'Some fans will have a problem' with £760m deal wanted by Newcastle owners PIF - Kieran Maguire
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While they may be among the most high profile assets owned by the Saudi Public Investment Fund, Newcastle United are just one piece of a business empire worth nearly £1trillion.
The £305m that PIF spent to acquire Newcastle in October 2021 is pocket change to the investment arm of the Saudi state, while even the £1bn redevelopment of St James’ Park would barely make a dent
But in terms of the soft power that they deliver for the Saudis, Newcastle are among the most valuable and controversial investments that they have made.
Profit and Sustainability Rules (PSR) have so far prevented PIF from realising their ambitions on Tyneside, but rising commercial income and the stadium masterplan will give them more breathing space soon.
To explore the biggest issues faced by Newcastle in the financial sphere at present. TBR Football spoke exclusively to Liverpool University football finance lecturer and industry insider Kieran Maguire.
PIF eyeing major new media deal
In news that slipped under the radar this week, it has emerged that PIF are looking to buy a 10 per cent stake in DAZN, who are a major Premier League broadcaster overseas.
While it isn’t a view that he himself shares, Maguire believes this could open the sovereign wealth fund up to accusations of a conflict of interest given their ownership of Newcastle.
“I think this is very intriguing,” he said.
“If we go back many years, Sky tried to buy 10 per cent in Man United and that was knocked back.
“Until recently, Andera Radrizzani owned Leeds United and he owned the TV company Eleven Sports.
“The multinational, multi-industry nature of conglomerates means there will always be overlaps.
“The critics will see it as a conflict of interest, others will just see it as business. Some fans will have a problem with it.
“Given the relationship between clubs and owners and their companies isn’t anything new. City have a close relationship with Eithad, Brighton with Starlizard, Newcastle with Saudi companies, I don’t think we can just separate out a broadcaster.
“It is a major Premier League broadcaster but it is not a domestic broadcasters, so I don’t expect there will be any efforts to push this back.
“The Premier League will ultimately sell to the highest bidder.
The reaction to the APT news at St James’ Park
By far the biggest news this week was the news that Man City had ‘won’ their legal challenge to the Premier League’s associated party transaction rules – that’s what early reports suggested, at least.
In reality, the outcome of the APT case was more nuanced, with both sides claiming victory.
However, the consensus is that City – who Newcastle provided evidence in favour of at the tribunal – will be the happier of the two parties.
That is a view shared by Maguire, who believes that Newcastle will be confident that the outcome will give them more freedom to negotiate lucrative commercial deals going forward.
“I think this will be received positively at Newcastle.
“They have been very quiet on this and the Premier League’s claim that the APT rules were not introduced as a direct result of the Newcastle takeover did raise eyebrows.
“However, that seemed to forget that one club wrote to the Premier League with the support of 10 other clubs that made reference to Gulf states.
“So I suspect the Newcastle board will privately be delighted with this outcome.
“It will allow them to negotiate deals with greater confidence than previously, and deals can be now completed faster than had the Premier League had more success in the case.”
Newcastle step up in Adidas portfolio
It has also emerged this week that Newcastle will become an Adidas ‘elite’ team from next season, joining the likes of Man United and Real Madrid.
Essentially, this status means Adidas will produce and supply authentic versions of the kits worn by payers as well as replicas, with different price points for each.
Adidas’s pricing structure has proven controversial, but Maguire believes that – from a commercial point of view – this is a no-brainer for both Newcastle and the German sportswear company.
“Newcastle have a fanbase that will embrace the kits.
“If you can sell a product for £125 that costs just £2 more to make than the product that sells for £80, it makes a lot of sense.
“So commercially, this is a smart route to go down. Product and price discrimination is used in other industries and we don’t blink.
“Think about catching a flight – you have got economy, business and first class. Even seating prices at football. Ultimately, you’re all watching the same match, but some clubs have as much as 16 different price rates now.
“It happens in all other aspects of business, so it’s no surprise to see it happening in football.”
