Reporter s Notes | Why are Premier League funders unable to be willful if they are rich

Xinhua News Agency, London, September 3 (Reporter Ma Bangjie) The controlling shareholder of Newcastle United Club is the Saudi Public Investment Fund. According to the Financial Times, it has assets of more than US$925 billion, making it one of the top investors in the Premier League. But Newcastle is not as proud as Chelsea spent a lot of money to buy the Warriors after Abramovich took over. This summer, he repeatedly suffered a defeat in the transfer market and was even forced to sell the star Isack to Liverpool with hatred.

I believe many people are confused about this.

Isaac signs with Liverpool. The picture comes from the official website of the Premier League

In August this year, Newcastle's targets in the transfer market were snatched away by Liverpool, Chelsea, Manchester United, etc., and was ridiculed by local British media to go to the wrong shopping supermarket. At that time, Newcastle head coach Eddie Howe said helplessly that they were tied up and that they could not spend money. He said: "We are subject to PSR. It is still limiting what we can do, and that's the reality."

It is this PSR that makes Newcastle restrictive - the profit and sustainability rules, which are a set of rules introduced by the Premier League in 2013, aiming to prevent clubs from falling into financial crisis due to excessive spending. The core provision of PSR is that the total loss of Premier League clubs in a rolling three-year period cannot exceed £105 million. A rolling three-year period refers to a time window that continues to move forward and always covers the last three years.

In addition, if Premier League teams participate in UEFA's events such as the Champions League, Europa League and Europa League, they must also abide by UEFA's "Financial Sustainable Rules" (FSR). According to this rule, the team's salary expenses this season shall not exceed 70% of the club's revenue. This is another tight hoop that is placed on the head of a big Premier League club.

Violating PSR and FSR will result in penalties, banning transfers or even revoking the qualification for participation. Everton was fined 8 points twice for violating PSR, almost equivalent to winning three games in less than three games. Aston Villa's salary expenditure and club income once exceeded 90%. He was fined by UEFA for failing to meet the FSR requirements for participating in the Champions League.

Aston Villa home court. The picture comes from the club's official website

To meet the requirements of PSR and FSR, there are only two methods: increasing revenue and reducing expenditure. Newcastle cannot compare with clubs such as Manchester City in terms of open source. According to the recently released official data, their revenue in the 2023-2024 season was 371.8 million euros, ranking seventh in the Premier League. Manchester City, Manchester United, Arsenal, Liverpool, Tottenham and Chelsea, which ranked first, all had revenues of more than 500 million euros, the highest of more than 800 million yuan. Therefore, Newcastle can only work hard to reduce expenses, so it is impossible to make a big move in the transfer market like Liverpool, Chelsea and Arsenal.

PSR allows bosses to inject capital into the club, but it must be in the form of holding shares rather than borrowing, and the total amount within the rolling three-year period is £90 million, with an average annual average of £30 million. This is only about one-tenth of Newcastle's revenue in the previous season. Newcastle bought two forward players, Walter Mad and Visa before the transfer window closed this summer, and spent more than £100 million. At that time, the outside world had concluded that they would definitely sell Isaac to Liverpool. Without the £125 million transfer fee paid by Liverpool for the Swedish international, Newcastle's net spending in the transfer market would exceed £220 million. That way, the PSR and FSR tightening curse will ring in their ears at the same time.

Visa signs with Newcastle United Club. The picture comes from the club's official website

In addition, after the Saudi Public Investment Fund acquired 80% of the Newcastle Club's shares in October 2021, the Premier League urgently issued a rule called "Affiliate Party Transactions" (APT Rules) at the end of that year. The core content is: any commercial transaction provided by a company related to the club owner (such as a state-owned enterprise in one country or a subsidiary of the same group) must be evaluated by independent Premier League institutions. This avoids the holding companies of some clubs injecting funds into the club through false sponsorship and other means, thereby circumventing PSR rules.

Therefore, subject to PSR and APT rules, except for limited capital injection through holdings, Premier League funders cannot directly use funds in their accounts to buy players and pay wages for the club. In other words, if the club wants to absorb funds from the fund owner and increase revenue, it must go through legal procedures and cannot directly transfer or borrow money. This prevents the gap between clubs from being infinitely widened and more effectively curbs the breeding and spread of gold and dollar football.

It was Abramovich who caused European football to be alert to "golden and dollar football" back then. In 2010, Platini, then-UEFA president, said: "He now spends all his money on football. If one day he wakes up and wants to invest in yachts with all his might, what should football do? We must find a way to protect football." So UEFA introduced the "fair fiscal policy" that was later upgraded to FSR. In 2013, the Premier League’s PSR and other rules were also introduced one after another.