Premier League clubs introduced new rules this month regarding ‘related party transactions’, with Manchester City and Newcastle United being the only two to oppose the move.
On Wednesday (December 22, 2021) morning, The Times published an article on the matter, giving more details on how exactly the new rules work.
Any Premier League club with a new sponsorship deal worth more than £ 1million per year must submit it for approval to the Premier League, who if they think they could potentially come under ‘transactions with related parties ”, will then pass the agreement to an outside of an“ independent ”company, to then verify if it is a“ fair value ”or if it is inflated due to a supposed relation existing between the club and the sponsor.
Newcastle United have already made it clear on several occasions that legally they do not believe these new Premier League rules could be put in place. While this new Times article also said that footballing figures felt the same, that they believed if the owners of Newcastle United challenged the new rules, it would be very likely that they would prevail over the Premier League.
Reacting to the Times article this morning, Kieran Maguire gave his take on the situation.
Football finance expert Kieran Maguire lectures on the subject at the University of Liverpool. He has written regularly in the past on Newcastle United and Mike Ashley, as well as of course, situations at many other clubs.
Kieran is also a Brighton fan and in 2018 he said: ‘I’d dirty myself’ if Mike Ashley took over his club.
Kieran Maguire via his Football prices online presence – December 22, 2021:
“All club sponsorships and player payments, handling over £ 1million to get the PL scrutinized to determine if they are at ‘fair value’.
“This is of course not at all, not at all, not at all intended for Newcastle and just an incredible coincidence that crept in after the takeover.
“Newcastle has a stadium which has 90% of the capacity [Manchester] City and Liverpool.
“So it can be assumed that Newcastle can make deals up to 90% of the value of these clubs?”
“[Manchester] City had £ 246million in trading revenues in 2020 compared to NUFC’s £ 26million, so plenty of scope for Newcastle to surely grow… to be fair?
This perfectly sums up the box of worms the Premier League has opened with these rule changes, which are simply the case with other clubs trying to keep Newcastle United from being able to compete in the years to come.
In the 2006/07 season Newcastle United were 14th in the list of rich football clubs in the world, with Deloitte reporting a turnover of € 129.4million (around £ 110million). Manchester City weren’t even in the top 20 and 20th on the list was Werder Bremen with turnover of € 97.3million (around £ 82.5million).
In the 2006/07 season, the last before Mike Ashley took over, Newcastle United had trading revenues of £ 27.6million.
The latest accounts available before Ashley’s departure show that in 2019/20, the NUFC had trade revenues of £ 25.9million, down from £ 1.7million from 13 years earlier when he took over.
In the first season, 2008/09, following their takeover by Sheikh Mansour, Statista reports that Manchester City’s trading income was still only € 21.1million (around £ 17.9million as of today’s exchange rate). They report that he then jumped to € 57.0million (£ 48.3million) the following season and that in their fourth season alone he had climbed to € 138.5million (around £ 117.5million).
Prior to that, in 2019/20 he was £ 246million as cited by Kieran Maguire, compared to £ 25.9million for Newcastle United.
How do you judge what exactly is “fair”?
Obviously, the natural level of NUFC’s trading income has been drastically reduced over the past fifteen years under Mike Ashley as all the other big clubs have seen massive increases. Including Man City who multiplied theirs by more than ten, while NUFC retreated!
Is Kieran Maguire right in proposing the idea that Newcastle United are now allowed to make trade deals, up to 90% of Manchester City’s?
Whatever you think, you certainly can’t base anything on the state in which Mike Ashley has now left Newcastle United.