View from Dubai: What we now know about Saudi takeover interest, and why talk always emerges in January
Feb. 11, 2020
Neil Mitchell, formerly chair of the NUST, writes about the latest takeover talk that focuses on a possible Saudi buy-out of United
In another of his occasional columns for the Chronicle, exiled Newcastle fan and former chair of the NUST Neil Mitchell – who lives and works in Dubai and was in contact with Bin Zayed Group – writes about the latest takeover reports and what the future holds.
Takeovers, fakeovers and Sheikhovers.
It sadly looks like we are back in silly season again and as you can imagine, once interest in Newcastle United and attributed to Saudi Arabia was leaked, there have been a lot of calls, messages and emails bouncing around trying to get to the bottom of what is going on and a lot of very astute questions raised by a careworn fanbase desperate for positive change.
The first thing, however, I would like to address is the timing.
There is no coincidence that takeover talk always aligns with the January transfer window, and, given the understandable frustration within the fanbase, you’d probably be surprised it has nothing to do with Mike Ashley setting up excuses to not spend in January.
I believe he has, opportunistically, used it as a reason to not do so but I can not believe he has a series of individuals lined up to engage with wealthy suitors to create ‘fake’ takeover stories.
It just doesn’t make sense. The reason they often arise in January is actually quite simple and all about setting up the deal. If you want to buy a football club, any football club, and get a transition team in place, get your final board, back room and management set up in place and be ready to spend and tailor the club to your vision when the next transfer window opens, I have been told by a number of people with knowledge of such negotiations that the very latest you should be placing your bid is mid-February.
If Valentine’s Day passes and you haven’t got your money on the table you’re leaving it very tight and you’ll either end up rushing things and creating headaches later or be very disadvantaged come the start of next season.
The fact that Mike Ashley has used the timing to his advantage at times is in many ways clever on his part but also means if any bid is leaked they are immediately put under pressure as potential ‘fakes’. Which also, I would also suggest, plays to his advantage.
There's ALWAYS interest in Newcastle
As I’ve said before, there is ALWAYS interest in Newcastle. The club remains the best value proposition in the Premier League right now, bar none. In the right hands and looking at it as purely a business transaction, the potential returns of investment is huge over a five year period and with a likely rise in income from television rights as Facebook prepare to enter the fray and Amazon go deeper this could go much higher.
The cost of due diligence is just one more reason I don’t believe that the people who get involved are conspiring to help Mr Ashley. The legal bills for this are substantial, running into hundreds of thousands involving tax, legal and other associated costs.
That is why, for example, one interested party was really upset when Bin Zayed Group made their announcement last year. This party believed they were the front runners and had already spent a significant amount in engagement and due diligence.
What happened to them after their toys came out of the pram and the BZG deal collapsed I don’t know, but you can certainly see why they were upset and likely to have been hundreds of thousands out of pocket, depending on how far through the process they were. No one spends this sort of money without being serious.
The current bid by a consortium led again by Amanda Staveley was revealed by a leak from an unconventional source.
My initial concern was two-fold. One, Mike Ashley has repeatedly stated he does not do his business in public and two, the unusual source from which the leak originated.
He has danced this dance with Amanda Staveley before and is clearly irritated and, two weeks on from the initial news, I can’t see who has benefitted in any way from this being thrust back into the public eye.
If the leak is from Mike Ashley’s side why would he do this when he repeatedly claims that it is the exact opposite of how he likes to do business? Unless of course there was suspicion about the nature of the bid or a doubt over finances, for example.
If the leak is from Amanda Staveley’s side of negotiations, given how things went the last time once it became public that seems a high risk strategy to me. Unless this was an attempt from a PR angle to out muscle Mike Ashley by getting the financial clout of Saudi Arabia’s sovereign fund, PIF, out in the open. Again this is not something that sits well when it comes to dealing with Mike Ashley.
A confusing picture on Saudi interest
As time has passed the range of information coming out from either side of the deal has been frankly baffling and utterly confusing. One very credible source early on had the deal done, just awaiting the last few details.
As time has passed different sources are now saying there is no bid on the table, no exclusivity and no deal agreed in spite of the deal still being “live”.
The Reuben brothers have confirmed their involvement yet some sources within Saudi Arabia claim to know nothing about the deal. One local source who works within the sovereign fund has claimed he is actively ‘working on the deal’. Who should we believe here?
And as the whole picture becomes further muddied we have now slipped to the Twilight Zone with a friend of the Kardashians and Barry Hearn now apparently thrown into the mix. It’s fair to say for me, the cans people talk about opening to celebrate new owners are back in the fridge.
What we know from leaked information is that the set up of Amanda Staveley’s bid was 80% funded by PIF, 10% the Reuben brothers and 10% from Ms Staveley.
I would ask two things. One: why would PIF need a fixer taking 10% of the club? Two, is this set up exactly what it seems? Is the 80% the full financial weight of PIF or is this a loan, creating a leveraged buyout with Saudi money? And if so, where is the working capital and investment money coming from?
It isn’t clear and yet this would make the bid something significantly different and would mean we would have to temper expectations of how much and where future investment was coming from, for example. It would also give credence to credible Saudi sources saying that they aren’t ”buying NUFC”. Because they’re not in this model, they’re just financing it. It would also explain why people in PIF say they are working on it while officially the line is “we aren’t buying’. I don’t claim to know that this is the case but in the absence of solid information it would make some sense of a lot of the nonsense in my opinion.
Then we come to the thorny issue of the so called fit and proper persons test. It’s clear from the longest winded “no comment” I’ve seen in a long time that the Premier League are aware that a lot of the eyes of the world will be on them if there are directors from the Kingdom of Saudia Arabia to be passed and approved. Between Amnesty International accusing people of ‘sportwashing’ and I’m sure pressure from other clubs, concerned that the weight of Saudi money behind Newcastle United could effectively see one less Champions League place up for grabs, it will make for a very interesting period IF it gets this far.
Where we stand
So where does this leave us? Well in the same old mess it seems. My initial concerns, shared as the story broke with Dubai Eye’s Chris McHardy, that a leak would see this takeover attempt doomed before it picked up steam seem, sadly, to be coming to fruition. Frustrating isn’t the word.
Are we seeing a scenario that for the second time Amanda Staveley has come to the table and come up short handed? Is the irritated Mike Ashley the villain of the piece? What involvement remains from Saudi Arabia, if any, and what form does that take? Are they open to bringing someone else into the deal if required?
The only chink of light I see is the possibility that other parties remain interested and we could see someone credible coming to the table, be that directly involved with PIF to resolve this stalemate or to step in separately and make the deal with Mike Ashley.
I remain firmly of the belief that if you understand Mike Ashley, how he works and his influencers and agree to his terms, in his way and maintain confidence he will sell to anyone, as long as you have the money.
I doubt we’ll get cards dropping on Valentine’s Day announcing a takeover, however. History tells us that when news of potential deals hit the press they’ve either hit the buffers or they are football’s unique form of begging letter. That said, the person or people who do eventually make that deal happen with Mike Ashley would become instant Tyneside royalty, let alone sultans or sheikhs, and then we could all fall in love with our club again.