Newcastle United turning into a super club is the money-spinning objective the Premier League has been built around
It has been nearly six months since Premier League side Newcastle United were taken over by the Saudi-led consortium, leading to a mixed reaction from the media for both the right and wrong reasons. While most supporters were in favor of the move, they were also wary of the human rights agenda.
Regardless, most believe that the primary goal for the club this season is to avoid relegation. Becoming the world's richest club certainly helped with that motive, and they showcased their strength in the January transfer window by spending nearly £100 million on some experienced and quality names.
Two names in particular stood out: Kieran Trippier and Bruno Guimaraes. They were targeted by elite teams in the Premier League, yet they chose to join Newcastle United. There's little doubt about Magpies being a big club, but why would such big names join a relegation-threatened club?
OFFICIAL: Newcastle United’s Saudi Arabia-backed takeover has been completed 💰 https://t.co/epraQN17ue
The answer to that is, in one word, money. Lucrative contracts and huge wages attract the best of the best, so it is no surprise that such high-profile players decided to sign for them. But this is precisely what the rest of the Premier League was afraid of.
Financial Disparity between the Top 6 and the rest of the Premier League
For the last 15 years, the Top 6, namely, Manchester City, Manchester United, Liverpool, Arsenal, Tottenham Hotspur, and Chelsea, have won the biggest trophies in England due to their financial prowess.
Manchester United are top of the Premier League, with their net spend compared to their top six rivals suggesting they should be there:
1. #MCFC - 564.71m
2. #MUFC - £501.21m
3. #AFC - £305.90m
4. #CFC - £263.7m
5. #THFC - £204.1m
6. #LFC £108.1m https://t.co/SxihF1rSFY
But this was not always the case. Chelsea would win the odd trophy and do well in the league in 1990s and early 2000s, but it was not until Russian oligarch Roman Abramovich took over the club in 2003 that they turned things around. Since then, the Blues have won more trophies than any other English side, thanks to the amount of money pumped in by their wealthy owner.
Similarly, Man City were acquired by the Abu Dhabi Group, and in a couple of seasons, they were winning league titles and trying to create a footprint in the rest of Europe. Today, they are one of the biggest spenders in world football and pay some of the highest salaries to their eye-catching superstars.
Arsenal, Liverpool and Manchester United have historically had the best teams in the Premier League and have rarely been knocked off their perch. Meanwhile, Tottenham Hotspur do not possess recent success, but are always competing for the European slots and have had historic teams in the past.
But this has created quite a bit of financial disparity in income between them and the rest of the Premier League. To shed a little light on this difference, it is important to note that the Top 6 have spent £7.45 billion on transfers since the start of the 2010-11 season while the rest of the Premier League have incurred a relatively measly £5.7 billion.
Uproar over Newcastle United takeover
When Newcastle United were taken over by the Saudi Public Investment Fund, who possess more money (£260 billion) than all the Premier League owners, it rang alarm bells in every corner of the most established league in world football.
The Saudi-led (they will be the richest club owners in the EPL) takeover of Newcastle United looks to be back on after the Saudi state resolved its issues with beIN Sports over illegal streaming of Premier League football.
Is Newcastle the next Man. City?
#TheGamePlan https://t.co/JbaeyM7BBI
Some argued that human rights issues, the country's treatment of women, and various other non-footballing aspects should be enough for the Premier League to veto the decision, but the Public Investment Fund (PIF) got the green light and turned St. James' Park into a home for the richest sporting club in the world. This decision was communicated to the rest of the league via email and there was plenty of uproar about this.
It was clear when a meeting was held among the representatives of every club to decide whether party-related sponsorship deals could be executed. This would basically entail Saudi Arabia’s national airline Saudia, for example, becoming the main sponsors of the Northeast club. It would also increase the revenue of the club quickly and also promote the airline brand globally.
Understandably, 18 Premier League clubs voted against this happening, with Man City abstaining from their vote while Newcastle United voted in favor of it. However, while this matter remains unresolved, there will be few laws stopping the Magpies from spending £150 million in the summer transfer window.
But since the takeover, several arguments have been made about it ruining the image of Premier League football and how the game could become all about money. While that could be the case, the game became about money a long time ago, and the top-flight has been built on financial objectives rather than noble ones.
Let us take a look at the breakdown of the same.
Newcastle United turning into a super club was always in the making
It is no secret that the Premier League is one of the richest sporting leagues in the world. La Liga and the Bundesliga are a fair ways behind them but there are several reasons behind it.
