By Gavin Gibbon
How a multi-million dollar takeover of English Premier League outfit Newcastle United can help forge a mutually beneficial relationship
It’s hard to imagine members of the Saudi Arabian royal family strolling down Gallowgate, amid a sea of black and white stripes, shoulder to shoulder with a fanatic Geordie support on a freezing cold Saturday afternoon in November.
But then it was only a short while ago that it would have been difficult to picture a world heavyweight boxing title bout played out in the kingdom. And who would have thought Saudi Arabia would host the superstars from the WWE? Real Madrid v Atletico Madrid in Riyadh anyone?
The next step on that sporting journey appears to be the imminent takeover of Newcastle United Football Club, a $377m deal that is said to be in the hands of Premier League authorities before being officially rubber stamped.
During a time when the sporting calendar has been decimated by coronavirus and there is nothing to cheer about from the stands, this at least provides some interest for general football fans, and is a potential powder keg of excitement for Newcastle fans.
The Newcastle supporteers have been here before though, albeit not quite as far forward if reports are to be believed. It was only a matter of months ago that fans had their appetite whetted by talk of another “imminent” takeover, at that time by the might of the Bin Zayed Group in Dubai.
“I think it would be fair to say, to the average fan, they couldn’t give two hoots who buys the club”
In July last year, a statement from the company, released on social media via a Dubai journalist, said: “Both parties have worked diligently in finalising a deal, none more so than ourselves. We have completed every aspect required in a takeover process.
“Press claims of no bids or Premier League approval processes are simply untrue.
“The current owners have cooperated amicably throughout this process and if a deal is not forthcoming it will not be due to lack of effort from both parties.”
Amicably maybe, but no deal was forthcoming or concluded.
It proved to be one of many false dawns as they desperately seek to break free from the shackles of owner Mike Ashley. The controversial British businessman, who also has Sports Direct and House of Fraser in his extensive portfolio, has been at the helm of the club during arguably its most tumultuous period, 13 years that has seen the North East giants suffer two separate relegations before bouncing back both times to reach the promised land of the Premier League.
It would be fair to say there will be few tears shed on the Tyne when Ashley does eventually call time on his tenure at the helm of a club, which was rated as having the 19th highest revenue of any football team in the world in the Deloitte Football Money League 2020.
Newcastle United Supporters’ Trust director, Peter Maughan, a lifelong Newcastle fan, reveals he hasn’t set foot in the 52,354-seater stadium this season, a common thread among even the most ardent supporters, long disillusioned by the current regime.
In terms of future ownership, he tells Arabian Business: “I think it would be fair to say, to the average fan, they couldn’t give two hoots who buys the club.”
British brothers Simon and David Reuben – billionaire property developers with North-East links – are said to be taking a 10 percent stake in the club – but the big money is arriving from Saudi Arabia and the kingdom’s Public Investment Fund (PIF), which is said to control assets worth $400bn.
The consortium, which includes PCP Capital Partners, headed by Yorkshire native Amanda Staveley (branded a “time-waster by Ashley in 2017), has reportedly sent a 350-page document to the Premier League detailing their financial plans for the club.
“Should the deal be confirmed, much will inevitably be made of the PR and reputational advantages of it for the government in Saudi Arabia”
The document outlines ambitious plans to plough hundreds of millions into Newcastle, to create a club capable of dominating the game in England and across Europe.
An understandably excited Maughan says: “They’re (Saudis) not short of a pound or two, although that doesn’t mean they’ll be investing it all in Newcastle United. They’re the right sort of people in terms of financial status and they’re keen.”
Maughan and his ilk only need to cast their eyes just over 140 miles south-west to see what a difference a cash injection from the Middle East can make.
Since arriving to replace former Thai Prime Minister Thaksin Shinawatra – ironically Stavely helped broker the deal – Abu Dhabi’s Sheikh Mansour Bin Zayed Bin Sultan Bin Zayed Bin Khalifa Al Nahyan has poured in billions to help Manchester City win four English Premier League titles, four League Cups and two FA Cups.
Such success has caused City Football Group’s value to skyrocket to £4.8bn ($5.95bn) – making them one of the most valuable sporting franchises in the world.
While the benefits of multi-billion dollar owners is clear to football club supporters, with dreams of Messi and Co being lined up to take their place on Tyneside, it is less clear exactly what their potential Saudi owners may reap from the investment.
In the past month, the kingdom’s sovereign wealth fund has bought or been linked to plans to buy an 8.2 percent stake in cruise operator Carnival Corp; and holdings in Royal Dutch Shell Plc, Total SA, Eni SpA and Equinor ASA.
According to a report from Bloomberg, Carnival shares are already down by about a third since the kingdom’s Public Investment Fund (PIF) completed its acquisition of stock in the business last month.
Even the PIF’s more prudent attempts to diversify its exposures into businesses distant from oil demand haven’t panned out so well. A pre-listing investment of $3.5bn in Uber Technologies Inc is worth less than $2bn now. Its 38 percent stake in South Korea’s Posco Engineering & Construction Co. has lost more than two-thirds of its value since it was bought in 2015. And the kingdom managed to sell out of Tesla Inc. before its extraordinary rally at the start of the year.
Simon Chadwick, director of Eurasian Sport at Emlyon Business School, tells Arabian Business: “It remains to be seen what the precise nature of Saudi Arabian involvement is in Newcastle United. Until such times as we have signed and confirmed agreement, we should be cautious about characterising the deal as being one thing or another.
“However, if a deal is confirmed then one suspects that Saudi involvement is being driven not simply by the desire to acquire a football club but by the network of opportunities it opens up to the investors. Such acquisitions are often connected to infrastructural, real estate or trade opportunities, and this case is unlikely to be any different.
“If you’re part of this consortium, and we believe the Saudi Arabians are putting the vast amount of money in, first of all I can tell you, that they will walk into St James’ Park and they will be heroes”
“Should the deal be confirmed, much will inevitably be made of the PR and reputational advantages of it for the government in Saudi Arabia.”
The Premier League is no stranger to Saudi royalty. Sheffield United is one of the oldest clubs in the world and is owned by Prince Abdullah Bin Musa’ad bin Abdulaziz Al Saud, who also serves as chairman of the club.
While there continues to be strong ties between the UK and Saudi, with more than £600m ($744.49m) worth of arms sold to the kingdom between October 2018 and March 2019.
Chadwick says: “At one level, one is unsurprised by Saudi Arabia’s interest in football. Indeed, the country has long been trying to privatise its own elite professional clubs.
“However, moves to invest in overseas football assets are something of a surprise as there has been little evidence in Saudi Arabian policy thus far to suggest a shift in focus towards external investments. The attractions are multiple and obvious; for example, owning a football club can often be used to leverage other business relationships.
“However, what happens in the future is a moot point. With the pandemic showing no sign of abating, with oil prices tumbling and fiscal stringency likely to be an outcome, one wonders about the extent to which we should expect further such investments.”
There is only one investment Newcastle United fans are keen to see and Maughan has assured the potential new owners of a warm welcome, no matter what time of year they arrive on Tyneside.
He says: “If you’re part of this consortium and we believe the Saudi Arabians are putting the vast amount of money in, first of all I can tell you, that they will walk into St James’ Park and they will be heroes; they will be heroes immediately, because they have ousted Mike Ashley, as far as the supporters and city is concerned.
“They’ve got rid of him. They’ve done what we’ve been trying to do as fans for 13 years.”For all the latest Sport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.