Basics of Newcastle United Takeover

Basics of Newcastle United Takeover

Saudi Arabia's Premier Sovereign Wealth fund - Public Investment Fund (PIF), spearheaded by Crown Prince Mohammed bin Salman, had recently launched a bid to purchase Premier League club Newcastle United from its current owner Mike Ashley. The takeover bid, if accepted, would have reportedly seen the Saudi’s PIF obtain an 80 per cent stake in the club. The remaining 20% would be split between Amanda Staveley's venture capital company PCP Capital Partners (10%) and British property investors, the Reuben brothers (10%).

However, the proposed £300 million ($390m) takeovers of the Premier League club have been withdrawn due to the protracted nature of negotiations along with heavy opposition being inflicted by various human rights campaigners on account of Saudi Arabia's welfare practices. The matters were complicated further when the World Trade Organization published a report that found representatives of the Kingdom had facilitated the breach of piracy laws through broadcasting network BeoutQ as well as have been accused of illegally showing live sport, including Premier League games.

One of the major reasons for takeover bid being rejected is related to disputes with Qatari television company beIN Sports and serious allegations of broadcast piracy on Saudi broadcasting network BeoutQ

Angus MacNeil, a member of the British parliament, had written a letter, in the capacity as a chairman of the International Trade Select Committee to Trade Secretary Liz Truss. The letter contained a request to initiate steps to block the proposed takeover, citing WTO’s ruling, which states that Saudi Arabia has been actively supporting BeoutQ’s operations concerning breach of international piracy laws by way of stealing the commercial rights of UK’s various sport bodies for past 3-4 years, thereby jeopardizing protection of UK’s sports rights.

Saudi authorities appeared to be dealing with the issues and were reported to have moved closer to a deal, but a set-back occurred in July when beIN Sports was banned from operating in Saudi Arabia. The dispute between the Qatari broadcasters and the Saudi government is part of a wider dispute between the two countries, which has been ongoing for numerous years and has been taken the shape of "cold war".When it was confirmed that the deal was off, however, Staveley denied that the dispute was a problem in the takeover. She told The Times: "The piracy issue was not an issue, but we tried to resolve it anyway."

On other hand, the Premier League representatives overlooking ‘Fit and Proper test’ which went over 16 weeks believed the Saudi state was just a de facto shadow director which was denied vehemently by the Consortium ending the most controversial and wearisome takeover in the history of the division. The Consortium, within the close doors, accused the League of ‘working under the influence of politically motivated attacks from third parties’ and ‘repeatedly delayed the process by refusing to put the timeline on making a decision regarding the takeover, devoid of the entire process of transparency or objectivity’.

According to the Consortium, The Premier League gave them “private assurances” before the deal was signed and again in mid-April, they confirmed that “approval would be forthcoming soon” before they changed their stance in June. Even after being asked by the Premier League to provide information about PIF’s independence from the Saudi state, the consortium guaranteed that there would be no state interference in the running of the club.

As per the Consortium’s business plan, they have proposed to sanction an initial £250 million to be injected directly into the club, plus more into the city and region, including infrastructure projects and have even made a refundable deposit of around £17 million to Premier League to initiate the proceedings of the takeover. The consortium suspected some of their top-flight rivals, believed to be Liverpool and Tottenham Hotspur, were strongly against the takeover and made their opposition evident to administrators and have finally agreed to pull the plug on the deal.

The current owner, Mike Ashley, heading Sports Direct International, is said to be visibly distraught on collapse of the takeover and will make renewed efforts to revive and execute the takeover. The Consortium have also quashed the allegations of ‘extorting more money for the takeover’ made against Mike Ashley.

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