Newcastle’s Saudi takeover bid fails
Jeremy Moore – Head of Sports Law
It was announced last week that, much to the consternation of Newcastle fans, a proposed takeover by PCP Capital Partners (Saudi Arabia’s Sovereign Wealth Fund) had failed after the fund decided to withdraw their bid.
This will come as a massive blow to those associated with the club who had dreamt of potential wealth along the lines of Manchester City’s after years of disappointment and underachievement under the current regime, led by the much maligned Mike Ashley.
So why was the takeover bid ultimately withdrawn? The bid had been the subject of much criticism from human rights groups and other Premier League clubs and was subject to the Premier League’s owners and directors test, which looks into the background of prospective club owners.
The matter had dragged on for several weeks, to the frustration of PCP, and was dealt a particular blow by a recent ruling of the World Trade Organisation (WTO).
The WTO ruled in June of this year that a pirate television service, beoutQ had been ‘operated by individuals or entities subject to the criminal jurisdiction of Saudi Arabia’ and that the state had breached intellectual property rights by failing to tackle it (the international TV company BeIN has rights in the state for the majority of matches there).
It is notable that the owners and directors test explicitly refers to digital piracy being a disqualifying factor, and to what extent PCP and the Saudi state itself were aligned would have been the subject of close scrutiny by Premier League lawyers.
News broke yesterday that Saudi Arabia had appealed against the WTO ruling, denying that beoutQ had been operated by individuals subject to Saudi jurisdiction. However, later in the day it emerged that the patience of PCP had apparently run out, with frustration growing that they were no nearer to completing a deal nearly 3 months after seeking approval.
We will never know if the Premier League will have ultimately approved PCP’s bid, but pressure is growing on the football authorities to be far more stringent in considering potential new owners, particularly in the light of the recent debacle at Wigan Athletic. Wigan were last week relegated from the Championship due to suffering a 12 point deduction after going into administration. This happened not long after a takeover by Newworth Ventures, a company incorporated in the British Virgin Isles.
That will not however provide any consolation to Newcastle and its long-suffering fans, whose wait for significant investment and the ability to challenge at the right end of the Premier League will go on.
Jeremy Moore is a Solicitor and Partner in our Manchester office with a national reputation for his work in high profile and serious crime work, as well as assisting clubs and athletes in sports related matters.