Untangling the curious case of the Newcastle United takeover has become a full-time job for many fans desperate for positive news from St James’ Park.
With the usual summer past-times of speculating about what the team might look like next season and keeping an eye on the transfer market largely redundant against the backdrop of unprecedented uncertainty over the manager and the owner, the takeover is taking over the black and white agenda.
It’s now more than three weeks since the Bin Zayed Group broke cover and for much of that time, it has appeared on the outside as if nothing is happening. Attempts to dig deeper have proved fiendishly difficult – one side may say something that contradicts what another believes and unpicking the details of a multi-million pound transaction is a little bit different to tracking a player transfer. Uncertainty has become the watchword on Tyneside.
Daniel Geey, Partner at sports law firm Sheridans and author of the book Done Deal – an insider’s account of how football works – is an expert on the takeover process. He explains that the reason for the silence is simple: this is a complicated, painstaking process that can take several months.
“It’s very difficult to complete a deal of this magnitude in a short period of time,” he says.
“There’s lots of different considerations that make that the case but ultimately there are likely to be two or three pretty important things that are going on in the meantime.
“Depending on the buyer’s appetite for risk there’s likely to be due diligence going on and usually that will be a pretty comprehensive process that takes place after the initial agreement is in place. That can take a significant period of time – I’ve seen due diligence reports which are a hundred pages or more – and usually that only starts once the outline agreement has been signed – and that is known as the Head of Terms.”
The fact that Bin Zayed have a document signed by Mike Ashley that outlines the agreement is not in dispute. It’s an important starting point but it is just that: “If you’re looking at a timetable, the Head of Terms is really signed at a fairly early stage of the process,” Geey explains.
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And what that sparks is the more complicated and crucial stage of the takeover – where the buyer has to in-depth due diligence before signing a Sales Purchase Agreement and then, finally, meeting the Premier League and going through their rigorous tests. Bin Zayed are going through “processes”, in their own words, but that final part is – according to Ashley sources – yet to begin.
Perhaps it has not been for the best that we know about this bid at what appears to be quite an early stage. “A lot of takeovers are only announced – informally through leaks to the press or formally – when the process is quite far along.
“If it’s only the Head of Terms that has been signed here there may be a significant amount of time that passes before we ge the final part of the process. There are a lot of reasons why it might not happen quickly – it could be that something is discovered in due diligence.
“The price may be agreed in the Head of Terms but there will most likely be a degree of flexibility on what has been agreed in that document. If, for example, there are onerous contracts discovered in the due diligence or tax liabilities then it may mean the buying party may look to negotiate on the terms.”
Another key issue is the structure of the payments. “There is a lot to be negotiated between the Head of Terms and the Sales Purchase Agreement, which will include detailed information like the way the transaction is paid for, the size of instalments, whether there is any agreement on what happens if the TV deal goes up or if the club is relegated.
“And even at that point, there are Premier League processes to go through.”
The Premier League’s rigorous checks will require anyone in the Bin Zayed Group who wants to hold a position of influence on the board, and anyone with a financial stake in the club, to meet with top flight officials. A business plan and accounts will need to be provided and, as of the last week, sources at Newcastle suggest this hasn’t happened.
That doesn’t mean it’s dead or that this takeover won’t happen. “The fact is, no-one goes into this process lightly. It will cost a sizeable amount to anyone buying the club to fund lawyers and accountants to do due diligence and even Head of Terms. Anyone going into this part of the process would be serious about the transaction.”
There are those in the Bin Zayed camp who insist things will be completed soon, and that the process is much further along than UK-based sources will admit. And Geey says that all eyes will be on the August transfer deadline. “The earlier the deal can be done the better as it will be a risk factor for any buyer if they can’t implement their own recruitment strategy,” he says. “And that is before the Rafa Benitez situation is taken into account.”
No prospective owner can have an influence on club policy until they have taken over, Geey points out, because it would be against Premier League rules on third parties having an influence over the say of a club. No seller would agree to fund transfers or a manager’s contract in case the takeover collapses.
Geey says both parties – Newcastle and Bin Zayed – have his “sympathies” at the way it is playing out in public. “It is usually a fairly drawn out process and you’d expect that, as you would any commercial negotiation where there’s a lot of money at stake.”
Source: Newcastle Chronicle