In 2019 Saudi Arabia’s Public Investment Fund (PIF) passed on an opportunity to buy a 30% stake in Premier League giant Manchester United; instead it opted to purchase Newcastle United in 2021, a team on the verge of relegation at the time of the sale.
While four years ago it appeared the Saudis missed an opportunity by not investing in one of the most storied clubs in the world, that view may need revising. Today, Newcastle is fifth in the EPL standings and preparing to face the Glazer family’s Manchester United at the final of the Carabao Cup (aka The League Cup) at Wembley Stadium on Sunday.
“The rationale for buying Newcastle isn’t quite the same as the rationale for buying United,” Chris Mann, head of M&A and special projects at Sportsology, a boutique sports consulting firm, told Sportico in an interview. “[Manchester] United is a commercial giant, one of the biggest brands in world sports. It’s commercially highly mature. There’s massive scarcity value there. It’s up there with the Lakers, the Yankees, the Knicks.”
Manchester United, emerging from a decade of unfulfilled performance on the pitch, is the most valuable team in the Premier League, worth $5.95 billion per Sportico’s latest valuations. Newcastle United sits in 10th place, valued at $440 million, a 63% value increase over two years.
PIF, PCP Capital Partners and RB Sports and Media acquired Newcastle for £350 million ($420 million) in 2021. The group purchased the club from British billionaire Michael James Wallace Ashley, who bought the club in 2007 for £134 million ($160 million).
Since the PIF purchase, Newcastle has been on the rise. Almost immediately, the club appointed a new board. The CEO of PCP Capital Partners, Amanda Staveley, got a seat on the board, and Jamie Reuben of RB Sports & Media became the director. The club appointed a new CEO (Darren Eales), a new sporting director and a coaching staff. Under the new management that season, the Magpies became the first team in Premier League history to avoid relegation after failing to win any of their first 14 games that season.
“I think what PIF has done is pretty impressive,” Mann said. “They had picked up an asset for £350 million in 2021. If you look at the ROI, £350 million will be approximately 5% of what Manchester United eventually gets sold for at $6 billion. PIF could transform its revenues from $140-$50 million today to $400 million. And if that happens, the team could be worth $2 billion in 10 years, which would be six to seven times the purchase price value. Is it Manchester United? No, and it will never be that brand. But if they flip this in 10-15 years, I’d expect them to make a huge return.”
In October 2022, one year after the Saudi takeover, Newcastle topped the Premier League spending table for the previous year, shelling out over £210 million ($238 million) on eight new players. The spending spree and the improved performance has boosted attendance. This week the club has been allocated 32,761 seats for the League Cup final on Sunday to season-ticket holders. Staveley’s husband and the co-owner of Newcastle, Mehrdad Ghodoussi, said the club want to add more seats to the team’s home, the 52,000-seat St. James’s Park, next season.
“We bought the whole team for £350m, instead of only having 30% in another team for £700 million,” Yasir Othman Al-Rumayyan, the governor of PIF, told The Athletic last October. “We will make that £350 million at least $3.5 billion.”
While the League Cup tournament might be lower in prestige and prize money than the FA Cup, it’s crucial for Newcastle. The winner earns a spot in the Europa League, another step in Newcastle United proving it’s an important player in the Premier League.
“But had they been relegated last season, that can be a different story,” Mann said. “That was the sliding doors moment for this ownership group. And now they’ve got through that, (and) they’re on the right side of it. I think it’s going to work out pretty well.”