Newcastle United could do deal with major Saudi company after £83m-a-year announcement
Newcastle United have once again been linked with a company close to their owners, the Saudi Public Investment Fund. After the takeover in October 2021,...
Newcastle United have once again been linked with a company close to their owners, the Saudi Public Investment Fund.
After the takeover in October 2021, it was expected that Newcastle would strike deals with PIF-owned companies on mass.
It was this very reason that the Premier League’s rules on associated party transactions (APT), which have been challenged in the arbitration courts by Man City, were introduced.
However, while Newcastle have struck several deals with companies within PIF’s portfolio, the expected deluge has not yet arrived.
That could change, of course, and there are notable deals with Sela, Noon and others that are worth several million to the club each season.
If City’s challenge against the APT rules is successful, which contrary to some reports has not yet been confirmed, PIF could use their £700bn-strong portfolio to pump cash into Newcastle and bypass PSR.
And the latest developments in Saudi Arabia when it comes to sports sponsorship and investment suggest that one firm in particular could be poised to be signed up.
Riyadh Air deal still on the cards for Newcastle
As Newcastle look to increase revenue in order to give themselves more breathing space under PSR (Profit and Sustainability Rules), commercial income is becoming increasingly significant.
Unlike broadcast and matchday income which if they increase do so slowly, commercial income can change overnight with the addition of a few smart sponsorships.
One deal Newcastle have done is with Saudia, the flag carrier airline of Saudi Arabia.
But Riyadh Air, a new Saudi airline backed by the Public Investment Fund, has also been linked with a commercial arrangement with Newcastle in what would likely be replacement deal for Saudia.
And as relayed by Arabian Gulf Business Insight, talks of a relationship between Riyadh Air and Newcastle is still continuing within the industry.
The report suggests that the competition between the Gulf states in terms of football sponsorship shows no signs of slowing down, with Qatar Airways having just struck an £83m-a-year deal with UEFA to sponsor the Champions League.
Chelsea are also believed to have held talks with Riyadh Air, who already sponsor Atletico Madrid, while UAE flag carrier Emirates are allied with Arsenal and Real Madrid among others.
Newcastle’s PSR situation
As has been well documented, Newcastle faced a mad late scramble to comply with PSR for the three-year assessment window up to 30th June 2024.
Eventually, they – like several other Premier League clubs – got within the threshold partly because of quasi-swap deals and the PSR-efficient sale of academy prospects.
Currently, Premier League clubs are allowed to lose no more than £105m over a rolling three-year period, and the margins are expected to be tight for Newcastle once again this season.
From next season, the top flight is expected to bring in a new system similar to UEFA’s which will see spending on wages, transfers and agent fees capped at 85 per cent of revenue.
That would likely mean that Newcastle would need to either find new revenue opportunities or decrease investment in their playing squad.
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