Saudi Arabia PIF got absolute bargain buying Newcastle United – Everton proving it
The Saudi Arabia PIF financed takeover of Newcastle United eventually happened on 7 October 2021.
You may recall it…
The deal attracted a ‘few’ headlines, everybody having an opinion on it.
One opinion / headline though was entirely missing from outsiders (journalists, pundits, rival fans) lecturing Newcastle United supporters on the takeover.
What they were totally missing was that the Saudi Arabia PIF had landed an absolute bargain.
I thought that absolutely at the time, £305m paid to Mike Ashley and 80% controlling stake for the Saudi Arabia PIF, which works out at £244m (80% of £305m).
Even if they have had to sort out some extra money to Ashley for whatever and / or take on potential liabilities such as cash that one day may need to be paid to HMRC, due to the ongoing civil action, you aren’t talking then surely much more than £300m from the Saudi Arabia PIF side of things. Then even if in reality it turned out they have funded the Amanda Staveley stake in the club (in return for her work helping the takeover happen) as well, you are still only bumping up the Saudi Arabia PIF contribution to nothing beyond £350m, in terms of buying Newcastle United.
Yes, you can point to the cash that they have already had to put into the club since taking over, especially when it came to having to finance to January transfer business. However, when you consider that Bruno Guimaraes is clearly worth at least double what he cost Newcastle, I think as an asset he alone pretty much covers that outlay. With Burn, Wood and Trippier all assets as well, where certainly if you sold all four now, I believe it would easily generate more money than was paid out.
Anyway, when you are looking to try and value something, see whether it was a good buy in retrospect, you need to look at the competition.
I was amazed at how many were seemingly battling to buy Chelsea AND how much they were apparently prepared to pay for the cockney club. The buying price for Abramovich’s shares reported as £2.5bn, then ‘In addition the new owners will commit £1.75bn in further investment for the benefit of the club.’
I have a feeling (hopefully!!!) that Chelsea will run into problems very quickly and exactly how this supposed extra £1.75bn spend will manifest itself (if ever), remains to be seen. At the very least though, they have paid £2.5bn for a club / brand that doesn’t even own its own stadium. Which obviously would be one of the major bonuses usually of buying a club situated where Chelsea are.
Yes Roman Abramovich has bought them a series of trophies these past near two decades and built the club to where it is now. However, they get 40,000 crowds and with Liverpool and Man City so dominant, they are fighting for the other two Champions League places with a (hopefully) growing number of clubs. Yes, Chelsea were / are worth a lot more money than Newcastle United in 2021 and 2022 BUT a couple of billion or more difference???? I don’t think so.
Now we have the big one though. The really interesting one.
News breaking (see below) that Everton look set for a takeover.
The Telegraph and many others stating matter or fact that the valuation will be £500m+…
When you consider that another £500m is needed to build the new stadium due to the Beamish era / style current ground, you are talking over £1bn for starters.
In contrast, the Saudi Arabia PIF bought a club with a stadium fit for purpose, in the best location of any Premier League stadium in the country, a stadium where the only problem is that apart from updating it superficially due to Ashley refusing to even clean it properly, is finding ways to expand the current 52,000 capacity.
I repeat, the Saudi Arabia PIF got an absolute bargain with (once club, one city) Newcastle United.
The Telegraph report – 13 June 2022:
‘Former Manchester United and Chelsea chief executive Peter Kenyon is fronting a consortium who have entered talks to try to buy Everton.
Kenyon is part of a group that includes chief executive of Minneapolis-based Talon Real Estate Maciek Kaminski and American businessman John Thornton, and is being advised by investment specialist Michael Klein, along with the US law firm Weil, Gotshal and Manges.
It is understood heads of terms have been signed although talks are described as being at a “relatively early stage”, with owner Farhad Moshiri believed to value Everton in excess of £500million, taking into account the club’s debt.
The consortium may want guarantees that Everton will not face a points deduction or heavy fine over Financial Fair Play issues before entering into a legally-binding agreement, but the club have always insisted they have not broken regulations.’
If you would like to feature on The Mag, submit your article to email@example.com