What Next for Newcastle? | The Football Boardroom

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1:03Welcome to the Football Boardroom. I'm Christian Perslow. And I'm Henry Winter. We're actually going to take a look at Newcastle today, which four and a half years into the Saudi project, we're going to take stock and particularly focus in on how financial fair play has been a key factor in that story. A bunch of comings and goings, both on and off the field. and really ask ourselves four and a half years in, has the project stalled and what would it take to get it back on track? So how have you been? Like the new haircut? Well, do you know what? When I said I'd do a podcast, I had no idea it would be on video.

1:43And rather than getting some feedback for the quality of our content, all I get is mates saying, get your haircut, mate. You look terrible. Anyway, let's talk. Let's talk. So it's interesting. Some of the feedback, and thank you for the feedback that we've had. John, an Aston Villa fan, he messaged to say that he was very impressed with your offer and your suggestions of the importance of Liverpool, your former club, and Aston Villa, your former club, having some element of mediation to liberate Harvey Elliott. Oh, yeah. Yes, that did seem to get a bit of pick up. And I'm slightly embarrassed to say that after I left here, when you hit me with your mediating question, it crossed my mind as I walked up the street, because I happen to know there's some very smart people at both clubs.

2:33But at Liverpool in particular, I know that they don't need me to tell them that Harvey Elliott not playing football for the next five months is not great for his value. So I asked myself, why haven't they mediated already? and I concluded that it's probably that right now Liverpool are six in the Premier League, Villa are third. We've discussed in our previous episodes the huge financial impact of Champions League football on these clubs. I just checked this morning. If one of the big three win this year, it's going to be worth£125 million versus maybe£35 million if you win the Europa League.

3:13So£90 million of difference. If I'm Michael Edwards or Richard Hughes, that's a big number, a much bigger number than maybe five or ten million on Harvey if his value goes down. And so my conclusion is that actually they obviously didn't expect to be in this position, but now they are. They don't want to help Aston Villa in any way, shape or form because they think they can still pit them to top five. And any help to Villa could make that less likely. So it's in Liverpool's interest, you're saying, for Harvey Elliott to stay in limbo? It's in Liverpool's interest to provide absolutely no help to Aston Villa, who are currently third in the Premier League, had a couple of bad results, but who are, you know, a huge rival for the all-important top five.

4:05Christian, a couple more questions from our audience. Robert Palmer, a Spurs fan, specifically wants to know if there's anything to rumours about Spurs ever having made a low ball offer for Jack Grealish, who you know well from your time at Aston Villa. Yes, it was four weeks before I joined in the summer of 2018. A very, very low ebb in the club's fortunes. You know, literally, I think within days of the club being rescued from a financial crisis by Nassif Suiris and Wes Edens, there was an offer for Jack from Spurs. I think it was for about£25 million that was turned down. And in fact, on my first day at work, the 1st of September 2018, I got a phone call from Jack's agent asking to meet the next day in London, which I did.

4:57And at that meeting, not only was Jack's agent present, but Jack's mum and dad, who I got to know extremely well. Absolutely lovely people. But I think it would be fair to say not best happy. and so my first CEO job at Villa was to try and calm Jack down and get him a new contract. And you got some great football out of him and 100 million quid. Yes, three years later. And Christian, Doug Rose has written in with some kind words of praise. Thanks, Doug. And he wants to know why some transfer fees are undisclosed. Good question. I think it's less common on the really big deals these days is because it generally leaks out.

5:41No club wants to admit they've overpaid and no club wants to admit they've sold somebody on the cheap. That's one simple explanation. And at the more tactical level in particular, I think, it kind of helps when you're selling players if no one really knows what you paid for them in the first place. Anyway, no, it's really interesting questions and keep them coming to get in touch at thefootballboardroom.co.uk. Right. Right. Where are we? Newcastle. Newcastle. So how do we get here? A1. Yeah, we're four and a half years into the period of ownership under the Saudi Public Investment Fund. They bought the club in October 2021.

