Newcastle United have shown huge ambition since Saudi Arabia's Public Investment Fund (PIF) bought out 80% of the club nearly three years ago, but there are obstacles they face in terms of financial rules especially if Champions League qualification is not been achieved year after year.
This season the Magpies are currently in seventh place and it is now mathematically impossible that they will qualify in fourth place for next season's expanded Champions League. If the new co-efficient system allows England a fifth position entry, it is still highly unlikely that they will enter into the competition next season.
It is not the progress that the Saudi based owners would have wanted, after reaching this season's Champions League after a fourth placed finish last season.
Newcastle have spent just under 380 million since the takeover, with the most expensive buy being a 60 million club record fee for Swedish striker Alexander Isak two years ago. Other major purchases were the 55 million spent on midfielder Sandro Tonali from AC Milan, and Anthony Gordon arrived from Everton last summer for a fee of 45 million.The most influential of all of the new signings since the takeover is arguably Bruno Guimaraes who joined from Lyon in a 40 million deal, the first real major signing under the new regime.
Yet despite the aspiration that the club has showed, there are obstacles in place due to the legislation frameworks regarding Profit and Sustainability Rules (PSR) of the Premier League, and the new Uefa Financial Sustainability Regulations.
In the Premier League there has been a growing storm over how to approach PSR rules, as a shareholders meeting on April 22 asked all Premier League clubs regarding a system where the most affluent clubs would be able to spend a sum tailored to the broadcasting revenue of the bottom clubs. But the clubs who compete regularly in Europe are not so impressed by such a deal, as this would place them at a disadvantage with their European rivals. Manchester United are especially against such a move.
It was thought that Premier League may decide on PSR's that would be in line by what Uefa have put forward in its financial regulations.
The European governing body has laid out new rules for those teams who are in European competition, where the limit on clubs spending on player and coach wages, transfers and agent fees is 90% of revenue for this season. This will fall to 80% for next season and then reach its ceiling of 70% for 2025/26.
Uefa have based the new rules on the three pillars of solvency, stability and cost control. It says that since the original financial fair play rules were introduced, the losses of Europe's top division clubs has dropped from 1.6 billion to a profit of 140 million by 2018.
Continued investment in the playing squad has resulted in losses for Newcastle, for the 2022/23 season a post tax loss of 73.4 million was recorded, which was in line with the club's financial performance the previous year. Currently the Premier League guidelines are that a club can incur losses of no more than 105 million over the course of three seasons.
Without Champions League qualification, the club could be forced to sell off players such as Guimaraes, Isak or defender Sven Botman to balance the books. But there is evidence that off the pitch the club is moving in the right direction as match day commercial and broadcasting revenues were higher than before.
Indeed the club reached 17th place in the Deloitte Money League table, having made a 36% year-on-year increase in revenue during 2022/23 compared to the season before.
Broadcasting revenue was raised from 146 million to 190 million, while commercial income rose climbed up to 54 million from 33 million.
Dr. Raffaele Poli, the founder of the Geneva based CIES Football Observatory, told Tribalfootball.com of Newcastle's current position: The salary cap at the current level is not a hard salary cap that is related to the smaller clubs.
The key point is to raise income, Newcastle have been in the Champions League with good crowds and the Premier League does well in terms of broadcasting.
From that perspective I think that they will find that they will be able to raise revenues, so they can pay higher salaries and attract better players or compete for them.
It could be a similar model to Paris St Germain in that you have the authority to attract more sponsors, and to compete in the Champions League even though it will not be the case next season.
Its an advantage to be in the English game as you can grow your portfolio worldwide, and boost your sponsorships more than what you could do in any other league.
At the same time the difficulty is to be able to compete in England for the Champions League with so many other top teams.
They should be able to increase their merchandising revenue as this goes hand in hand with being in a popular league, and as a more popular club you can go on for example tours all over the world.
The biggest clubs already do this, and receive the reward for more having more fans, sponsors and merchandise sales."
Then Saudi owners are taking a long term view of where they are going to take Newcastle, and in November 2022 they backed up their takeover with a 70.4 million equity investment, which took PIF's investment in the club to just over 450 million.
Dr Poli continued: Its difficult to compete with bigger football brands, but the Saudi based investors know all about this.
They will be looking to progress from year to year, the start was very good with Champions League qualification, it's a long term project.
I don't think that the PIF will back out of Newcastle if they do not qualify for the Champions League year after year, if you see PSG with the Qatar owners it has been twenty years since they took over, and see the example of Manchester City.
They all entered into football later, and the advantage is that they know what it is all about, and they know how much will need to be spent.
Saudi Arabia have the World Cup in 2034, and the Saudis will invest in that alongside ownership and their own league, from that perspective the Newcastle fans can be quite reassured.
Its not like its an investment in a small club and then they get bored, it's a big investment and they will not just stop if one season was not as good as the previous one."