The Dubai Interest: 3 Things to Think About

Craig Hope of the Daily Mail broke out a story claiming that a new Middle Eastern investment group based out of Dubai has joined Amanda Staveley’s PCP group as interested buying parties for the club.

Hope reports that the group is looking to meet Ashley’s price of £350million after monitoring the club’s situation from afar. The group has not entered a period of due diligence, which means that this valuation of the club is a blind one based on no actual information collected on the club.

Hope states that the Dubai group has no fear of Staveley and the PCP group purchasing the club due to the fact that the club is sitting in 13th, only 3 points above the relegation zone. The Dubai group believes that PCP will not make any progress with the deal as long as the club is in danger of relegation.

The report from Hope also discusses that the Staveley group is of course concerned with the ongoing HMRC investigation of the club and what the implications of that investigation could entail. This is a point often forgotten when fans discuss the club’s sale, but is extremely vital to the sale. The club is a much less attractive deal if they could be punished heavily from the FA or HMRC as a result of the investigation.

There is a lot to consider with this report, and the first thing to consider is the price. The Dubai investors apparently intend on meeting Ashley’s asking price of £350 million. This is of course is great news for Mike Ashley and bad news for Staveley who has spent the past few months trying to negotiate the price down to £300million. It is incredibly odd that a random group has emerged wanting to pay the price Ashley demanded without even attempting to investigate whether or not that that is a fair offer. It is an incredibly timely report as “the talks” between PCP and Ashley have seemingly hit a speed bump, and from the outside looking in it appears as if the two parties are not close to getting a deal.

The second thing to look at here is the fact that the source Hope has been in contact with was adamant on mentioning that the these Dubai investors have no issue with the two things that Staveley seemingly has an issue with regarding the purchase of NUFC. If this seems too good to be true, that is because it probably is. No investor in their right mind would ignore the fact that Newcastle are struggling in the Premier League and that they are under investigation. Those two factors are big differences in how much you get on your return in the investment. If the club does get relegated, you make less money because you no longer have access to that lucrative TV money deals that Premier League clubs prosper from. That is an even bigger deal considering that Newcastle made more money off of TV deals in the first 7 televised games this season than they did all of last season. Newcastle also have been nationally televised a fair share this season, which results in a ton of money entering the club. Even if Newcastle get televised way less next season, the lowest amount of money they can make is £99.9million, which is the amount last place Sunderland made last season. The HMRC investigation is something beyond profit, it has legal implications that could result in fines, the removal of key figures from the club, and honestly anything; because an investigation of this sort has not happened in the Premier League. The FA could also get involved and punish Newcastle further depending on the result of the investigation, and nobody really knows what punishments HMRC could dish out. Long story short; any smart investor would consider the factors Hope’s report claims Staveley’s group is considering.

Photo by Owen Humphreys/PA Images via Getty Images

Lastly, consider the timing of this announcement of a new potential buyer. The announcement of a Dubai investor comes at a time when Staveley and Ashley are not seeing eye to eye concerning a deal that they both want to get done. The Dubai investors claim to ignore all of the issues the Staveley group have concerning the deal almost as if they believe these issues are not actually of great concern and should not impede the sale of the club. Furthermore, the Dubai group is not taking action because they are confident PCP won’t take action until Newcastle is out of the relegation zone. This not only forces PCP to think internally about speeding up the process if they truly want to buy the club, but also allows this Dubai group to not make a move quickly or make any move at all. If they never make a move and PCP gets Newcastle, the Dubai group will first and foremost be forgotten, and secondly when reporters ask about the group the club can respond with the fact that they were able to successfully get a deal done with PCP. The timing of this seems convenient to Ashley, because it is. That is the main thing to take away from this announcement. The timing, price, and lack of concern creates a perfect buyer that likely does not exist.

The biggest takeaway you should claim when assessing the entire story of a new Dubai investment group is that, like the Chinese Consortium, it does not exist. Before I move on I want to point out that fans should not be mad at Craig Hope for breaking this story. He is simply doing his job as a reporter to report what he has discovered or has been told. He could have heard this from Ashley’s right hand man himself, Justin Barnes, who is the best source possible, which doesn’t necessarily mean the story is true although it came almost directly from Ashley. Hope, by presenting all of the facts has left it up to people like me and you, the fans, to interpret the whole situation. Hope leaves his opinion out of this intentionally, and rightfully so. This isn’t a column, it’s news, so he does is jobs and presents us a story. That being said, in my opinion this is a fake group created by Ashley in order to advance the sale or drive up the price. This is not necessarily a bad thing, because it could work and we have new owners next week. It also is not a great thing, because lying to get what you want is not only morally incorrect, but also flat out rude and disrespectful to the party you are negotiating with. Ashley does not want to budge from his price, and he may have to in order to get the sale done. I see this honestly as a last ditch effort to sell the club for his price of £350million before caving in and actually negotiating with Staveley. It is important to note that what I said could be completely wrong because it is speculation and it is just what I think is going on after studying the situation with a critical eye. I could be completely wrong and this investment group does exist. If that is the case, then fair play to Ashley for getting someone to pay his price without caring about the actual state of the club.

As a fan remember to think critically and take everything with a grain of salt. Business as a whole is unpredictable, and that only adds to the excitement of this takeover saga.

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