6:24For those of our listeners who wonder what PIF means, the Public Investment Fund of Saudi Arabia, Think of it as hugely wealthy countries like the Saudis, like the Norwegians, where they have small populations and huge wealth, pooling that wealth into an investment fund, kind of like a huge pension fund to invest all around the world to diversify their wealth away from the oil industry. Biggest wealth fund in the world? One of the biggest, worth over$1 trillion and has been deployed different actually to some sovereign wealth funds. Lots of private company investments in this country. They're a big shareholder in Heathrow Airport, for example.

7:10Obviously, our listeners will know that almost at the same time as they bought Newcastle for 300 million pounds, a drop in the ocean for this fund. they went big in golf with something called Live Golf. And over the last five years or so, they've invested over$5 billion in a rival golf tour to the established PGA. Although some of the golfers are coming back now, aren't they? They are. But I think it's important our listeners understand that the Public Investment Fund of Saudi Arabia, one of the biggest investment funds on the planet, trillion dollars. And this is a tiny by number, but highly visible strategic investment for the Saudis.

8:00And four and a half years in, let's kind of break it down into three phases. I think we should look at those today. The first phase, I'm going to call that the Amanda Stavely era. She was the person who skillfully brokered the purchase between Mike Ashley, maybe one of the most unpopular ownership regimes in my whole time in football, and the PIF. And after that transaction was consummated, she really took a front row seat in looking after the investment for PIF. And the first phase was a period of significant change in on-field and off-field. We'll take a look at that. And then the second phase is actually the summer of 2024, when it was as if the buffers were hit dramatically and suddenly.

8:52And we saw lots of change in senior management, including Amanda's exit. And then the third phase, scrolling forward last summer, when after a period of zero transfer activity, we saw the famous Alexander-Ezac summer and getting back on the front foot in terms of transfers. So let's start with that first phase. You had a front row seat on this. You've covered Newcastle all your life. You covered the Ashley era and saw just how toxic that became. was it a breath of fresh air when the Saudis and Amanda arrived? And how did they get on? Well, I mean, Mike Ashley, I mean, I lost a bet with Newcastle fans over Mike Ashley and ended up having to swim the Tyne, which was just about sort of thawed out.

9:44That was quite an experience. So, yeah, whenever you mention Mike Ashley, I always think, oof, be careful what you say. In terms of when Amanda Stavely came in, I mean, it was like water in the desert in terms of the fans were parched. They had this thing called cans and it was huge on social media, hashtag cans. And cans basically meant we could get the cans out, we could celebrate because Mike Ashley has gone. And Amanda Staveley, you know, she was more than the front for the Saudis. As you say, she's a very skilled negotiator, well-respected in the banking and financial community. But what she was very good at was there was a slight sort of David Gill element to her in terms of being on the executive side, but also being able to work incredibly well with the manager, as Gilded with Sir Alex.

10:36And she was very good with Eddie Howe. They did a lot of business. They did a lot of business in that first year and a lot of really good business. I think over the three, four transfer windows, the type of players that they've brought in who are still huge now. I mean, in no particular order. Lewis Hall came in on loan, and then he's been fantastic when they converted that into a permanent deal. You look at Livermento, you look at Bottman, you look at Bruno Guimares, you look at Anthony Gordon. I mean, Anthony Gordon was playing centre-forward against Spurs the other night, I mean, even though he's a fantastic winger.

11:10And I think that showed two things. First, the importance of Amanda Stavely in getting deals done in that period and also Eddie Howe's ability to develop players because Anthony Gordon... I counted 11 players in those first three windows who, with the exception of Izak, who was sold at huge profit, by the way, are still absolutely key players. Burn and Trippier and players like that. Yeah, and obviously in the October, in that January, the first job was to stabilise and survive. I think they finished 11th. And then I think there were four signings made in that window to stabilise. Trippier was noteworthy, wasn't he?

