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Three clubs benefit from intragroup sales

At Aston Villa and Newcastle United, the internal restructuring of assets by club owners generated combined paper profits of £247million. At Everton, who still posted a loss, similar moves generated £49m. Strip those out and Premier League losses topped a billion pounds.

In essence, the moving around of companies or assets within the wider group controlled by each club’s owners created accounting profits. Those profits improved the bottom lines of teams who would otherwise have each posted pre-tax deficits beyond £50million.

On Tuesday, it was revealed Newcastle turned an otherwise record loss into a £34.7million profit by ‘selling’ their home stadium St James’ Park and adjacent land to a new company three days before the club’s accounting year-end date last June. The company was set up by Newcastle’s ownership group, headed by Saudi Arabia’s state Public Investment Fund (PIF).

The latter point was seemingly enough to obscure, for some, what the actions of last June now mean: Newcastle United no longer own St James’ Park.  It will help Newcastle comply with the Premier League’s profitability and sustainability rules (PSR), and it’s not like they are the first to exploit a loophole. 

One reason Villa couldn’t have done the same thing with Villa Park last season is that they had already done it six years earlier. In May 2019, their owners at NSWE shifted the club’s home into its own newly formed company, ‘spending’ £56.7million on it in the process, in a much more blatant circumnavigation of financial rules.

The internal sales of two more women’s teams were highlighted this week, at Villa and Everton.

The challenge for all three of these clubs is to try and break into the ‘big six’ when there isn’t anything approaching a level financial playing field.

PSR will disappear domestically at the end of this season, removing the appeal of intragroup sales. But its squad cost rule (SCR) replacement tethers spending to revenue, baking in advantages for the richest. The competitive gulf stands to get even wider.

 

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