can be picked with the examples, noting transfer levies to the various football associations involved, not to mention agents’ fees. However, the scenario could explain messages ostensibly coming out of Newcastle United for the need to be creative, endorsed by Darren Eales on publication of NUFC accounts.

In any event, the principle of churning has existed for seasons. It will continue to exist. Whilst we may wish to maintain a spine of Pope, Botman, Bruno, Isak, commit to the flair of the likes of Gordon, there is plenty that can be done around the fringes.

Perhaps the biggest fly in the ointment at Newcastle United is our injury list. Will players be fit enough to pass medicals?

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