Saudi-financed takeover will provide post-coronavirus boost to North East economy, not just Newcastle United – football finance expert

The Public Investment Fund of Saudi Arabia-financed takeover of Newcastle United will provide a boost for a whole lot more than the club’s coffers – that’s according to football finance expert Kieran Maguire.

Thursday, 23rd April 2020, 4:45 pm
Updated Thursday, 30th April 2020, 3:39 pm

Author of The Price of Football, Maguire thinks the PIF, Reuben Brothers and PCP Capital Partners takeover has not only the potential to transform United on the pitch, but also the financial post-coronavirus landscape in the sprawl around St James’s Park.

Speaking on the Gazette’s Mouth of the Tyne podcast, Maguire said: “The city's economy will need that kind of boost coming out of the pandemic, it will have taken a huge hit.

“Do they want to showcase the nature of Saudi investment at Newcastle and increase its value? I have lived in Manchester most of my life and I have seen first-hand the impact Sheikh Mansour has had on East Manchester.”

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Maguire continued: “Man City were a Keystone Cops kind of club, likeable but in a funny way.

“Mansour's investment has seen improvements in infrastructure in the city as well as around the football club.

“And now there is a real change on a matchday - there are a lot more football tourists in the city, not just for when Manchester United play. City have now become a tourist attraction of their own and that money filters down to the hotels and restaurants and the rest of the city's economy. And I am sure Newcastle fans will see positives and negatives to that.

“You may well see Saudis coming over too with the idea this is their club and spending weekends in the city - I think everyone at least once in their life needs to experience a Saturday night in the Bigg Market.”

Saudi Arabia's Crown Prince Mohammed bin Salman (L) and Saudi Deputy Defence Minister Khalid Bin Salman await ahead of their meeting with the US Secretary of State at Irqah Palace in Riyadh on February 20, 2020. (Photo by ANDREW CABALLERO-REYNOLDS / POOL / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/POOL/AFP via Getty Images)

As part of the deal Reuben Brothers and PCP Capital Partners will take a 10% stake each, with PIF buying out 80% of Mike Ashley’s share.

At present the owners are believed to be still waiting on the green light from the Premier League over their owners and directors tests, with an announcement possible within the next 48 hours.

Companies House movement has got people talking this week with PIF’s Bander Bin Mogren appointment as a director of NCUK Investments Limited, thought to be a vehicle company used to facilitate the transfer of funds and shares in the event of the deal finally going through. Yasir Al-Rumayyan is also a director of NCUK.

But what does this mean? Maguire thinks it’s a sure-fire sign things are starting to heat up.

“The process is similar in many ways to buying a house,” he said.

“The contracts have been exchanged, the deposit paid, the due diligence done.

“Some of the stories circulating with regards the Qatari attempts to block the deal have proved unsuccessful.

“They've tried to put a spanner in the works but the Premier League owners and directors test is very pragmatic.

“Are you a criminal? There is no evidence of that. Do you have the money? Well, if PIF do not have the money then god help the rest of us.”

Ashley wanted £340million prior to the coronavirus but has had to settle for less.

Is he still getting a good deal? Maguire thinks every party can be happy with their business.

“I think everyone is getting a good deal here," he said.

“I valued the club at around £380million using the 2018 accounts. If it was worth £380million in 2018 we know the market has taken a hit due to COVID. So Mike Ashley gets his money back for his shares, the loans and makes a little for himself, while the Saudis are buying a football club with a lot of potential to grow.

“They will look and see that Liverpool was bought for around £300million back in 2012 or 2011 by FSG - that club value has massively increased.

“Wolves were bought for £40million and they could probably sell for the ten times that amount.

“At £300million I think everyone is coming out of this reasonably happy.”

A post-Ashley landscape at United was almost unimaginable for many fans not so long ago, and now it is a very real reality, one making the Magpies potentially the richest club on the planet.

Using Sunderland and Aston Villa as a barometer, takeover cash doesn’t always guarantee success, according to Maguire.

“The money has to be spent right,” he said.

“We have seen the likes of Randy Lerner at Aston Villa and Ellis Short at Sunderland have had their fingers burnt.

“If you get the strategy right, the recruitment and break into Europe.

“The club can then start to generate cash by selling boxes at a higher price but keep season ticket prices the same. That way the fans are not ripped off and the club still generates money in what is a working class city with working class roots.”