Newcastle United has been taken over by a Saudi Arabian-backed fund, ending retail tycoon Mike Ashley’s 14 years as club owner.
The Sports Direct boss bought the club for £134m ($182m) in 2007 but the Premier League has now approved a £305m bid from Public Investment Fund (PIF) following assurances that the Saudi state would not be in control.
Although Mohammed bin Salman, the Crown Prince of Saudi Arabia, is a chair of PIF, it is seen as separate to the state.
This has put aside concerns of ‘sportswashing’ by Saudi Arabia after the state was accused of human rights abuses.
According to Western intelligence agencies, the crown prince ordered the murder of journalist Jamal Khashoggi in 2018, although this has been denied by bin Salman.
The group will provide 80% of funds for the deal, and is leading a consortium made up of PCP Capital Partners and RB Sports & Media.
Due to PIF having assets of about £300bn, the takeover makes Newcastle now one of the richest clubs in the world.
The Saudi PIF is regarded as one of the world’s biggest sovereign wealth funds, and reinvests the country’s oil revenues around the world.
Sovereign wealth funds spread the risk of their investments by buying assets in developed countries where legal rules protect them from arbitrary changes to property rights.
Chaired by the Crown Prince, the company is also headed by Yasir Al-Rumayyan, who sits on the boards of Uber (UBER), SoftBank Group (SFTBY) and Reliance Industries (RELIANCE.NS), which is the largest publicly traded company in India.
Al-Rumayyan, 51, who is also on the board of state oil company Saudi Aramco (2222.SR), will serve as non-executive chairman of Newcastle United.
PIF, established in 1971, began snapping up a number of high-profile investments about six years ago. It acquired an almost 40% stake in South Korea’s Posco Engineering and Construction company in 2015, followed by a 5% holding in Uber in 2016 for $3.5bn.
Since then, the group has amassed a 5.7% stake in concert distributor Live Nation (LYV), and minority stakes in a string of US companies including Boeing (BA), Facebook (FB) and Citigroup (C), as well as Disney (DIS) and Bank of America (BAC).
In 2017, PIF confirmed that it would be spending some $40bn on infrastructure projects in the US, as then-president Donald Trump visited Saudi Arabia.
It also recently disclosed a small stake in Berkshire Hathaway (BERK-A), and oil giant BP (BP.L).
The Saudi-led consortium initially withdrew from the Newcastle deal in July last year after the Premier League identified the Saudi state as a director with control over the club.
However, since then the state resolved its issues with beIN Sports over the illegal streaming of Premier League football.
The Qatari network had been unable to broadcast in Saudi Arabia for the last four-and-a-half years, as part of a diplomatic dispute, but the ban has now been lifted.
The acquisition, however, has seen some opposition from human rights organisations.
Amnesty International UK said it was “an extremely bitter blow for human rights defenders”.
“We can understand that this will be seen as a great day by many Newcastle United fans,” chief executive Sacha Deshmukh said.
“But it’s also a very worrying day for anyone who cares about the ownership of English football clubs and whether these great clubs are being used to sportswash human rights abuse.”