Finance expert reveals factor that has potential to derail Newcastle United takeover

Football finance expert Kieran Maguire believes the outstanding HMRC investigation has the potential to throw a last-minute spanner in the works of the Newcastle United takeover.

Tuesday, 21st April 2020, 7:30 pm
Updated Tuesday, 21st April 2020, 7:43 pm
OXFORD, ENGLAND - FEBRUARY 04: Mike Ashley owner of Newcastle United talks to managing Directory Lee Charnley ahead of the FA Cup Fourth Round Replay match between Oxford United and Newcastle United at Kassam Stadium on February 04, 2020 in Oxford, England. (Photo by Catherine Ivill/Getty Images)

While university lecturer Maguire, author of The Price of Football, believes the deal is 90% likely to get done, he does believe the HM Revenue and Customs raid from back in 2017, the results of which are outstanding, could still prevent any sale.

Speaking on the Football Matters podcast, Maguire said: “There’s two things that could happen. The owners’ and directors’ could be failed. I think that’s highly unlikely, or as part of the final due diligence Amanda Staveley’s teams of accounts and lawyers discover something they’re not particularly happy with.

“We know there are outstanding issues in terms of tax legacy issues.

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“They might ask for indemnification in respect of those. It could collapse in that regard.”

Could the HMRC investigation reveal some last-minute skeletons in closets? Or is the deal as good as done? Here our writer Liam Kennedy takes a look at the likely outcome.

Where is the Newcastle United takeover at?

The Echo understands a deal worth in the region of £300million has been agreed, papers lodged to the Premier League and the owners and directors test well under way. All that stands between Mike Ashley relinquishing control of the Magpies after 13 years and the Public Investment Fund of Saudi Arabia, the Reuben Brothers and Amanda Staveley’s PCP Capital Partners taking the seats in the boardroom, is the green light by the league and a transferring of the remainder of the balance, thought to be around £283million.

Who are the consortium involved?

Property magnates the Reuben Brothers, Simon and David, according to the Sunday Times Rich List – which was most recently published in May 2019 – are worth £18.66billion.

That places them as the second richest family in the United Kingdom. It would also make them the second richest football club owners in England, were they to buy the club outright. They are taking a 10% stake.

David Reuben’s son Jamie Reuben is set to take a place on the United board, according to reports. He currently sits on the board at Championship outfit QPR.

Then there is PCP Capital Partners, headed up by financier Amanda Staveley. Her wealth is unknown, but she is credited with brokering the Manchester City takeover and attempting to buy Liverpool. Herself and husband Mehrdad Ghodoussi are understood to be also taking a place in the St James's Park boardroom.

And finally, there is the Public Investment Fund of Saudi Arabia, who are the sovereign wealth fund of the kingdom. Ranking as one of the richest wealth funds on the planet, their worth is estimated to be around £260billion.

They run the most profitable company in the world, Saudi Aramco.

What is the HMRC case against Newcastle United? And what happened back in 2017?

Managing director Lee Charnley’s Gosforth property was raided along with offices at St James’s Park and the club’s Benton training ground in relation to suspected tax and national insurance fraud.

Charnley was released without charge, while authorities in the UK and France made several arrests and collected potential evidence. West Ham United’s London Stadium was also raided.

At the time, and HMRC spokesperson said: “180 HMRC officers have been deployed across the UK and France. Investigators have searched a number of premises in the North East and South East of England and arrested the men and also seized business records, financial records, computers and mobile phones.

“The French authorities are assisting the UK investigation, have made arrests and several locations have been searched in France.”

What next for Newcastle in terms of takeover and HMRC investigation?

As an HMRC spokesman said at the time, fraud investigations of this size and nature “take a very long period of time” to be come to fruition, ie see prosecutions.

So, as things stand, it is business as usual on the HMRC investigation front.

As for the Saudi-financed takeover, Newcastle must continue to play the waiting game.

There are yet to be any red flags brought up in the owners and directors test done by the Premier League, but that is on-going.

Due to the coronavirus crisis, Ramadan, which starts this week, is set to see countries continue as usual, despite the usual slowing down of business. That is thought to be unlikely to impact on any potential announcement.

By next week fans can start looking forward to a resolution, the signing off of finances and the exchange of the club from Ashley to the consortium.