Fit and proper
|Jul 31, 2020||1|
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The Saudi-led takeover of Newcastle United was “90% certain” six months ago. Well, that turned out to be far from certain.
After a long battle to gain approval from the English Premier League, the investment group led by the kingdom’s sovereign wealth fund have decided this week to withdraw their £300 million offer to buy the club.
“Unfortunately, the prolonged process under the current circumstances coupled with global uncertainty has rendered the potential investment no longer commercially viable,” said the consortium, which also includes British financier Amanda Staveley and the billionaire Reuben brothers.
The collapse of the deal is deeply frustrating for thousands of the club’s fans who pinned their hope on this acquisition, but also for Saudi officials who once again are confronted with the fact that their missteps in recent years continue to haunt them despite their best efforts to move forward.
When owner Mike Ashley, a British retail tycoon, agreed a deal to sell the football club in April, the Saudis appeared confident that getting the required regulatory approval would be a mere formality. As the talks dragged on, Newcastle fans —including freshly-minted ones in the kingdom— began feeling nervous and manager Steve Bruce said the uncertainty was hindering preparations for the next season.
Considering Saudi Arabia’s reputation, the Public Investment Fund and its partners were expected to be ready to face the intense scrutiny that such a potential deal would bring, but as days stretched into weeks and weeks into months, the group seemed to have underestimated the hurdles.
Leading English clubs such as Liverpool and Tottenham were reportedly against the deal, while some senior European football officials like Spain’s La Liga President Javier Tebas accused the Saudis of seeking a “seat at the top table” after “stealing football.”
In effect, what killed this deal was a decision made in the summer of 2017 when someone in Saudi Arabia thought it would be a good idea to launch a pirate television network as part of the kingdom’s campaign against Qatar. It was a bizarre and blatant move, but those who supported it did not appear to be ashamed at all.
They called it “beoutQ” and it appeared to take beIN Sports live coverage feeds during matches and cover their purple logos with another layer of graphics before rebroadcasting it to viewers in the kingdom.
A few months later, beoutQ started to replace beIN commercials with their own, many of them mocking Qatar and its policies. One ad made fun of Qatar’s small area size by comparing it to little-known islands in different oceans around the world. Another depicted Qatar Airways specialising in the transport of cows. “No to monopoly, no to politicising sports,” the beoutQ slogan read.
The Saudi government has sought to distance itself from the piracy operation, but trying to do so while imposing a ban on beIN Sports which already owns exclusive television rights to most international competitions for the Middle East region proved to be very awkward.
As the Saudi national team was preparing to play the 2018 World Cup opening match against hosts Russia, authorities began promoting public fan zones for people who want to watch the game. Such government-sponsored venues had to use the official beIN Sports feed despite the fact that beIN Sports is banned in the country.
beoutQ set-top boxes were widely available across the kingdom during that period, but occasionally authorities would release statements about cracking down on piracy as international media started to ask more questions about the new channel.
“The number of confiscated devices was 12,000...in recent months, although the actual figure in my opinion is much higher,” Saud al-Qahtani, former adviser to Crown Prince Mohammed bin Salman, told AFP in late June 2018. “Saudi Arabia respects the issue of protecting intellectual rights and abides by international conventions in this regard.”
A similar statement was issued in November 2018, saying that 3,780 pirate devices were confiscated and claiming the campaign against piracy started even before the World Cup.
After Al Jazeera last September aired a documentary that included alleged leaked footage from inside beoutQ headquarters in Riyadh, the Saudi Authority for Intellectual Property released images and video of its staffers raiding stores that sell IPTV boxes.
The same tactic was used again during recent negotiations after beIN Sports asked the Premier League to block the Newcastle sale over piracy concerns. The government’s anti-piracy watchdog announced that it was working “to block 231 websites that violate intellectual property regimes, with a view to shutting them down.”
The British press enthusiastically embraced that announcement and called it a “significant development” towards finalising the deal but that seemed like a desperate attempt to change the narrative after the World Trade Organisation found that the kingdom’s government had “infringed” international trade agreements because of involvement with beoutQ.
Saudi Arabia, which has always denied any involvement with the channel, has claimed victory after the WTO ruling was issued last month but then decided to appeal it. Less than 48 hours later, the PIF pulled out of the Newcastle deal.
Even though human rights groups and families of detained Saudi activists have lobbied the Premier League to prevent the PIF from buying the club in protest of the kingdom’s human rights record, in the end it came down to the piracy issue. As Matt Slater writes in The Athletic:
a PIF-led deal to buy Newcastle United could never pass the Owners’ and Directors’ test without the Saudi government really shutting down beoutQ, lifting its temporary ban on beIN, compensating beIN for three years of damages and promising the Premier League, and every other leading sports competition in the world, that it would never steal their content again.
The failed takeover attempt is certainly a setback for the PIF and Saudi sports ambitions. Whether this will make Saudis tread more carefully in the future remains to be seen, but it is unlikely to be the end of the story.
The kingdom’s sports ministry just announced launching a major academy with the goal of winning 5 medals in the 2028 Olympics, while the sovereign wealth fund has continued to spend heavily on both foreign acquisitions and domestic “giga-projects.” The next deal is probably not too far.
That is all for this dispatch from Riyadh Bureau, which has recently received an honorary mention in Substack’s fellowship program. Thanks for reading! You can send your feedback by email: email@example.com. If you enjoy this newsletter please do share it with others.