Newcastle United are a 'big club' with huge potential but Wolves chairman Jeff Shi has warned that the Magpies will 'reach a ceiling sooner or later' because of financial restrictions.
The club's owners spent £93m on Kieran Trippier, Chris Wood, Bruno Guimaraes, Dan Burn and Matt Targett (loan) in their first window last January in a bid to beat the drop and Newcastle will strengthen once more in the summer. However, it is important to stress that the hierarchy are acutely aware of the need to comply with the Premier League's profit and sustainability regulations, which only permit top-flight clubs to lose a maximum of £105m over three seasons.
Newcastle's owners also hope to one day compete in Europe so they are taking note of UEFA's new financial sustainability rules, which will eventually limit clubs playing in European club competitions to spend 70% of revenue on wages, transfers and agents fees by 2025-26. Newcastle are currently running at about 65% when it comes to wages to turnover alone and part-owner Amanda Staveley has previously admitted that figure is 'probably too high'.
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While revenues will be boosted by future sponsorship deals, the Magpies are going to have to be particularly smart when trading in the coming months. It will, therefore, be a summer of evolution rather than revolution on Tyneside as Eddie Howe's side look to attack the cups and break into the top 10 next year.
Newcastle actually came remarkably close to finishing in the top half this season, despite failing to win any of their opening 14 league games, and the black-and-whites ended up just two points off 10th-placed Wolves in the table. However, Shi does not appear to be overly concerned just yet.
"If the Premier League, if Europe, are clear about the rules, the regulations, the ceiling is always there," he told Wolves TV. "Newcastle is a good club, a big club, and maybe if you're talking about the stadium capacity, commercially, just about the club itself, they have slightly higher potential than us but not too much. Still not comparable to the big six.
"Maybe they have a bit of a high ceiling there, but not too much so I don't see a difference between us too much. They can spend more, but, also, they will reach a ceiling sooner or later.
"They will face the same challenge as we are facing now. I see them to be compared to us, but not someone we cannot compete with."
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