Extra funds can be raised through player sales, with a significant clearout hoped for, particularly as players like Isaac Hayden, Jamal Lewis and Ciaran Clark have not even been included in the 25 man squad since January.

Newcastle need to cut unwanted players from the wage bill and keep plenty of space available under FFP, which will mean they will also be able to recruit next January if targets are available.

There is prudence in Newcastle’s approach but also common sense, something Howe has stressed since he became manager.

They want to evolve into one of the top sides in England rather than simply spend millions on new players trying to change overnight, which means handing out vast sums of money in fees and wages for big names.

This will come as a surprise to many, including fans and pundits, who continue to describe Newcastle as the “richest club in the world” because of the financial backing of Saudi Arabia’s Public Investment Fund.

But that has never been the business model discussed by PIF, Staveley and consortium partner Jamie Reuben.

The club are already aware of the restrictions FFP puts on them and that is going to be an issue this summer at least.

Although Newcastle are backed by PIF, which is one of the largest sovereign wealth funds on the planet, the club have not announced any new sponsorship deals since the takeover in October.

Which means their current income levels – unless money is pumped in by the consortium – are roughly the same as they were under former owner Mike Ashley.

In turn, Newcastle will not be expecting a top-six place in the Premier League next season, presuming they stay up in May, instead looking to secure a top-10 finish and avoid any sort of relegation worries.

Newcastle’s summer transfer budget explained

By Luke Edwards

Why has the richest club in the world got such a tight transfer budget?

Newcastle have very wealthy owners in the form of Saudi Arabia’s Public Investment Fund and are extremely ambitious in terms of what they want the club to be. The plan is for Newcastle to become one of the best teams in Europe, but that is going to happen through gradual growth, rather than rapid, lavish spending on inflated transfer fees and wages. 

There is an emphasis on organic, sustainable progress which will take longer. The board, though, hope this also makes the foundations put in place for future success far more secure.

In turn, there is only so much money Newcastle’s new owners can just pump into the club under Financial Fairplay rules (FFP). 

Newcastle could have spent as much as £190 million in January under FFP, but instead spent around £90 million. 

But the new owners also had to put in a lot of money to cover running costs, with the public face of the consortium, Amanda Staveley, revealing they had to put in more than £45 million into the club’s bank account shortly after the takeover had been completed last year. 

This is all taken into consideration under FFP. It is thought more money has been put in to help with running costs since then too. Conservative estimates suggest the club’s wage bill increased by more than £200,000-a-week in January. Covering running cost losses drains the money available for transfers.

Are new sponsorship deals a way around this?

Yes, of course, but as things stand, Newcastle have not announced any new commercial deals. That means income streams remain roughly the same as they were under former owner Mike Ashley.

Until the consortium secures more lucrative sponsorship deals, which is something they are working on and hope to make some breakthroughs with soon, they are not able to match the sort of spending people expect from the so-called “richest club in the world.”

Manchester City have become the wealthiest club in the game according to the latest figures released by Deloittle largely because of the sponsorship deals they have done with companies in Abu Dhabi, where owner Sheikh Mansour also happens to be Deputy Prime Minister.

It is expected that a number of Saudi Arabian companies will eventually announce commercial relationships with Newcastle United to elevate income streams to something like City’s level, but they have not been completed yet.

As things stand, there are five English clubs among the top ten richest clubs in Europe, with City top, Manchester United fifth, Liverpool seventh, Chelsea eighth and Tottenham 10th.

Newcastle, in the last year of the Mike Ashley era, were down in 28th place in the rich list, six places below Leeds United. That is where the club’s current income, outside of owner investment, remains without new sponsors. That is an issue for Newcastle’s new regime under FFP this summer.

Surely Newcastle still need to improve their squad?

Yes and they will, but it will be done sensibly. Newcastle will be active in terms of recruitment again and will sign between three and four players before the start of next season.

They signed five in January at a rough cost of around £90 million and could go as high as that again if the deals are right – meaning they can stagger payments and insert clauses which will spread the cost over a longer period. Managing the balance sheet in this way is a challenge.

Most of the January deals were structured with a smaller up front payment than the headline figure. For example, Bruno Guimarães will eventually cost Newcastle £43 million, but that is not how much money they handed over to Lyon in January, which may have been as low as £30 mllion. Kieran Trippier will cost the Magpies £15 million, but they only paid £12 million for the England international in January. 

This is how Newcastle will try to do things again in the summer window, but it is clear the budget will be much smaller than has been hyped.

That can change if the club finds new sponsors and gets deals through the Premier League’s owner-related test before the summer window.

Newcastle need to prove that any new deals, from companies linked to Saudi Arabia, represent fair market value and are not “inflated associated party transactions.”

Although supporters are naturally inclined to focus on potential signings, the search for new sponsors and commercial partners is far more pressing for the consortium at this stage of the project.