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 Daily Telegraph - Business - - Football - By Jason Burt

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.

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