LONDON: Saudi Arabia’s £305 million ($416 million) takeover of Newcastle United FC is a sound financial investment for the Kingdom, but one that should be judged beyond the annual profit and loss accounts of the club in the coming years.

Premier League football is not a particularly profitable business. Even before the pandemic struck, the league’s clubs posted a collective pre-tax loss of £165 million in the 2018/19 season even as revenues passed £5 billion for the first time, according to professional services firm Deloitte.

Unsurprisingly, the pandemic had a major impact on revenues, which slid to £4.5 billion the following year, leaving clubs nursing losses of just below £1 billion.

Premier League clubs have recorded pre-tax profits just four times since it was launched in 1992, all since 2013.

There is also a growing divide in English football. Many of the largest clubs are able to turn a profit while the smaller outfits struggle. Manchester City, owned by Abu Dhabi’s Sheikh Mansour, posted a fifth consecutive annual profit in 2018/19, of £10.1 million, while rivals Manchester United earned £18.88 million. Both posted losses in 2019/20.

However, City’s profit is a drop in the ocean compared with the more than £1 billion it has invested in the club since it acquired it in 2008.

So, if profits are not the motive for Gulf states to plow money into English football, what is?

One of the more obvious answers is branding. Saudi Arabia is in the process of building a number global businesses, including a new airline, and a global name like Newcastle FC would potentially be a great vehicle for the Kingdom’s tourism ambitions.

There have been rumors that PIF is looking to build a portfolio of clubs, with Inter Milan and Marseille both possible targets. The relationships that such investments bring and the opportunities to build more partnerships through corporate hospitality are vast.

But there is more to this deal than marketing. The deal offers Saudi Arabia an opportunity to invest in other related sectors in Newcastle and beyond that fit with its Vision 2030 economic strategy.

Real estate (might there be a new stadium complex), logistic and renewable energy come to mind as potential areas of synergy. Offshore wind is a growing industry off the northeast coast of the UK and the River Tyne is rapidly becoming a hub for the country’s wind industry.

It’s not too much of stretch to imagine the city’s port becoming part of the Kingdom’s growing international logistics network centered on Jeddah Islamic Port.

However PIF leverages its investment in Newcastle, it represents an exciting opportunity for the Saudi Arabia as it remakes its economy for a post-oil world.