Singaporean company Bellagraph Nova wants to buy Newcastle United, one of the English Premier League’s biggest clubs. Asian companies already control teams throughout Europe but what is the appeal and what are the challenges that lie ahead?
Fans of Newcastle United, the biggest soccer club in northeast England, have gotten used to takeover rumors regarding their club coming to nothing. Current owner Mike Ashley has been trying to sell the team since 2017 without success. Last month, a proposed £300 million (US$387.55 million) deal with a Saudi firm collapsed after protracted negotiations.
Bellagraph Nova, a company owned by three cousins from China and Singapore, has reportedly offered £280 million and is, the firm claims, in “advanced talks” to buy the club. However, the deal is nowhere near done. Such takeovers can take months to complete and even then, there are plenty of obstacles to overcome.
Analysts are wary of the Singaporean bid given Bellagraph Nova’s checkered history. It stood accused of photoshopping its logo into a photo of ex-US President Barack Obama with its directors. The Singaporean police are investigating claims of financial irregularity.
The latter will be of most concern to the Premier League (PL), which has set up strict rules concerning takeovers that interested parties must follow; buyers must provide evidence of funding and be clear of any corruption or fraud charges.
Why does Bellagraph Nova want to buy Newcastle United?
Speaking to the BBC, Bellagraph Nova co-founder EvangelineShen said “bidding for Newcastle is part of our strategy because it’s a well-known football (soccer) club but still has room to improve, and we believe that improvement is good for the club as well as for our brand.”
There are many reasons why investors see soccer clubs as valuable additions to their portfolios. Some are genuine fans of the game or a particular club. Big firms see the opportunity to attach their brand to an already established global commodity with a huge fanbase, often within a specific target market. Some want to get in and out relatively quickly and make a profit.
However, with so many concerns over the Bellagraph Nova bid, it seems unlikely that it will succeed. “The bid has turned into a shambles for the bidders and appears dead in the water,” said Kevin McCullagh, a senior analyst at SportBusiness.
It could be that Bellagraph Nova’s attempt is nothing more than a publicity stunt. It wouldn’t be the first and it probably won’t be the last time that somebody has claimed to be close to buying a club only for it to fizzle out.
Taking control of a soccer club is no easy task
If the bid succeeds, there are several challenges ahead. Previous investors from Southeast Asia offer examples of how to achieve success and, just as pertinently, a blueprint of how not to behave.
In 2007, Thaksin Shinawatra, then-prime minister of Thailand, took over Manchester City. Sven-Goran Eriksson, manager at the time, described his spell as owner as “bizarre” and Thaksin sold the club—at a profit—after less than two years. His days were numbered once the Thai military froze his assets as he was running out of money and would have failed the PL’s “fit and proper person” test. “He didn’t understand football (soccer) at all,” lamented Eriksson.
Meanwhile, Cardiff City’s Malaysian owner Vincent Tan caused uproar among the club’s fans when he changed their playing colors from blue to red and altered the club crest. He eventually reversed both decisions but it was a prime example of why new owners should treat their new clubs with respect.
Earlier this year, Hong Kong firm Next Leader Fund acquired Wigan Athletic, which was then playing one level below the PL. Four weeks later, new owner Wai Kay Au Yeung placed the club into administration, a measure taken when a club cannot meet its financial obligations.
League rules state that any club that is declared insolvent receives a 12-point penalty. The points deduction meant they finished the season in the bottom three places, were relegated as a result and started this season in the third tier. His disastrous and brief involvement with the club left them fighting for survival although Spanish money could bail them out.
Bellagraph Nova should look to emulate better examples
Arguably the best example of how to proceed is provided by the late Vichai Srivaddhanaprabha, founder of Thai company King Power, who took over Leicester City in 2010. His strategy of providing a reliable source of funds and leaving soccer experts—including Eriksson, his first manager—to make soccer decisions eventually bore fruit as Leicester upset the odds to win the PL title in 2016.
Furthermore, Bellagraph Nova would be well advised to look at what Chinese company Fosun International has done since acquiring a majority stake in Wolverhampton Wanderers, also now a PL club.
The Chinese government has encouraged its businesses to invest in soccer clubs, and Fosun International developed a clear strategy for success. It established links with experienced soccer people including so-called “super-agent” Jorge Mendes. His input into manager and player recruitment helped the club return to the top-flight and become an established top-half club.
What happens next?
Bellagraph Nova’s takeover bid, rather like the company itself, is shrouded in controversy. While it is under investigation for financial irregularities, Newcastle’s current owners will remain cautious. The firm must still meet the PL’s standards, proving it has the money to fund the takeover and the day-to-day running of the club for the foreseeable future.
Success would grant Bellagraph Nova an eye-catching addition to its portfolio as well as potential revenues and branding opportunities. At the same time, it carries a responsibility to the club’s fans to bring stability and success.
If the takeover happens, expect Newcastle to make regular tours of Singapore and perhaps elsewhere in Asia in years to come. Such tours are now becoming commonplace—Leicester regularly head to Thailand, for example, and several clubs play pre-season tournaments in China—but there is one more warning for Bellagraph Nova if it thinks it can simply use the club to further its business aims.
In 2018, Leeds United played two matches in Myanmar, a tour that was condemned by fans, reporters and even politicians for its inappropriateness considering the Rohingya crisis. Club chairman Andrea Radrizzani owns a television network and later admitted he wanted to do deals in Myanmar.
That leaves plenty for Bellagraph Nova—and any other firms in the region—to bear in mind as it moves closer to adding a chunk of Singaporean money to the wealthiest league in the world. Get it right, and the rewards are potentially enormous. Get it wrong, and Bellagraph Nova risks alienating a loyal fanbase, leaving in disgrace and having to repair a damaged reputation.