Newcastle United’s financial manoeuvres have attracted the scrutiny of UEFA’s Club Financial Control Body, with the Magpies now facing the prospect of severe trading restrictions regardless of this season's final Premier League standing.
Newcastle's decision to sell the leasing rights of St James’ Park to sister company, PZ Holdings Ltd, is the particular transaction that could land the club in hot water with UEFA, according to City AM.
This 'reorganisation of assets', as described by the club, generated a £133.1m profit, allowing Newcastle to report an operating profit of £43.6m for the relevant accounting period.
Newcastle 'breach UEFA spending rules'
However, while such internal asset transfers are permissible within the Premier League’s Profit and Sustainability Rules (PSR), UEFA regulations prohibit infrastructure sales to related parties and are therefore not counted as eligible income.
Last season, UEFA set a precedent in relation to English clubs' asset transfers, rejecting the sale of Chelsea and Aston Villa's respective women’s teams as legitimate profit.
According to City AM, Newcastle could be hit with heavy fines and a mandatory 'net positive' transfer requirement, forcing them to generate more from sales than they spend in upcoming windows.
Newcastle’s dismal on-pitch form will not save them from UEFA sanctions, either.
Currently in 14th place after four consecutive defeats, European qualification looks increasingly unlikely but there is an indication via City AM that failing to reach the Europa or Conference Leagues will not exempt the club from penalties.
A final ruling on the potential breach is expected by the end of the season, leaving the club’s summer recruitment plans hanging in the balance.
Newcastle host Arsenal in the Premier League this weekend but are expected to be without talisman Anthony Gordon, who sat out the Magpies' last game against Bournemouth with a hip injury. The England international has been strongly linked with a move to Bayern Munich this summer.
Both Chelsea and Aston Villa entered into a settlement agreement with UEFA to make amends for their expenditure which was found to be in breach.
The Blues were fined £27 million, with the potential that it could rise to £60m if terms of the settlement agreement are breached. Villa, meanwhile, were hit with a £9.5m fine, that could yet rise to £17m.
Similarly, Chelsea and Villa must maintain a positive net transfer balance to register new players for UEFA fixtures.
