The Future of Newcastle United and Antitrust Law in Sports

Ahmed Imam

In the midst of a global pandemic, the summer of 2020 was bleak. For others, however, namely fans of Newcastle United FC, one of the biggest and most storied soccer clubs in England, the summer seemed like the light at the end of a tumultuous 12-year tunnel. Indeed, it was in April that the news first broke out that the Saudi Arabian Public Investment Fund, the Kingdom’s sovereign wealth fund, reached an agreement with current Newcastle owner Mike Ashley to purchase the club for a reported $407 million.[1]

There are truly few clubs that inspire such passionate support as Newcastle. The club is home to one of the largest stadiums in the UK, St. James’ Park, and has been the venue for many a legendary player and coach. The famed Newcastle #9, adorned by players like Alan Shearer, Andy Cole and Les Ferdinand, remains one of the most iconic shirts in English soccer. Moreover, the extreme fandom is rooted in the location of the club. Newcastle is a city nestled in the Northeastern part of England, and the club is the only professional top tier team in the city. Newcastle locals, or Geordies as they’re called, are known for fanatics for their team. 

When Mike Ashley first bought the club in 2007, a “spur of the moment” deal, done to allow the billionaire to “have some fun,” fans were optimistic.[2] Today, most true English soccer fans would describe him as probably the worst owner in the Premier League. Not only has we watched Newcastle burn since taking over, but he’s actively blocked deals, and failed to invigorate the club with the necessary investments into its facilities that its peers make year-on-year. Having been the subject of years of hate and abuse from fans, Ashley finally put the club up for sale a few years ago, and in 2020, when the Saudi consortium agreed to a deal, Newcastle fans started to not just believe the nightmare was over, but that they could actually dream again.

Indeed, the deal looked to plunge them back into the forefront of elite soccer. It promised to make the club the richest in England, backed by owners whose ambitions signaled continental domination in the sport. Unfortunately for the Geordies, the dream wasn’t to come to fruition. In July, the Premier League’s chief executive, Richard Masters, claimed that the Saudi investors withdrew their bid “voluntarily,” and before a formal decision was made on whether the proposed investment group passed the league’s “Owners’ and Directors’ Test.”[3]

The test is designed to assess a potential owner’s financial credential and criminal history. Until the Newcastle deal, it was relatively unheard of. The process was at the center of attention though, because it was the last piece in the takeover puzzle and seemed to drag on forever. Ashley, obviously infuriated at the lost opportunity, rejected the Premier League’s claims, instead alleging that the league had “rejected” the bid based on the ownership test. Since the takeover collapse, Ashley and his legal team have been working to try and push it through, claiming that the Premier League violated UK anticompetition laws in its handling of the deal. Since then, both the World Trade Organization and the British government have become involved, as both sides prepare for a mounting legal challenge.[4]

In general, this protracted takeover saga does present some important questions over the role of antitrust laws in sports. Generally, whether in the US or Europe, the economic activities related to sports fall within the scope of competition law, including sales of media rights, ticket sales arrangements, betting laws, and more. However, it seems like no one has dared to question whether or not the actual ownership structure of these teams, many of which valued in the hundreds of millions plus, actually constitute some sort of violation on their own.

What makes a sports team such an attractive investment in the first place is the fact that the majority of these teams have access to generational customer bases. Whether it’s basketball, soccer, or football, there are so many stories of somebody becoming a fan of a team because their parents or grandparents were fans. In a lot of ways, sports teams are etched into household lineages, forming bonds that are tough to be broken. Moreover, sports teams are a part of the identity of the cities they are based in. But, in reality, where is the accountability for those owners who are lagging behind, unwilling to repay the faith shown by their loyal customer bases? It just seems as though there’s no sort of mechanism for fans to voice their disappointment in a way that actually produces tangible impact.

In most industries, customers have a fair say. If one company’s product isn’t cutting it or is pricing itself out, you move onto the next company’s product. Indeed, having options is the beauty of healthy competition in business, and the hallmark of antitrust regulation. But, in sports, while you’re still technically “free” to start cheering for another team, culturally that just isn’t what happens. If your team’s owner clearly doesn’t care about the team’s success, and has demonstrated that for a number of years, fans are left with little option. Again, in many cases, these teams are a part of their identity, either through their families or the cities they are from.

All in all, it’s pretty apparent that there needs to be some sort of change. Fans deserve more transparency and more of a say in the management of their sports teams. Perhaps the leagues could act as mechanisms for accountability, ensuring that sports owners must pass a year-on-year satisfaction criteria amongst fans, or otherwise sell the team. Who knows? This is just an idea, but the main takeaway should be that if sports teams are now considered businesses, whose potential value can be anywhere upwards of multiple billions (i.e. the Golden State Warriors)[5], or whose shares are even traded on public markets (i.e. Manchester United)[6], the fans need to have their say, rather than let this clear insulation from antitrust law force them to suffer.

It will be interesting to see whether the Newcastle United takeover reignites. There are Geordies by the millions praying on it. But, more importantly, hopefully regulators, governments, and trade organizations around the world are taking a keen eye on this. No fan should have to sit in limbo, awaiting a new owner who seems to be the only way out of a turbulent, ill-advised marriage. Transparency and accountability are needed now more than ever in soccer and the sports world at large.  





[4] Id.