The sale of Newcastle: between a new case of ‘sportswashing’ and an opportunity to be reborn

On the morning of October 7, all the floodlights of world football turned to Newcastle upon Tyne, a city in the north of England. Hundreds of fans from his local club, the Newcastle United, came to the gates of St. James’ Park to celebrate.

As the beers flew through the air, the team’s official Twitter announced that the Public Investment Fund (PIF), investment fund of the government of Saudi Arabia, acquired 80% of the club’s ownership. Two other companies share the remaining 20%: RB Sports & Media, from one of the richest British families, and PCP Capital Partners, from businesswoman Amanda Staveley, who was an intermediary in the purchase process.

It transpired that the Newcastle It was sold for 300 million pounds, about $ 409 million.

The PIF is led by Mohammed Bin Salman, prince of the Arab country, who has a wealth of more than US $ 500 billion. This represents more than double the GDP reported by Peru in 2020 (US $ 202 billion). In total, the royal family has a net worth of $ 1.4 trillion.

These figures are what encourage fans of Newcastle, who today see their team in the penultimate place of the table of the Premier League. They have yet to sing a single victory. The club’s football debacle began 14 years ago when businessman Mike Ashley acquired it. His austere transfer policies, as well as his ability to sell to the team’s most talented players for quick profits, ended up leading the Magpies to contest the Second Division twice.

In the last five years the team has been in the insignificance of tenth and thirteenth places in the league.

Its actuality contrasts with the main teams of the tournament. According to the British consultancy Deloitte, five of the ten clubs that generated the most revenue in the 2019/2020 season are English. Manchester United alone raised more than € 711 million. Newcastle In 2018/2019 it generated € 201 million, ranking nineteenth worldwide. This year it came off the radar.

Teams with capitals from Arab countries are also on the list, such as Paris Saint-Germain (€ 635.9 million) or Manchester City (€ 610.6 million). Both are owned by millionaires from Qatar and the United Arab Emirates, respectively. Also, this is not the first Saudi experience in European football. Turki Al-Sheikh, the country’s minister, acquired Almería from the Spanish Second Division in 2019 and is currently fighting for promotion.

Thus, hope rests on the historic and today insignificant team of the English north.

Reviving the brand and image

The Newcastle It was founded on December 9, 1892. It has not been a champion of English football since the 1920s and has not fought for a championship since 1997. In that same year, Allan Saint-Maximin was born, its most promising player today.

The magpies have not approached sporting success for a long time, and their new owners will precisely seek to change that face with new signings. These acquisitions are expected to be media, so they will bring the club closer to its fans. “You are talking about a new dynamic with the fans. If tomorrow you break the market with a renowned player, people will turn around and there are people who will become fans. It is a matter of the moment, of a trend, of a brand that you want to consume and without a doubt there is room for it. Newcastle”, Explains Ricardo García, founding partner and commercial director of the Peruvian Sports Marketing Association (APEMD).

However, the makeover of a historic club in low times would not only be explained by the sports business. From England, various voices warn that the Saudi investment could represent a case of ‘sportswashing‘, that is to say, .

Amnesty International criticized the sale, arguing that English football allows the government of the Arab country to use the tournament to wash its image. “Amnesty notes that this represents a very clear attempt on the part of the Saudi authorities to launder their bad management. [contra los] Human Rights, using the ‘glamor’ of the Premier League“Said the agency in a statement.

According to a United States intelligence report, leaked in February, the prince Mohammed Bin Salman approved and ordered the assassination of Jamal Khasoggi, a journalist opposed to the regime. The events occurred inside the consulate of his country in Istanbul, in 2018. The planes with which the assassins escaped would have been the property of the FID. The Newcastle owner denies the charges.

Previously, Amnesty International had also spoken out against the purchase of Manchester City by sheikhs of the United Arab Emirates.

Thus, according to these critical voices, the royal family would seek to enter the Premier League to improve your image, while expanding your investments. “It is about washing the image or changing the concept of the Arab sheiks. Why choose soccer? Because it can give you an important image revenue. It is a refreshment of the image of the country, to the extent that there are sporting achievements that accompany it”, Says Raúl Rosales, director of the Sports Administration and Business career at the UPC.

To achieve these victories and qualify for international tournaments, the new owners of the Newcastle They will be able to take advantage of new networking opportunities with international authorities and other relevant club presidents. “There is also a public relations issue, when one organizes the game one can afford to invite authorities to the presidential box. Finally, that is an investment in image, which in some way should give you economic returns”Adds Rosales.

Despite the background of the FID, the specialists consulted coincide in highlighting that if the English league approves the transaction it is because the buyer complied with all the necessary protocols, including transparency in the origin of the money invested. For this reason there would be no future inconveniences for the new rich team of the country. “Initially there is a media noise that is questioned because of the Saudi government, not the FID, and it makes everything rare. It will be up to the authorities in charge to define if there is something that is not right”, Highlights García.

In this way, between the controversy over the buyer and the hope of the fans, the magpies of Newcastle they will face a new flight in their centuries-old history. The investment road does not end with the purchase, your next challenge will be to obtain the best signings without breaking the rules of financial fair play that exist in world football.

A purchase in Peru?

There were no sheikhs in the negotiations, but the case of a millionaire failed purchase of a Peruvian club is well remembered. At the beginning of 2004, the economic crisis at the Sports University was becoming more and more evident. After many years of speculation, Jorge Vergara, president of the Omnilife Group, which at that time was the owner of the Guadalajara club in Mexico and the Costa Rican Saprissa, presented a formal offer to acquire the merengue club.

As he told the media, he would invest US $ 20 million a year to strengthen the club and hoped to turn it into a public limited company. His sporting plan was for the ‘U’ to be made up solely of Peruvian players, the same characteristic that his Mexican team had.

His proposal also accepted any debt that is recognized to Gremco, the company in charge of the construction of the Monumental stadium. Today, University owes US $ 57’788,868 to this company.

In those years, Alfredo González was a congressman and president of the cream box. From the outset he decided to oppose the possibility under the slogan “the ‘U’ is not for sale.” After some negotiations and despite the fact that a part of the members tried to convince him, González achieved his mission and continued to direct the club until 2007.

Currently the economic crisis continues to afflict the cream team, being the only team declared insolvent in 2012 that to this day does not have an approved restructuring plan nor has it paid a sol of its bankruptcy debt. In total, it owes more than US $ 64 million and more than S / 157 million. Indecopi recognizes more than 400 creditors.

For his part, Vergara would return to Peru in 2017, seeking to buy Sporting Cristal. Negotiations were not successful either and Backus ended up selling the celestial club to Innova Sports for more than $ 5 million in 2019.

Vergara passed away on November 15, 2019, leaving his son as the new president of Guadalajara. In life he also dabbled in American and Chinese soccer. But his best results were always with the Mexican sacred herd.