This is a new, updated version of an article first published in October 2024.
Acronyms have been the bane of Newcastle United’s post-takeover existence.
PSR, APT and FMV have restricted the pace of their growth under the majority ownership of Saudi Arabia’s Public Investment Fund (PIF) — but Manchester City’s recent victory over the Premier League at a tribunal means the financial shackles that have held Newcastle back may be about to slacken.
Last week, associated-party transaction (APT) rules, which were introduced in the immediate aftermath of Newcastle’s takeover in 2021, were declared “unlawful” and “void and unenforceable”.
Immediately, Newcastle fans began celebrating this as a victory. It was, some suggested, a game-changing moment, permitting PIF to channel limitless funds into the club via lucrative commercial deals. The reality is more nuanced and, while Newcastle are likely to welcome the verdict, there is no guarantee this will be transformative.
The Athletic explains Newcastle’s pre-existing relationships with PIF companies, their stance on APTs and what this verdict means…
What is the ruling? And how did it come about?
Last June, City took the Premier League to independent arbitration, claiming that the existing APT rules — which attempted to ensure that any deals agreed by clubs with sponsors represented fair market value (FMV) — were unfair and against competition law.
In October, when the initial ruling was made public, City and the Premier League claimed a victory after three aspects of the APTs were found to be unlawful.
A tribunal has concluded that the APT rules in place between December 2021 and November 2024 were “unlawful” and “void and unenforceable”, following a two-day hearing last month.
However, rather confusingly, following the initial arbitration, the Premier League asked its member clubs to vote on amended APT rules in November. Newcastle were one of four clubs, alongside City, to vote against them, but they passed with 16 votes in favour and, theoretically, those APT regulations do actually remain (for now).
Yet City had warned rival clubs not to vote on the proposed changes until the tribunal released its full ruling and they launched a second case against the new rules this month. The Premier League believes the amended rules are legally sound, but City are arguing otherwise, and the tribunal will determine whether the updated regulations are enforceable or not.
Put simply: the legal wranglings are ongoing, even if the latest ruling was an undoubted victory for City — and potentially a positive for Newcastle.
In simple terms, why are APTs relevant to Newcastle?
The Newcastle takeover on October 7, 2021, rapidly accelerated the introduction of far more stringent APT and FMV rules.
Premier League rivals feared that, given PIF’s wealth, Newcastle could emulate City’s rapid commercial expansion under their Abu Dhabi-based owners. If PIF ploughed money into Newcastle via sponsorship deals, then it could massively expand the club’s spending within the PSR limits, with some members worrying about an apparent circumnavigation of the rules.
The tightening of APT legislation in late 2021 was a direct response, an attempt to prevent Newcastle from doing what City have done since being taken over 17 years ago with their Etihad agreements and deals with other companies linked to their owners.
From the start, Newcastle always insisted this was not their plan, yet they were surprised and affected by the rush to change the regulations.
Newcastle featured 15 times across nine separate references during the 175-page arbitration verdict, which was released in October.
In that document, the club’s takeover in October 2021 is cited as “accelerating” the tightening of PSR rules with the introduction of APTs. Newcastle were also called by City as “witnesses of fact” and provided “written statements” for the claimant.
While Amanda Staveley is not named, she was asked to provide evidence as she was a 10 per cent co-owner of Newcastle and her company held the management contract to run the club when the rules were introduced.
Staveley departed Newcastle in July but still spoke during the arbitration hearing. Although her appearance was not necessarily at the behest of the club’s hierarchy, Staveley felt it was important to argue against APTs, given how their removal could benefit Newcastle.
Why did Newcastle act as a witness for City in the first APT case?
With Newcastle opting not to comment or steer throughout the process, it is hard to provide a definitive answer.
For part of it at least, Newcastle were merely called a “witness of fact”, which suggests they may have been providing clarification on specific facts or events. But given Newcastle were also the only club to provide written evidence on behalf of City — while five did so on behalf of the Premier League — they were at least cooperative.
It would be a stretch to conclude that Newcastle were supporting City’s claim but it does imply partial backing. If that is the case, self-interest is surely a motivating factor for Newcastle, given they can arguably benefit most from it.
One club source — speaking on the condition of anonymity to protect their position — described Newcastle as “interested onlookers” when news of City’s case first broke last summer. It is easy to understand why.
