Newcastle back to square one after takeover bid collapses
The £300m takeover of Newcastle United came to an abrupt end in July when it was announced that the Saudi Arabia state-led consortium had pulled the plug on the deal.
Amanda Staveley, one of the proposed new owners who also played broker for the Newcastle takeover deal, cited the global uncertainty due to the COVID-19 situation and a prolonged acquisition process as the main reasons for backing out.
News had broken out in April that the Saudi government led by crown prince Mohammed Bin Salman was interested in buying Newcastle United. However, the unprecedented global situation due to the pandemic made the consortium deem the deal to be no longer 'commercially viable'.
Who proposed to buy Newcastle United?
Newcastle United's prospective buyers were the cash-rich Saudi Arabia's sovereign wealth fund- PIF who were set to take on an 80% share in the ownership of the club. The remaining 20% would have been divided evenly between Amanda Staveley's PCP Capital Partners and the Reuben Brothers.
Mohammed Bin Salman, the Crown Prince of Saudi Arabia, is the Chairman of the Public Investment Fund. The move to buy Newcastle United was aligned with Vision 2030 of the Saudi government, which plans to diversify the country's predominantly oil-driven economy.
A businesswoman from Yorkshire, Amanda Staveley is no stranger to business deals with the Middle-East. She played a prominent role in Sheikh Mansour's acquisition of Manchester City and later in purchasing shares of Barclays Bank.
The third and final party in the proposed Newcastle deal were the Reuben Brothers. They are an UK-based real estate investor who are rumoured to be the second richest family in the country.
The bid to buy Newcastle United was the culmination of the Saudi PIF's three years of research and due diligence that culminated with the bid in April. Initially, there were no red flags regarding the takeover.
What were the difficulties with the Newcastle takeover?
After the Newcastle takeover bid was placed, things got complicated and the process to finalise the purchase became too prolonged. The Saudi-led consortium, ultimately had to back out of the £300m acquisition of the Premier League club due to a plethora of issues: violation of human rights in the Saudi state combined with the illegal streaming of the Premier League, to name a few.
In 2018, Qatari owned media company beIN sports, who were the official broadcasters of the Premier League in the Middle-East, were banned by Saudi Arabia over political disputes with Qatar. Soon after the ban, the Premier League was illegally streamed on beoutQ, which was alleged to have been backed by the Qatari government as claimed by the World Trade Organisation (WTO).
Just after the bid was made, Amnesty International, an NGO which focuses on human rights, made public of their disapproval on the Newcastle takeover. Amnesty accused Saudi Arabia of 'sports washing', a term which refers to improving public perception using sports as a medium in the backdrop of the country's poor human rights records.
Amnesty International pointed out several 'immoral' activities and long-standing issues in the country like suppression of women's rights, poor treatment of the LGBT community and absence of freedom of speech in the oil-rich nation. Perhaps, the most notable case on violation of human rights came in 2018 when journalist Jamal Khashoggi was assassinated at the Saudi consulate in Istanbul by Saudi 'agents' who purportedly worked for Mohammed Bin Salman.
What does the failed takeover bid mean to Newcastle fans?
Mohammed Bin Salman, whose net worth is £320 billion, initially planned to invest £250m at Newcastle United over a five-year period along with plans to invest in the local community.
Had the takeover been successful, it would have made Newcastle United the richest football club in the world as the Saudi owners' worth is respectively 15 times and 30 times that of Manchester City's and Chelsea's.
Commonly called the 'Geordies', the Newcastle fans had been agitating for a change in the club's ownership for a long time after witnessing two relegations under the present owner Mike Ashley.
The declaration of the club's takeover in April raised the hopes of Newcastle fans during the tough COVID-19 lockdown period before they were quashed when the bid collapsed. Newcastle fans were left heartbroken and devastated as they dreamt to see better days at the club.
The failure of the takeover bid certainly disappointed Newcastle fans but the takeover not going through may not be the worst thing for the club.
The identity of the club could have been in jeopardy had it been connected with the Saudis. The deal not happening is a blessing in disguise for Newcastle. Football clubs have social significance in the community they are situated in, something that could have got eroded in the event of a state takeover.
Getting a new buyer for Newcastle United may not now be possible in the foreseeable future for the Magpies owner Mike Ashley due to the COVID-19 situation. The focus of the club should now shift from the takeover disappointment to build a better team under manager Steve Bruce next season.