Football supporters are not the usual audience for preliminary hearings at the Competition Appeal Tribunal (CAT), but earlier this week thousands of Newcastle fans tuned in for just such a live stream.
The simple reason is that a takeover of Newcastle Football Club is the single biggest story in the city and has been for years. This is not just because Mike Ashley has presided over 14 years of decline and stagnation, with just one top six finish and one European campaign, but also because the proposed buyers are Saudi Arabia’s Public Investment Fund (PIF), the largest sovereign wealth fund in the world.
The proposed takeover could therefore turn Newcastle into one of the richest clubs in the world, capable of matching the spending of the likes of Paris Saint Germain and Manchester City. Here’s how the takeover stands.
How did the takeover start?
Ashley first put the club up for sale in September 2008. Amanda Staveley, who is brokering the Saudi deal, first tried to buy it in the autumn of 2017.
News of PIF’s interest was first leaked to the media in the Wall Street Journal in January 2020, a deal was agreed with Ashley and funds proven in April. The Premier League’s owners and directors test began in May, which is when the problems started.
Why did the takeover not go ahead?
The Premier League believed PIF are controlled by the Saudi State, most notably the Crown Prince Mohammad Bin Salman, who is the Kingdom’s de facto ruler, and also chairman of PIF. He is not elected to either position as the country is not a democracy.
In the Premier League’s view, Saudi Arabia and the Crown Prince needed to be subjected to the owners and directors test. The buyers, however, refused to accept that the Crown Prince and other Government officials on the PIF board could be subjected to an examination of their conduct and character by a private company in a foreign country.
PIF publicly withdrew their takeover bid in July 2020, having rejected an offer of arbitration from the Premier League to settle the dispute about whether PIF was controlled by the Saudi State.
What has happened since?
In September, Ashley announced his intention to pursue arbitration with the Premier League to settle that dispute and to revive the takeover. Arbitration was postponed in the summer of 2021, after both sides failed to disclose relevant information, date has now been set for the case to be heard on January 3, 2022.
Ashley also launched a second legal challenge last year, through CAT, for the loss of income caused by the refusal to sanction the £340 million sale. The Premier League want this case thrown out because they believe that if Newcastle win arbitration, the takeover will almost certainly go through and the CAT case will be irrelevant.
Arbitration will be heard in private, as stated under the Premier League rules which Newcastle signed up to. Newcastle failed in a legal challenge at the High Court to have the arbitration hearing in public last year, along with an attempt to change the panel that will hear it.
What happened this week?
The hearing on Wednesday, was a preliminary one to determine whether the CAT case should be heard or thrown out, but crucially it was held in public so various legal arguments and accusations could be made and subsequently reported in the media for the first time. A judgement is due later this week.
Ashley’s representatives also said at the hearing that there are other “credible bids” for Newcastle.
What happens next?
In terms of the CAT case, very little. Even if the case is allowed to proceed it will not be heard until after January’s arbitration hearing, which will either make or break the takeover. Newcastle’s legal team even argued they would be happy to wait until after that arbitration hearing for the CAT case to proceed.
The most important thing to come out of the preliminary hearing was that a date has been set for arbitration in January.
Telegraph Sport has been informed by multiple sources on both sides of the argument that they do not believe the arbitration hearing will be postponed again. It really will be judgement time.
What is at stake?
In short, nothing has changed since May 2020 when PIF first refused to be subjected to the owners and directors test.
If Newcastle win the arbitration, it will be judged that PIF are separate from the state of Saudi Arabia and therefore only those who will sit on the proposed Newcastle board need to pass the owners and directors test. Potentially, this paves the way to allowing any independent global investment vehicle to buy a Premier League football club.
PIF already invests in a huge number of global companies, including Uber and Disney, but those companies do not have owners and directors tests for investors to pass before they do so.
For the Premier League to win the arbitration, they only have to prove that they followed and applied their own rules correctly.
Why can’t the club be owned by Saudi Arabia?
The chief problem is piracy. You cannot legally watch the Premier League in Saudi Arabia because the competition’s broadcast partners in that region, Qatar-owned beIN Sport, are banned.
Saudi Arabia is top of the USA’s watch list for piracy, accused of illegally broadcasting a vast array of international sport and other events in breach of international copyright laws.
The Premier League tried to take legal action against those responsible for piracy nine times and were prevented from doing so by the Saudi state. Several other European leagues, as well as Uefa, have also suffered from piracy in Saudi Arabia and have tried and failed to legally challenge those responsible.
In June, 2020, the World Trade Organisation judged that the Saudi Arabian Government had breached global rules on intellectual property rights by failing to prosecute a pirate broadcaster of sports and movies in a dispute with Gulf neighbour Qatar.
Any other problems with Saudi Arabia?
Yes. The American government, along with most western intelligence services have determined that the Saudi Arabian journalist, Jamal Ahmad Khashoggi, who was critical of the ruling regime, was assassinated in Turkey in 2018 on the direct orders of the Crown Prince, with the alleged murderers transported to foreign soil by planes owned by PIF.
There are also concerns about the country’s human rights record and the imprisonment and torture of those who criticise the government within Saudi Arabia.
What was the point of the CAT hearing?
To be blunt, most observers believe that the CAT hearing (which is separate from the arbitration hearing with the Premier League) was to create noise, to make accusations against the Premier League under the protection of courtroom privilege, to air the club’s grievances in public, have them reported in the media and to create public pressure on the Premier League before the arbitration hearing. It will also allow Ashley to pursue damages if he also wins arbitration.
