Sheikh Khaled target Newcastle outside of KPMG's top 32 clubs for value

06 June 2019 Consultancy-me.com

As speculation continues to swell around the sale of Newcastle United to Emirati billionaire Sheikh Khaled Bin Zayed Al Nahyan, KPMG’s latest European football enterprise value ranking reveals the worth of the club fall outside of the continent’s top 32.

Following his reportedly £2 billion failed move on Liverpool last year, the Emirati billionaire and self-declared English football fan Sheikh Khaled Bin Zayed Al Nahyan – a member of Abu Dhabi’s ruling family and cousin to Manchester City owner Mansour bin Zayed Al Nahyan – has popped up again with a fresh, £350 million bid for English Premier League rival Newcastle United.

“We can confirm the representatives of his Highness Sheikh Khaled Bin Zayed Al Nahyan are in discussions with Mike Ashley and his team about the proposed acquisition of Newcastle United Football Club,” the Sheikh’s Bin Zayed Group said in a statement. “We view it as an honour to have the opportunity to build on the strong support, history and tradition of the club. We have agreed terms and are working hard to complete the transaction at the earliest opportunity.

Enterprise value

While Al Nahyan has confirmed his interest, skeptical speculation and conflicting details around the deal remain rife. Less hazy is this year’s “Football Clubs’ Valuation: The European Elite 2019” report compiled by global professional services firm KPMG, which attempts to quantify the enterprise value of Europe’s 32 most prominent football clubs – a list which doesn’t feature the Magpies. 

Having remained relatively steady over the past few years however, the sharp end of the table has in the latest edition also experienced some notable disruption, with Real Madrid bumping Manchester United from its perch after three years at the top – the Spanish giant growing to a calculated worth of €3.22 billion through a 10 percent gain. Man U meanwhile slipped to €3.2 billion, a decrease of €48 million on last year.

Indeed, while featuring the same set from last year, all of the top ten clubs bar Manchester City – which remained steady in 5th – shuffled in their rankings, with Bayern Munich pushing Barcelona into 4th to claim the 3rd spot, Tottenham jumping Juventus into 9th, and Arsenal falling to 8th due a surging Chelsea and Liverpool – the pair making respective gains of 26 and 32 percent to break the €2 billion barrier and move into 6th and 7th.

Top ten key performance indicators of leading European football clubs, 2017/18

To arrive at its final list for enterprise value, KPMG draws data from the publicly available financial statements of Europe’s leading teams (therefore not taking into account the business and sporting results for the 2018/19 season), and applies a proprietary algorithm based on a revenue multiple approach which considers five football-specific metrics: profitability, popularity, sporting potential, broadcasting rights and stadium ownership.

“For the third consecutive year, the overall EV of the 32 most prominent European football clubs has increased by 9 percent (35% over the past three years),” said Andrea Sartori, KPMG’s Global Head of Sports. “This growth rate is in contrast with the overall trend of the major European Stock Exchanges, notably the STOXX Europe 50 Index1, showing a year-on-year decrease of -13%, and demonstrating the different pace at which the football industry is evolving.”

Sartori continues, perhaps providing a timely reminder for eager Newcastle fans on the nature of sporting club ownership; “It comes as no surprise, that such remarkable growth has heated the debate concerning the transformation of European clubs’ competition structure. However, the stakeholders involved do not necessarily share the same interests and instead have opposing positions that are likely to make future decisions even more challenging.”

Newcastle United

According to KPMG’s analysis, Newcastle sits behind at least the lowest of the nine English Premier League entries on the list – Everton in 20th with an assessed enterprise value of €543 million – while also falling somewhere outside of a top 32 which features SS Lazio, AS Monaco, new entrants Celtic and Villarreal, and Turkish club Galatasaray SK in the bottom five – the latter with an EV of €246 following a one-year 26 percent decline.

Here, Newcastle’s omission is somewhat contrary to other value ranking tables, with the methodology adopted by Forbes currently pegging the club as the 20th most valuable worldwide and placed at 19th on fellow Big Four firm Deloitte’s Football Money League. Deloitte, in its own recent annual football financial report, also noted the increasingly tough operating environment of the Premier League, with clubs facing sliding profitability in their efforts to remain competitive.

So, does the interest in Newcastle from Sheikh Khaled – who according to the Bin Zayed Group website is a graduate in Business Administration from Boston University and has completed his Finance PhD course work at Michigan State – go beyond simple business prospects? Deloitte’s Sport Business Group head Dan Jones shared his views in a discussion with Newcastle regional news site Chronicle Live.

“Premier League clubs are profitable now, which makes them more appealing to all investors.” Jones stated, when asked more broadly on the interest in British clubs from Middle Eastern investors. “And because of the league’s global broadcasting deals, the clubs have huge international profiles… But I would also add that there is an emotional return, as well as an economic one, from owning a club.”

Related: KPMG examines local football development in lead-up to Asian Cup final


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