Saudi’s Tyneside Takeover

Is the Premier League’s due diligence really up to the test…?

The takeover of Newcastle United by the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, delighted many fans desperate for hope after 14 turbulent years under previous owner Mike Ashley. It also prompted an equally passionate debate around football club ownership.

Before any UK club can be sold, a prospective owner, part-owner, or club director must face the Owners’ and Directors’ Test. This is a series of requirements designed to prevent questionable businesspeople from owning Premier League football clubs.

Separation from the State?

The test is more stringent than the requirements that must be met to become an owner or director of a standard UK business. According to the Premier League handbook, a deal cannot be approved if a prospective buyer “has engaged in conduct outside of the UK that would constitute an offence if such conduct had taken place in the UK, whether or not such conduct resulted in a conviction”.

However, this has not stopped PIF from becoming Newcastle United’s new owner, despite well-documented cases of state violence and human rights abuses by the Saudi government. The Premier League reportedly approved the sale after receiving assurances that the Saudi state would not be involved in the running of the club. This was a key development because it allowed PIF – even superficially – to create distance between itself and the state’s alleged crimes, including the assassination of journalist Jamal Khashoggi in October 2018 and the government’s purported use of the Israel-supplied Pegasus spyware to target dissenting voices at home and abroad.

This was despite the fact that PIF is chaired by Mohammed bin Salman (MBS), the controversial Saudi crown prince who has been accused of using the fund as a tool of state financial policy. The Premier League’s decision to accept PIF’s argument that it is separate from the Saudi government crucially meant that MBS was not considered as part of the Owners’ and Directors’ Test. And even if he had been, the test does not take into account potential human rights violations.

Regional Politics at Play

As it was, the biggest hurdle to PIF’s Newcastle acquisition was not ethics but money. In recent years, the Saudi government has allegedly promoted digital piracy organisations such as BeoutQ, which showed Premier League matches in the kingdom despite not owning the broadcasting rights. This followed the regime’s banning in 2017 of the official regional broadcaster, the Qatar-owned beIN Sports, in the context of a wider dispute between the two nations. On 6 October, Saudi Arabia lifted its ban on beIN Sports. A day later, PIF finalised its acquisition of Newcastle.

Of course, British football teams have been snapped up by controversial foreigners before. Yet Roman Abramovich’s takeover of Chelsea in 2003 happened before the Premier League’s due diligence test, while the Abu Dhabi United Group (ADUG), a private equity company owned by a senior Emirati royal that bought Manchester City in 2008, could at least claim to be nominally private. PIF is the first foreign government to directly own a UK football team.

Industry groups and NGOs have renewed calls for the Owners’ and Directors’ Test to consider potential human rights violations. Without such provisions, the onus is on the selling party to be robust in conducting its own due diligence, as Sunderland Football Club notably did in 2018 when it claimed to have rejected “higher offers from less qualified buyers”. For now though - and despite pockets of discontent - PIF’s purchase of Newcastle will continue to be celebrated on Tyneside.