11:46Trippier in terms of, A, a very good player, but also a leader. Yeah. Also someone with a mouse, because he'd worked under Simeone, gone from Spurs to Atletico, had something about him, that leadership quality. Yeah, I agree with you. Even though, you know, he's retired effectively with England, he's still a force for Newcastle United, started the other night. Yeah, and then the following summer, obviously now well and truly stabilised, you got the feeling that they took it to the next level. And let's be clear, we should leave our listeners in no doubt how successful this dramatic transformation on field was that they finished fourth, uh, in that first full season under Piff ownership with Eddie and Amanda, um, working together and, um, and qualified for the champions league for the first time ever.

12:36And then the following season, again, that I think that January Gordon came in and they finished that season a seventh and had a very good run in the champions league. I think they're a bit unlucky, actually. But here's the point, Henry, and I think it's really significant. So we can agree, can't we, that this first phase was a huge success on the field and really characterised by a transformation in the playing squad and lots of really good signings who delivered massive improvement in on-field results. But there's a but. if there was a benefit for um buying the club from mike ashley it was ironically that probably you know let's call him the king of austerity one of the very few football clubs that never lost money uh some would say because they never spent any money meant that newcastle was bought by piff with a clean ffp slate and that's what enabled that phase of 11 or 12 major signings to occur in those first three years of PIF ownership.

13:45Mike Ashley doesn't get many thanks for that retrospectively, does he? He doesn't, but I just want our listeners to understand that key point. The FFP slate was clean, so they were able to front load their investment. They spent, Henry, over£500 million of capital on rebuilding that team very successfully, and they did so whilst rebuilding the club, which was also run in a rather austere fashion. very very low numbers of staff compared to its rivals and competitors appalling facilities that needed to be improved and so in terms of training ground or within the building they the training ground definitely and i know that that hasn't been done fundamentally but plenty had to be spent in the short run building out their staff building out their commercial team so frankly a huge increase in their costs as well as in their capital investment, which meant, I'm afraid, that suddenly, and it really did happen quite suddenly, at the end of that Champions League campaign, when they finished seventh and didn't qualify for the following year's Champions League, it felt to me like a balloon burst.

15:02FFP suddenly hit with a vengeance and we will see as we scroll forward that from that moment on for the best part of three full transfer windows no more players could be signed because the club found itself right up against the FFP limits those three years of front loading and then not making the Champions League which gives you that additional revenue and that additional cushion financially meant suddenly that they knew that they were going to be up against it. And I think this is a good moment for us to actually just segue to the subject of FFP. Because you're known by Villafance as Mr PSR. Yeah, well, I call it FFS actually because I just think Newcastle is emblematic of a myth that exists around the financial regulations, previously called financial fair play, now called profitability and sustainability, soon to be called squad cost rules.

16:13Let's just call them financial regulations, OK? Newcastle United, I think there isn't a listener who does not appreciate that this club is owned by one of the wealthiest investors on the planet. And so when we hear that the justification for financial regulations is sustainability, and to put that in plain English, sustainability again, another euphemism, I guess what it really means is the risk of a business or a football club going bust. So we have these financial rules to stop clubs going bust. nobody could seriously believe that with owners like Newcastle it's ever going bust and the truth is these financial rules exist just as much to prevent new entrants being able to deploy huge amounts of capital to change the status quo, to challenge established big clubs whose natural history advantage of trophy winning and success over decades has given them a level of turnover revenue, I should say, that gives them an advantage in that region.

17:39I mean, we're going to get on to Leicester City later, but Leicester City won the title in 2016 with good management and sensible recruiting yeah well that's a good point and and and and i can be done it can be done thank you and i completely agree with you that it isn't all about the money but what i'm saying is a slightly different point the um newcastle's ability to challenge the elite has been manifestly constrained by those financial regulations and in the name of sustainability, I don't think that argument really holds water. The same is true for Manchester City and what is interesting, by the way, to make a comparison between the two, is the fact that the Saudis have taken a much less confrontational approach to compliance with financial rules and regulations than City ever did.

