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Abu Dhabi, UAEWednesday 20 June 2018

Newcastle takeover hangs in the balance as Ashley holds out for £300m from Staveley

Consortium led by Dubai financier in discussions with owner of English Premier League club

Newcastle United's Joselu celebrates scoring against Leicester City. Action Images via Reuters
Newcastle United's Joselu celebrates scoring against Leicester City. Action Images via Reuters

Mike Ashley is still asking for too high a price for Newcastle United as talks continue over a potential takeover of the English Premier League club by a consortium led by Dubai financier Amanda Staveley.

Reports in the British media on Wednesday said PCP Capital Partners have made an improved offer to buy club, said to be about £300 million (Dh1.4 billion), paving the way for a breakthrough in discussions, which had hit an obstacle after Staveley made a second offer, below that figure. However, £300m remains much higher than the valuation put on Newcastle by PCP Capital Partners in light of the risk of relegation, a source close to the discussions said.

Newcastle host Everton on Wednesday at St James’ Park, sitting 16th in the table and only two points off of the relegation zone.

Staveley had been willing to pay an amount not much below £300m in one lump sum rather than in instalments but it is understood that Ashley seemed reluctant to agree at that valuation.

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There had been a sense that if a final figure could be agreed then Ashley would sell the club and the new owners, led by Staveley, would then take on all the future risk – both in terms of possible relegation and the player investment the team badly needs to avoid it.

The pair met last week in London, fuelling speculation that talks had progressed, yet they are still some way from a deal because of Ashley’s high selling price.

When announcing his intention to sell in October, Ashley had signalled he would accept payment in instalments and was said to be seeking between £350m and £400m.

Staveley’s PCP Capital Partners-led consortium has been in discussions with Newcastle’s owner since then and an initial offer of £350m to be paid in instalments over a period of three years was rejected by Ashley because it contained clauses that would have altered the price in the event of relegation from the Premier League. Newcastle have a bitter experience of relegation in recent years, having been dropped out of the top flight twice since Ashley first invested in the club in 2007. Before their last relegation, for the 2015/2016 year, the club made a profit after tax of £4m on revenue of £126m. For the same period, the club's match day revenue was £25m, broadcasting brought in £73m, with commercial and other income at £28m.

Ashley has in the past said he would be willing to sell Newcastle, particularly in the wake of relegation in 2009, before taking the club off the market in the absence of any serious bid. Reports in 2013 put the figure he would be willing to accept to sell the club then at £267m, allowing him to recoup his investment which includes the £134.4m he paid to buy it outright. Last month, he appeared to be committed to a sale following interest from the consortium led by PCP Capital Partners, which includes both Gulf and Chinese parties. Law firm Dentons is representing Ashley, however he is understood to be very much in charge of negotiations from his side.

Regardless of the final outlay required to acquire Newcastle, it is universally agreed that there is plenty of opportunity to be tapped from the growth of the Premier League, the passion of the fan base and the fact that St James’ Park is a world-class stadium, in the city centre, with a 52,000 capacity.

Staveley’s consortium is keen, it is understood, to wrap up the deal to buy the club before the January transfer window opens in order to buy new players.

However, that is looking increasingly unlikely as the parties wrangle over the sale valuation.

Officials at Newcastle United could not be reached for comment. PCP Capital Partners declined to comment when contacted.