With Sean Longstaff closing in on a move to Leeds and expected to complete his medical soon, it’s a good time to look at the details behind this sale and what it could mean for future spending power in the world of PSR.
A £10m bid plus £2m add-ons was rejected last week, but a Tuesday night update from David Ornstein confirmed that a £12m fee has now been agreed, with the potential for £3m more in ‘achievable add-ons.’
The Athletic have now explained what this sort of fee, in PSR and ‘pure profit’ terms, could mean for Newcastle United and our spending power over the coming weeks.
A major boost to finances?
Sean Longstaff’s sale could open the door to considerable investment over the second half of Newcastle United’s summer transfer window.
On the fact of it, a guaranteed £12m doesn’t seem like a huge influx of cash, but The Athletic’s Chris Waugh has explained why it could actually fund a significant signing.
Based on a £10m fee, Waugh explains that Longstaff’s book value and academy status could offset a £50m signing (based on them agreeing a five-year deal). On the basis of a £12m sale, this would equate to a £60m arrival on the same long contract.
‘Any fee received for Longstaff would represent ‘pure profit’ for PSR because he came through the academy, meaning Newcastle would bank all of the money’, Waugh states.
‘Given how sales and purchases are registered in the accounts, theoretically, a £10m-plus fee received for Longstaff would practically offset a £50m outlay on a signing who agrees a five-year deal because the cost of arrivals can be amortised over their contract.’
As Waugh goes on to say, this is why Longstaff has been ‘long been identified as Newcastle’s ‘most saleable asset’’, even if Eddie Howe believes the 27-year-old is worth more than the £15m package agreed with Leeds.
This sale and the financial boost could be just what our stuttering summer needs, whether it helps fund Longstaff’s replacement, pushes us to sign a top class centre-back, strike a deal for James Trafford or land a quality second striker who may have been previously deemed too pricey.
Howe wants replacement
In the same piece, Waugh insists that Eddie Howe will ‘push’ for a Longstaff replacement to ensure our midfield depth is not compromised by his exit.
It’s considered the right time to sell or all parties given his contract situation, lack of game time recently and ‘pure profit’ status, but Newcastle can’t weaken another area of their squad ahead of such a busy season.
Waugh writes: ‘Should Longstaff be sold, Howe will push for a like-for-like successor, which may prove costly, especially if they boast similar Premier League experience.’
Replacing Longstaff won’t be cheap, but his sale still makes sense when it could fund a £60m signing over five years.
You realise that any player sold beyond their original contract length period is “pure profit” in PSR right? Same as any academy graduate. There’s nothing super special about academy graduates that unlock more funds.
For example: Miguel Almiron represented pure profit
Trippier would be pure profit if sold now
Seems like an odd thing to zero in on.
Haz(Quote)
Howe wants a replacement – in 2030 the rate we move
Bob Dodsworth(Quote)
I am sick of this nonsense being pushed out by people who probably haven’t even got a GCSE in maths. Let’s say we sell our entire academy squad for £200m. All “pure profit” so on this logic we can spend £1billion on new players. Fantastic. So the £200m amortization cost for year 1 is covered by the sales. How on earth do we cover the next £800m over 4 years? We then have to find other income don’t we? And we would never get an increase like that
Keith(Quote)