Well-placed sources have repeatedly told Telegraph Sport that as well as reviving the takeover, Ashley has been motivated by a desire to embarrass and expose the Premier League. He wants to make things uncomfortable for them, even if he ends up losing arbitration.
That is why there were accusations from his legal representatives that beIN Sports, as well as other Premier League clubs, had forced the Premier League into incorrectly applying its owners and directors test to ensure the takeover did not happen. There was also a reference made to a threat to expel Newcastle from the Premier League if they did not provide all the relevant paperwork to do with the ownership of the club.
Have the Premier League responded to those allegations?
In a letter to the Newcastle MP Chi Onwurah back in August 2020, Premier League chief executive Richard Masters denied that pressure from other Premier League clubs had any impact on the owners and directors test.
However, beIN Sports have confirmed that they did lobby the Premier League that summer, as they were entitled to do so as commercial partners and the aggrieved party in the piracy dispute. Sources with knowledge of the matter have pointed out that the Saudis did the same thing, most notably when the Crown Prince contacted the British Prime Minister, Boris Johnson to urge him to tell the Premier League to reverse its “incorrect decision” not to allow the takeover to go through.
The Premier League resisted that political pressure, always pointing to the offer of arbitration to settle things.
How likely is the takeover to happen?
Nobody can say with absolute certainty, but the chances of Newcastle winning the arbitration and the takeover therefore going ahead seem slim. The fact that the Crown Prince is chairman of PIF and is regularly credited with controlling and masterminding the state investment vehicle’s projects in Saudi Arabia makes separation incredibly difficult to prove.
The fact that PIF’s board is also made up of Government ministers is also impossible to ignore.
The Premier League have always been extremely confident in the strength of their position and have not felt the need to brief against the takeover or defend themselves against Newcastle’s attacks. They believe in the process set out and have directed the buyers down this route for more than 18 months.
Public pressure, a tactic used by the buying side throughout this saga, is also unlikely to influence an independent panel made up of legal experts, used to sitting and hearing complex legal cases.
Newcastle fans may overwhelmingly want the takeover to happen, as does Ashley, but that is irrelevant to the strength of the legal arguments both sides can make.
The fact that arbitration will take place in private is also likely to mean highly sensitive evidence relating to matters in Saudi Arabia — some of the CAT case was heard in private when this evidence was discussed on Wednesday — will have a huge bearing on the outcome.
Arbitration though is long overdue and vital. It will bring closure and a definitive outcome after so long waiting. If Newcastle win, the club should have new owners before the end of the season. Lose, and the dream of becoming the richest club in the world will be over and everyone can move on accordingly.
What has been said?
Steve Bruce has declared he would not be in the least bit surprised if rival clubs have tried to block a proposed takeover of Newcastle United by a Saudi Arabian led consortium as they do not want them to become one of the richest clubs in the world.
Newcastle owner Mike Ashley has launched two legal challenges to the Premier League for not allowing the takeover to proceed in the summer of 2020.
An arbitration hearing that could unlock the takeover if Newcastle win and bring Saudi Arabia’s Public Investment Fund back to the table is scheduled to start on January 3.
One of the accusations Newcastle will make in their legal attack is that the Premier League failed to apply its owners and director’s test properly because other clubs urged them to block it.
“Would it surprise me if other clubs [worked to block it]? No it wouldn’t surprise me,” said Bruce, whose side travel to Wolverhampton Wanderers this weekend looking for their first win of the season. You wouldn’t want another big player on the patch would you.”
Given this takeover first leaked into the public domain in Jan 2020, there has been almost constant background noise for Bruce since he became manager in July 2019.
“It seems a bit complicated for me, to be brutally honest,” he continued. “I’ve not got a clue how the Competition Appeal Tribunal hearing has gone, what is about or where it is going.
“I have to switch off from it, there is nothing I can do about that. It seems to be an ongoing saga here.
“It’s gone on for years before I arrived and it’s been going on for two years since I arrived. My job is to just win a football match which has proven difficult enough this season.
“I focus on the team and how we are going to play, that is all I can devote my energy to. I’ll let other people deal with that.
“I can only do what I can do [in terms of building up and improving the football club]. That is what I try to do. Anything that benefits the club, if a takeover is going to happen, if it’s good for Newcastle and good for everyone concerned, then great.
“I’m not going to use it as an excuse for anything, it’s not been easy at times because it has become boring if you like.
“How many stories are we going to read about Newcastle and a takeover? I try to completely switch off from it. I’ve got enough going on, All I am concentrating on is Wolves and trying to get a result. That has been difficult enough, I can tell you.
“The players are used to it, a lot of them have been here a long time, and if anything it becomes tedious. Their job is the same as main, to control what we can control and that is how we play.”
Bruce has faced sustained calls for him to be sacked by Newcastle supporters this season, but the club have been unequivocal in their message that his job is not under any threat, with sources telling Telegraph Sport this week that the football has been far better to watch and they deserve to have more points on the board.
“The backing helps, there is no disputing that,” added Bruce. “But I cannot take that for granted. We haven’t won a game yet and whether you are the manager of Newcastle United, or anybody, you’re under pressure very, very quickly.
“That’s what we all face in this league, I’m not alone in that. There are two to four points separating the whole bottom half of the division again. We’re not alone. The reassurances we have had, certainly after Brighton last season when the club came out making that stance that my job was secure, was important.
“I think we have played well of late, the performances have been decent, but we need to win a match and then the noise will quieten down a bit.”