Michael Martin – @TFMick1892
It wasn’t unexpected when Saudia Air was announced by Newcastle United as its partners accompanying the club on its imminent warm weather training camp and friendly matches in Saudi Arabia. Our city-region is a village in many ways and the social media grapevine had photos of some of the marketing shots being taken on the Millennium Bridge and outside St James’ Park and following the company’s logo showed on perimeter advertising at the Chelsea game it took no-one by surprise when the news was officially broken.
We’ve been expecting this stuff. Indeed we need it because for Newcastle United to grow it needs income and whilst it is good to hear of £70m being piled into United’s coffers as we did a few weeks ago, we know it’s unrealistic for that to continue indefinitely.
Whether Saudia Air assumes a much bigger role in the commercial life of Newcastle United wouldn’t surprise me but if it does or not is simply speculation. I do expect the training camp in Saudi Arabia to be about much more than Eddie Howe tuning the players up and it provides the perfect opportunity for United’s executive team to be meeting with potential sponsors and others within the Public Investment Fund out in Riyadh.
For its own interest alone, it will be interesting to hear what might be coming down the tracks as we understand what this means about the form of sponsorships and what it might mean for training ground, stadium and shirt deals etc.
But there are much wider points to consider. I listened to Alex Hurst speak on a recent podcast (patreon only) about the nature of club sponsorship and what it means about the nature of football clubs. I found myself nodding in agreement with Alex when he expressed the view he didn’t want the commercial world of Newcastle United to develop as a mirror to what has occurred at Manchester City.
That might sound counter-intuitive given Man City’s current status as the dominant force in PL football and with ambitions to match that on the Champions League stage.
But Alex makes an excellent point. Fundamentally, Man City isn’t a real football club. It is one which is funded not on bona-fide commercial growth to sustain it as an elite sporting institution. No, it is funded through various means of less than credible commercial relationships which currently make a mockery of the Financial Fair Play and related party-sponsorship rules supposedly governing the game.
It does fly rather under the radar but Man City are consistently in dispute with the game’s ruling bodies for what appear obvious departures from the detail of FFP but certainly its spirit. Sad to say it because there’s much to admire in Guardiola and his team but they are cheating.
These are just a sample of the reporting – which haven’t really formed part of the mainstream football conversation. There is plenty more. I don’t recall Pep being quizzed about it in the way Eddie Howe was about human rights abuses last season at Stamford Bridge.
Were Newcastle United to choose to go down this road I’m sure, because of the wealth PIF has at its disposal, we could probably blow Man City, PSG and anyone else out of the water. Newcastle United could if it chose to knock the football world off its axis.
But it won’t and like Alex, I’m delighted about that.
The reason for that is for all of their success, Man City isn’t a real football club. The money it uses to attract the most garlanded manager in world football and follow that up by paying De Bruyne and Haaland for example the wages they are on is not due to Sheik Mansour’s people building a powerful business to allow this platform. No, it is simple patronage. And it is unsustainable and potentially huge risk to Man City in the longer term and it is obviously no good for football.
I do not want Newcastle United to get to the same position as Man City off the pitch, if I do look forward to the days when we can be their betters on it.
I don’t want Newcastle United to operate like Man City and I don’t think the people at the Public Investment Fund do either. As anyone who has been paying attention will have clocked, PIF’s involvement with Newcastle United isn’t centrally motivated by a desire to improve its image or sports-wash as many claim.
To understand what is happening at Newcastle United we have to understand what motivates PIF – sorry to disappoint the Miguel Delaneys, Oliver Holts and Tariq Panjas of this world but it is money, not sports-washing. That is why Amanda Staveley has invested such a large stake of her personal wealth into Newcastle United and the same is true for the Reubens. They will all want a return on their investment and to think any different is foolishness on stilts.
You will have noticed that Chelsea were put up for sale in the summer gone and bought for c.£4.25bn. Liverpool is currently being punted for a similar amount. When the latter is sold it will mean an eye-watering profit for the Fenway Sports Group who bought Liverpool for £300m in 2010. Abramovich bought Chelsea for £140m in 2003.
I’ve absolutely no doubt Saudi PIF have clocked those profits and thought we’ll have some of that. Now to achieve those vast profits, Newcastle United has to compete with those clubs on and off the pitch.
In my view, Man City isn’t worth anything like what Liverpool or Chelsea is worth. Nor are they anything like a similar value to Man Utd. If any potential buyer of Man City did their due diligence, I’m pretty sure they would be horrified at the club’s liabilities and dependencies, if their intention was to run it as a growing concern. Currently, Man City is an Abu Dhabi vanity project and is unmoored from fiscal reality.
I have no doubt there will come a time when the current owners will decide to sell Newcastle United and realise the return on their investment. The good news is for them to get that return Newcastle United needs to be transformed from the hollow shell Ashley left them with into something resembling Chelsea and Liverpool.
Newcastle United hasn’t appointed a raft of executives to manage the kind of faux-business relationships Man City has established with inter connecting shell companies that are taking the piss out of football governance. They are at SJP to build a business and commercial relationships the like of which will support the development of United as a sporting enterprise with value commercially.
Newcastle United was valued at £300m at the point of sale last year as a result of the state of the business Ashley had largely neglected but which had increased on the back of increasing TV deals. Liverpool and Chelsea have grown into businesses worth what they are on the back of commercial growth eclipsing where they were at previously with Ken Bates and Hicks and Gillett. To do that they have had to be successful on the pitch and that has required investment at all levels.
On the face of it, a tie-up with Saudia Air seems rather like what Man City and PSG have got with Abu Dhabi and Qatari air-lines. We may go down the same route and indeed there’s every possibility other Saudi/Middle Eastern businesses will join them (the sleeve sponsor NOON is indicative of that).
Clearly, Saudi Arabia and PIF has an interest in its businesses being marketed on the global stage that the Premier League operates in. As Mike Ashley’s businesses did though United is about to be weighed in properly for the privilege.
Currently sitting third in the Premier League with the Newcastle United “brand” growing internationally, those sponsorship deals have every chance of being significantly greater than what they were at the end of last season when we’d finished well in eleventh but were known to be a club with perennial relegation struggles.
We can all reel off the Saudi businesses that might choose to become sponsors of Newcastle United but they will be doing so for strategic business reasons and Darren Eales isn’t going to have these relationships dropped into his lap. The club is going to have to work for them and that is only right because that is what will make a real football club rather than the facsimile of one at Man City.
In the short term, I do see United benefitting from the doors that will be opened to it by PIF and particularly in Saudi Arabia and the wider Middle East.
But for Newcastle United to grow into a football behemoth those business relationships will have to have far more global reach – Apple as well as Aramco for example.
We will not know the true strategic direction of the club until it gets there and for what it’s worth, it will take as long as Chelsea to do so because the opportunity for blowing rival clubs out of the water with a bigger bag of money than everyone else doesn’t exist any longer.
Newcastle United’s name is frequently put alongside Man City and PSG for understandable reasons. But what is happening at St James’ Park is completely different to what is going down in Manchester and Paris.
Have a great week.
Keep On, Keepin’ On …
Michael Martin, @TFMick1892