The acquisition of Newcastle United funded by Saudi Arabia’s PIF took place on 7 October 2021.
You may remember…
The deal attracted a “few” headlines, everyone had an opinion about it.
However, there was an opinion / headline missing from outsiders (journalists, pundits, rival fans) lecturing Newcastle United supporters about the takeover.
What they totally missed was that Saudi Arabia’s PIF had gotten an absolute bargain.
I thought absolutely at the time, Mike Ashley was paid £305m and 80% of the controlling stake in the Saudi Arabian PIF, which comes out to £244m (80% of the £305m free).
Even if they have had to pay additional money to Ashley for anything and/or take on potential liabilities, such as cash that will one day have to be paid to HMRC, because of the ongoing civil action, you are surely not talking. well over £300m from Saudi Arabia PIF. So even if they actually turned out to have funded Amanda Staveley’s stake in the club as well (in return for her work in helping the takeover happen), you’re still just increasing the PIF contribution of the Saudi Arabia to nothing beyond £350m, in terms of buying Newcastle United.
Yes, you can point to the cash they’ve already had to put into the club since taking over, especially when it came to having to help finance the transfer business. However, when you consider that Bruno Guimaraes is clearly worth at least double what he cost Newcastle, Botman very similar, although I’m sure Isak will prove to be on par with that pair, it’s very progressive transfer business like all of them. Wood was always a short-term solution, while Pope must be worth at least three times the £10m he spent and the likes of Burn, Trippier and Targett have also proved quality signings.
Anyway, when you’re looking to try to value something, see if it was a good buy in hindsight, you have to look at the competition.
I was surprised how many were apparently fighting to buy Chelsea AND how much they were apparently willing to pay for the cockney club. The purchase price for Abramovich’s shares was 2.5 billion pounds, and then, “In addition, the new owners will commit 1.75 billion pounds in further investments for the benefit of the club.”
Yes, Roman Abramovich has bought them a host of trophies over the past two decades and built the club to where it is now. However they get 40,000 fans and need to build a new stadium, yes Chelsea were worth a lot more money than Newcastle United in 2021 and 2022 BUT a couple of billion or more difference now? I do not think so.
Then you have Everton looking for a takeover, much of the media are actually saying their valuation is around £500m or more…
When you consider that an extra £500m is needed to pay for the new stadium, you’re looking at over £1bn to start with.
Instead, Saudi Arabia’s PIF bought a club with a fit-for-purpose stadium, in the best location of any Premier League stadium in the country, a stadium where the only problem is that apart from upgrading -it superficially because Ashley refuses to even clean up. correctly, it is finding ways to expand the current capacity of 52,000 people.
I repeat, the Saudi Arabian PIF got an absolute bargain with (once a club, once a city) Newcastle United.
Now we go to the big ones, Liverpool and Manchester United.
Are these two clubs worth more than Newcastle United at the moment? Yes.
Are these two clubs worth twenty times or more what Saudi Arabia PIF paid for Newcastle United? No.
However, this is what is being talked about, both Liverpool and Manchester United for sale now, after their owners failed to take over the Premier League along with the rest of the self-styled elite six, then the same when they tried it with their European Super League controlled by their own.
Liverpool are rumored to be worth over £6bn, while Man Utd could be worth £8bn.
These figures are twenty to twenty-five times the price Saudi Arabia’s PIF paid for their initial purchase of Newcastle United.
Chelsea increased in value by over a couple of billion under Abramovich, Man City have arguably increased in value even more than this last decade or more.
There is no reason why Newcastle United can’t do something similar, or even far beyond what has happened at Chelsea and Man City, Newcastle United with a much bigger natural supporter base than this couple
I personally don’t think Liverpool or Man Utd will go for the kind of figures quoted above, BUT I bet they still make absolutely massive amounts, giving FSG and the Glazers billions in profit.
This is a serious investment from Saudi Arabia’s PIF and paying a few hundred million for a club with the undoubted potential of Newcastle United… is serious business they got.
