English football's economic miracle driving Staveley's Newcastle bid
The Dubai financier leading a consortium of investors including Gulf backers has had a long history of involvement as a deal maker for those interested in tapping into the English Premier League's economic windfall
The commercial success of Manchester City under Sheikh Mansour bin Zayed's ownership is the model that will be attempted at Newcastle United should a consortium of investors led by Dubai financier Amanda Staveley succeed in their pursuit of the English Premier League football club.
Ms Staveley’s PCP Capital Partners is understood to be in discussions with Mike Ashley, Newcastle’s owner, for a deal that could be worth at least £300 million before player investment, sources close to the negotiations said.
The deal could be wrapped up by December, giving the new owners time to make player acquisitions in the January transfer window.
If successful, this would be a coup only weeks after Ms Staveley was rebuffed at the 11th hour by Fenway Sports Group, the owner of Liverpool FC, for a £1.5 billion offer to buy the Merseyside club.
Ms Staveley has been at the epicentre of global, headline-producing deals before. Her involvement in Barclays’ capital raising efforts in 2008 that allowed the bank to stay out of government hands during the financial crisis is now the subject of a £1bn lawsuit, filed by Ms Staveley over fees that it is claimed were due to her firm from the bank but were instead allegedly paid to Qatari investors to facilitate their involvement.
PCP Capital Partners has evolved since its early days as a company offering advice on cross-border deals involving Middle East money and British institutions. The firm now has billions in committed capital that it draws on and deploys on a deal-by-deal basis with investors deciding if they want to be in on the idea or not.
The Liverpool deal was one of these ideas and was driven both by history and the future. The latter, going back to 2008 when Ms Staveley helped Dubai investors to put together a £500m deal to buy Liverpool only for its American owners at the time – Tom Hicks and George Gillet – to be unable to agree on the sale, ultimately derailing the deal.
This time around, Ms Staveley had put together about twice as much capital to tempt Liverpool’s current owners to sell, and she and her team, which includes her husband, PCP’s managing partner Mehrdad Ghodoussi, were excited about the growing economic prospects of the English Premier League.
Recent failed efforts by the so-called top six clubs, which include Man City, Liverpool and Manchester United, to renegotiate the terms of how foreign TV rights are distributed are expected to eventually be successful, giving them a far bigger slice of a very fast-growing pie – currently at £3.2bn (Dh15.48bn) over three years to 2019. Media rights are also expected to be given a boost by the entrance of digital players such as Facebook and Amazon, providing competition for traditional broadcasters.
Still, the sum on the table for Liverpool would have put a strain on the club – in the financial year up to May last year, it reported a loss of £19.8m on record revenues of £301m.
Newcastle represents an outlay of about £300m before investment in players and just as much opportunity from the growth of the Premier League.
On top of that comes the passion of the fanbase and the fact that St James’ Park is a world-class stadium, in the city centre, with a 52,000 capacity.
It is understood that there are Gulf investors in the PCP Capital Partners consortium interested in Newcastle United, alongside Chinese money, and that the belief is that the experience of Manchester City can be replicated on Tyneside.
Abu Dhabi United Group acquired a majority stake in City in 2008 for £201m.
Two years ago, a consortium led by Shanghai’s China Media Capital Holdings and Hong Kong’s Citic Capital bought a 13 per cent stake in City Football Group – now a global brand that includes New York City FC and Melbourne City FC as well as the Manchester club – for about US$400m, valuing it at $3bn (Dh11.01bn).
Manchester City reported a profit of £20.48m for the 2015-2016 season compared with a £10.54m after-tax profit for the 2014-2015 season.
It reported record annual revenues of £391.77m, an 11 per cent rise on the £351.76m in revenue generated in 2014-2015. Newcastle’s revenue for 2015-2016 was £145.6m.
“There are a lot of similarities between Newcastle now and Manchester City before the Sheikh Mansour acquisition,” says Ali Khaled, editor of FourFourTwo Arabia. “The quality and size of St James’ Park, the loyal fanbase, the close ties with the local community in the Newcastle area, all point to the same potential both in terms of success on the pitch and off of it.” Mr Khaled says that the outlook for Newcastle also compares favourably to its rivals Everton, in which Iranian businessman Farhad Moshiri took a 49.9 per cent stake in February, which are still at least three-years away from moving to a new, bigger stadium.
The PCP-led consortium is aware that commercial success at Newcastle will need to be driven by the winning of football matches.
It is understood that recent reports of £500m being made available for players is exaggerated, but that there will be significant funds for manager Rafa Benitez to deploy.
Based as Ms Staveley is in Dubai, her links with the Gulf and wider Middle East are also of significance in this deal.
While she and PCP Capital Partners declined to comment on either the attempted acquisition of Liverpool or the current bid for Newcastle, Ms Staveley did say that watching how Sheikh Mansour's investment in Manchester City has played out so well has been pivotal to her own outlook on the opportunity that the Premier League has to offer. In 2008, she was one of the advisers involved initially.
“The experience I gained has been instrumental in preparing me for the investment I wish to make now in the same league.”
Updated: October 27, 2017 12:54 PM