18:35Is that because they're looking at what's happening with 115? Well, I think it's certainly fair to say that by the time they made their entry into the English Premier League, City were well down the road in a series of legal cases, firstly at the UEFA level and obviously later at the Premier League level. but where City's view all along has been to make their investment and argue their case and defend their position, if necessary, in law. And Newcastle have adopted an entirely different approach. And so, yeah, I think there's a real possibility that they decided to play a wait-and-see game, see how ultimately things do play out with Man City.

19:25and I think by the way you know in a scenario where Man City were to win that case hands down where frankly those very rules that that sought to constrain new entrants like City like Newcastle then you might imagine that the taps would open so to be clear and I want to make sure our listeners have landed this, that Newcastle United proves in terms of just what a damaging impact it had on PIF's growth plans, that FFP perhaps has been an unnecessary and unfair constraint on their ability to invest. The flip side to that is that they have to develop their revenue streams. They do. And let me say that in the period of ownership, no club has grown any of its financial measures faster than Newcastle United.

20:20So again, speaking purely as a businessman, the performance of the club in terms of revenue growth, in terms of all of the key items, matchday income, commercial income, and of course TV income, have grown faster than their rivals. But, and this is the nub of the matter, Henry, their revenues at£335 million are almost exactly a half of the four highest revenue clubs in the league today, who are all between now£670 and £700 million. and in a world where the league has just approved the squad cost rules for next season, where you're allowed to spend a percentage of that turnover, simple arithmetic, Newcastle United will have to have a wage bill, approximately a half of those leading clubs in the Premier League, despite having owners who quite obviously, if they were allowed to, would like them to be competing to win the title.

21:20And that is the strategic conundrum that Newcastle face. So that's what happened in 2024. In 2024, after three years of significant investment, you've raved about the quality of the signings in that period and Eddie's performance. They hit the buffers. We should scroll forward because, you know, Dan went and then Amanda went. OK, so we can read into that what we will. And then Paul Mitchell arrives, by the way, and we're in the summer of 24. and one gets the sense that missing the Champions League, everybody in the building knew, oh my God, we're going to have an FFP problem. And Amanda's gone, Dan's gone, Paul arrives.

22:02You know, another hugely experienced sporting director, a good guy, good track record, worked very well with Pochettino in the old days, did good work in Europe, a person I admire. You know, I don't think losing Dan was a good idea, But I think it's a pretty good replacement. And he arrives at the start of the summer of 2024. And imagine what it's like to be a sporting director who arrives. Not a single player is signed. OK. And then last day of the window, a pretty significant moment, actually, when I think the world woke up to what we've pointed to in this conversation, that FFP had hit and had hit hard.

22:42£50 million black hole. When Paul Mitchell has to essentially oversee. not an exciting signing but the sale of Elliot Anderson what the hell you knew everyone in football knew this is the poster boy for academy product making it into the first team I mean look at his trajectory since he's left I can give you his trajectory because I met him first in a hotel when he was having breakfast with his parents in the middle of Bristol and I was down there seeing some people at Bristol Rovers and they introduced me to Elliot Elliot, he was on loan from Newcastle. I think he was their player of the year that season.

23:20He was absolutely outstanding. And Bristol Rovers were raving about him, A, as a player, B, as a leader, and C, as just a good, good pro. And, you know, when you meet young players for the first time, you get a sense they have a, not a self-entitlement, but just they've got a feel to them that they're going places. And I absolutely got that from Elliot Anderson. So I followed his career. Obviously, he came through Walls End Boys Club. I think his great uncle had played for the club embedded in Newcastle. So it must have been a wrench for him to leave. And also, I mean, he probably wouldn't have started.

