Saudi Arabia's $400 Million Takeover Of Newcastle United

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Hey Friends,

Newcastle United fans woke up a bit happier than usual this morning.

After more than a decade of dealing with one of the most disastrous ownerships in English football, billionaire Mike Ashley has sold the club to a consortium led by Saudi Arabia’s $500 billion sovereign wealth fund.

Newcastle's Premier League Finishes Under Mike Ashley:

  • 2007/08: 12th

  • 2008/09: 18th

  • 2010/11: 12th

  • 2011/12: 5th

  • 2012/13: 16th

  • 2013/14: 10th

  • 2014/15: 15th

  • 2015/16: 18th

  • 2017/18: 10th

  • 2018/19: 13th

  • 2019/20: 13th

  • 2020/21: 12th

Mike Ashley officially transferred the club’s shares yesterday at a value of just over $400 million, or more than 2x what he paid for the club back in 2007 — not including all the indirect sponsorship value he hemorrhaged for his company Sports Direct.

Here’s how the club’s cap table sits today:

  • The Saudi consortium owns 80% of the club

  • Property developers Simon & David Reuben own 10%

  • PCP Capital Partners own the remaining 10%

The craziest part? Saudi Arabia’s sovereign wealth fund currently has roughly $500 billion in assets, meaning Newcastle is now considered the world’s richest club.

Important note: The Saudi kingdom has reportedly signed a legally binding “separation agreement” with the Premier League which guarantees that they will not control the 128-year-old soccer club.

The exact details of that agreement aren’t clear at the moment.

Admittedly, I don’t follow Newcastle United religiously. Still, the feeling I got from interacting with fans via Twitter was that this is much more about getting rid of Mike Ashley than bringing in Saudi Arabia.

“This is my hometown club (I’m a former long-standing season ticket holder). For now, I’m just delighted Mike Ashley has left the building — he robbed the club and city of its soul. Onwards." mentioned one fan on Twitter.

We could talk about how Ashley didn’t invest any money into the infrastructure & facilities of the club, his inability to adequately sell players, and his obsession with profit over winning, but ultimately, this graphic tells you everything you need to know.

Shoutout to Sam Ranson for pointing it out and Swiss Ramble for putting it together.

Of course, the realization that Newcastle was going from one of the most frugal owners in English football history to the wealthiest ownership group in English football history certainly drummed up some excitement also.

The Saudi Public Investment Fund, which Crown Prince Mohammed bin Salman leads, currently has about $500 billion in assets under management.

Not only does that make Newcastle the richest club in the world, but they now have more capital at their disposable than all the other Premier League teams….combined.

This graphic is a bit blurry, and whoever created it spelled “Newcastle” incorrectly, so bear with me, but the data looks correct, and it’s quite the shocking image.

Newcastle’s wealth in comparison to other Premier League clubs:

Still, there is nuance to this. Even if all $500 billion of the Saudi Public Investment Fund’s assets were available to Newcastle, it’s not like they could go out and spend any amount of money they imagined.

Financial Fair Play (FFP) regulations still apply, although, to be fair, early reports suggest that Mike Ashley left the club in a strong enough financial position that Newcastle will be able to spend roughly $250 million without breaching FFP rules.

Regardless, I couldn’t end this email without dropping this amazing meme. If you still haven’t watched Squid Games on Netflix yet, you definitely should.

I hope each of you has a great weekend. Monday is Columbus Day, so I’ll talk to everyone on Tuesday.

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Huddle Up is a daily letter that breaks down the business and money behind sports.

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