Fans react outside the stadium after Newcastle United announced a takeover by PIF. (Reuters)
Riyadh: Saudi Arabia's Public Investment Fund (PIF) is taking over the Premier League Club, New Castle from the British billionaire Mike Ashley. A consortium of PIF, PCP Capital Partners and RB Sports & Media are expected to hold 80% of the shares of the club, say reports.
The PIF is a sovereign wealth fund that since the early 1970s has taken the bulk of Saudi Arabia's savings from the sale of oil which is worth about $430bn (£315bn). Reports say that Yasir Al-Rumayyan, the governor of PIF, will become the non-executive chairman of Newcastle United.
Rather than profit-making what prompted the oil-rich country to take over Newcastle United FC with £305 million ($416 million) is a moot question as Premier League football is not a particularly profitable business.
Arab News has quoted professional services firm Deloitte report to show that the league's clubs posted a collective pre-tax loss of £165 million in the 2018/19 season even though revenues passed £5 billion for the first time.
According to the report, the pandemic had a major impact on revenues of these as club revenues slid to £4.5 billion in 2020, leaving clubs nursing losses of just below £1 billion. The reports also say that Premier League clubs have recorded pre-tax profits just four times since it was launched in 1992.
The move by PIF to take over New Castle aims beyond profit-making says the report pointing to the rumours that PIF is looking to build a portfolio of clubs, with Inter Milan and Marseille as possible targets. According to the report, the Kingdom believes such investments bring more opportunities and it is eagerly looking to build more partnerships through corporate hospitality
The report also adds that acquiring a global name like Newcastle FC would potentially be a great vehicle for the Kingdom's tourism ambitions and the deal also offers Saudi Arabia an opportunity to invest in other related sectors in Newcastle and beyond that fit with its Vision 2030 economic strategy.
The PIF plan to invest in Newcastle is in accordance with the idea of Saudi's de facto ruler Crown Prince Mohammed bin Salman's vision to wean the economy off a dependency on oil. The crown prince aims to prepare Saudi Arabia's economy for a post-oil world.