Newcastle failed takeover poses questions around suitability

NEWCASTLE UNITED’s takeover by a consortium including the Saudi Arabian sovereign wealth fund, Middle East expert Amanda Staveley and the Reuben brothers may have collapsed, but the club remains up for sale and there is a chance the transaction could be rekindled.

If that is the case, the controversy over Saudi Arabia, with its suspect human rights record, will rear its head again, dividing public opinion and questioning the ethics of the football industry.

Newcastle fans are desperate to get rid of owner Mike Ashley, but they have to consider the moral questions. On the other hand, should it matter given so many aspects of business life are inter-woven with middle eastern issues?

Morals

It does matter. As we have seen in recent years, football has attempted to become an outlet for causes and campaigns, pushing itself to the forefront of virtue signalling. Given the position the game has acquired, being the first port of call for any cause or opportunity for conspicuous grieving or appreciation, how can Saudi Arabia’s human rights abuses be ignored? You are either the moral compass of the people or merely campaigners of convenience.

Naturally, Newcastle fans were excited about the possibility of the club realising some of its potential, backed by Saudi money, but how many people were prepared to sell their soul in the process?

We have seen, since Roman Abramovich bought Chelsea in 2003, resentment of clubs who receive inflated investment from the rich and influential. Clubs like Chelsea, Manchester City and Paris Saint-Germain are hated because of their financial advantages. But is it not true that almost every envious fan would secretly like their club to be patronised in the same way? And when a rich oil sheik, oligarch or Asian businessman drives into town, some people become apologists and grab the opportunity – sometimes blaming Chelsea, City or PSG for creating the situation in the first place. We don’t like this game, but we will play it all the same.

Fans invariably want an owner, in crude terms, who pours money in and keeps out of view, allowing the club to win prizes and become a big-hitter. Some owners, such as Roman Abramovich, do not expect or ask for a return. Abramovich is relatively low profile these days, but he still backs Chelsea in order to maintain competitiveness. He has a past and he’s from Russia, which also has a questionable human rights record. If Abramovich was taking over Chelsea today, he may find the environment a little more stringent than it was in 2003.

Nevertheless, Abramovich is seen as a good owner by Chelsea’s fans – it is surprising what 16 major trophies can do! – even if the plethora of coaches that have gone through the Stamford Bridge revolving door might disagree. Manchester City’s followers will no doubt say their owners are more than decent benefactors after a total of 11 major honours since 2011.

Other clubs are unhappy with their owners, namely Manchester United and Arsenal, two clubs that dominated the era before Abramovich and have struggled to live up to their name since they lost two iconic and powerful managers, Sir Alex Ferguson and Arsene Wenger respectively.

Equally important in the relative decline of these two clubs has been the type of ownership that has controlled their destiny in recent years. Both have US owners and to a large degree, they adopt a business approach that expects to have something to show for their investment. Neither the Glazers at United and Kroenke’s Arsenal are popular with the support base, but a few trophies here and there would change the perception of the club’s owners. Both have picked up silverware, but what is crucial in this debate is that Arsenal and United have lost their position of leadership they enjoyed in the period before Chelsea and City became contenders.

The interest in English football is growing and 17% of the 92 clubs have some form of US ownership. They largely want their businesses to be run properly, low risk and capable of providing a return. This approach is reflected in US Major League Soccer, where clubs are mostly well run and play in good stadiums. It is worth noting that America’s principal sports run on a “closed league” basis, which means relegation is not a concern for owners.

At the highest level, football is no longer “owned” by local business people who love the club they supported as a youngster. Financially, such owners could not possibly compete with the oligarchs and Asian retail tycoons that proliferate the global game today. Therefore, it is a case of biting the bullet in order to compete. But where do you get the sort of money needed to play among the uber-wealthy?

Bite

Football has shown many times it can bite-off the hand of any would-be investor, often regretting it later. The current climate has forced many clubs to mislay their traditional values in order to be successful. Some have courted protagonists from the alternative investment world such as private equity and hedge funds, very few of which would have a long-term view on club ownership. Leveraged buyouts, which can land the club with substantial debt on their balance sheet, have been used to make acquisitions, such as the Glazers with Manchester United. Football has certainly moved into the financial world and is seen as a market of opportunity, even though it is an industry that conforms to very few conventional business practices and has added burdens in the form of emotion and expectation.

Where does this leave Newcastle United? Mike Ashley has wanted to sell the club for some time – Amanda Staveley, through her company PCP Capital Partners, tried before to strike a deal – but despite plenty of talk about possible buyers, it just hasn’t happened. Presumably, the intention is to transform the club into a trophy-winning, all-star team that can compete at home and in Europe. It needs to happen soon, because the club could be in danger of losing its cachet – it has been, after all, 51 years since they won anything other than promotion.

That needs serious money and there’s only so many places where that can be found. The Champions League final this year could well be Manchester City versus Paris Saint-Germain, Abu Dhabi versus Qatar. They have the money, but they got in there first. Newcastle’s timing has not been good, hence the microscope has been firmly focused on them as people have questioned the way football is heading. Saudi Arabia may not be the ideal owner of a club, but can the Premier League honestly say, hand-on-heart that its portfolio of owners is clean? Whatever happens, the people of Newcastle deserve greater clarity over the future of their club.

@GameofthePeople