Revealed! The steps taken by potential Newcastle United investors amid claims £340m takeover moves step closer
Potential investors in Newcastle United have been carrying out ‘off the books’ due diligence ahead of a possible takeover bid.
Reports in the Telegraph state the Public Investment Fund of Saudi Arabia bid has now formally been put to the top flight for ratification, with potential owners and directors tests to follow.
They claim the Crown Prince Mohammed bin Salman-led PIF bid, with Staveley and Reuben Brothers each taking a 10% stake, remain in the driving seat to purchase Newcastle with a fee thought to be in the region of £340million.
And the Gazette has learned a buyout of Sports Direct tycoon Mike Ashley appears to be a step closer with an interested party in the process of doing ‘off the books’ due diligence in the North East – this despite the current coronavirus lockdown putting football on hold.
The Gazette has been in contact with a London-based agency commissioned to 'do some digging' by their client, thought to be the Saudis.
The links to a Saudi takeover went dead earlier this year when talks broke down between the two parties – but things have been heating up in the negotiations stakes of late, according to reports.
Staveley, along with property group Reuben Brothers, offered a takeover of Newcastle to PIF in 2019, with the help of popular Saudi fixer and US national Carla DiBello.
Reports over the weekend claim PIF chief Yasir Al-Rumayyan will become Newcastle chairman, should a deal go through. Current QPR director Jamie Reuben would also join the board.
A proposed takeover by the Bin Zayed Group last summer did progress a little further, but proof of funds, when required by Ashley and Newcastle's legal team and the Premier League, proved to be the end of the road.
There has been a high level of interest in Newcastle by investors, but the outbreak of the COVID-19 pandemic seemed to have put the brakes on any hopes of a deal getting done, with all levels of society set to take some kind of financial hit due to the outbreak.
Although these latest reports seem to suggest the Saudis are not concerned by the club’s potential value dropping due to the pandemic.
“The problem is not necessarily the short-term hit, it's the long-term one," according to football finance expert Kieran Maguire.
“We have absolutely no idea what this country will look like when we come out the other end of this. It is likely people will lose loved ones, jobs, revenue and much more.
“If someone does not know if they will have a job in a week or two are they going to be buying a season ticket?"
The income of Premier League clubs is largely made up of the sale of top flight broadcasting rights – and with no football to broadcast, those contractual agreements bring their own challenges.
Maguire added: “I think this season will end up going ahead and there will be a compromise because the biggest problem facing the Premier League and its clubs is the amount which will be due back to broadcasters if the season cannot be completed."
Financial analysis of the situation seems to suggest any possible investor is likely to keep their powder dry and let this international crisis play out before any major deal is brokered.
And the Telegraph claim this deal could be done before football returns to these shores post-pandemic, but the deal is unlikely to be made public before then.
Ashley's own retail empire is set to take a ‘considerable’ hit as a result of the coronavirus outbreak in the UK.
Frasers Group Plc, the name of Ashley’s company formerly known as Sports Direct, last week released a statement claiming they will be unable to now make financial forecasts for 2020 due to on-going uncertainty.
They also claim while the true impact of the COVID-19 pandemic is yet to be determined, they predict the virus ‘will cause significant disruption to its business’ and as a result ‘Frasers Group will not achieve the range of guidance of 5 to 15% EBITDA (earnings before interest, tax, depreciation and amortization) growth’.
What impact this will have on Ashley’s personal fortune is not yet unknown, but the statement forecasts his companies, like most, will be adversely affected.
Previously billionaire Ashley has explained his want not to spend his money, and desire for an NUFC takeover, by describing his wealth as “like wallpaper”.
Speaking to Sky, he said: “I'm nowhere near wealthy enough to compete with clubs like Man City. I don't have the ability to write a cheque for £200m."In theory I'm a multi-billionaire, but in reality my wealth is like wallpaper – it's all in Sports Direct shares.”
It is understood Staveley has been in talks with various potential investors regarding Newcastle since 2017.
American Joe DaGrosa, brought to the table by former Chelsea and Manchester United chief Peter Kenyon, was also linked last summer