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Lack of ownership structure halts Newcastle takeover

The Saudi takeover of Newcastle United has come to a halt over a lack of clarity surrounding ownership of the club.

Current owner, Mike Ashley, received a £300 million (US$385 million) offer from Saudi Arabia’s investment fund (PIF) in April with the deal expected to be wrapped up following the owners’ and directors’ test by the Premier League.

Sixteen weeks on and the deal is yet to be over the line. It’s understood that, as part of the test, greater clarification of who is actually responsible of The Magpies is required for the deal to be processed. Currently, PIF are hoping to receive 80 percent of the club, while the remaining 20 percent will be split evenly between Amanda Staveley, who negotiated the deal, and financier Jamie Reuben.

The uncertainty adds to the surrounding controversy of the takeover, as the World Trade Organisation (WTO) published a report damning the Saudi government over their lack of discipline to clamp down on piracy. In addition to concerns over horrific human rights in Saudi Arabia, the WTO report found the pirate broadcaster BeoutQ were backed by the government.

However, the current deal has now stalled with the Premier League asking for greater clarity regarding the connection between PIF and the Saudi government.

Another twist to the tale occurred earlier this month when Qatar-based broadcaster, BeIN Sports were banned from broadcasting in Saudi Arabia, making it impossible to legitimately watch the Premier League.

It’s believed that the Premier League are ‘not satisfied with the answers it has been given’ on key issues. The Premier League’s Chief Executive, Richard Masters, and its board want clarification as to who will actually be running the club and make the final decisions on issues such as commercial contracts. The most watched league in the world is reported to be unhappy with the Tyneside club’s proposal of their new management structure which doesn’t acknowledge PIF’s majority stake.

The potential new owners have continued to state that PIF is a separate organisation to the Saudi government. However, Prince Mohammed bin Salman, chairman of the fund, is actually the de facto ruler of Saudi Arabia.

If the takeover was to go ahead, Staveley would be responsible for the day-to-day operations of the business, while Saudi representatives would make up three-fifths of the board, as Yasir Al-Rumayyan is expected to be chairman. Current director of Queens Park Rangers (QPR) Jamie Reuben would also be on the board, as he would be expected to step down from his current position.

More than 97% of Newcastle United Supporters’ Trust members support the takeover, yet, if the deal falls through, Ashley has other options available. Last month, Californian and CEO of Clear TV, Henry Mauriss proposed a bid of £350 million (US$449 million). As PIF’s deal with Newcastle has expired, Ashley is able to negotiate with Mauriss if he is still interested.

Author: James Parker