Saudi-led consortium forced to abandon takeover of Newcastle United

The controversial £300m takeover of Newcastle United collapsed on Thursday after a Saudi Arabia-led consortium withdrew its bid amid growing fears it would fail the Premier League’s owners’ and directors’ test. In effect the consortium walked before it was pushed.

The Guardian also understands the Premier League privately told the bid team weeks ago that it regarded the Saudi Public Investment Fund – which was hoping to acquire an 80% stake in Newcastle – as part of the Saudi state. That proved to be a key intervention because the kingdom has repeatedly blocked the Premier League taking legal action against the pirate broadcaster beoutQ for illegally streaming matches.

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Crucially the owners’ and directors’ test is failed if a crime, such as piracy, is committed overseas that would also be considered one in the UK.

This month the Saudi-led consortium was given the opportunity to restructure its bid but given the kingdom’s de facto leader, crown prince Mohammed bin Salman, is also chairman of PIF, it was unable to do so. There was also exasperation among Premier League circles that the Saudis failed to acknowledge a World Trade Organisation ruling that the beoutQ service was “operated by individuals or entities subject to the criminal jurisdiction of Saudi Arabia”.

The WTO ruling, which was first revealed by the Guardian, also said the Saudi state had breached intellectual property rights by failing to tackle piracy – yet Saudis bizarrely claimed the WTO’s decision was a victory for them.

That was clearly a high-risk strategy given the Premier League had supplied evidence directly to the WTO detailing Saudi piracy. Last month the league’s chief executive, Richard Masters, also told parliament it wanted Saudi Arabia to “respond positively to the situation and allow sports rights holders to protect their rights” – something it repeatedly failed to do.

While the Premier League refused to comment on Thursday, sources close to the consortium comprising the PIF, Amanda Staveley’s PCP Capital Partners and Reuben Brothers accused it of continually “moving the goalposts” after initially indicating they would approve the deal.

The bid, finalised with the Newcastle owner, Mike Ashley, in March, had been gridlocked for the past 17 weeks during which Newcastle effectively became a pawn in the three-year cold war between Saudi Arabia and Qatar as Tynesiders dreamed of supporting England’s richest club.

Sources close to the consortium claim that, in April, the Premier League privately informed them the deal would be approved and there were “no red lights” but, instead, countless barriers were thrown up as the governing body grew increasingly concerned about the legal separation between PIF and the Saudi government.

As Newcastle fans struggled to accept they were stuck with the unpopular Ashley, a tearful Staveley claimed Masters had bowed to pressure from rival clubs, with Liverpool and Tottenham said to be among those who had opposed the buy-out.

“We are heartbroken obviously,” she said. “Of course we do [blame the Premier League]. They had a chance, they say we have not answered all the questions and we have done so. But the other clubs in the Premier League didn’t want it to happen.”

Staveley also told the Times: “The piracy issue was not an issue but we tried to resolve it anyway. They [the Premier League] tried to make the state of Saudi a director. The PIF had agreed to become a director.”

Henry Mauriss, an American television executive, has reportedly offered Ashley £350m for Newcastle but considerable scepticism surrounds his bid.

Human rights groups, who had repeatedly asked the Premier League to block the takeover, citing a sweeping crackdown on human rights in Saudi Arabia and the murder of the journalist Jamal Khashoggi inside the Saudi consulate in Turkey, welcomed the news.

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“The fact this sportswashing bid has failed will be seen by human rights defenders in Saudi Arabia as a sign their suffering has not been entirely overlooked,” said Peter Frankental of Amnesty International UK.

“Numerous peaceful Saudi human rights activists are currently behind bars, and of course a Saudi journalist was grotesquely murdered by agents of the Saudi state less than two years ago. Looking ahead, there needs to be a rule change to ensure the Premier League’s owners’ and directors’ test provides proper scrutiny of the human rights records of those trying to buy into English football, not least when the buyers are governments or government representatives.”

Andrew Smith of Campaign Against Arms Trade said: “This is the right outcome for the wrong reasons. The negotiations should never have taken place. The history and character of the Saudi regime should have been enough to prevent it even being considered.”