Newcastle United’s spending is “unsustainable”, warned director of football Dan Ashworth last October.
He bought Anthony Gordon for £40million ($51.1m) three months later.
“We aren’t going to have a bottomless pit of money,” said head coach Eddie Howe in May. “We are going to be operating under tight constraints.”
One month later, Sandro Tonali arrived for £55million.
After the Italian’s arrival, one senior figure told The Athletic: “I’ve said it 1,000 times: Financial Fair Play (FFP) is a restriction for us. We can’t go big again.”
Into St James’ Park walked Tino Livramento and Harvey Barnes for a combined £72million.
Newcastle’s owners are amongst the richest in world football — but these comments give the illusion of the club breaking into the Premier League’s comfortable living room and finding money down the back of an FFP-shaped sofa.
Just as the club’s search for a left-back seemed to be pulling up only crumbs, however, Howe’s teaser that they would have to “be creative” in the market proved prescient.
Lewis Hall has arrived from Chelsea on loan with an obligation to buy for £28m plus £7m of add-ons — with both sides viewing it as a permanent transfer.
So what actually is Newcastle’s current FFP position — and why did this deal make sense for all parties?
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What is Newcastle’s FFP situation?
First, a quick refresher on how FFP actually works. The Premier League permits pre-tax losses of £105million over three years.
Under threat of relegation, Newcastle spent far more than intended in the first window under their new ownership. While those decisions were entirely justifiable — after all, the club avoided the drop — that spending still affects deals made today.
Now, teams have spent far more than Newcastle during that period. Chelsea, for example, have spent £900million since their new ownership group took control last year, including £300m on midfielders in 2023 alone.GO DEEPERWhy Chelsea believe their £900m transfer spending is within FFP rules
The west London club believe they are within the guidelines due to amortisation — which means spreading the FFP hit of a transfer across the length of a contract. This was initially done by handing out eight-year contracts — but new regulations introduced by UEFA ahead of this summer’s window mean they can only be distributed across a maximum of five years.
Chelsea are also much larger commercially than Newcastle currently, and with FFP a measure of profitability rather than net spend, are permitted to spend larger amounts. Newcastle are aggressively trying to grow their revenue — with examples including the controversial decision to allow Saudi Arabia to play at St James’ Park this September.
With Newcastle having spent around £380million since the Saudi takeover and yet to come close to fulfilling their commercial potential, it is clear why the £105m limit is squarely in focus.
That said, senior club officials have looked at Manchester City’s example — charged with breaking FFP rules on over 100 occasions over a nine-year period — and knowing the league’s distrust of their ownership, Newcastle are determined to build sustainably and operate within the rulebook.
However, a significant detail of FFP is that player sales are booked in their entirety during the same financial year that they are received (minus any remaining amortised cost) — meaning they play an outsized role in balancing the books.
Newcastle may not have sold significantly since their new owners came in, but have received around £48million for Chris Wood and Allan Saint-Maximin this summer. The realities of the calculations are more complicated than this, but with Newcastle’s £380m spend amortised over five years, the two figures become much more comparable.
For example, it was the sale of Wood and Saint-Maximin which unlocked the funds needed to finalise the signings of Barnes and Livramento.
It is also worth stressing that wages often play a far more significant role than transfer fees. For example: if Club A signs a player for £50million and gives him a five-year contract worth £100,000 a week, and Club B signs a player on a free transfer and agrees to pay him around £400,000 a week, it is Club B’s player who is more expensive on a weekly basis.
Newcastle are rigorous in making sure new arrivals fit inside their wage structure, with the high-profile acquisition of Tonali included. The club are also still trying to get non-playing squad members — such as Ryan Fraser, Jeff Hendrick, and Isaac Hayden — off the books.
All these factors leave Newcastle in their current position. Howe wanted a left-back to complete his summer spending — but despite being within FFP laws to date, could not afford a significant initial outlay.
Why did Newcastle want Hall?
As explored by The Athletic last week, Newcastle studied a handful of left-backs this summer, including Arsenal’s Kieran Tierney, Real Betis’ Juan Miranda, and Chelsea pair Marc Cucurella and Hall.
Though there are reasons why each may fit Newcastle’s style of play, each had drawbacks: Tierney’s aerial ability, Cucurella and Miranda’s one-vs-one defending. Aside from his inexperience, it is striking that Hall’s main flaw was what had been viewed as a lack of availability rather than any footballing factor.
He won Chelsea’s Academy Player of the Season last year, while also making an impressive step up to the senior side — acquitting himself impressively against Manchester City, Liverpool, Manchester United, and Newcastle themselves.
His pizza chart shows a well-rounded game — although it is a small sample size at just 402 minutes.
The following example against Nottingham Forest shows what he likes to do — preferring to progress the ball through carrying rather than passing.
Here Hall picks up the ball under pressure from Serge Aurier…
…before nutmegging the defender and laying it on a plate for Joao Felix.
It is worth stressing that Hall is not just a left-back. He has shown his versatility in Chelsea’s academy sides, lining up in positions as varied as centre-back and left wing.
Hall favours playing as a box-to-box midfielder, which projects to the left-sided No 8 role in Newcastle’s system if Howe opts to use him away from left-back.
The examples of Elliot Anderson and Lewis Miley demonstrate how Newcastle encourage their young players to retain their versatility.
Why does a loan with obligation solve so many issues?
Well, it means that the initial £28million transfer fee does not count against FFP regulations until the loan is made permanent ahead of the 2024-25 season.
The only cost to Newcastle is the portion of Hall’s wages which they have taken on from Chelsea — which, owing to the intentions of the deal, is likely to be virtually the entire amount. With Hall still only 18 years old, this is unlikely to be a bank-breaking number.
Both teams view this as a permanent transfer; the loan is purely a device to delay the official registration of the transfer for FFP purposes.
Newcastle get the squad depth they need, as well as a talented and versatile player who has been tipped for full England honours. But what about Chelsea?
Why were Chelsea willing to let him go?
There has been an air of disappointment at Hall’s departure from Chelsea — both from supporters and some inside the club. Concerns have been expressed that this is a return to the Chelsea academy’s old model, where talented prospects are sold to fund expensive imports.
The fact that Cucurella remains at the club, having disappointed since his arrival from Brighton last summer, has been a source of frustration.
However, Chelsea’s FFP position means they are in a position where they need to sell. The Athletic detailed last week how the club believe they are within current FFP guidelines, but it is a close-run thing. By knowing the money for Hall will come in next summer, they build themselves the space to be fluid in the market.
As a youth academy product, his sale reflects pure profit against FFP, with the player carrying no amortised cost.
Hall started for Chelsea against Newcastle in May (Photo: Richard Callis/MB Media/Getty Images)
Though Hall is highly rated, his prospects at Chelsea were harmed by the number of left-backs at the club. Ben Chilwell, the undoubted first-choice, is still only 26, while Ian Maatsen impressed during pre-season. Chelsea would like to find a buyer for Cucurella, but his ability to also fill in as a left-sided centre-back is useful.
With a squad as big as Chelsea’s, when the club finds a willing buyer for fringe players they are near enough bound to make a deal.
Examples of this come from their willingness to do deals with potential competitors for European football, something which would not have occurred during the Roman Abramovich era. In the last 12 months, they have sold Kai Havertz and Jorginho to Arsenal, Mateo Kovacic to Manchester City and Mason Mount to Manchester United.
Newcastle are the latest beneficiaries of Chelsea’s excesses — ultimately, it is a deal that makes sense for both parties.
(Top photo: Serena Taylor/Newcastle United via Getty Images))