Newcastle United: Can sovereign wealth and football ever work?

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Is a football club the ultimate trophy asset? And is buying one necessarily as dim an investment for a sovereign wealth fund (SWF) as it might at first appear? The acquisition of Newcastle United by Saudi Arabia’s Public Investment Fund brings with it some mixed history, and some big current-day questions as well.

Football club purchases often look absurdly showy, no matter who is doing the buying. They are associated with the boisterous, the boorish, rather than with the savvy investor, and certainly not one tasked with stewarding the long-term wealth of a nation.

Exhibit A is Saif Gaddafi’s purchase of a stake in Juventus through the Libyan Investment Authority (LIA) in 2002 during the sovereign fund’s early days. These days, a frivolous stake in a glamorous footie asset ranks rather low on the list of sins for a man wanted under an International Criminal Court arrest warrant for crimes against humanity. But still, back then, it seemed illustrative of an investment style based on the power-hungry trappings of a screwball dictator – or a dictator’s son, anyway – Muammar Gaddafi was Saif’s father – rather than a refined investment methodology.

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