Fair Market Value now for Newcastle United – Will radically alter the PSR position | OneFootball

Newcastle United and Fair Market Value (FMV).

Along with PSR (Profitability and Sustainability Rules), FFP (Financial Fair Play) and the rest, FMV and APTs (Associated Party Transactions) something that Newcastle United fans came to routinely see debated.

This is reality.

Everybody having to cope with becoming amateur accountants and legal experts, to try and understand what is happening, what is likely to happen in the future.

When any of us first walked into St James’ Park back in the day, never did we imagine that this would become the reality of supporting Newcastle United in the future.

Whilst FFP and PSR has remained a constant as time has gone on, FMV and APTs have taken a back seat. Rarely, if ever, now talked about.

A reminder about what exactly Associated Party Transactions and Fair Market Value are all about

When Newcastle United were freed from Mike Ashley’s control in October 2021, Premier League clubs panicked.

Terrified that Newcastle United would now become a serious threat, unlike the joke club that had existed for a decade and a half under Ashley, the Premier League rushing through measures to try and prevent this happening.

Amongst these, the Premier League clubs hastily voted in and introduced new rules on 14 December 2021, which required all clubs to prove that their commercial deals when it came to APTs (Associated Party Transactions), represented ‘fair market value’ (FMV).

Associated Party Transactions (APTs) are where the owner(s) of a Premier League club makes commercial deals with other companies that they also own, either entirely own or in part.

So whilst Premier League clubs were over the moon to see Mike Ashley use APTs to benefit himself at Newcastle United’s expense for a decade and a half, using NUFC to promote his retail empire for zero money going into NUFC for so many years…when it came to things happening in reverse rival PL clubs not quite so happy.

The Premier League clubs specifically wanting to stop Newcastle United doing megabucks deals with other businesses that are also under Saudi Arabia PIF part or whole ownership. These APT deals could still be done with other Saudi Arabia PIF business interests BUT Fair Market Value had to be shown. In other words, Newcastle United couldn’t do commercial deals with PIF businesses at a price that was considered more than could have been generated with non-PIF companies, so Fair Market Value but not Above Market Value.

So who decides what the Fair Market Value is?

At the time when the new rushed in rules were put in place in December 2021, it was announced that the Premier League approval process would require clubs to submit evidence to support their ‘fair market value’ assessments. The board of the Premier League to then be advised by an ‘independent assessor’ when judging each deal.

The Premier League also announced that a databank would be set up of all previous commercial transactions entered into by PL clubs, that information then used to help make decisions on future ‘related party transactions’ that clubs wanted to enter into.

After a decade and a half of Mike Ashley, what was Fair Market Value for Newcastle United?

This is the thing.

Mike Ashley had bought a club that played regularly in Europe, had been runners’ up twice in the Premier League, had finished top six plenty of times under the previous ownership, reached cup finals, had a stadium that only seven years earlier had been much enlarged and modernised, a full St James’ Park.

Mike Ashley then turning it into a club that reached Europe once in his decade and a half, battle relegation most seasons, had been relegated twice and heading for a third under Ashley until the takeover, had the lowest spend of all PL clubs on the infrastructure during his decade and a half, commercial revenues a joke and didn’t rise in his decade and a half whilst boom time everywhere else, as he took all the commercial benefits he could for his own personal benefit and ended up with dire main outside sponsors such as a payday lender and an overseas betting company nobody had even heard of. Ashley drove fans away, forcing a boycott to which he responded by giving 10,000+ free season tickets away to fill the seats next to his repulsive adverts, United never getting past the quarter final in any cup competition, whilst the playing squad became relegation certainties (again) due to lack of investment.

So we get to the October 2021 Newcastle United takeover, rival Premier League clubs rush in these new rules which they laughably deny were just due to the threat now posed by NUFC. So if the new owners wanted to do deals with other Saudi Arabia PIF owned companies, what Fair Market Value could be shown?

What was the value of the Newcastle United brand after a decade and a half of Mike Ashley?

You have to laugh really.

Yet another act of Mike Ashley revenge, after he had left. He had wrecked a once proud club and as a brand, Newcastle United a total joke.

What existing commercial deals, which ones in the past, could the new Newcastle United owners point to, to justify Fair Market Value at NUFC?

The club a total shambles on and off the pitch and facing what looked certain relegation as they inherited a dire mess from Mike Ashley.

Four years after the departure of Mike Ashley, what is Fair Market Value now for Newcastle United?

This is what I never really see discussed.

For me, Fair Market Value appears to still be in people’s heads from back in December 2021.

What is also important to remember, is that whilst of course Associated Party Transactions could be used in the past as a means of getting through ridiculous amounts of extra cash into a club. It is also accepted that doing deals with related companies, with companies that operate in the same region, these deals can be of far greater value to those concerned, than with outside interests. In Newcastle United’s case, Saudi Arabia and Saudi Arabia PIF companies carrying far greater value for themselves if getting involved with NUFC.

The reality is that the landscape had totally changed and Fair Market Value for potential Newcastle United APTs is massively different to back in 2021.

We have no idea whether any deals have been knocked back by the Premier League assessors these past four years. This is all done in private, on a confidential basis. We have seen Sela become the main shirt sponsor at £25m per season two years ago but we have no idea whether the Premier League turned down a higher valuation, whether Newcastle United had Sela prepared to pay more than?

What we do know is that commercial revenues have rocketed at other Premier League clubs and that this has been the biggest factor in driving the usual suspects so far ahead of Newcastle United when it comes to financial power.

These past three and a half years have seen Newcastle United have the third highest points total across the second half of the 2021/22 season, finish fourth and qualify for the Champions League in 2022/23 and get to a Cup Final, play Champions League football in 2023/24 and finish seventh in the Premier League despite the worst ever season for injuries in the club’s history, then in 2024/25 win a Cup Final and qualify once again for the Champions League via top five in the Premier League.

On the back of all that, what is Fair Market Value now for Newcastle United?

After a decade and a half of just existing, Newcastle United now regular challengers towards the top end, two cup finals in three seasons, winning a trophy three months ago, Champions League football twice in three seasons, crazy numbers of people desperate for tickets and St James’ Park always full.

The question now on Fair Market Value is…

What are the Newcastle United owners going to do about it?

Compared to four years ago, even compared to two years ago, this is a very different Newcastle United, on and off the pitch.

Quite obviously, commercial deals Newcastle United could do now, will be for amounts of cash massively higher than previously. Whether that is with other companies part or fully owned by PIF, or indeed non-associated businesses.

Things have gone very quiet on commercial deals, so will this summer be the time for that all to change and the Newcastle United owners to now realise the potential across various sponsorship/commercial partnerships?

Sela and Noon are the current main shirt sponsors, alongside Adidas as the shirt supplier.

As others have pointed out, very strange that the Newcastle United owners haven’t as yet announced sponsors for the training ground, the training kit, even St James’ Park, alongside numerous other sponsorship routes.

We all wonder what Newcastle United will/can spend this summer (and beyond).

Have the NUFC owners waited until now and we will see a whole raft of new seriously hefty commercial/sponsorship deals announced, deals that could radically alter the PSR position and seriously increase what Newcastle United can spend on new signings?