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- Premier League clubs voted to revamp financial regulations for next season
- Hopkinson targets UK£550m in annual revenues
- Club to discuss stadium dilemma in PIF meeting
Newcastle United chief executive David Hopkinson hopes to increase the club’s revenue by more than UK£100 million (US$135.8 million) to take advantage of new financial rules that he believes will allow the club to narrow the gap with the Premier League’s elite.
Premier League clubs voted to introduce a new squad cost ratio (SCR) system for next season, which links spending limits to revenue rather than impose a hard cap on permitted losses.
Teams will be allowed to spend up to 85 per cent of revenue on on-pitch expenditure, such as transfer fees, wages and agents’ costs. SCR replaces the existing profitability and sustainability rules (PSR), which only allowed losses of UK£105 million (US$142 million) over three seasons.
Hopkinson told SportsPro London that existing financial regulations were a “regime designed to keep everybody where they are” and that Newcastle voted for change because SCR was a “better system” that allowed teams to be rewarded for generating more revenue.
“We’ve got to generate more revenue, give ourselves a bigger envelope to work with,” he said. “SCR will give us the opportunity to invest away from the pitch to unlock revenue generation capabilities we can then deploy on the pitch. It’s frustrating that you can’t just go buy a trophy, dump the money into your squad – the rules prohibit that.
“The other reason we prefer SCR to PSR is that it’s the system Uefa uses. Quite frankly, the simplicity of working under one financial regime and not two, is important to us.”
Saudi Arabia’s Public Investment Fund (PIF) have spent invested significantly on transfer fees and wages since acquiring the club in 2021. Last year was the first time Newcastle posted a profit since the takeover.
The Magpies generated a club record of UK£335.3 million (US$455.5 million) in revenue, which included a 44 per cent increase in commercial income to UK£120.1 million (US$163 million). Hopkinson is optimistic of further revenue growth and wants Newcastle to be regularly competing in the Uefa Champions League and challenging for the Premier League by 2030.
To facilitate this, Newcastle will need to invest further in their playing squad, something that SCR will make easier. Increasing matchday, sponsorship and merchandise is central to this vision, with Hopkinson believing all were “significantly underperforming” when he joined the club last year.
“If we execute superbly, there might be UK£100 million in annual run-rate revenue that could be unlocked,” Hopkinson said. “Our revenue is worth about UK£400 million, that could become UK£500 million and stretched further to UK£550 million.
“Then we’d enter the conversation [of competing at the top]. That’s our ambition and it’s our job now to go unlock this [income].”
A delegation from the PIF is currently meeting with Newcastle this week to discuss the club’s strategic priorities going forward.
“We’re considering what to do with our stadium, whether that’s a significant renovation or a brand-new stadium,” Hopkinson said of the meetings. “We need more capacity to drive that revenue.
“Our training ground’s very good but it’s not as good as others. To achieve our world class ambitions, we need world-class infrastructure to support that. These are the types of conversations we’re going to have over the next couple of days.”
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