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DUBAI / MANCHESTER: An offer from a Saudi Arabian state fund to secure ownership of Newcastle United is under scrutiny, but even if successful, petrodollars are unlikely to transform the Premier League club into a powerhouse in the near future.
The prospect of Saudi Arabia’s bid to fuel 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 that the impact of the investment may not be as significant. A scale.
A group led by British financier Amanda Staveley, with an expected investment of 80 percent from the Saudi sovereign wealth fund PIF and the 10 percent stake of billionaires brothers David and Simon Reuben, has submitted a bid of £ 300 million (US $ 375 million) buys 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 came under international criticism following the 2018 murder of prominent Saudi journalist Jamal Khashoggi at the Kingdom of Istanbul’s consulate, the Yemen war and the arrest of several women’s rights activists.
Added to that is the long-running dispute with 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’s “Proof of Owners and Directors”, which was previously known as the “Proper and Proper Person Proof.”
Investors wishing 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, a Despite affirming that it is one of the largest in the country. 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 downgraded 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 undertaking at a time when it appears that the kingdom will need many liquid assets to finance deficits and maintain its currency parity,” says Steffen Hertog, associate professor of comparative politics at the London School of Economics.
IMPROVING INFLUENCE
Hertog, like several observers, believes that Saudi Arabia’s participation aims to improve 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 am not sure how much extra money they will invest in the club. Given the current fiscal developments and the difficulties of some of the other PIF assets, there will likely 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 ‘hands-on’, so it would probably go into the background,” 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 get no return.”
“Furthermore, these types of crises create investment opportunities. Many companies reduce their investments, which creates opportunities to invest in them,” he told the 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 kingdom’s de facto ruler, 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.
