Newcastle United takeover is ‘peanuts in the bigger game Saudi Arabia is playing’

Princess Reema Bandar Al-Saud mourned the American basketball legend Kobe Bryant, shortly after his death early last year. Bryant will be “an eternal symbol of kindness and the positive power of sports,” the princess, a member of the royal family of Saudi Arabia, wrote on Twitter that day. Bryant was killed in a helicopter crash, along with his 13-year-old daughter and seven other passengers.

Princess Reema knew Kobe Bryant personally. They met on December 2, 2018 and talked about “the development of basketball in Saudi Arabia.” The meeting was arranged by Anna Lewis, the boss of the Churchill Ripley Group – a well-known Los Angeles lobbying firm. She was busy for the Saudi royal family during that period.

Under a contract made public in 2019 by the U.S. State Department, Anna Lewis was paid $22,000 a month (about $19,000) to establish contacts for the royal family and hold talks with nearly all major sports executives in the United States. to prepare. She did: The princess met with board members from the National Basketball League (NBA), National Hockey League (NHL), Major League Soccer (MLS), and wrestling association World Wrestling Entertainment (WWE).

“Anna will travel to Saudi Arabia every quarter to meet the Royal Highness and her team. She will participate in telephone conversations and come to the kingdom if the Royal Highness commands,” the contract reads. She also had to arrange interviews with major media outlets – she succeeded, including television channels CNN, ESPN and the daily newspaper The Washington Post. Everything had to be planned and prepared “very discreetly”.

The aim: to “strengthen the position of the kingdom” – help in the birth of Saudi Arabia as an internationally recognized sports nation.

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With the takeover of Newcastle United football club by the Saudi Public Investment Fund (PIF) last week, it has become clear that Saudi Arabia’s influence in the international sports world has now taken on serious forms. Even if the deal is not financially viable. The amount that the Saudis paid for the club, about 350 million euros, represents about 0.1 percent of the total assets in the fund. Cyril Widdershoven, a Dutch consultant who has worked, among other things, for the investment fund that buys Newcastle United, calls the acquisition “peanuts in the bigger game that Saudi Arabia is playing”.

But the Saudi ownership of Newcastle United has great symbolic value. The club is a British football institution with a history of more than 130 years, deeply linked to the former mining region of the North East of England. In addition, the sovereign wealth fund, and its chairman Crown Prince Mohammed bin Salman, will now be given a seat at the tables where the future of European football is being shaped. It also includes Sheikh Mansour bin Zayed Al Nahyan of Abu Dhabi, owner of Manchester City since 2008, and representatives from Qatar, which has owned the shares of Paris Saint-Germain since 2011. Qatari PSG president Nasser Al-Khelaifi is now chairman of the ECA, an association of European clubs.

The acquisition of Newcastle United is the next step in a Saudi strategy that until now mainly consisted of bringing in popular sporting events. On January 12, 2020, Atlético Madrid played the final of a mini-tournament of the Spanish Supercup at the King Abdullah Sports City stadium in Jeddah, Saudi Arabia. The Spanish federation received forty million euros from the Saudi authorities to organize the duels in the kingdom. Real Madrid won on penalties.

The Italian Football Association was also willing to move cup matches to Saudi Arabia in exchange for petrodollars. In addition, the Saudis paid more than €100 million for a heavyweight boxing title fight – the ‘Clash On The Dunes’ held in 2019 between Andy Ruiz Jr. and Anthony Joshua II in Diriyah – freeing the country millions to host snooker, golf and wrestling matches. The biggest deal to date: $560 million to host Formula 1 – the first Grand Prix will be held in Saudi Arabia in December.

oil price

The Saudi interest in sports is a relatively recent phenomenon and partly a reaction to the sporting status acquired by its much smaller neighbors Qatar and Abu Dhabi. There is also commercial logic behind it. In 2016, when the oil price reached an all-time low, the regime decided it was time to structurally change the country’s image and revenue model. In the ‘vision 2030’, the Saudi royal family announced its aim to become less dependent on oil. Saudi Arabia wanted to develop culturally and financially as “an example to the world.” Top sport, with access to billions of viewers worldwide, was an important part of that campaign.

