13 October 2021 Owning the Pitch: Newcastle United Football Club Takeover Deal

Owning the Pitch: Newcastle United Football Club Takeover Deal​

The Story

Last week, after an 18-month delay, a takeover deal has been confirmed for Newcastle United Football Club. The club has been brought by a consortium, led by Saudi Arabia’s sovereign wealth fund, for £305 million. This brings to an end the 14-year ownership of Newcastle United by Sports Direct and House of Fraser tycoon, Mike Ashley.

What It Means For Businesses and Law Firms

The deal for Newcastle United means the club now has one of the richest owners in world football (Sky Sports). Saudi’s sovereign wealth fund, the Public Investment Fund (PIF), controls assets worth £320 billion. The PIF will take an 80% stake in the club, whilst British financier Amanda Staveley’s PCP Partners and the billionaire Reuben brothers’ RB Sports & Media will take 10% each (Sky News).

The same consortium tried to buy the club in April 2020, but the takeover did not pass the Premier League’s Owners’ and Directors’ fitness test. This was because of a piracy debate between a Saudi-backed network and Qatar’s beIN Sports, who pay $500 million to stream Premier League games (Reuters).

A recent thaw in relations between the two nations, which involved Saudi Arabia reversing its decision to ban beIN Sports (The Athletic), paved the way for the deal to go through. Saudi’s settlement of the dispute allowed them to pass the Owners’ and Directors’ test. Moreover, the Premier League has sought “legally binding” assurances that the club is not owned by the Saudi state and that the PIF is a separate entity (Premier League) – despite the group being chaired by the Crown Prince of Saudi Arabia. This has led to some criticism by human rights experts, who are concerned the takeover will be a form of “sportswashing”* Saudi’s stance on women’s rights and the LGBTQ+ community (Amnesty International).

For Newcastle fans, the takeover spells the end of what some considered Mike Ashley’s ‘frugal’ ownership. There have been campaigns for over a decade against Ashley’s ownership due to his lack of investment in the squad and the club’s infrastructure. The new owners now have unparalleled buying power, celebrated after the announcement by scenes of partying outside of Newcastle’s stadium. The PIF is worth six times more than the combined owners of the other 19 Premier League teams, and 50 times more than the Qatari-backed owners of PSG, who are seen as one of football’s most affluent clubs (The Independent).

Law Firms Involved: Allen & Overy was tasked with providing corporate, litigation, tax, and antitrust advice to the PIF. Mike Ashley was advised on the sale by long-term legal partners at Dentons. Staveley’s PCP group was advised by corporate partners at Freshfields Bruckhaus Deringer whilst the Reuben brothers relied on the services of Reed Smith (Law.com).

*Sportswashing typically refers to states using international sport as a political tool to improve its reputation. For example, hosting an event or purchasing a team to divert attention from other controversial practices