Will Bruno Guimaraes (need to) be sold? Entering a dangerous phase… | OneFootball

With Bruno Guimaraes we are in a very dangerous phase, where he has a release clause (widely reported / claimed to be £100m) that exits until the end of June.

A penny for Bruno’s thoughts as he looked at the TIFO at the Gallowgate End last Saturday, Wor Flags paying homage to our exquisite Brazilian and quite right too

Bruno Guimaraes being one of the finest players to have donned the famous black and white striped jersey in my lifetime (I was born six months before that famous evening in Budapest when Newcastle United beat Ujpest Dozsa to lift the Fairs Cup in 1969).

When Newcastle United published its accounts for the year ending June 2023, Chief Executive Darren Eales made the point that the Premier League’s profit and sustainability rules had left Newcastle United facing the prospect of potentially ‘churning players’ in the future, even star players, despite having the richest owners in world football. ‘Churning players’ basically meaning selling players in order to bring in other signings that strengthen your squad even more, especially with the current PSR/FFP rules and amortisation, meaning seeing a player for a certain amount, could allow you the ‘headroom’ to sign new players for far more than the incoming transfer fee agreed.

Eales going into detail: “If you are churning players you create more headroom. We have seen lots of examples of this elsewhere. Philippe Coutinho at Liverpool and they brought in Allison and Virgil Van Dijk. Jack Grealish going from Aston Villa and they have reinvested and reloaded. If you trade players on it creates more headroom. You have to keep growing that headroom, increasing commercial revenue and player trading.”

I wrote an article for the Mag in February that took a closer look at Newcastle United’s financial statements and what I highlighted in that article was that the cumulative value of the pre-tax losses NUFC had racked up in the two years to 30 June 2023 amounted to £144.1 million.

When set against the Premier League’s profit and sustainability rules that allow £105.0 million of losses across a three-year time horizon before the kind of sanction imposed on Everton and Nottingham Forest this season kicks in, that is not good news. At first glance, the club needs to make a profit of just under £40 million for the year ending June 2024 in order to stay clear of trouble, hence the comment from the Chief Executive.

I said at the time that I wasn’t surprised by his comments. Whilst many have suggested it was unhelpful, I personally thought that in the context of Newcastle United’s financial performance, it simply reflected the stark reality of the PSR straitjacket we find ourselves in. Furthermore, I didn’t think Eales’ comment equated to a lack of ambition. After 14 years of Mike Ashley, you only have to look at player acquisitions since the takeover, our relegation escapology act, a Wembley final and a fourth-place finish that saw the return of Champions League football, to see the ambition, and the most recent set of published accounts reinforce this.

In the year to 30 June 2023, turnover was up 39% on the prior year (from £180 million to £250 million), whilst expenditure also increased significantly (by 36%, from £243 million to £332 million, with wages and player amortisation accounting for 90% of the increase in costs).

I fully expect this year’s accounts to show further growth in revenue. Despite that cruel exit from the group of death in December, Champions League football will have brought in an estimated £40 million. The Commercial team has also began undoing the damage that Mike Ashley did. The Sela front of shirt sponsor will add to the coffers and whilst the Adidas deal will probably feature in future sets of accounts, that’s something else to look forward to in terms of revenue potential.

Despite this, NUFC’s turnover seriously lags those around us. Both Manchester clubs generate around £700 million (Man City a tad more and Man U a tad less) whilst Liverpool, Arsenal and Tottenham are all earning double that which Newcastle United earn.

The £144.1 million loss in what the accounting geeks label T-1 and T-2 does of course, need to be adjusted for what is referred to as infrastructure expenditure, although within T-1 and T-2, this was only a cumulative £28 million, which very crudely means that cumulative net losses reduce to £116.1 million. Assuming this is correct, that would still mean Newcastle United needing to post a pre-tax profit in 2023/24 to avoid being caught out by profit and sustainability rules. Put another way, Newcastle United is definitely close to the three-year limit imposed by the Premier League.

Which brings us back to whether financial performance will improve in the current year, consistent with Newcastle United not having to offload one or other of its star players.

I said in the article that covered the club’s latest set of accounts that for me, the jury was well and truly out on whether we might have to move someone of Bruno Guimaraes’ calibre on.

Obtaining £100 million or so would generate significant financial headroom, particularly if the book value of the player concerned is considerably less, a function of both the cost of attracting him to Newcastle United in the first place (£41.65 million in Bruno’s case), as well as the amount that has already been written down in amortisation (presumably, over 40% given Bruno signed in January 2022 on a five year deal). The profit on the sale would hit the P&L, thereby ensuring the three-year profit and sustainability limit wasn’t breached, and assuming money for subsequent transfer fees is really no object, this could potentially mean three to four quality acquisitions, depending on wage demands and the amortisation associated with the new recruits.

I don’t want to be the harbinger of doom here, but if we don’t sell Bruno, I can’t see much happening in the way of new recruits being brought to SJP over the summer.