Russell Martin will be desperate to bring in some attacking talent before the end of the transfer window to help bolster Southampton’s Premier League survival chances.
Southampton have spent just over £55 million so far this summer as they look to build a squad capable of staying in the Premier League.
That total consists of eight first-team signings, with £38 million of that going on last season’s loan duo Taylor Harwood-Bellis (£20m) and Flynn Downes (£18m).
Those two players aside, Russell Martin has seen owners Sport Republic spend relatively modest fees, with £7 million spent on Ben Brereton Diaz, £5.88 million on Yukinari Sugawara and £3 million each on Ronnie Edwards and Nathan Wood.
The other two arrivals – Adam Lallana and Charlie Taylor – were both free.
Martin wants attacking reinforcements, with players that can be the difference maker in the final third often coming at a premium, so Southampton fans will want to know how much their side is able to spend in order to comply with Premier League Profit and Sustainability Regulations (PSR).
Finance expert explains current Southampton PSR situation
In order to understand where Southampton stand with their finances ahead of the August 30 transfer deadline, Southampton FC News spoke to finance expert Adam Williams.
First, Williams explained how PSR works, as well as the impact of a year in the Championship, as he said: “Premier League clubs are allowed to lose a maximum of £105 million over a rolling three-year period, as long as the bulk of those losses are secured by an owner.
“Southampton, however, have spent one of the last three seasons in the Championship, so their maximum allowable loss is lower at £83 million.
“The club posted a pre-tax loss of £87 million in 2022/23, which is the only year of published accounts that is relevant in the current three-year monitoring period.
“In isolation, that would put them already over the £83 million threshold, but you then have to add back PSR-deductible expenses such as youth and infrastructure investment.”
A complex issue, Williams then went on to set out what this means for Southampton, explaining: “The Saints have a Category One academy, so you can assume £10-20 million of deductible expenses there.
“Take off another £4-5 million for community initiatives and women’s football and you’re at around minus £60m.
“For the 2023/24 season, Southampton made massive profit on player sales which they were able to book immediately.
“I suspect they will have recorded a modest profit for the campaign, which probably gives them a fair bit of breathing space in terms of the £83 million loss limit.
“In terms of their net spend based on headline figures we have seen, Southampton’s negative £45 million is actually one of the higher figures in the division.
“Eight clubs have a positive net spend, and I think that illustrates that there has been a lack of liquidity in the market as a result of the absence of massive Saudi spending and the issues with the French TV deal.
“And while those figures aren’t the ones that count to PSR – it is amortisation that does – Southampton’s net does give an indication of the room they have to spend.
“Their PSR headroom will be extended if Armel Bella-Kotchap is sold, which would go immediately towards their PSR calculation.
“So I think they have the freedom to spend without player sales if the owners are willing to put the funds in. Whether they do or not is another matter.”
Southampton can push for signings even if Armel Bella-Kotchap sale falls through
It has been widely assumed that Southampton are likely to have to need to sell to buy for the remainder of the transfer window.
However, Williams’ explanation shows that this is not necessarily the case.
The fact remains that there are players that Southampton want to sell to raise funds, though, with Bella-Kotchap and Paul Onuachu the most obvious two.
Bella-Kotchap was on the brink of sealing his £13 million exit to Hoffenheim prior to a heart issue being picked up in his medical this week, whilst Southampton are still waiting for Trabzomspor to make a respectable offer for Onauchu to return.
Martin is a big admirer of Celtic attacking midfielder Matt O’Riley but a deal looks unlikely given he will cost somewhere in the region of £30 million.
At least one winger is needed in addition to an attacking midfielder, with a goalkeeper, striker and cover for Downes also on the agenda.
Martin will hope the board manage to shift one or two players for decent fees as soon as possible to add to his transfer kitty ahead of what will be a difficult season in the Premier League.