23:54And he was used slightly out of position from the position we see him play so well as a six for England, slightly differently for Forrest. But he wasn't really going to get into that midfield, that first choice midfielder, Bruno Grimare, Sandro Tonali and Joe Linton, who were doing very well. so I could I kind of sort of understood it with that I'm surprised to hear you say that well let's be clear they had they had to look it was pure profit you always tell me pure profit academy product that was not a football decision that's an FFP decision do me a favour and by the way Mitchell okay this is a big moment in recent times goes on the record he's barely in the building it's probably you know imagine being him he hasn't signed a single player he's the guy who has to say to the world we've just sold you know the definition of you know one of our own what's their alternative well there was no alternative that's the problem with ffp but mitchell goes on the record and says transfer two and a half years of uh we need to change our approach to transfer policy not fit for purpose i think that was quite provocative and i think eddie took it badly and personally i thought that was that was never going to end well once mitchell starts criticizing basically everything that's gone before that you've just pointed out was actually some fantastically astute business but Mitchell makes that announcement Elliot goes and by the way let me just say it I think that one of the easiest rule changes that every football fan in the country starting with you and me would love to see would be to have academy players playing for a first team to have their costs their their wages not deducted for FFP purposes just like sorry for what period I mean are we talking Phil Foden who's what at 24 25 he's got five titles still that period you would have him listen it's detail five years ten years I don't care I just think giving clubs an incentive to keep their homegrown players rather than what we have today which is a perverse incentive to sell them to comply with financial rules it's wrong Conor Gallagher should not have left Chelsea Jacob Ramsey should not have left Villa and Elliot Anderson should be the future of Newcastle sold for a technical financial reason nobody intended that I promise you when FFP rules were written it's an unintended consequence and it needs to be fixed they presumably put in a salon I presume they did listen we need to scroll forward because we're under the pump here and I want to get to the summer of 25 three years three excuse me three windows not a single player comes in the building Darren Eales leaving the club I'm sorry to say due to illness Paul Mitchell goes Amanda's long gone and in the summer of 25 Eddie basically no CEO no sporting director has to oversee the tumultuous events surrounding EZAC we talked about them in a previous episode but let's face it last summer is now well and truly under the microscope.

27:01What did you make of it? Well, some of the players they brought in actually did okay the other night in terms at Spurs. But did you expect to see Volta Marder and Visser on the bench? I mean, that's a huge thing. And that is... That's£120 million worth of firepower on the bench. And they didn't get their main target. Maybe they'd had a sporting director and they hadn't had the Isaac saga or it had been settled earlier with Liverpool. I mean, Amanda Stavely would have gone in there, realised within 10 minutes that Isaac was not for turning, that they might as well sell him, do a deal with Liverpool earlier in the window and they might have got Eketike, who they were linked with.

27:42I completely agree with you. I completely agree with you. That's the difference between proactive and strategic management of squad and reactive chaos. And my takeaway for what it's worth is that the owners knew, the owners knew they needed a new chief executive. They knew they needed a new sporting director. For some reason, they left that until September and left Eddie in complete charge. And in the modern game, you know my view, Henry, it is simply not feasible for a manager to be thinking through pre-season, tours, preparation, the start of the Premier League in August, whilst at the same time managing the potential loss of their star player and the urgent and crucial need to replace that player.

28:27Just too much for one person, not Eddie's fault. No great surprise. They bounced into what felt and looked like a late window trolley dash, not a strategic approach to recruitment. What would you have done if you'd been in the... I would have been discussing in March and April and May last season with my manager, with my sporting director and definitely with my owners, that it is inevitable that there will be bids for our best player this summer. If we don't think we can keep him because the salary on offer from clubs with twice our revenue will inevitably be beyond our pay level, then we need to get this deal locked up privately and early and simultaneously lock up our replacement, which, again, this isn't hindsight, it's foresight.

