Newcastle United have spending power, but January windows can disappoint

NEWCASTLE United’s controversial takeover by the Saudi Arabian sovereign wealth fund will be tested soon when the transfer market opens again. Already, predictions have been made about who they might sign and how much they will have available to spend in one window. 

Newcastle are in dire straits and have to strengthen their team if they are to avoid relegation, but can they get the required quality they need to clamber out of danger, or will the Saudi regime have to begin its reconstruction job from the second tier of the English game?

January windows don’t always work out well and the players available are often not the most coveted around. Furthermore, remoulding a team in January does not allow much time for new talent to gel. The most pragmatic way for Newcastle may be to bring in short-term, high-quality players in order to stave off relegation. Then, with that mission completed, start to acquire the level of player that can start to make them into a team challenging for honours. The trouble is, managers are rarely given the time they need, but even a low profile prize will seem like achievement given the club’s 50-plus years without a glimpse of silverware.

As it stands, Newcastle look bound for the drop, which would be an inauspicious start to the Public Investment Fund’s (PIF) reign in the north-east. Players like Sven Botman (21), Jesse Lingard (29), Aaron Ramsey (30), Kieran Trippier (31), Dele Alli (25), Philippe Coutinho (29), Pierre-Emerick Aubameyang (32), James Tarkowski (29) and Kieran Tierney (24) have all been linked to Newcastle. According to CIES Football Observatory, the value of this group of players would come to around € 200 million, but the problem is Newcastle will find the market will expect them to pay more than they need to given the size of their wallet.

While they are struggling at the foot of the Premier League table, Newcastle may find it hard to attract premium players that can pull them away from danger. And should the worst case scenario happen, the sort of star names the fans are longing for will be reluctant to play in the Championship. Newcastle need so many new players in order to make them a contender for something other than a trip through the trapdoor.

Cash will be available, but the Saudi Arabian fund will not be able to “do a Chelsea” and go crazy in the market like Roman Abramovich did in his first two or three years at Stamford Bridge. Chelsea and Manchester City seemed to have no constraints when they became wealthy overnight, but the consequences of their behaviour are the many restrictions clubs now have. The profit & sustainability rules mean Newcastle will have to work within strict boundaries, but that could still mean a war chest of up to € 500 million. Moreover, the new rules around sponsorship are deliberately designed to prevent inflated investment that exceeds “fair market value”, so there’s another hurdle.

Not that money is any guarantee of success, but it does go a long way towards elevating a club to the upper quartile of the Premier. Not every club is proficient in the market – for all Chelsea’s success since Abramovich took over, some of their signings have not worked out as planned – Fernando Torres (a January signing) was not a rip-roaring success, and players like Mateja Kežman, Hernán Crespo, Adrian Mutu, Andriy Shevchenko and Álvaro Morata proved to be quite underwhelming.

In more recent years, Everton under Farhad Moshiri have had a poor return on their investment in players and remember how careless Tottenham were with the proceeds of the Gareth Bale sale to Real Madrid? Whoever controls player recruitment – and the club is looking to hire a sporting director very soon – will have to have a clear strategy that looks beyond the next few months. They had hoped to secure Liverpool’s highly-rated Michael Edwards, but he turned down their approach.

The fact is, Newcastle’s substantial funds will rebuild their team, but they may still find they trail the Premier’s elite clubs by some distance. They may be rich now, accounting for 83% of Premier League clubs’ overall owner wealth, but PIF cannot simply pump Newcastle full of money.

The current situation is dire, but Newcastle can still get out of danger, but they must start winning consistently. Only one win in 16 games is a poor show and their away record is undoubtedly relegation form. Both Chelsea and Manchester City took time to move from under-achievers to global super clubs, so Newcastle United and their fans may have to be more patient than they care to be at this particular time. Dynasties are not built in one (or two) transfer windows. However, from a financial perspective, Newcastle can probably afford to make mistakes in the forthcoming window, but whoever they sign, they need to get it right if they are to remain in the Premier.

The end of transfers as we know them?

SHOULD Lionel Messi and Barcelona fail to repair their differences over the coming months, and the little Argentinian magician decides to leave Catalonia for a swansong, who will be able to afford him? Messi will be costly, unless he opts for a charitable mission, perhaps one that elevates or enhances an under-achieving club while adding to the legend.

With the financial and cultural cost of the pandemic still uncertain, the full extent of which may not be known for another 12 months, Messi and others of his kind could find the cost of securing a world-class superstar, albeit one that is at the tail-end of his career, may deter clubs that would normally have bitten-off the hand of the players’ agents in an instant. There may be a whole list of stars, such as Mbappe and Neymar, and would-be stars that could find themselves temporarily priced-out of a moribund market, which may stop transfers or, at the very least, put moves on hold.


The question is, should the transfer market be rightfully depressed in a time when clubs have lost a significant slice of their income, wages have been suspended or cut and, outside the rarified cauldron of professional football, people have lost their jobs, been furloughed and the pandemic has claimed thousands upon thousands of lives? Would tempered enthusiasm for high-spending and a curb on spiralling wages not be more empathetic than somewhat hollow gestures of solidarity and agenda-driven virtue signalling?

