Newcastle United owners PIF have struck a major deal with FIFA.
It has been announced that PIF will be sponsoring the FIFA Club World Cup, which is set to begin later this month in America. The biggest clubs in world football will be taking part in the newly expanded tournament, with Manchester City and Chelsea representing the Premier League.
The Newcastle United owners will be partnering with FIFA, as Saudi Arabia ink another huge deal with football’s governing body. It was announced last year that Saudi Arabia will be hosting the 2034 FIFA World Cup.
PIF officially involved in ‘desperate’ Club World Cup
As well as partnering with FIFA for the competition, PIF also have a minority stake in the Club World Cup’s main broadcaster, DAZN. SURJ Sports Investment, which is owned by PIF, invested $1billion in DAZN earlier this year.
According to TBR Football’s finance expert Adam Williams, PIF partnering FIFA for the Club World Cup is no great surprise given their involvement with DAZN.
Photo by Eva Marie Uzcategui - FIFA/FIFA via Getty Images
Photo by Eva Marie Uzcategui – FIFA/FIFA via Getty Images
“It’s been clear for almost a year now that Saudi Arabia has been underwriting the Club World Cup through its investment in the tournament’s broadcast partner, DAZN,” Williams told Geordie Boot Boys.
“Everyone I’ve spoken to in the industry has been highly sceptical about the value of the media rights deal, which is worth over £750million. At one point, they thought they could get £3billion from the media rights. That was absolutely crazy for an iteration of the tournament which is entirely unproven.
“We have no idea how many people are going to watch it. If the disappointing ticket sales figures are anything to go off, then FIFA haven’t got quite the product they think they have on their hands.
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“In principle, there’s no reason why an expanded Club World Cup couldn’t be one of the biggest shows in town in the future – and, under a more equitable distribution mechanism for the non-European clubs, it could be positive for global football. However, the hype at the moment feels very manufactured. It all looks a little desperate, to be honest.
“For context on the value of the media rights deal, £750million is about one-third of what FIFA generated from the Qatar World Cup. This tournament isn’t going to draw an audience one-third the size – that’s just a fact. Even looking at it through the most charitable lens, the real value of the rights is nowhere near £750million. But to Saudi and the Public Investment Fund, it’s a way to buy more influence with FIFA.
“The mood music is that the 2029 Club World Cup could be played in Saudi. That would be a warm-up for the 2034 international World Cup.”
What PIF’s latest deal means for Newcastle United
But what does any of this have to do with Newcastle United? Well, Williams is of the belief that it shows the Magpies are not PIF’s top priority as other major European clubs challenge for their riches.
“In terms of the implications for Newcastle, I think an interesting way of looking at this is that they are effectively funding several of the club’s rivals, not just on the Premier League stage but also internationally as well,” he said.
“If Chelsea win the tournament, for example, they are going to get almost £100million in prize money. Now, Chelsea have got off the PSR hook with some creative accounting, but that’s not going to last them for the whole three-year domestic PSR cycle. £100million in prize money would let them breathe a lot easier, which in turn strengthens one of Newcastle’s direct rivals.
“I think this is emblematic of the fact that Newcastle aren’t PIF’s top priority. They are thinking much, much bigger. The club is an important part of the masterplan, but it is one cog in a machine. You can use the same analysis when it comes to PIF-owned Pro League sides buying waifs and strays from other Premier League sides for massive fees. Again, that has massively helped out some of Newcastle’s rivals.”
Newcastle United held back by PSR as PIF strike major deals
As PIF expand their footballing portfolio, Newcastle United continue to be held back by PSR.
The Magpies are looking to enhance their squad this summer, but the Premier League’s financial rules are limiting their ability to splash the cash.
Newcastle have decided that Bryan Mbeumo is too expensive, while there are concerns over Joao Pedro’s asking price too.
The only way they can improve their PSR position is by increasing their revenue through player sales or sponsorship deals. When it comes to player sales, Newcastle United have no interest in cashing in on their top stars.
Being back in the Champions League will help their financial position, and Williams has predicted Newcastle’s revenue could increase to £400million by next season.