The protracted Saudi-led takeover of the English soccer club Newcastle United came to an end last month when a consortium comprising the Saudi Public Investment Fund, PCP Capital Partners LLP, and RB Sports & Media Limited bought the Premier League club for GBP 300 million (USD 409 million). This purchase capped off an 18-month saga which began when the consortium initially reached an agreement with Newcastle’s former owner Mike Ashley in April 2020 before that deal collapsed.
The affair is notable for having reignited a long-running debate over state-ownership, political exposure, and the values of European soccer leagues and clubs that has been at the fore of the soccer community following similar big-ticket takeovers in the 2000s and 2010s. The controversial acquisition is a poster child for reputational due diligence in advance of major business transactions.
The consortium withdrew its initial bid in July 2020 over fears that it would not pass the Premier League’s owners’ and directors’ test, which outlines requirements that potential owners must meet in order to purchase a club. The test includes questions about criminal convictions, outstanding bans by sporting bodies, and breaches of certain soccer regulations.
A key sticking point during the initial failed bid was assurances that the consortium would act independently of the Saudi government, which wholly owns the Public Investment Fund. The Public Investment Fund, in turn, would be the 80 percent shareholder of the club if the takeover was completed.
Another issue was state-sponsored content piracy in Saudi Arabia amidst its ongoing diplomatic dispute with Qatar which began in June 2017. The kingdom turned a blind eye to illegal streaming of Premier League games in the country after it blocked the Qatari sports channel beIN Sports from broadcasting games in Saudi Arabia.
The rapid success of the consortium’s second bid rested on two important reforms. First, it was able to assure the Premier League that the Saudi government and Crown Prince Mohammed Bin Salman, who heads the Public Investment Fund, would not exert any control over Newcastle. Second, the government lifted its ban on beIN Sports and cracked down on illegal streaming in the country.
In the meantime, it appears that minority-shareholder Amanda Staveley, the chief executive of PCP Capital Partners who is well connected with the investment community in the Middle East, will act as the face of the consortium. On the day of the takeover, she gave an interview to Sky Sports, in which she spoke about the direction the new owners hope to take the club. Despite this, questions still abound as to how the club will operate independently of its majority shareholder.
While the sale was met with jubilation from Newcastle supporters, who had long grown tired of former owner Mike Ashley’s 14-year reign at the club, others were quick to criticize the sale. Perhaps the most vocal critic has been Amnesty International, which claimed that the takeover was an attempt to “sportswash” the Saudi government’s abysmal human rights record, which includes extrajudicial murder, jailing women’s rights advocates, and a disastrous bombing campaign in neighboring Yemen. The Crown Prince himself has been implicated in many of these violations, raising concerns about the Premier League’s new bedfellow. Amnesty International recommended beefing up the owners’ and directors’ test to include questions about human rights violations to prevent similar takeovers in the future.
The Newcastle takeover is the latest in a notable trend of European soccer club acquisitions by Gulf royalty. In September 2008, Sheikh Mansour bin Zayed Al Nahyan, a member of the royal family in Abu Dhabi, purchased Manchester City, turning the once small club into a European powerhouse in the space of a few years. Notably, Staveley was a key broker in Mansour’s takeover of the club.
Similarly in June 2011, Qatar Sports Investment, a fund established by the son of the emir of Qatar and heir to the throne Sheikh Tamim Bin Hamad Al Thani, acquired a 70 percent stake in French soccer giants Paris Saint-Germain (PSG). Qatar is also set to host the 2022 World Cup. Like their neighbor Saudi Arabia, both the United Arab Emirates and Qatar have been accused of serious human rights violations. These investments in soccer had less to do with turning a profit and more, as Tifo Football put it, to do with “reputation laundering, sportswashing, and a chance to offer an alternative story about the country to the rest of the world.”
At the same time as Gulf states pour money into European soccer, the global public is increasingly pushing for companies to properly vet their partners and institute environmental, social, and governance guidelines. This makes screening for adverse media coverage, politically exposed persons, and sanctions all the more important. However, based on the response Newcastle fans showed following the takeover and the recent successes of Manchester City and PSG, it may well be that the Premier League will not face any serious blowback from its customers for allowing acquisitions like the one witnessed earlier this month to proceed.
Regardless of how the public reacts, it is still in the interest of European soccer clubs and leagues to ensure they remain compliant with local and international regulations. To steer clear of unexpected complications in advance of your company’s upcoming deals, connect with a Premier League level provider of due diligence investigations. Vcheck Global offers your company the tools and insights to screen potential partners for deal-derailing issues including sanctions violations, political exposure, controversial affiliations, and other adverse media across multiple jurisdictions.
Adam Valavanis is an Associate at Vcheck Global.