Newcastle United are backed by the wealth of the Saudi Public Investment Fund, who are nearing the $1trn mark in terms of assets under management.
Newcastle themselves, who were bought for £305m by PIF in 2021, are a tiny, tiny element of their portfolio. In terms of their value as an asset on the balance sheet, at least.
For context, PIF recently bought Electronic Arts – in tandem with Manchester City investors Silver Lake via a leveraged buyout – for about £42bn. The video games behemoth reported revenue of about £5.6bn for the last financial year, while Newcastle’s club-record turnover in their last reporting period was £320m.
The deal that saw Amanda Staveley and Mehrdad Ghodoussi sell their stake in the summer of 2024 valued the club at around £1bn. So, if PIF were to sell tomorrow, they would already have achieved a very healthy markup, assuming a buyer could be found at that price.
Newcastle United fans celebrate their takeover by the Saudi Public Investment Fund (PIF
Photo by Robbie Jay Barratt – AMA/Getty Images
However, while questions have arisen about how far up Newcastle United are on PIF’s list of priorities in recent years, it seems beyond question that they have outsized importance relative to the Saudis relative to their value.
Why else would Saudi Crown Prince Mohamed Bin Salman have become personally involved in the takeover? Why would PIF kit Newcastle United out in green away shirts which see players act as billboards for the country’s flag?
Football – and sport more broadly – is a huge part of the oil-rich Gulf nation’s plan to diversify their economy. Newcastle United were, in many experts’ eyes, a beachhead for much bigger, much grander investment in the beautiful game.
But unlike their dizzyingly ambitious plans for the 2034 World Cup, the Saudi Pro League or their many so-called giga-projects, PIF haven’t been able to throw around limitless petrodollars at St James’ Park. Profit and Sustainability Rules (PSR) have seen to that.
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So while Newcastle are, by any measure, ahead of schedule in PIF’s timeline for the team, they won’t reach the top of football through brute force alone.
And now, in Atletico Madrid, they have a rival for the title of the world’s richest club.
Earlier this week, the private equity titan Apollo acquired Atletico in a takeover which valued the club at £2.2bn. Apollo currently have about £688bn of assets under management, close to PIF’s £701bn.
The introduction of private equity – a type of investment company that pools money from high net-worth individuals and institutional investors which aims to increase the value of assets before later flipping them for a profit – into football is just as significant as sovereign wealth’s ambitions in the sport, albeit for different reasons.
11 Premier League clubs – including Newcastle, through the Reuben Brothers – are now either owned by or have sold a significant stake to private equity firms. By some estimations, as many as 35 per cent of European clubs are now backed by private capital.
Yasir Al-Rumayyan, owner of Newcastle United and governor of PIF, looks on
Photo by Richard Heathcote/Getty Images
Private equity companies are also increasingly lending money to clubs. Apollo, for example, recently provided £80m worth of debt to Nottingham Forest. Other firms are now also acting as transfer creditors, allowing clubs to claim transfer fees paid in instalments upfront and in full in exchange for a cut of the fee.
Unlike Newcastle’s owners, the long-term mission of companies like Apollo is quite simple: generate return for your investors.
Newcastle, the owners have said, will always spend right up to the limit of PSR in every cycle. For private equity firms, that is going to be a much less common strategy.