Premier League U-turn could see Newcastle United land premium sponsor after £32.5m PIF agreement
Newcastle United are set to vote on potential changes to the Premier League’s associated party transaction rules (APT) on Friday.
Football Finance expert Kieran Maguire believes the proposed changes to the rules could benefit the likes of Newcastle United as it would allow Saudi Arabian sponsors to pay a ‘premium’ while still adhering to the ‘fair market value’ rules.
APT rules were introduced shortly after Newcastle’s takeover by the Saudi Arabian Public Investment Fund in October 2021. After an initial block on any commercial deals with companies linked to a club’s owners was lifted, rules stating any commercial deal would have to be independently assessed and deemed ‘fair market value’ before being approved.
But proposed changes to the rules include a more relaxed definition of ‘fair market value’ - removing the open-to-interpretation phrase ‘normal market conditions’ and changing whether a value ‘would’ be agreed to ‘could’ be agreed between a club and a company. Newcastle have already passed significant commercial deals under the current ruling including a £25million per-season shirt sponsor deal with PIF-linked company Sela and a £7.5million per-season sleeve sponsorship deal with Noon, another PIF-linked company.
"The reason why [the proposed changes are] interesting is that what could be of value to a potential sponsor might be greater than what it would be worth to other sponsors," Maguire said on the Price of Football. "Let's take Manchester City and Abu Dhabi-based sponsors and Newcastle United and Saudi-based sponsors.
"It could be worth more to a Saudi-based sponsor to pay what might be seen to be a premium fee because they feel they would get additional benefit within Saudi Arabia itself in terms of the local market, in terms of attracting buyers to their products, than on a more global basis. That's the first thing.
"Secondly, the Premier League has deleted where it refers to 'normal market conditions' in relation to the value of a sponsorship agreement so under normal market conditions, a deal from a white-label gambling company is worth £10million.
“Well, that no longer applies so, again, you could say, 'These are abnormal market conditions. We believe that this particular club offers us a unique opportunity to get into the Premier League and, therefore, we're willing to pay a premium for that.' That benefits the sponsor, in theory. They get the sponsorship. That then benefits the football club."
Manchester City have argued that the APT rules are ‘unlawful’ and ‘rushed through’ in the wake of Newcastle’s takeover while Aston Villa have urged for the vote to be postponed for 90 days.