Newcastle United ‘open doors’ for PIF as 2 EPL rivals to cash in from £1.2bn bailout

Who would willingly invest in a Premier League football club? That question was on the minds of many when the Saudi Public Investment Fund (PIF) acquired Newcastle United in October 2021.

Premier League clubs collectively posted operating losses exceeding £1 billion in the last financial year, and Newcastle alone has reported losses of nearly £150 million since the takeover.

Yet, PIF has injected over £300 million into the club through equity funding, with the most recent contribution of approximately £15 million made just weeks ago.

If PIF plans to fund the redevelopment of St James’ Park or construct a new stadium entirely, the additional costs could reach up to £1 billion. Despite these financial commitments, PIF insists that Newcastle United is a business investment, much like any other in its £750 billion portfolio. But when can they realistically expect to see a return on this substantial investment?

Football club owners typically have three ways to profit: taking dividends when the club turns a profit, loaning money to the club and charging interest, or selling the club for more than they originally paid.

Newcastle has stated that they intend to operate within the limits of the Premier League’s Profit and Sustainability Rules (PSR), which means long-term profitability isn’t a feasible objective. As for loans, traditional interest-bearing models conflict with Islamic finance principles, which PIF adheres to. Additionally, PIF’s investment philosophy prioritizes asset appreciation over loan arrangements.

This leaves the third option: selling the club at a higher valuation than the £305 million PIF paid for it in 2021. Last summer, when Amanda Staveley’s PCP Capital Partners sold their remaining shares to PIF for £60 million, Newcastle’s valuation stood at £1 billion.

However, whether a buyer would pay such a price is debatable. For Newcastle to justify that valuation, they would need to become regular participants in the UEFA Champions League. While Eddie Howe has led the team to impressive performances despite financial constraints, maintaining such success under the stringent PSR regulations will be challenging.

Even if a buyer emerged, PIF’s total investment in Newcastle—already surpassing £600 million—along with planned infrastructure spending, means a £1 billion sale would still result in a loss.

Turning a £500 million profit on the club would barely register for PIF, whose financial scale dwarfs such returns. For PIF governor Yasir Al-Rumayyan, who oversees an expansive global portfolio, a modest financial gain is unlikely to justify his direct involvement in the club’s operations.

If monetary profit isn’t the primary objective, then what motivates PIF’s involvement in Newcastle United? While sportswashing—enhancing Saudi Arabia’s global image—plays a role, their ambitions appear far broader.

Recent developments in the sports business sector shed light on these motivations. In October 2024, reports surfaced that PIF was negotiating to invest in DAZN, a sports streaming service with broadcasting rights for the Premier League in Spain and Portugal.

Though PIF initially denied these claims, highly credible sources now suggest that they are preparing to invest approximately £820 million for a significant minority stake in DAZN.

This development has implications for Newcastle United beyond potential conflicts of interest. According to football finance expert Kieran Maguire, PIF’s ownership of Newcastle enhances their credibility and opens doors to lucrative opportunities in sports and media.

Maguire explains that clubs like Newcastle serve as “loss leaders,” allowing owners to leverage fan passion and global reach for broader financial gains.

PIF’s stake in DAZN positions them to benefit from the rising value of Premier League broadcasting rights, which remain one of the few consistently appreciating assets in European football. The advent of new technologies, such as immersive viewing experiences, promises to revolutionize the industry, making early investments in broadcasting particularly valuable.

DAZN, despite operating at significant losses—nearly £1.2 billion in the last financial year—continues aggressive expansion. Recent deals include a £2.7 billion acquisition of Australian cable giant Foxtel and an £800 million agreement to air the expanded FIFA Club World Cup. These moves underscore the long-term potential that major players in the sector, including PIF, see in DAZN’s growth trajectory.

Interestingly, PIF’s involvement in DAZN could indirectly finance prizes for Newcastle’s rivals. FIFA’s expanded Club World Cup includes elite teams like Manchester City, Chelsea, Real Madrid, and Bayern Munich.

If PIF’s investment supports DAZN’s Club World Cup deal, it effectively channels funds toward competing clubs. This dynamic illustrates PIF’s broader strategy: their goals in football extend far beyond Newcastle United.

PIF’s ambitions encompass influencing the sports ecosystem globally. By aligning with major broadcasters and governing bodies like FIFA, PIF seeks to shape the future of football and its related industries.

Their ownership of Newcastle serves as a strategic asset within this grander vision, enhancing their profile and influence while facilitating partnerships in media and technology.

For Newcastle fans, the implications are mixed. While PIF’s financial power has brought renewed competitiveness and optimism, the club remains part of a larger strategy that prioritizes global influence over local success.

As PIF continues to expand its footprint in sports and media, Newcastle’s role in their portfolio may evolve, raising questions about the long-term objectives for the club and its loyal supporters.