What APTs do we know about at Newcastle?
Two PIF-owned brands feature on Newcastle’s kit. Another is their “official airline partner”, and they even released a video last year of Alexander Isak, the striker, “driving” a Formula E car through the city.
In Newcastle’s most recently published accounts, for 2022-23, as commercial revenue increased 66 per cent from £26.5million ($33.4m at present exchange rates) to £43.9m, the club “recognised” annual income totalling £6.71m “from fellow subsidiary and associated undertakings” of PIF.
That only accounts for 38.5 per cent of their year-on-year commercial uptick.
That was almost exclusively covered by their Noon shirt-sleeve sponsorship deal, which has been in place since 2022. Noon is the Gulf’s largest online retailer and the subject of a special report by The Athletic into allegations of serious worker mistreatment in its supply chain. But Newcastle also featured in the Diriyah Cup in Saudi in December 2022 while the World Cup was taking place in neighbouring Qatar. Saudia was their “official tour airline operator”.
For the 2021-22 season, Newcastle did not declare anything in sponsorship from associated parties. That can partly be explained by the takeover only being completed two months into that campaign, meaning commercial deals — including with Fun88, the front-of-shirt partner, and Kayak, the sleeve sponsor — were already in place, while Peter Silverstone, the chief commercial officer, was only appointed in October 2022.
However, for the 2023-24 accounting period, which should become public within weeks, Newcastle will show a significant increase in APT revenue (if they do indeed decide to specifically outline the total value of their deals with PIF-related companies).
Sela, a PIF-owned events company, replaced Fun88 as shirt-front sponsor at the beginning of 2023-24 and that deal brings in approximately £25million a year, a significant uplift on the previous £7m-a-year deal that was due to run until 2025 but was terminated early. The relationship with Saudia was expanded in October 2023 to make it the club’s “official airline partner” in a “multi-year” deal.
Then, for 2024-25, further income from the STACK — the fan zone located behind the Gallowgate End of St James’ that opened in August — will be present, given it is “powered by Sela”, in the words of the club. Further deals with PIF-affiliated companies could also be announced before the season is out, with suggestions some are already being worked on.
During the 3-0 victory over Wolverhampton Wanderers on January 16, pitchside digital advertising hoardings displayed the PIF logo for the first time.
PIF pitchside advertising has been seen at recent Newcastle home matches (Serena Taylor/Newcastle United via Getty Images)
Did Newcastle miss out under the rules that have now been deemed unlawful?
Newcastle have benefitted from their majority owner’s vast portfolio of companies, yet none of these partnerships has been straightforward to conclude. Each one has been arduous — and not only because of PIF’s “process-driven” approach, which means nothing happens quickly.
More challenging has been how Newcastle have needed to conduct shadow negotiations with other non-PIF companies to prove FMV, so that the Premier League would ratify their deals. Newcastle were facing relegation before the takeover, making the FMV of their potential deals significantly lower than it would have been once they qualified for the Champions League in 2023.
The Amazon Prime documentary We Are Newcastle showed how the club contacted 1,193 companies, met 65, and reached advanced negotiations with multiple firms, before settling on Sela. Explaining the decision, Silverstone said: “I want us to be the most supported club in Saudi. Having a Saudi brand will grow that fanbase, which means more commercial revenue.”
Newcastle recognise the value of PIF-related deals, but those partnerships only account for a portion of their rapid revenue growth.
Regardless, while Staveley said in 2022 that Newcastle did not have a raft of Saudi-based deals ready to go when the takeover was ratified, there is the potential for the club to claim compensation on deals they missed out on, or feel they missed out on, or believe were undervalued.
City may seek damages following the rejection and delayed approval of their deals, so Newcastle could do likewise if they feel that has happened.
There is no suggestion yet that Newcastle do feel that any specific deals were rejected, or that they will seek recompense for what they now view as artificially reduced sponsorships.
Even if that proves to be the case, it is unlikely to bring in tens of millions, and the greater benefits should be felt going forward regarding how Newcastle may use APTs.
What is the club’s stance on their links to Saudi-owned companies?
Let’s take a step back.
The ratification of Newcastle’s takeover was a shock. After months of limbo, the new owners did not have a detailed plan ready, whether that was replacing manager Steve Bruce or bringing in lucrative sponsorship deals.
