Wary of Newcastle’s New Money, Rivals Vote to Limit Cash Infusions
Fearing that the arrival of another deep-pocketed ownership group from the Gulf might soon put even their own billionaire owners at a competitive …
Fearing that the arrival of another deep-pocketed ownership group from the Gulf might soon put even their own billionaire owners at a competitive disadvantage, Premier League teams voted Monday to restrict — for a short time at least — the new Saudi Arabian owners of Newcastle United from injecting some of their vast wealth into their newly acquired soccer team.
The decision, reached at an emergency meeting of the league’s clubs, imposed a moratorium on teams’ signing sponsorship deals with brands or companies linked to their investors. The temporary rule change — to be in place for less than a month while a permanent one is considered — is not specific to Newcastle but is a clear sign of the worry among Premier League teams that a group led by Saudi Arabia’s Public Investment Fund could soon remake the economic and competitive state of the league.
The clubs are concerned that Newcastle, now backed by resources of one of the world’s largest sovereign wealth funds, will quickly be able to buy its way to success in a manner similar to Manchester City, the Premier League team bought in 2008 by the brother of the ruler of Abu Dhabi. Manchester City financed its rise from mid-table strugglers to perennial champions partly through a series of sponsorship deals with companies tied to the United Arab Emirates.
Those deals, with partners like Etihad Airways and Abu Dhabi’s department of culture and tourism, are the subject of an ongoing dispute about possible violations of Premier League cost-control regulations.
The degree of concern among Newcastle’s rivals was clear when it came to voting on the new regulation on Monday: 18 teams voted for the temporary ban, with only Newcastle opposed it. Manchester City, after consulting with its lawyers, abstained.
With the moratorium in place, the Premier League has now asked for feedback from its teams while it considers introducing a permanent rule outlawing so-called related party sponsorships, or at least a requirement that such deals be vetted for fair-market value by industry experts.
Manchester City is not the only team in the Premier League with sponsors linked to its investors; under its previous owner, Mike Ashley, Newcastle plastered its stadium, St. James’s Park, in advertising for his discount sportswear company.
But the timing of Monday’s emergency meeting left little doubt about its focus: It came one day after Newcastle played its first game under its new ownership, and after home fans rose as one before kickoff to cheer the team’s new Saudi chairman.
The takeover of Newcastle had been delayed for more than a year but finally got the go ahead after the Premier League said the P.I.F. provided “legally binding assurances that the Kingdom of Saudi Arabia will not control Newcastle Football Club.”
The Premier League has declined to provide details of those assurances. The chairman of the multibillion-dollar fund is Mohammed bin Salman, the crown prince of Saudi Arabia and its de facto ruler, and Newcastle’s new chairman, Yasir al-Rumayyan, is the governor of the P.I.F. and the chairman of Saudi Aramco, the state-owned oil company.
“Newcastle fans will love it but for the rest of us it just means there is a new superpower in Newcastle — we cannot avoid that,” Liverpool’s German manager, Jürgen Klopp, said last week when asked about the possible effect of an infusion of Saudi investment into one club. “Money cannot buy everything but over time they will have enough money to make a few wrong decisions, then make the right decisions, and then they will be where they want to be in the long term.”
Team owners have privately fumed over the Premier League’s handling of the takeover, complaining that they were not informed about the progress of the sale until the transfer of ownership was announced on Oct. 7. Rival teams are also concerned, given the Premier League’s insistence that the P.I.F. is now viewed as separate from the Saudi state, that any sponsors from the kingdom not directly affiliated to the fund will not be barred regardless of the new rules.
One version of a working document reviewed by The New York Times stated that “entities controlled by the same government” that had a stake in a Premier League team could not become a sponsor of that club. The Premier League declined to comment, and it has not made any public comment on the Newcastle sale beyond its news release announcing that the deal had been completed.
The Premier League has struggled in the past, however, to enforce its cost-control regulations. An investigation into whether Manchester City breached the league’s financial regulations has now stretched into its third year with little sign that a resolution is near. City filed a series of legal motions that slowed the process, drawing a rebuke earlier this year from a senior judge who wrote, “It is surprising, and a matter of legitimate public concern, that so little progress has been made after two and a half years — during which, it may be noted, the club has twice been crowned as Premier League champions.”
The type of financial regulations now being discussed by the Premier League are similar to rules that a group of 12 leading European teams had sought to include this spring in the failed effort to create a European Super League.
Several of the clubs involved in the Super League planning, including Barcelona, Real Madrid, Manchester United and Liverpool, had expressed concerns about their ability to compete financially with teams — notably City and Qatar-backed Paris St.-Germain — who could draw upon seemingly bottomless resources from outside of the game. “Club revenue must be obtained on an arm’s length basis,” one of the regulations in the Super League plans stated. Teams that broke those regulations faced permanent expulsion from the competition.
Some of those same cost-control ideas, though, are now on the table at the Premier League, which will soon face outside scrutiny of its operations as well. Britain’s government this spring appointed a lawmaker, Tracey Crouch, to review soccer governance. Crouch has suggested that she will recommend the appointment of an independent regulator for the sport.