29:20We know that Eketike was their primary target. They now have Ross Wilson's come in, Hopkinson's come in. Yes. Do you think when we head towards this summer, where the chances are they're going to be people looking at Tonali in a way that dance has already started? We know that. That's just in this window it started. Absolutely. Whether it's going to be Juventus, whether it's going to be Arsenal, whether it's going to be Manchester United, who might go for Anderson, it's going to be a busy summer. And then is Bruno Grimarić settled? Every time he talks, Roxy obviously sounds absolutely embedded in there.

29:51You wait till he gets in that Brazil squad. Well, absolutely, we'll see. And then Anthony Gordon as well. In a way, they're those three gems. How many of them do you think will be at Newcastle at the start of next season? Well, I think actually two things. Firstly, the answer is definitely not all three. So I think this is the moment. This is the inflection point. We're saying, aren't we, that in essence, from the summer of 24, when they hit the buffers in FFP, through to the inexplicable summer of 25, where the owners took no action on replacing and filling the void left by Amanda, left by Dan, left by Paul, left by Darren, and left Eddie on his own.

30:40They now have, in principle, a CEO, a sporting director. We've seen this movie. Last year it was Izak. It's a black and white movie. This year, it's a black and white movie. Very good age. This summer, it ain't just one player. It's at least Grimma, Reich, Gordon and Tonali. And the acid test of this new regime is whether they get their act together in advance and anticipate and plan and figure out which of those three that are going to let go. You cannot keep all three. and in the world of FFP actually selling skillfully for profit is a core competency of a well-run football club. And so Piff, in a way, has to get more involved, but they also have to keep an eye on Eddie because we know what a good manager is.

31:25He showed that again the other night. You saw him go across the pitch at Tottenham Hotspur. You saw the reaction of the 33 ,000 Geordies in the corner and doubtless scattered all around the world, absolutely showering him with love. But you also know that there will be other people who will be looking at Eddie Howe as well as those players in the summer. I think you're quite right. Tray Secret, when I was at Villa in 2018 and about a month after I joined, we were in the market for a manager. It's when Dean actually joined. The first person I called was Eddie Howe. That's how long I've admired his work.

31:59And I think just today in this conversation, how on earth Eddie got Champions League and fifth last year after three windows without a single signing. None of his rivals would survive a period like that. So his record is impeccable. But, and I'm going to say it, I'm going to say it. I heard his speech earlier in the week where he said that if he didn't think he was the right man for the job, he'd go. And I believe him. But the question is not Eddie. The question is the job. Eddie's job is coaching footballers, you know, just on-field decisions, selection they absolutely dominated Spurs in a key game that's where he's in his element but Eddie running recruitment running off-field activities trying to secure replacements for his star striker with the best will in the world that's a job where he needs professionals doing that 24-7 he inputs, he's got a great eye for talent but he shouldn't be actually running around the supermarket it himself on a trolley dash.

33:07Just very quickly. And that's on PIF. Yeah, because we need to move on to Leicester City. But just on PIF and just on the Saudis, you would have been in the room when the takeover was mooted at the Premier League. Did you have any issues with the possibility of the Saudis coming? In terms of, if you look at the latest Amnesty International report into the Saudis, I mean, it makes fairly grim reading. I understand the trading element. Was it£16 billion in the last four quarters we've done of trade with them? They're big allies. But it is an issue. Did you have an issue? Look, I don't actually know whether this is in the public domain or not, but people have often asked me, why didn't you stop that takeover?

33:54Could you have stopped this takeover? But the answer is that, you know, 18 clubs got an email saying Mike Ashley has sold his shares in Newcastle United to PIF. Fait accompli. And that was from the Premier League? So there was no discussion. There was no vote. It was totally and completely out of the blue. This was a year after their interest was first mooted and there was famously legal toing and froing between the Premier League and the Saudis over a piracy case. but essentially most people hoped and believed it had gone away because anyone could see that it would be a very, very, very significant moment in the history of Premier League to have the world's biggest investment fund own a club like Newcastle.