Newcastle v the system - is Saudi 2030 vision unrealistic?

David Hopkinson was remarkably bullish when taking on the role of Newcastle United chief executive at the end of last year.

The Canadian reckoned he could put Newcastle "in the debate about being the top club in the world" by 2030.

After Sunday's 2-1 home defeat by Sunderland, they are not even the top club in the north east in terms of the current Premier League table.

Manager Eddie Howe, under pressure for the first time in his four and a half years at St James' Park, was asked if the Saudi Public Investment Fund (PIF) project was running out of steam.

"The club desperately want to be ambitious, but there's a limit to what we can spend," Howe said.

"I think the rules have made it very difficult - I don't know where we can beat that system."

Howe might have a point. Are the financial rules stifling Newcastle?

There is no doubt Profit and Sustainability Rules (PSR) have put the brakes on Newcastle.

It is why the Magpies support their replacement, Squad Cost Ratio (SCR), which comes in on 1 July. But will it reinforce the position of the elite?

The problem for PIF has always been that it was too late to the party.

Whereas Chelsea and Manchester City were able to spend freely to build their empire, governing bodies now have the shackles on.

PSR was put in place in 2013, well before the Saudi takeover.

Though Manchester City do face 115 charges over alleged spending breaches between 2009 and 2018.

PIF spent £404.7m in the first three years after buying the club in 2021.

But by bringing in only £50.4m from sales the stark reality of PSR hit home in 2024.

Newcastle had to sell Elliot Anderson (£35m) to Nottingham Forest to help stave off a points deduction.

They lost a high-quality academy product, a lad from Whitley Bay who came through Wallsend Boys Club.

The 23-year-old is now an England regular and very likely to go to this summer's World Cup.

BBC Sport understands that Forest would want £80m should he be sold this year.

PSR focuses on limiting losses, but SCR is about income. In short, the more you generate the more you can spend.

In the Premier League that will be 85%, though it is possible to spend as much as 115% in the first year and pay what is in effect a luxury tax.

On the surface, this sounds great. After all, Newcastle have recorded record revenues in each season under PIF.

Football finance expert Kieran Maguire says that for the Magpies it made total sense.

"The plusses outweigh the minuses," Maguire told BBC Sport. "With having a bigger stadium, hoping to either expand the stadium or move, they see the longer-term benefits of SCR."

But once you look under the hood you see that SCR might reinforce the financial dominance of the Premier League's established order.

Newcastle may be in favour of the new rules, but they will still be well behind on spending power.

Analysis by Swiss Ramble, external shows that, based on the 2023-24 accounts, the Magpies' SCR budget ranked ninth (£243m) in the Premier League.

Compare that with the big six: Manchester United (£597m), Manchester City (£580m), Arsenal and Liverpool (£449m), Chelsea (£407m) and Tottenham Hotspur (£397m).

Unless Newcastle generate higher income, the status quo will always be able to spend more, paying higher wages.

"Look at Newcastle's wages of £220m [in 2023-24]," Maguire added. "It's £100m less than Arsenal and Chelsea. And it was £200m less than Manchester City. So that is the problem.

"The desire to narrow the gap is a challenge. Football is a talent game. Talent follows the money in terms of both recruitment and wages - and it makes it difficult for Newcastle to make that step up."

Newcastle face a battle to qualify for Europe - but not making it could be a positive.

Stay with us while we explain.

Uefa's SCR system limits clubs in European competition to spending 70% of their income.

A club not in Europe would be able to go to 85% or above under the Premier League rules, designed to give teams not in continental competition some extra space to compete.

To show the impact by analysing the 2023-24 figures, West Ham (£267m) and Brighton (£276m) would have had bigger budgets than Newcastle, had these rules been in place.

And this is further underlined by another quirk which means being in the Conference League could be the worst thing financially.

The winners of the competition only earn about £20m, yet must work to the 70% rule. The difference between 70% and 85%, based on the 2023-24 figures? At least £33m less to spend.

Newcastle would prefer the riches of the Champions League, though even that competition further entrenches the position of the biggest clubs.

Uefa gives bonus payments under the 'value pillar', partly based on a club's coefficient. It rewards historical success.

For this season's league phase, Swiss Ramble calculated, external that Newcastle received £47m. But Arsenal, Chelsea, Liverpool and Manchester City were all paid in excess of £79m.

Everywhere you turn it seems the football establishment wins again.

There is one clear solution for PIF - increase matchday income by investing in the stadium. The expenditure does not count towards SCR.

Newcastle's matchday revenue was £50m in 2023-24, compared with £102m for Liverpool and £137m for Manchester United.

The 52,000-capacity St James' Park must be revamped - or they need a new ground.

Hopkinson told the Financial Times Business of Football Summit last month that Newcastle had not "maximized the opportunity before it".

"If we want to become an elite club, we need to behave like an elite club," Hopkinson said.

It is going to take years to reap the rewards and there are no signs of plans being submitted, let alone spades in the ground.

Performances on the pitch, with the club 12th in the Premier League, indicate that spending big again will be a necessity.

That is after Newcastle's outlay of £242m last summer - their most in one transfer window, although they did recoup £125m from the sale of Alexander Isak to Liverpool.

SCR will create some more scope, but not enough to be transformational - especially when their rivals have greater spending power, as Newcastle discovered last summer. They missed out on Hugo Ekitike to Liverpool, Benjamin Sesko to Manchester United, and Joao Pedro and Liam Delap who both joined Chelsea.

The appointment of Hopkinson indicates that PIF knew there had to be a change in commercial direction.

But the laws of football's ecosystem dictate that without action the club could fall further behind.

Without a new stadium, it is hard to see how Newcastle United can spend more and become the "top club in the world", despite the incredible riches of their Saudi owners.