#Saudi Newcastle punt is not as silly as it sounds – Breakingviews

Saudi Newcastle punt is not as silly as it sounds – Breakingviews:

Saudi Arabia’s enthusiasm for Newcastle United is less silly than it sounds. Riyadh’s wealth fund is mulling a deal to buy the English Premier League soccer club for around 340 million pounds. There are worse ways to spend the $30 billion the kingdom raised selling 1.5% of oil giant Saudi Aramco.

There are plenty of reasons to be sceptical about the oil-rich country replacing retail tycoon Mike Ashley as Newcastle’s owner. Its $300 billion sovereign wealth vehicle, the Public Investment Fund, has made a ropey start spearheading Crown Prince Mohammed bin Salman’s plan to diversify Saudi Arabia away from its dependence on the black stuff. Part of the $45 billion it pledged to the SoftBank-run Vision Fund financed tech dud WeWork, while an investment in Uber Technologies has been on a roller coaster since the ride-hailing firm’s initial public offering. Splashing out on a soccer club that hasn’t been a serious force in the English Premier League since the 1990s looks like another ego trip.

Still, the mooted valuation implies an enterprise value of just under 2 times Newcastle’s revenue in the year to June 2018. Manchester City and Manchester United, the UK’s biggest clubs by revenue, are valued at more than 4 times. The black-and-white shirted team’s poor performance on the pitch partly explains the club’s depressed price. Still, its EBITDA was the seventh highest in the Premier League and the Magpies attracted the eighth-largest crowds, according to Swiss Ramble, a football analyst.