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Saudi Arabia PIF getting a bargain paying £305m for Newcastle United – Reuters analysis

1 week ago
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The Saudi Arabia PIF financed Newcastle United takeover is expected to be officially announced today (Thursday 7 October 2021).

A seemingly never ending saga that after around two years in the mix, has suddenly set to become a reality in the space of only 24 hours.

On Wednesday, the news became public that Saudi Arabia had been working behind the scenes for some time to settle their differences with beIN Sports / Qatar.

With compensation agreed to be paid, a crackdown on TV piracy and opening up of Saudi Arabia to allow their citizens to access beIN Sports, the solving of these TV piracy issues also having led to the door swinging open to allow the Newcastle United takeover to happen.

Ahead of the official announcement, interesting to read this analysis from Reuters (see below), as to whether or not Newcastle United is a good, or poor, investment. That is, when looked at purely from the direct financial aspect, as opposed to any other perceived benefits that the Saudi Arabia PIF may be getting, such as the whole ‘Sportswashing’ debate.

Yasir Al-Rumayyan (pictured above) is the Governor of the Saudi Arabia PIF and strongly rumoured to be set to be the Chairman of Newcastle United once the takeover is completed.

So is Newcastle United a potential bargain?

Reuters analysis on Saudi Arabia PIF takeover of Newcastle United:

‘Soccer clubs are often poor investments. Saudi Arabia’s Public Investment Fund (PIF) may have found an exception with a possible 305 million pound acquisition of Britain’s Newcastle United, known as a “sleeping giant” of the game.

‘Buying a football club may sound like a frivolous investment for the PIF, which is tasked with helping the country wean itself off oil revenues. Yet the fund seems to be getting a bargain.

‘At the mooted price tag, the deal would value Newcastle at 1.7 times its revenue in the last pre-pandemic financial year. Listed clubs Manchester United (MANU.N) and Juventus (JUVE.MI) trade at 4.1 times and 2.1 times respectively.

‘And the club, currently owned by retail magnate Mike Ashley, arguably has better prospects than most.

‘The new owners could crank up commercial income: sponsorships, merchandising and similar revenue sources are just 15% of sales, compared with 44% at Manchester United before the pandemic.’

Interesting to see a different perspective.

Especially the fact that they point out the deal values Newcastle United at only 1.7 times its revenue, in those last relative accounts.

The thing is as well, as Newcastle United fans, we all know that that last line in the Reuters analysis above, is very much on the money.

In pretty much every area / aspect of the club, there is massive room for things to be run in a far more profitable way. The potential revenues Newcastle United is capable of generating, completely smothered by Mike Ashley’s model of ownership.

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