The Premier League has its critics concerning its activity in the transfer market. In the summer of 2020, around £ 1.2 billion was spent, which prompted politicians to question the wisdom of such spending when the UK government was considering financial support for sport.

There are signs that the transfer market, which has over-heated like a 19th century Californian gold rush in recent years is losing momentum. Just consider that the recent transfer window was arguably the most uneventful in years. The covid-19 pandemic is far different from the financial crisis of 2008-09 in that clubs are actually being affected operationally. In 2008, there were pressures, but by and large, football was able to continue almost as normal. There has never been anything like the financial impact of the pandemic to test the solidity of football’s business model in the post-WW2 world. According to Deloitte, the top 20 revenue generators in European football could lose around € 2 billion over the course of 2019-20 and 2020-21.

The January 2021 window saw gross expenditure in the Premier League total just £ 70 million from 24 transfers, of which 75% of the spend was connected to just three transactions. A year earlier, the amount was £ 230 million from 46 transfers. Moreover, the gross spend in January 2021 across the Bundesliga, La Liga, Serie A and Ligue 1 was around one third of the January 2020 window.


In all of the big five leagues, 2020-21 spending has dropped dramatically versus the three-year average, most notably in Spain, which has dropped 70%. Germany has fallen by 51%, France 40%, Italy 33%. The Premier League, in 2020-21, has declined by just 20%.

Interestingly, in 2020-21, only one a small number of the elite clubs has increased their gross spending in the transfer market. Chelsea, who paid the equivalent of € 247 million versus € 45 million in 2019-20, were the biggest spenders, accounting for approximately 20% of overall Premier expenditure. This was partly attributable to the transfer ban imposed on the club in 2019. 

Of Chelsea’s rivals in England, Manchester City only just increased their outlay, while Liverpool spent € 83 million compared to € 10 million in 2019-20. Internationally, all the major clubs spent far less than normal, notably Real Madrid, Atlético Madrid and Juventus. The elite clubs are all net buyers, but some clubs rely on transfer income to balance their books and to remain competitive. If the pandemic induces a prolonged period of transfer inactivity, these clubs are likely to experience some real challenges.

For example, Portugal’s top clubs have generated over € 2 billion since 2011-12 from transfer sales, resulting in a net gain of more than € 1 billion. Similarly, the Netherlands’ trio, Ajax, PSV Eindhoven and Feyenoord have earned € 1 billion, on a gross basis, from the market. Should a lack of liquidity hit the football market, net-sellers like Benfica, Porto and Ajax could be squeezed in the short-term. English clubs will also be faced with additional hurdles due to Brexit such as a restriction on the amount of under-21 players and a ban on making under-18 signings. 


The transfer market has shifted in recent years in so far that fund managers have realised the opportunities in professional football. InterTrust Group, a specialist financial services company, said in its paper, All change – how player transfer funding has evolved, “the game changer to football player transfer funding has been long coming”. In the past, bank lending was the primary source, but bespoke financing arrangements have become more common, including the use of special purpose vehicles.

However, the pandemic has seen some funding sources retract from the market. The consequences of a diminishing appetite have included loans being subject to early repayment, payment holiday requests and in the worst cases, payment defaults which have impacted cash flows and investors. 

The next key period will come in the summer, which will provide pointers to the long-term health and capabilities of the transfer market. There’s little doubt that clubs will come under enormous financial pressure over the coming year, but the after-shock of a depressed market will extend beyond the balance sheet of the clubs themselves and the personal wealth of players. 

A lot of the football industry’s peripheral business will suffer, starting with intermediaries such as player agents, not to mention the smaller clubs that rely on regular sales of home-produced talent to more affluent members of the football hierarcy. We could be at an inflection point in the transfer market, which some will wholeheartedly applaud, but others will fear because of the dislocation. Change is certainly needed and long overdue, but slow, measures may have to be adopted to ensure the eco-system remains intact and shock-proof.

Source material: KPMG Football Benchmark,  Deloitte,  Keiran Maguire,  InterTrust Group,  Transfermarkt.

Photo: Flickr Mo640 CC BY-SA 2.0

You don’t have to spend if you’re champions, but it helps

EARLIER in the summer, Liverpool were receiving some criticism because they had decided not to spend to reinforce their title-winning team. Jürgen Klopp made a public statement about the club not being run by an oligarch or a country and a few people got a little bent out of shape.

Sceptics suggested Klopp was making a subtle attempt to get some cash for new acquisitions. The Reds’ activity in the transfer market since underlines that his well-timed comments worked. Liverpool have since signed a few players and suddenly, their squad looks that little bit deeper.

It doesn’t always pay to throw your tentacles around the market too aggressively when you’ve won the league. For a start, your status adds a premium to the price of any player. But on the other hand, if your squad gets too comfortable, complacency can set in.

New players are needed to add creative tension to the dressing room and ensure there is competition for places. Furthermore, a team can get “found out” and struggle after winning the big prizes.

