Why the Saudi takeover at Newcastle United floundered at the final hurdle

The £300 million deal to buy Newcastle United – which was christened 'Project Zebra' by those putting it together in a nod to the club's famous striped shirts – was never black and white.

Unfortunately it was always far more complicated, emotional, political – geo-political in fact when it came to Middle Eastern relations – than that. Now almost three years after a takeover was first mooted with financier Amanda Staveley attending Newcastle’s Premier League fixture at home to Liverpool in October 2017 it is – finally it seems – off.

In the end it was not the objection raised by the Qatari-owned beIN Sports over the theft of Premier League broadcast rights or a critical World Trade Organisation report or, indeed, the protests over Saudi Arabia’s human rights record that directly scuppered it.

It was the Premier League not being satisfied that the Public Investment Fund, which was taking an 80 per cent stake in the club, was independent on the Saudi state. In fact although it has not ruled on the takeover yet the Premier League insisted the connection had to be formally established. “They wanted the state of Saudi to effectively be a director of the football club and that was impossible. The directors and owners test was written for individuals not a state,” a senior source said.

It seemed, in fact, the Premier League did not want a club to be effectively owned by a country and wanted the Saudis to sign a so-called “Form Five” which would have meant a state basically being bound to the Premier League’s rules. Maybe that was a tactic to ensure there was no further piracy?

At the same time the PIF categorically insisted that although its chairman is Mohamed bin Salman, the deputy prime minister, it was an autonomous investment vehicle and not controlled by the state. It made its own investments, it said, and that independence was enshrined in its charter.

Even the personal intervention of Yasir Al-Rumayyan, the governor of the PIF, who spoke to Premier League chief executive Richard Masters and the new chairman Gary Hoffman, did not remove the impasse while an offer of arbitration was rejected by the buyers.

It is remarkable to think that the deal to sell was struck back in March, just before the coronavirus hit, when, finally, there was a face-to-face meeting between Mike Ashley and the PIF’s representatives in Hampstead, northwest London close to where the Newcastle owner lives.

After that there was, according to sources, a degree of so-called “back-channelling” with the Premier League to establish it would be okay with the PIF becoming the majority shareholder with 10 per cent being taken by RB Sports and Media, which is run by the Reuben Brothers, and the final 10 per cent going to PCP Capital Partners, led by Staveley who had brokered the deal.

What has stunned the bidders is that for weeks they felt they had reassurances of no so-called “red flags” before that suddenly changed more than two months into the process.

The involvement of the PIF – the Arab state's sovereign wealth fund – was huge. It was undoubtedly their highest-profile, significant and controversial attempt to move into football which is the most followed sport in Saudi. Staveley was at the Future Investment Initiative (Saudi’s ‘Davos in the Desert’ event) in October last year and held talks with the PIF which, sources say, was key in bringing them onboard.

Questions will now be asked about the PIF’s involvement given Sheikh Mansour, the deputy prime minister of the United Arab Emirates, was able to buy Manchester City in 2008 will little difficulty because the takeover was framed as a private transaction. Why did the Saudis not follow this model?

The plan was actually to announce a deal in January when Al-Rumayyan, who was to become Newcastle’s chairman, registered a company called NCUK Investment Limited which was designed to buy 100 per cent of the club’s shares from MASH – Mike Ashley Holdings. As revealed by Telegraph Sportit was only on March 24 that the Premier League was formally notified by Newcastleand the buyers of the intention to complete the deal with the paperwork finally submitted and subject to the owners and directors test.

The initial delay was not over price, a £340 million deal was agreed in principle some time ago, and although there has been renegotiation to just over £300m given the current economic climate, it was not a problem. There were further renegotiations with Ashley as the delay dragged on but they were not deal-breakers.

It was always complicated and not least by the fact that there were three parties, and therefore three set of lawyers, on the buying side. The pandemic also slowed matters further and maybe it was just doomed to failure although the buyers are pinning the blame firmly on the Premier League.

But undoubtedly the involvement of beIN Sports, the Qatari-owned broadcaster, who lobbied aggressively against the takeover amid accusations that the Saudis were being the piracy of sports rights, was also significant.

At one point the Premier League even employed external legal advice to try and pick its way through the claims and counter-claims with the fear that it may be sued by one of its biggest broadcast partners.

The collapse of the takeover is a severe personal blow for Staveley who has now failed in a number of attempts to buy Newcastle, and has had her credentials questioned, but has never been so close.

Above all though it is a huge disappointment for the Newcastle fans who, whatever the ethics of the club being bought by the Saudis, were desperate to leave the loveless marriage with Ashley and see some serious investment in their club. Unfortunately it does not appear it will happen through ‘Project Zebra’.

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