Newcastle United suffer consequences of Premier League rules after £400m investment & Liverpool transfer claim

Newcastle United were once described as having 'no ceiling' when it comes to spending power and transfers by Liverpool manager Jurgen Klopp.

At the time the comments were made, Newcastle had invested heavily in the first-team squad following the takeover led by Saudi Arabia's Public Investment Fund. The signings of Bruno Guimaraes, Kieran Trippier, Sven Botman, Alexander Isak, Dan Burn and Nick Pope in particular in 2022 provided Newcastle with the foundations to challenge at the top end of the Premier League table once again.

During the season that saw Newcastle finish above Liverpool for the first time in over a decade and secure Champions League qualification, Klopp made reference to The Magpies' spending power compared to his club by citing sporting director Dan Ashworth.

“I heard now that at Newcastle [Ashworth] said ‘there is no ceiling for this club’,” Klopp said. “Yes, he is absolutely right. There is no ceiling for Newcastle. Congratulations. But some other clubs have ceilings.”

Since the takeover, The Magpies have spent around £400million on new signings while only recouping about £40million in player sales. Over the same period, Liverpool have spent around £250million while recouping over £110million in player sales. 

Newcastle's initial spending spree was enabled by a lack of spending under Mike Ashley's previous regime. But the disparity between Newcastle's spending on transfers and the revenue generated through player sales has caused the club significant headaches when it comes to remaining compliant with the Premier League's profitability and sustainability rules. Clubs are limited to losses of £105million over a three-year period, a figure Newcastle have adhered to but are understood to be close to surpassing.

As a result, Newcastle have been unable to make a signing in the winter transfer window. Head coach Eddie Howe admitted that the club missed out on top midfield target Kalvin Phillips on loan from Manchester City due to the 'finances involved'. He also claimed the club would have to sell players in order to have a chance of making any first-team signings due to PSR restrictions.

While there is 'no ceiling' for Newcastle in terms of the ambition of the club's owners, that ceiling has been firmly installed in the form of PSR - and the club have reached it. The Magpies find themselves in a ridiculous situation where they are effectively unable to make first-team ready signings despite having no senior strikers and just two senior midfielders currently fit and available.

The reason for that is partly self-inflicted by the club's summer transfer business in which they opted to invest in signings for the future such as Tino Livramento and Lewis Hall. The two major signings of Harvey Barnes and Sandro Tonali have scarcely been seen this season due to a foot injury and betting ban respectively.

A meeting is set to take place later this month to address potential changes to PSR. The current rules seem focused on suppressing ambitious clubs such as Newcastle, West Ham United and Aston Villa or forcing them to sell their top players and keep the status quo of the big six intact.

Financial rules most certainly have a place in modern football. But making clubs follow the same archaic rules introduced over a decade ago when the transfer landscape has changed so much in that period only risks limiting the competition.