Many critics, such as Amnesty International, see Saudi sports investment as an attempt to divert attention from human rights violations and oppression in the country. But if ‘sportswashing’, as it’s been called, is the primary goal, then the strategy is failing, says British sports economist Simon Chadwick (Emlyon Business School). Precisely by claiming a prominent role as host of much-watched sporting events and owner of a Premier League club, Saudi Arabia is provoking discussions about abuses in the country, he says. According to Chadwick, the Saudi sporting ambitions reflect a desire for status and legitimacy on the part of the regime. It’s about being taken seriously.

In addition, other, larger interests play a role in the acquisition of Newcastle United. both for the British government and for Saudi Arabia. The deal will be the prelude to significant Saudi investment in the impoverished region, Chadwick expects. In real estate, but also in the port city’s ambition to become a center for the production and development of windmill technology. In addition, Saudi Arabia has announced that it will soon start a national airline that will compete with Emirates and Qatar Airways. The new owners can use Newcastle United for the promotion. Chadwick’s conclusion: “This deal really doesn’t have much to do with football.”

mega yacht

Political and commercial interests may explain why the Saudi takeover of Newcastle United eventually went through despite previous blockades. Financial Times wrote that investor Amanda Staveley warmed Saudi Crown Prince Bin Salman to the deal as early as October 2019 when she was a guest on his mega yacht Serene. He was enthusiastic, but disturbed political relations in the Middle East and objections from the Premier League stood in the way of the plan for a long time.

The former resulted in a row over Premier League broadcasting rights. Competitions cut their broadcasting rights into chunks and sell them globally to the highest bidders. In the Middle East, that is BeIN Sports, owned by the regime in Qatar. At the end of 2020, that paid more than 430 million euros to be able to broadcast matches from the best English clubs in the period 2022 to 2025. One club was against: Newcastle United.

That was no coincidence.

Even then, Newcastle United were open to money from Saudi Arabia. But that country had a major conflict with BeIN Sports. Or rather: with Qatar, the region’s financial and cultural rival. Saudi Arabia is even said to be involved in setting up and operating pirate channel BeoutQ, which streamed Premier League matches online without having the rights to do so – much to the ire of BeIN Sports, of course.

So there was a lot of resistance when the first rumors emerged of Saudi plans to take over Newcastle United. BeIN Sports and the Qatari authorities, influential because of the money they have invested in Premier League sponsorship and TV rights, have been particularly troublesome. At the same time, organizations such as Amnesty protested about human rights in the country, the disadvantaged position of women, the repression of critical journalists and opposition.

The Premier League should not forget that the Saudi regime is held responsible for the murder of journalist Jamal Khashoggi, who was killed in October 2018 at the Saudi consulate in Istanbul. According to a CIA report, Crown Prince Mohammed bin Salman – chairman of the investment fund PIF – personally ordered the assassination. The Crown Prince himself has always denied that.

Moral concerns quickly fly off the table when one of the world’s richest investment funds knocks on the door of the world’s most expensive competition, in a country that can’t afford to alienate Saudi Arabia. Once Qatar and the Saudis had settled their fight over TV rights, the Premier League sought and found a goat path to approve the deal. No, according to the rules, a state was not allowed to own a club in the Premier League, but that did not stand in the way of the takeover by the sovereign wealth fund, according to the league board.

Put under pressure

According to sports economist Chadwick, the British government has put pressure on the Premier League to approve the deal. That thought is not strange. Daily Mail on Financial Times write that Bin Salman sent a text message to British Prime Minister Boris Johnson when the deal was still on hold was standing. “We expect the English Premier League to reconsider and correct erroneous conclusions,” Bin Salman wrote at the time. Failure to do so could damage diplomatic relations between Britain and Saudi Arabia. It was also announced earlier this week that the British government is refusing to reveal what instructions it has given the Premier League on the subject.

Newcastle United fans don’t care. They took to the streets to celebrate the takeover by the Saudis, some wearing Arab-style headscarves. After fourteen years without significant investment under owner Mike Ashley, supporters can dream of the arrival of big stars, perhaps this winter. “We have our club back,” they chanted.

Correction (October 16, 2021): An earlier version of this article stated that the investment of 350 million euros is 0.001 percent of the total investment fund. This should be 0.1 percent, and has been adjusted above. It also stated that sports economist Simon Chadwick was affiliated with the University of Leeds. That had to be Emlyon Business School.