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Saturday, May 30, 2020

Newcastle United, a proxy war, piracy allegations and a Saudi takeover bid

Saudi Arabia's sovereign fund’s potential takeover of Newcastle United has run into troubled waters, with the proxy war between the Gulf State and Qatar spilling over into the Premier League.

Written by Mihir Vasavda | Updated: April 25, 2020 7:48:54 pm
Newcastle United is set for a £300million takeover. (Source: Reuters)

The takeover bid

The Public Investment Fund, chaired by Saudi crown prince Mohammed bin Salman, is leading a group of investors to complete a £300m takeover of Newcastle United, which is currently owned by British billionaire Mike Ashley. The deal, if completed, will make Saudi Arabia the latest Middle Eastern investor in European football, after an Abu Dhabi-backed consortium took over Manchester City and Qatar’s funding of Paris Saint-Germain.

Qatari intervention

A Qatari broadcast company, beIN Media Group, is the rights holder for showing the Premier League matches in the Middle East. beIN’s three-year contract, worth £500 million, is the PL’s second-biggest overseas deal according to The Times. Earlier this week, the chief executive of the Doha-based group, Yousef al-Obaidly, has written to the league and its member clubs calling for them to further investigate the Newcastle deal and discouraging them from allowing the deal to materialise. The relationship between Saudi Arabia and Qatar has been strained since 2017, when the former led a regional boycott of Qatar, accusing them of destabilizing the region.

‘Commercial rights theft’

beIN has ‘accused Saudi Arabia of backing a sophisticated piracy operation undermining its valuable television rights by siphoning off its broadcast signal’, according to The New York Times. The BBC, quoting the letter, said Al-Obaidly accused the Saudi government of the “facilitation of the near three-year theft of the Premier League’s commercial rights – and in turn your club’s commercial revenues – through its backing of the huge-scale beoutQ pirate service. It is no exaggeration to say that the future economic model of football is at stake.”

READ | Newcastle urged to reject ‘immoral’ Saudi-backed takeover bid

Piracy accusation

In September 2019, a report from brand protection firm MarkMonitor – commissioned by world football’s governing body FIFA – found links of the piracy operation to Saudi Arabia. The New York Times said it was ‘the largest operation in sports history, with the biggest athletic events around the world targeted, most of which were sold to beIN, the world’s largest buyer of sports rights.’ It is alleged that beIN’s broadcasts were transmitted via Arabsat – a regional satellite operator in which Saudi Arabia is the biggest investor – and the beIN feed was identified with a beoutQ logo. FIFA and European football’s governing body UEFA called for the beoutQ service to be shut down, albeit without success. Arabsat, as per the BBC, has ‘denied that beoutQ uses its frequencies to broadcast illegally and has accused beIN of being behind defamation attempts and misleading campaigns’.

Ownership test

For the Newcastle deal to go through, the investors will first have to pass through the “owners’ and directors’ test.” According to The Financial Times, the test is a ‘detailed assessment of the finances and business plan of prospective buyers’, and the Premier League officials ‘can block takeovers’. The BBC reported that although beIN is not considering its partnership with the Premier League at the moment, ‘the group did threaten to pull its deal with Serie A over the decision to stage the Italian Super Cup in Saudi Arabia’.

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