Newcastle United points deduction threat slammed after £135m Premier League move blocked

Kieran Maguire believes the cap of £105million losses over a rolling three year period for Premier League clubs that was introduced over a decade ago is in need of updating to reflect inflation. Maguire argues that the cap had ‘no logical justification’ when it was introduced and has restricted many clubs, including Newcastle, in the transfer market.

Over the summer, Aston Villa lobbied unsuccessfully to raise the permitted losses to £135million to reflect the Bank of England’s guidance on inflation which would see the £105million cap introduced in 2013 now worth £143million. But the change was ultimately blocked with Villa owner Nassef Sawiris suggesting taking legal action against the Premier League for the rules.

Newcastle have spent significantly since the 2021 takeover led by the Saudi Arabian Public Investment Fund but their activity in the transfer market and PIF’s spending power has been limited by Premier League Profitability and Sustainability Rules in recent windows. Over the summer, the club felt they were forced to sell Elliot Anderson and Yankuba Minteh in order to satisfy the allowable losses threshold and avoid a points deduction.

Newcastle and Villa have managed to disrupt the so-called ‘established elite’ in the Premier League by qualifying for the Champions League in recent seasons despite having smaller wage bills, transfer budgets and commercial revenue.

On the Price of Football, Maguire argued that the ‘completely farcical’ rules were introduced to prevent the likes of Villa and Newcastle from competing with the ‘big six’.

"I do have sympathy for those clubs who have been acquired since 2013 and whose owners have not been allowed to spend as much money as their predecessors," Maguire said. "But then you have to go back to why these rules were introduced.

“I maintain that the rules were introduced not to create financial sustainability - certainly not to create profitability because it doesn't exist - but to prevent the big six becoming a big seven or a big eight. That's what we have at present.

"If the £105m limit had been index-linked in line with revenue of Premier League football clubs, it would today be £249m. If you were a fan of Everton or Nottingham Forest, you would be going, 'How much would we be deducted in terms of points?' The answer, of course, would be a big fat zero. Also, it would have allowed clubs like Aston Villa and Newcastle to invest more and it's very clear from the pronouncements from their owners that's what they would like to do.

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"If the limit had been increased in line with Premier League wages, it would have gone from £105m to £230m, which is broadly the same figure, but the most astounding one was if you linked the PSR limit to the increase in transfer fees in terms of players purchased by the Premier League. That £105m would today be £504m i.e. a club could lose half a billion pounds over three years and still be within the limits.

"It does seem that some clubs are getting a raw deal. At the same time, you will have the people who want the limits to be lower saying, 'What happens if there's a change of circumstances with the owner? What happens if the owner loses interest? Or, as we saw with Roman Abramovich, has his assets frozen?' That's a risk in life. That's a risk in business.

"There's a risk that Sky might decide to go and cancel the Premier League TV deal and we saw what happened to the clubs in the EFL when ITV Digital did that. It doesn't mean that we say to clubs, 'You shouldn't go and spend your money from the TV companies in case the TV companies go bust.'"