The likely stumbling block in Newcastle United takeover talks

The sovereign wealth fund is taking advantage of falling share prices to buy stakes in major European companies.

It was reported this week that PIF, planning to open a London office this year, had accumulated stakes in four oil firms. This followed the revelation that it had bought an 8.2% stake in Carnival, a struggling cruise firm which had been badly hit by the coronavirus pandemic.

More acquisitions will follow in the coming weeks, according to the Financial Times. Will one of them be Newcastle United?

PIF has been in talks over a takeover of the club for some time. Discussions started long before the coronavirus pandemic, which is seen as an “opportunity” by the fun, reached Europe. Crucially, there’s not yet an agreement.

There’s hope among fans on Tyneside that PIF, backed by Amanda Staveley and the Reuben Brothers, will now push through their interest in the club, which has been up for sale since late 2017.

Certainly, football, like so many sectors, has been hit hard by the pandemic. Premier League chief executive Richard Masters said: “We’re losing revenue at an unprecedented level.”

If Newcastle were a public company, then its share price, like those of the oil and cruise companies, would have plummeted given the challenges facing clubs during football’s shutdown.

But it isn’t, and the price is down to owner Mike Ashley, whose retail empire has been badly hit by the country’s lockdown.

Ashley – who has delegated talks to associate Justin Barnes – has been looking for upwards of £300million for the club, which stands to lose an estimated £40million if this season isn’t restarted.

Will he revise his expectation? That’s the question that needs answering, as it seems inconceivable that PIF – or another potential owner – would not want the harsh financial realities facing football reflected in the asking price.

Up to now, the indications have been that Ashley – whose willingness to sell has long been questioned on Tyneside – is not minded to cut his losses, despite the pressures he’s facing elsewhere.

That position, of course, could change – as cash is king right now.