Firstly, the Bundesliga does not allow complete private ownership. This prevents clubs from going into debt and keeps them fan-owned. So most of their transfer decisions are also financially sensible. La Liga has its own restrictions on this avenue. The Spanish top-flight have imposed certain financial restraints on each of their 20 clubs, allowing every side to spend money on transfers and wages in proportion to their income.
However, the Premier League follows the traditional system of Financial Fair Play (FFP), which has allowed several clubs to break them by finding countless loopholes. But the reason behind all of this is private ownership and giving such owners the opportunity to make these clubs their own rather than being their custodians.
Under the beloved rule E.46 of the Premier League handbook Related Party Transactions at above ‘Fair Market Value’ can be restated downwards for FFP purposes. However, the definition of RPT’s is set by accounting rules & can be circumvented. https://t.co/j3RJlH5Ppy
Man City's owners were among the first to take advantage of this by renaming their stadium the Etihad after the latter completed the club's takeover and secured the rights for the stadium more than a decade ago. Etihad Airways also became the front-of-shirt sponsor for the club, resulting in a party-related sponsorship deal.
Since then, the City Football Group (CFG) has been expanding its ownership of clubs across the globe and at times, conducting inter transfers between two of their clubs. This made them one of the first super clubs in world football.
Chelsea are not far behind, as they have also been spending sizable chunks of cash season after season. This is despite them recording a net loss of £145.6 million for the financial year ending June 2021. But they can do so because they have the backing of a wealthy owner.
Chelsea have announced a post-tax loss of £145.6 million for the year ending June 30, 2021. The figure is in stark contrast to a £36.4m profit for the previous year, reflecting the huge financial impact of COVID-19.
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#EPL #PremierLeague #ESPNCaribbean https://t.co/7yc2YxHyjK
Manchester United, Arsenal and Liverpool have American ownership, and although they generate substantial revenue, they spend comfortably more than a majority of the Premier League clubs. Tottenham Hotspur also spend handsomely but their finances have been restricted over the past couple of years following the COVID-19 impact and the loan taken for the construction of the new stadium.
To top it off, the Premier League currently has only five local owners as all the other clubs have a majority of foreign ownership. But it is not just sporting clubs that are benefitting from such investments.
Harrods, London's most famous department store, is owned by Qatar, as is the Shard, the tallest building in the city. Qatar Investment Authority is a major stakeholder in Sainsbury's, Heathrow Airport and Barclays Bank while the UK Government announced last year that they secured £10 billion from Abu Dhabi, which will go towards the country's infrastructure, energy transition and technology.
Ironically enough, Saudi Arabia's Public Investment Fund also has investments in British assets such as the telecom industry, and Babylon, a healthcare app used by the NHS.
So what was going to stop the same PIF from acquiring a big club, especially when their fans have suffered long and hard in the 14-year reign of Mike Ashley?
If one looks at the perks of investing in a Premier League club, few would pass up the opportunity. According to Deloitte's Annual Review of Football Finance 2021, the cumulative projected revenue for the Premier League in 2022 was going to be £5450 million, with each club receiving an average of £273 million combined from broadcasting rights, commercial deals and matchday revenue.
This is after matchday revenue suffered a massive hit following the pandemic. The world-wide disease had an inverse effect on broadcasting deals as there was a larger audience to cater to once there were no fans in the stadium. Commercial deals are experiencing growth, with more and more brands wanting to align with Premier League clubs.
So, with no real financial restraints over transfers, sponsorship deals or ownership, it was an open invitation to a wealthy investment fund to acquire a club with the profile of Newcastle United.
Denouement
There is nothing stopping Newcastle United from becoming a super club and reaping the riches of European football by the end of this decade. Like several Premier League clubs, they will also find loopholes in the rules and regulations and try to sign the best players from every club in the world.
The Top 6 currently have an issue with this because there is somebody threatening their financial prowess, while the rest of the Premier League would have also rolled over and accepted this ownership had it benefitted them. Nobody is worried about the human rights issue in any country or what kind of image it would set for one of the wealthiest sporting leagues in the world.
Jurgen Klopp on Newcastle United's takeover:
"It’s basically like the Super League now – just for one club. Then Newcastle are guaranteed to play a dominant role in world football for the next 20 or 30 years." #awlive [sport witness] https://t.co/SkedJSlJuD
The decision to turn this into an entertainment spectacle which would attract money was taken a long time ago but Newcastle United have only just arrived to the party. Others will follow suit in due course and there will be little to stop any of this because sustainability is not a long-term goal for any stakeholder.
Money-spinning deals, signing the best stars, lucrative contracts, fruitful sponsorship agreements, and various other elements that fill the pockets of power-hungry owners is the only thing at stake here. Accusing Newcastle United for initiating this is hypocrisy of the highest order, for that that ship sailed a long time ago.