Newcastle United were bought out by a Saudi-backed fund, ending retail mogul Mike Ashley’s 14 years as club owner.
The Sports Direct boss bought the club for Â£ 134million ($ 182million) in 2007, but the Premier League has now approved a Â£ 305million offer from the Public Investment Fund (PIF) after it assured that the Saudi state would not be in control.
Although Mohammed bin Salman, the crown prince of Saudi Arabia, is chairman of the PIF, it is considered separate from the state. This put aside concerns about Saudi Arabia’s “sportswashing” after the state was accused of human rights violations.
According to Western intelligence agencies, the crown prince ordered the murder of journalist Jamal Khashoggi in 2018, although this was denied by bin Salman.
The group will provide 80% of the funds for the operation and lead a consortium made up of PCP Capital Partners and RB Sports & Media.
Due to the PIF having assets of around Â£ 300bn, the takeover makes Newcastle one of the richest clubs in the world.
Who is PIF?
The Saudi PIF is considered one of the largest sovereign wealth funds in the world and reinvests the country’s oil revenues around the world.
Sovereign wealth funds spread the risk of their investments by purchasing assets in developed countries where legal rules protect them from arbitrary changes in property rights.
Chaired by the Crown Prince, the company is also headed by Yasir Al-Rumayyan, who sits on the boards of directors of Uber (UBER), SoftBank Group (SFTBY) and Reliance Industries (RELIANCE.NS), which is the India’s largest publicly traded company.
Al-Rumayyan, 51, who also sits on the board of directors of state-owned oil company Saudi Aramco (2222.SR), will be the non-executive chairman of Newcastle United.
PIF, established in 1971, began capturing a number of leading investments about six years ago. It acquired an almost 40% stake in South Korean company Posco Engineering and Construction in 2015, followed by a 5% stake in Uber in 2016 for $ 3.5 billion.
Since then, the group has amassed a 5.7% stake in concert distributor Live Nation (LYV), and minority stakes in a series of US companies including Boeing (BA), Facebook (FB) and Citigroup (C). , as well as Disney (DIS) and Bank of America (BAC).
In 2017, the PIF confirmed it would spend around $ 40 billion on infrastructure projects in the United States, as then President Donald Trump visited Saudi Arabia.
He also recently unveiled a small stake in Berkshire Hathaway (BERK-A) and oil giant BP (BP.L).
Watch: Newcastle fans celebrate Saudi takeover of club
The Saudi Arabia-led consortium initially pulled out of the Newcastle deal in July last year after the Premier League identified the Saudi state as a manager controlling the club.
However, since then the state has resolved its issues with beIN Sports regarding the illegal streaming of Premier League football.
The Qatari network had not been able to broadcast in Saudi Arabia for four and a half years, amid a diplomatic dispute, but the ban has now been lifted.
At the end of the deal, Al-Rumayyan said: “We are extremely proud to become the new owners of Newcastle United, one of the most famous clubs in English football.
“We thank the Newcastle fans for their extremely loyal support over the years and we are delighted to be working with them.”
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The acquisition, however, encountered some opposition from human rights organizations.
Amnesty International UK said it was “an extremely hard blow for human rights defenders”.
“We can understand that this will be seen as a big day by many Newcastle United fans,” said general manager Sacha Deshmukh.
“But it is also a very worrying day for anyone who cares about the ownership of English football clubs and whether these big clubs are being used to cleanse the sport of human rights abuses.”
Watch: Jamal Khashoggi’s fiancee says it’s ‘a real shame’ as Saudi-led consortium buys football club