The Premier League’s initial blanket ban on all APT deals and then a swift changing of the rules were in direct response to Newcastle’s new-found wealth, yet — from the club’s perspective — it represented a misunderstanding of their model. Gaming the system with Saudi commercial partners was never on the agenda, at least for some figures inside the club, they say.
“Initially, there was a lot (of hostility),” Staveley told The Athletic two years ago. “But I’m on the (Premier League’s) financial fair play committee and I said, ‘You won’t find a raft of related-party transactions, because this was not our business plan’.
“We said, ‘We’re not what you think we are’, and other clubs are getting to know that. We want to be transparent about the way we do business.”
Back then, Staveley said the Premier League had devised a “set of rules that we can work with”. She continued: “I’ve always known we will be able to show fair market value. We’re getting offers for sponsorship that are probably outbidding potential Saudi sponsors.”
Mehrdad Ghodoussi, Staveley’s husband, said: “There’s nothing specific telling us it has to be Saudi. We wanted to do it the right way. Did we plan to bring in a ‘dodgy’ deal for £100million? Not at all.”
Amanda Staveley and former co-owner Mehrdad Ghodoussi (left) unveiling Eddie Howe in 2021. (Owen Humphreys/PA Images via Getty Images)
When the couple left the club last summer, Staveley’s stance was unchanged. “It was important to do what was right, fair and legal,” she told The Athletic. “I can always see things from other clubs’ points of view, and we wanted to build relationships with them. I never thought we should just rely on related-party deals, because the only way to build a really successful brand is to attract global partners.”
Yet Staveley indicated she would give evidence in Newcastle’s favour if asked to. Even if there was no quick fix available to them post-takeover and even if it was not their big idea, there is little doubt that the APT changes hemmed them in.
“I’m leaving Newcastle, but it is important that we support that wonderful place as much as we can,” she said.
“The Premier League is in a difficult position because it is lobbied by so many clubs, but it was hard on Newcastle. We were in such a tough hour and we’d come from nowhere and didn’t have huge revenue anyway. It wasn’t as if we had a load of valuable players to sell. So this was important.”
Will this ruling change Newcastle’s strategy?
Newcastle had received no advanced notice before the outcome emerged on Friday, with some officials even on an internal and routine video call when the verdict was released. For some at the top of the club, there was a combination of surprise and no immediate sense of precisely what it might mean (officially, the club declined to comment).
Internally, the feeling appears to be: good news, but probably not a game-changer in revenue. Those inside the club are also awaiting the outcome of City’s case against the amended APT rules, which could affect whether the previous ruling is redundant or enforceable.
Theoretically, there are a few ways Newcastle could benefit, however — especially if City win their second case.
One source, for example, described it as a “big thing” that the club may no longer have to prove they received a sponsorship offer of equivalence or higher than that of a PIF-related company for that partnership to be ratified.
That means Newcastle would no longer have to hold parallel discussions with other businesses to prove FMV, saving time and effort and perhaps bumping up the numbers, albeit there would still be “checks and balances”.
Interestingly, with Staveley and Ghodoussi no longer at the club, Newcastle’s hierarchy may also adopt a fresh stance on APT deals.
While the former co-owners preferred a global approach, believing that strong arms-length sponsorship deals were healthy, the majority of Newcastle’s most lucrative post-takeover commercial partnerships have been with PIF-related companies.
The biggest potential money-spinning contracts Newcastle have yet to enter relate to the stadium, training ground and training kits. Some supporters have questioned why the club has not splashed dedicated branding across any of those, but perhaps Newcastle have been waiting for the outcome of the APT cases, so they can fully maximise the potential revenue of those contracts.
Should Newcastle construct a new ‘super stadium’ or redevelop St James’ Park, as well as build a state-of-the-art training ground, as is the long-term plan, then a PIF-related company may be able to pay an increased price for the naming rights as a result of APT rules essentially being abolished.
If Newcastle supporters are hoping that this is the golden ticket the club have been waiting for to spend, spend, spend, then the reality appears less immediately transformative.
It is positive news, but it remains a case of ‘wait and see’ over how significant it will be in their quest to increase revenues.
(Top photo: Joe Prior/Visionhaus via Getty Images)
