After the initial excitement of the Saudi Arabia-backed takeover fades, Newcastle is left wondering where the project will go next.
This week, three years ago, Newcastle United was named the “richest club in the world” when Public Investment Fund (PIF) of Saudi Arabia took possession.
After 18 months of prolonged acquisition discussions during those turgid days of Covid lockdowns, Newcastle finally had owners who intended to compete at the top of European football. The city felt the same force that had been released in the early nineties when Sir John Hall and Kevin Keegan momentarily threatened to win the Premier League.
Rapid expansion has occurred, providing fans who felt depleted of hope under previous owner Mike Ashley with a magical journey. However, there are now legitimate doubts regarding the course of travel. Although it was a pivotal event, was it really revolutionary?
Newcastle, who have been subjected to harsh criticism outside of their area of expertise due to Saudi Arabia’s human rights record and legitimate charges of sportswashing, are left wondering where the project is heading as the initial excitement surrounding the takeover fades.
First steps
First, we need to take stock of our accomplishments. Newcastle hired Eddie Howe as manager in November 2021, spending £450 million gross (£350 million net) on new players, and qualified for the Champions League a year after surviving relegation. Newcastle inherited a club that was second from bottom in the Premier League, winless, and directionless.
For the first time in twenty years, they also advanced to a major cup final—the Carabao Cup—and, in spite of a debilitating injury list, finished in the top seven the previous season.
Newcastle is not the same as it was under Ashley. Can Newcastle, however, take the next step in the realm of profit and sustainability rules (PSR), which they very nearly violated back in June?
The gap between anticipation and reality is there. Even though Newcastle’s owners are the richest in sport, their money is mostly meaningless since PSR shackled them and new restrictions that significantly restrict sponsorship agreements related to owners were implemented right after the takeover in 2021.
Newcastle has two sponsorship agreements with Saudi businesses: Noon sponsors the sleeves and Sela sponsors the front of the jersey. The fair market value regulations restricted them to £25 million and £6.5 million annually, respectively. Newcastle has been sluggish to go forward with other sponsorship agreements, such as naming rights for the stadium and training facility, but it is suspected that they were holding off to see how Manchester City’s fight with the Premier League would play out.
They are unable to profit from expensive sponsorship agreements associated with certain Saudi companies due to the limitations. While their arrival relieved some people on Tyneside, it caused great frustration for others.
Newcastle is seen as a dangerous team with questionable ownership. The future sponsorship arrangements between Newcastle and Manchester City are still to be seen, as is the potential consequence of the city’s legal struggle against associated-party transactions.
Up until now, commercial growth has been robust, but it has slowed and in some cases, stopped. Newcastle’s revenue streams are still well behind those of the Big Six teams.
Newcastle ended exactly where they did in the Premier League, which is seventh in the income table (they were eleventh when the takeover was confirmed). They are still far behind Arsenal, who are in sixth place. Newcastle’s recent reports show that their income increased by 40% year over year to £250.3 million. In 2022–2023 Arsenal’s was £465 million. Manchester United’s was £661.8 million, for more context.
Although Newcastle’s owners are extremely wealthy, they are unable to indulge in extravagant spending. Newcastle has most likely reached its limit going forward. On and off the pitch, they are a top eight club but not yet a top four one. It is necessary to adjust expectations appropriately.
Newcastle are not PIF’s No 1 priority
The amount of money spent on LIV golf, boxing, hosting the 2034 World Cup, and even their own Saudi Pro League looks to be more important to Saudi Arabia than their investment in Newcastle.
They are also more attention-grabbing endeavours. Saudi Arabia now has a place at the Premier League table, the most watched and thrilling league in the world, and Newcastle is more than content with that.
PIF still has interest in Newcastle; it’s simply not their top concern right now. It never was. It has always been considered as a long-term investment; a long-term project, but one among several for chairman Yasir Al-Rumayyan to manage.
“We want to be the best club in the nation, the chairman stated,” a source told Telegraph Sport. What does that actually mean?
The message has remained constant throughout. It is about attaining sustainable, long-term success. to compete for awards and attempt to earn a spot in the Champions League each year.
“We are still striving for that goal, which is still our goal. Nothing has changed in terms of PIF’s view that this is a long-term investment.
Nonetheless, it was significant that Saudi Arabia offered no assistance to Newcastle during their desperate situation with PSR throughout the summer.
No bids were made, despite Kieran Trippier and Callum Wilson being linked to transfers to Saudi teams. Although Allan Saint-Maximin did spend almost £20 million to join Al-Ahli in the summer of 2023, Newcastle has not profited nearly as much from Saudi wealth as other English teams have.
“If they were not going to help Newcastle this summer, they aren’t going to help them at all,” stated one insider.
The one gap left by the Premier League was moving players from Newcastle to Saudi Arabia. It would have been the simple way to go past two old England internationals and fulfil PSR requirements.
However, Saudi Arabia is home to many conflicting interests, and the league no longer wants to be thought of as a place where big-name players retire. More important to Newcastle than helping them balance their budgets was the league’s prestige. It was a sobering discovery within.
New stadium
This serves as a gauge for PIF’s medium-term goals for Newcastle in many ways. Newcastle needs a new stadium to boost income sources in addition to updating its premier football facilities. With a capacity of 52,000, St. James’ Park is currently too small to meet demand for tickets and doesn’t generate enough revenue on game days to rival the Big Six.
A feasibility study has been completed, and CEO Darren Eales stated back in July that an announcement was “imminent.” An update did come through last week, saying basically that “all options are still being looked at and no decision has been made yet.” It was like someone kicking a can down the street.
According to Brad Miller, who was hired by PIF as chief operational officer to supervise the stadium project, there would be another announcement in “early 2025.” It could be a while before we see spades in the ground. Leeds United and Manchester United have both announced intentions to construct spectacular new venues of their own in the meantime.