Already people are wondering if Klopp’s style will endure another season, just as they questioned if Manchester City have been rumbled last year.

Keeping it fresh

Jota, Liverpool’s new signing

From a commercial perspective, a major new signing sells season tickets as well as merchandise. The legendary Tottenham manager, Bill Nicholson, liked to sign a big name every year to keep interest in the team bubbling away – players like Jimmy Greaves, Alan Gilzean, Martin Chivers, Martin Peters and Ralph Coates were all signed in the period between 1961 and 1971, each time for around £100,000-plus and all keeping Spurs in the headlines, although they didn’t win the championship.

Today the transfer market is a lot more strategic and scientific, but there’s no denying that a major signing keeps the money rolling in.

If you are the league champion club, you really have to leverage your position at the top of the game in order to lure players your way – everyone wants to be associated with winners.

Liverpool finally swung into action and two of their signings, the excellent Thiago Alcantara from Bayern Munich and Diogo Jota from Wolves are very impressive acquisitions.

The arrival of these players should remove any doubts about Liverpool sitting back. Their net spend is around £ 65 million since the end of 2019-20, which is actually higher than Manchester City (£ 39 million), Manchester United (£ 35 million) and Arsenal (£16.5 million).

The fact is, the transfer market is now integral to the entertainment of the game and the fans expect their clubs to provide that in the form of a truckload of new signings each year. It is almost as if boredom sets in if a club doesn’t unveil new faces each close season.

The media has also created this sideshow, notably in the days leading up to the end of a transfer window. In the past, transfers were almost incidental and a solution to a problem such as an injury or loss of form of a key individual and maybe one or two new players were brought in. These days, almost half a squad can arrive in the summer window, especially at clubs who are cash rich.

Often a successful team that has been crowned champions signs a big name as a power play and it doesn’t work out as envisaged. A good example of this is Fernando Torres at Chelsea in 2011, signed for £ 50 million. Chelsea were reigning champions at the time, but they finally captured Torres too late, he had peaked, although he did play his part in the club winning the UEFA Champions League in 2012.

Big signings

Go back to 1985 and Everton signed Gary Lineker for over £ 800,000 after he had scored 29 goals for Leicester City in 1984-85. Lineker had a great season for Howard Kendall’s side, netting 38 goals in 56 games, but Everton sold him to Barcelona after that solitary season for £ 2.8 million. Similarly, Tottenham, who won the double in 1960-61, signed an unhappy Jimmy Greaves from AC Milan in December 1961 for £ 99,999 and although he scored 30 goals, Spurs lost their crown as champions. Likewise, Leeds, champions in 1969, pushed the boat out to buy Allan Clarke from Leicester in the summer of 1969 and their new man scored 25 times in 1969-70, but Leeds won nothing, despite being a better side on paper.

Allan Clarke runs out for Leeds, 1970

History has shown that some teams needed to strengthen their squad but a lack of action (or money) meant their side disappointed as they set out to defend their crown – Manchester City in 1969, Arsenal 1971 and Aston Villa in 1982 all could have used some additional talent when they began their follow-up campaign. In the case of Arsenal, they signed Alan Ball halfway through the 1971-72 season, while Villa snapped-up Coventry’s Andy Blair. More recently, Arsenal’s “invincibles” of 2004 only received a £ 1.5 million reinforcement in the form of Emmanuel Eboué. Interestingly, the regular Arsenal title-winning line-up of 2003-04 had an average age of more than 28.

Manchester City, meanwhile, spent £ 285 million in 2017-18, won the title and then paid out just £ 70 million in 2018-19 for new players. When they defended their second successive title, they had a net spend of £ 88 million. There were times when Manchester United, in their pomp, spent very little in the market, but then they had a very successful youth system which provided Sir Alex Ferguson with the core of his team in the mid-1990s. In the post-Ferguson era, United have been less dynamic in the market and have signed a number of players who have not lived up to expectations.

Ferguson liked to shake things up, but also knew the value of continuity, one of the strengths of Liverpool in their 1970s and 1980s heyday. Only one player, Virgil van Dijk, started every Premier League for Liverpool in 2019-20, perhaps emphasising strategic team selection or rotation. When Liverpool won the title in 1965-66, nine players played 40-plus games in the league, while Aston Villa’s 1980-81 team included seven players who played all 42 league fixtures.


The pandemic and the lack of time between seasons may meanthere will be less of a frenzy in the transfer window, although it is a game of brinkmanship to a large degree and we can expect poker faces and cunning agents to come to the fore as time runs out. Football is an impatient game and that’s why squads change so much – everyone hopes that mass turnover can change the mediocre into the outstanding, the unlucky into the lucky. There seems little time to nurture a side, which makes a mockery of supposed two or three year plans. How many managers are given the luxury of a three-year build-up?

Making a champion team into a better one is possible with the right signings, but there is a fine balance between enhancement and disruption. It is important to keep a squad fresh, both tactically and in terms of its composition, but how do you improve teams that have averaged over 90 points each over the past three seasons? How do you spend your money wisely?

Photo: PA