As Newcastle United were held to a goalless home draw on Saturday in an FA Cup match against third-tier side Oxford United, there was a strangely celebratory mood among the English Premier League club’s fans.
Earlier that day it emerged that Saudi Arabia’s sovereign wealth fund was the leading backer of a move to acquire the team from UK retail tycoon Mike Ashley for slightly less than £350m.
The Public Investment Fund, controlled by Crown Prince Mohammed bin Salman, was brought to the table by Amanda Staveley, a well-connected British financier. Over the past six months, talks between the PIF, Ms Staveley and Mr Ashley have intensified, according to people familiar with the discussions.
The optimism in the stands at the club’s home stadium of St James’s Park is at the prospect of Mr Ashley’s departure. The founder of the Sports Direct retail chain is reviled by fans because of a perceived lack of investment in players that has led to mediocre performances on the pitch.
Ms Staveley’s PCP private equity firm would put in 20 per cent of the consideration for the club, according to the people with knowledge of the talks, with 10 per cent of the funds coming from her directly. The majority of funding would come from PIF. The prospective buyers have also earmarked a further £200m for new investment in the club.
Talks are at a delicate juncture. While one person said a deal could be completed as early as Tuesday, others warned that discussions may yet drag on for weeks or collapse altogether, particularly given the involvement of mercurial figures such as Mr Ashley, Ms Staveley and Prince Mohammed.
Two years ago talks between Mr Ashley and Ms Staveley collapsed in acrimony over leaks to the media after a cash offer of £250m was rejected. In the past year Sheikh Khaled bin Zayed Al Nahyan, a member of the United Arab Emirates’ ruling family, and an investment group led by former Chelsea and Manchester United chief executive Peter Kenyon have also made unsuccessful approaches over an acquisition.
“I’m just very cautious,” said one person with knowledge of the talks, adding that Mr Ashley “can change his mind on a sixpence”.
Newcastle, PCP and the Premier League declined to comment. PIF and Mr Ashley did not respond to requests for comment.
The involvement of PIF, which has more than $300bn in assets under management and has made high-profile foreign investments including the acquisition of stakes in Tesla and Uber, means the discussions are being taken seriously.
Accountants involved in auditing Mr Ashley’s retail businesses were told in recent weeks that Newcastle was “disappearing from the book”, according to a person with knowledge of the matter, in another sign that the British billionaire is finally moving to offload it.
Saudi Arabia is looking to follow a playbook adopted by neighbouring Gulf states that have already gained entry into the world’s most popular sport. A person with knowledge of Saudi plans said the acquisition had already been “blessed” by the state, with plans to introduce “KSA-type branding” on Newcastle’s black and white striped shirt.
Ms Staveley, known for her Rolodex of Gulf royals, rose to prominence by brokering the 2008 sale of Manchester City to Sheikh Mansour bin Zayed Al Nahyan, the billionaire businessman and member of the Abu Dhabi royal family.
In 2011 state-backed Qatar Sports Investments acquired France’s Paris Saint-Germain. This year Prince Abdullah Bin Mosaad Bin Abdulaziz al-Saud, a Saudi prince and grandson of the late King Abdulaziz, secured full control of Premier League side Sheffield United.
The business justification for these deals is that the valuations of leading football clubs continue to rise, in part thanks to multibillion-pound media rights contracts across Europe. But critics argue these sports investments are really designed to project soft power and distract attention from negative coverage of Middle Eastern states.
In preparation for an expected backlash about misgivings over an acquisition by the kingdom’s regime, following the international outcry after the killing in Istanbul of dissident journalist Jamal Khashoggi by Saudi agents, officials have begun drafting a letter to fans in an early bid to get supporters on side.
Another concern is whether Saudi backing could fall foul of the Premier League’s ownership rules, which were tightened in 2017 and can bar potential owners if they have committed an act in a foreign jurisdiction that would be considered a criminal offence in the UK, even if it was not considered illegal in their home territory.
Such considerations are sure to complicate any transaction.
“Football deals should be straightforward,” said one person with knowledge of the talks. “But they aren’t.”
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