Plans are in place to renovate and enlarge St. James’ Park, but they also have another option: a new stadium may be constructed on neighbouring Leazes Park, a green space from the Victorian era that is a legally protected conservation area. If the club were to go through with it, it would be a very contentious idea that may face several legal challenges as well as bureaucratic obstacles related to planning.
PIF hasn’t committed to paying for anything as of yet. They are now determining how to maximise the economic return on a £1 billion investment. The range of 65,000 to 70,000 is suggested as the capacity.
It will be a new stadium regardless of location, Telegraph Sport was informed last week. It will be a part of a big makeover of the surrounding region. The plan is to construct a cutting-edge, multifunctional space that serves as more than just a football stadium.
Miller describes it as “a once in a generation” project. They had to take their time, according to a different source, to make sure they could “deliver what they promise in a suitable time-frame that works for everyone.”
“While there haven’t been any formal talks between the club and the council, our door remains open as it would with any developer,” Newcastle City Council stated in a statement to Telegraph Sport. When the group requests to join us for a meal,
Given that the council owns the land on which St. James’ Park is constructed, Newcastle must renew its existing 70-year leasehold and assume responsibility for Leazes Park’s future.
The club also announced shortly after the takeover that they will construct a brand-new, cutting-edge training facility. No updates are available. Newcastle upgraded its current Benton base for about £10 million, but it appears they will have to settle for this for the foreseeable future.
Stagnation in recruitment
In the summer, Newcastle failed to add even one player to bolster their starting lineup. They also didn’t do it in January. PSR limitations play a major role in this, but every team that finished both above and directly below them in the previous season improved.
According to Telegraph Sport, even if they spend around £50 million on a player in January—which is what new sports director Paul Mitchell wants to do if the right player is available—they will still have to sell a player in the summer in order to comply.
Mitchell has begun to restructure the club’s scouting network and hiring practices. In order to add more promising players from a worldwide pool with a higher prospective resale value, Newcastle will search for more value in the market. Compared to Manchester City, Arsenal, or Manchester United, it will more closely resemble Brighton.
More players who can be developed and sold are anticipated to come out of the program. Under head of academy Steve Harper, expenditure on young players from throughout the nation has increased significantly. In addition, new coaches have been sought for; Diarmuid O’Carroll of St. Mirren is one of four newcomers hired to bolster the junior system. However, like with any player development, it will take some time before Newcastle can enjoy the results of their hard work.
Long-term concerns have been raised over the futures of several well-known figures, including Bruno Guimaraes, Anthony Gordon, and Alexander Isak. The goal of Newcastle being a regular Champions League team was sold to everyone. This season, they are not touring Europe.
They were all, in principle, for sale due to PSR worries throughout the summer, which left them all, to varied degrees, unsettled.
The concern is that this Newcastle team will eventually be broken up. One of the crown jewels will be sold. How damaging that will be will depend entirely on how the money is reinvested. The bottom line is, Newcastle are not operating as an elite club yet, as they do not have an elite club’s budget to spend on wages or transfer fees.
Wider investment in the city
When the acquisition occurred, there was a lot of discussion about increased investment in the area, but not much has transpired subsequently.
Reports that the PIF is interested in purchasing the city’s faltering rugby side, the Newcastle Falcons, have been shot down by both the Kingston Park leadership group and individuals close to the sovereign wealth fund. The Falcons’ management has discussed the possibility of opening a rugby academy in Saudi Arabia, but that’s all.
A reliable source claims that PIF presently has “no plans to invest” in rugby union in this nation. It is quite frustrating, in fact, that those purporting to speak for PIF but actually speaking for themselves have fostered this narrative in the press.
The basketball team in the city, the Newcastle Eagles, attempted to get investment from Saudi Arabia but were turned down. As one insider put it, PIF would purchase a club in the NBA in America rather than in England if they were going to invest in basketball.
The amount of money required to establish the Falcons and Eagles as dominant teams in their respective sports would pale in comparison to the amount required, say, to construct a new stadium at St. James’ Park. It would seem like an easy victory for Saudi Arabia and PIF to turn Newcastle into a trophy-winning, booming sporting city and to buy the football team, but there doesn’t appear to be much enthusiasm. “Nobody ever said the plan was to create a Barcelona-type sporting club with multiple clubs across different sports,” Telegraph Sport was informed when pressed on the matter.
It was also mentioned that investing in these sports would most likely result in a loss, similar to what happens with a charity contribution. Currently, Newcastle United’s women’s team pays to play its home games at Kingston Park Stadium, home of the Falcons.
It was also mentioned that the ownership group, which is headed by fellow investors the Reuben family, already contributes a sizable sum to the city’s foodbank. The philanthropic arm of the club, Newcastle United Foundation, has also received major funding and as a result is able to carry out significantly more in the community. That was the end of the talk.
Regarding the city council, some inauspicious attempts have been made to establish more robust commercial relations with the Kingdom, but that’s about it. They have also mentioned the owners’ investments.
According to a spokeswoman, club and council representatives have been attending international trade shows lately, effectively laying the foundation for any future expansion.
The Newcastle United women’s team’s commercialisation, the Newcastle United Foundation’s promotion of equality of opportunity, the Newcastle Foodbank’s assistance for low-income families, and other acts of charity contribute to the club’s growing commitment to the city’s social fabric.
“The multi-million-pound STACK fanzone at St. James has added to the vibrancy of the city centre, especially on match days, and created job opportunities for 140 locals.”
The city as a whole is enticed by the prospect of a new stadium and a significant reconstruction of the surrounding region, but we are being kept in a holding pattern until specific plans are revealed.
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