Why the Saudi takeover at St James’ Park foundered at the final hurdle
The key figures who had been lining up to create a new future on Tyneside ➤ Almost three long years of high-finance planning, politics and back-channel talks end in failure as Newcastle deal is off
The £300million deal to buy Newcastle United – christened “Project Zebra” in a nod to the club’s famous striped shirts – was never going to be black and white.
It was always far more complicated, emotional, political – geopolitical in fact when it came to Middle Eastern relations – than that.
Now almost three years after a takeover was first mooted in October 2017 it is – finally, it seems – off.
In the end it was not the objection raised by the Qatari-owned beIN Sports over the theft of Premier League broadcast rights or a critical World Trade Organisation report or, indeed, the protests over Saudi Arabia’s human rights record that directly scuppered it.
It was the Premier League not being satisfied that the Public Investment Fund, which was taking an 80 per cent stake in the club, was independent of the Saudi state. In fact, although it has not ruled on the takeover yet, the Premier League insisted the connection had to be formally established.
“They wanted the state of Saudi to effectively be a director of the club and that was impossible. The directors’ and owners’ test was written for individuals not a state,” a senior source said.
It seemed, in fact, the Premier League did not want a club to be effectively owned by a country and wanted the Saudis to sign a socalled “Form Five”, which would have meant a state basically being bound to the Premier League’s rules. Maybe that was a tactic to ensure there was no further piracy?
At the same time, the PIF categorically insisted that although its chairman was Crown Prince Mohammed bin Salman, the deputy prime minister, it was an autonomous investment vehicle and not controlled by the state. It made its own investments, it said, with that independence in its charter.
Even the personal intervention of Yaser Al-Rumayyan, the governor of the PIF, who spoke to Premier League chief executive Richard Masters and new chairman Gary Hoffman, did not remove the impasse, while an offer of arbitration was rejected by the buyers.
It is remarkable to think that the deal to sell was struck back in March, just before the coronavirus hit, when, finally, there was a faceto-face meeting between Mike Ashley and the PIF’s representatives in Hampstead, near the Newcastle owner’s home.
After that, there was, according to sources, a degree of so-called “back-channelling” with the Premier League to establish it would be OK if the PIF became the majority shareholder, with 10 per cent being taken by RB Sports and Media, which is run by Reuben Brothers, and the final 10 per cent going to PCP Capital Partners, led by Staveley, who had brokered the deal.
What has stunned the bidders is that they felt they had reassurances of no so-called “red flags” before that suddenly changed.
The involvement of the PIF – the Arab state’s sovereign wealth fund – was huge. It was undoubtedly its highest-profile, significant and controversial attempt to move into football, which is the most followed sport in Saudi. Staveley was at the Future Investment Initiative (Saudi’s “Davos in the Desert” event) in October last year and held talks with the PIF which, sources say, was key in bringing them on board.
Questions will now be asked about the PIF’s involvement, given Sheikh Mansour, the deputy prime minister of the United Arab Emirates, was able to buy Manchester City in 2008 with little difficulty because the takeover was framed as a private transaction. Why did the Saudis not follow this model?
The plan was actually to announce a deal in January when AlRumayyan, who was to become Newcastle’s chairman, registered a company called NCUK Investment Limited, designed to buy 100 per cent of the club’s shares from Mash – Mike Ashley Holdings.
It was only on March 24 that the Premier League was formally notified by Newcastle and the buyers of their intention to complete the deal and with the paperwork finally submitted and subject to the owners’ and directors’ test.
Undoubtedly the involvement of beIN Sports, the Qatari-owned broadcaster, which lobbied aggressively against the takeover, was significant.
Above all, though, it is a huge disappointment for Newcastle supporters who, whatever the ethics of the club being bought by Saudi Arabian interests, were desperate to leave the loveless marriage they have endured with Ashley and see some serious investment in their club. Unfortunately it does not appear it will happen via Project Zebra.