Saudi plans for Newcastle may not be on the scale of the transformation of the City of Man
DUBAI/MANCHESTER: An offer from a Saudi Arabian state fund to secure the property of Newcastle United It is drawing scrutiny, but even if it succeeds, petrodollars are unlikely to transform the Premier League club into a powerhouse in the near future.
The prospect of the Saudi offering driving a rapid rise to the top, in the manner of Manchester City's four title successes under UAE owners, has thrilled many Newcastle fans, but several analysts believe the impact of investment may not be that important. A scale.
A group led by the British financier Amanda Staveley , with an expected investment of 80% from the Saudi sovereign wealth fund PIF and a 10% stake from billionaire brothers David and Simon Reuben They have made an offer of £ 300m ($ 375m) to buy the club from British businessman Mike Ashley.
The proposal faces some initial obstacles, and the prospect of Saudi ownership of a top-tier English club has been condemned by human rights groups.
Saudi Arabia was internationally criticized after the 2018 murder of the prominent Saudi journalist Jamal Khashoggi at the kingdom's consulate in Istanbul, the Yemen war and the arrest of several women's rights activists.
Add to that the long-running dispute with the Qatari company BeInSport over allegations of Saudi tolerance of 'pirate' broadcasts in the kingdom, an issue raised by some MPs in the UK.
The proposed acquisition is now being reviewed as part of the Premier League Owners and Directors Test, which was previously known as the Right and Right Person Test.
Investors who wish to become owners of English professional clubs must demonstrate that they do not have an unused criminal conviction for fraud, are not bankrupt and have not been prohibited from serving as director of the company.
Newcastle supporters, however, are excited at the prospect of a large investment in their team, which has not appeared in the Champions League since 2004 and has not won the English title since 1927 or the FA Cup since 1955, despite claiming one of the country's largest fan bases.
However, the timing of the offer is far from ideal: the Premier League is currently suspended due to the coronavirus pandemic. On Friday, Moody's Investors Service lowered Saudi Arabia's outlook from stable to negative, saying that falling oil prices have raised fiscal risks for the Gulf nation.
It is a relatively risky company at a time when it appears the kingdom will need plenty of liquid assets to finance deficits and maintain its currency parity, he says. Steffen Hertog , Associate Professor in Comparative Politics at the London School of Economics.
Hertog, like several observers, believes that Saudi Arabia's involvement is aimed at improving the country's influence and image outside its borders, but says that economic realities may limit PIF's ambitions.
It is definitely part of an Abu Dhabi-style soft power strategy, but I'm not sure how much extra money they will invest in the club. Given current fiscal developments and the difficulties of some of PIF's other assets, there are likely to be limitations on Saudi generosity, he said.
The United Arab Emirates owners of Manchester City have been closely involved in major decision-making at the club with Khaldoon President Al Mubarak since September 2008, but the Saudis cannot follow that path.
PIF does not have the experience or the ability to be 'practical', so it would likely take a back seat, says Neil Quilliam, CEO of Gulf-focused consulting firm Castlereagh Associates.
Saudi Finance Minister Mohammed al-Jadaan addressed the issue of overseas investment in a television interview on Saturday, without directly mentioning PIF's possible offer for Newcastle.
Investments are very important because they have returns that we can use in the event of a crisis to curb the deficit. If we use the reserves, we will consume the assets and have no return.
Furthermore, these types of crises create investment opportunities. Many companies reduce their investments, creating opportunities to invest in them, he told Al Arabiya news channel.
PIF manages more than $ 300 billion in assets. It has been in existence since 1971, but became a more active investor since 2015, when it began reporting to a high-level economic body headed by the crown prince of the kingdom, the Crown Prince. Mohammed bin Salman .
PIF has been tasked with fulfilling Prince Mohammed's ambitious drive for economic transformation to reduce the kingdom's dependence on oil revenues.
The fund is headed by former Saudi banker Yasir al-Rumayyan, whose title is governor and is considered close to Prince Mohammed.
Financial sources told Reuters that the crown prince had a voice in many strategic PIF decisions, such as the investment in Softbank's Vision fund.