Buying the football club: what do the Saudis want in Newcastle?

Saudi Arabia’s purchase of English club Newcastle United has divided fans. If the majority is hoping for great success, others wonder what is behind it. Because the Saudis seem to have other goals.

Almost everyone in Newcastle talks about the club – most with pride. That was completely different until a year and a half ago, before the Saudis took over 80 percent. The Premier League side weren’t something to brag about in Newcastle. The performances are too dreary, the score too low.

Newcastle United is a fixture in this regard. The stadium is in the heart of the city. The stadium roof can be seen from many places in Newcastle. People are crazy about football.

The new owners have now invested more than 300 million euros in players who are among the best in their field. And with them, Newcastle is suddenly one of the best in the league. Now in the city they dream of trophies that could soon be won. That’s exactly what the new owners wanted. To win people’s hearts. However, not for romantic reasons – their motives are different.

The buyer is the Saudi sovereign wealth fund

Newcastle’s football club is effectively owned by the Saudi state. Officially, the country’s Public Investment Fund, or PIF for short, bought the shares. It is Saudi Arabia’s sovereign wealth fund, controlled by the ruler and crown prince Mohammed bin Salman, who personally heads it. Ministers hold important offices. Government revenue goes into the fund.

Because PIF has a special order. He should ensure the prosperity of the desert state. The oil that has made Saudi Arabia immensely rich is still bubbling up. But the end of the deposits is visible on the distant horizon. PIF therefore invests heavily at home and worldwide.

Uber is in the portfolio, Starbucks or Disney. According to their own statements, there are almost 600 billion euros in the sovereign wealth fund. The goal is to double that by the end of the decade. Yasir Al-Rumayyan is the head of PIF. At the economic summits in Riyadh, which are held annually, he likes to talk about the strategy: he wants to invest in the real economy, in real estate, transport, renewable energies, and less in the financial sector.

Saudi monarchy wants to improve its image

But Saudi Arabia has one problem that limits it – and that’s its own reputation. Amnesty International regularly draws attention to the poor human rights situation in the desert state. Crown Prince bin Salman is suspected of ordering the murder of dissident Jamal Khashoggi. He denies that, but suspected state terrorism is no good when looking for international business partners.

On state television, bin Salman recently gave an insight into how he wants to change that. You need influence to achieve your goals, he says there: “Let’s take our Public Investment Fund as an example. If you have influence in the world, if you have a good reputation, then the world will be more open to our investments.” And that would open up new possibilities.

Newcastle fit into the soft power strategy

The English city of Newcastle obviously plays an important role in all of this. This is where Crown Prince bin Salman’s strategy becomes clear. His words seem tailored to Newcastle. Al-Rumayyan, the PIF strategist, is personally the boss of Newcastle United. That says a lot.

He not only invested in the team, but also bought a piece of land in front of the stadium. “There should be a fan zone there,” says Aaron Stokes, who writes for the local newspaper The Chronicle. In addition, the owners have renamed the central fan bar “Shearer”, after the soccer star and idol of the fans. And donated the equivalent of 170,000 euros to the Tafel. Both caused “an incredibly positive response”.

In Newcastle, a fan group regularly protests against the Saudi owners, citing human rights violations. In view of the good deeds in Newcastle, however, they penetrate less and less. This has achieved what Crown Prince bin Salman wants. The reputation has been polished.

Next goal: real estate and technology investments

But that’s probably just phase one. Sports scientist and economist Simon Chadwick believes that Newcastle was not chosen at random. In fact, the city is in dire need of investment in housing. Employees may not be quoted, but they point to a whole range of building land in prime locations, prime pieces.

Getting the bid here is more difficult than acquiring shares in Uber or Disney. “Of course you don’t need a football club to buy it,” says Chadwick. That could also be done through normal channels, but they are bureaucratic. “It’s much easier to say: Come to the game on Saturday.” Relationships would be built there and you could influence a lot.

In addition, Newcastle wants to establish itself as a location for future technologies in the field of renewable energies. That too is part of the Saudi strategy. He expects investment in the industry from the country soon, says Chadwick.

UAE shopped in Manchester

How useful it is to own a football club when you are also interested in the city and region can be seen in Manchester. The United Arab Emirates bought Manchester City there – and recently built 1,600 modern apartments in a prime location. High rental income over the next few years is guaranteed.

A group of researchers from the University of Sheffield have looked at the deal with the city and marvel at how cheaply they gave the land to the Manchester City owners. “Silverware was sold there,” says Richard Goulding, one of the scientists. He also wonders how opaque the whole deal was. The city rejects the allegations with reference to the good partnership. New projects have already been initiated.

Something similar can be expected in Newcastle, possibly even on a larger scale. Also because football clubs have a great impact when they are successful, not only in the city, but also nationwide, sometimes even worldwide. And so Saudi Arabia’s strategy is not limited to Newcastle either.

Or, as Crown Prince bin Salman put it: “A good reputation, a reputation as a driving force, opens up new opportunities.” Newcastle could thus be the catalyst for the large-scale, further expansion strategy.