Analysis: Newcastle United's New Dawn
The takeover of Newcastle United by a Saudi-led consortium has been an on-off drama which has provided the national and local press with thousands and thousands of articles and column inches.
Whilst controversial in its nature with accusations of it being a vehicle for ‘sports-washing’ Saudi Arabia’s human rights record, Newcastle fans were United in their joy at seeing an end to Mike Ashley’s 14 year tenure at the club.
Today (8th Nov) Newcastle United confirmed the appointment of Eddie Howe as the club’s new head coach on a contract until summer 2024. The 43-year-old arrives on Tyneside having left AFC Bournemouth last summer after leading the club through all four tiers of English football, culminating in five years in the Premier League between 2015 and 2020.
Howe said of his appointment: “It is a great honour to become head coach of a club with the stature and history of Newcastle United. It is a very proud day for me and my family.
“This is a wonderful opportunity, but there is also a lot of work ahead of us and I am eager to get onto the training ground to start working with the players.
“I would like to thank the club’s owners for this opportunity and thank the club’s supporters for the incredible welcome they have already given me. I am very excited to begin our journey together.”
Newcastle United co-owner, Amanda Staveley, added: “We have been incredibly impressed by Eddie through what has been a rigorous recruitment process.
“As well as his obvious achievements with AFC Bournemouth, where he had a transformational impact, he is a passionate and dynamic coach who has clear ideas about taking this team and club forward.
“He is a great fit for what we are trying to build here. We are delighted to welcome Eddie and his staff to St. James’ Park and very much look forward to working together towards our collective ambitions.”
Howe’s appointment is the first step in a potential overhaul at the club which has under-performed both on and off the pitch. But what does the new ownership need to do to take Newcastle United to the very top of football’s elite clubs?
fcbusiness spoke to a number of industry experts to gather their thoughts on what the club can do to establish themselves at the top of football’s table and the key areas for performance, business and operational excellence.
Club Organisational Structure
Prof Simon Chadwick, Global Professor of Sport & Director of the Centre for Eurasian Sport, Emlyon Business School
This depends upon what the ambitions are of the new owners. If they’ve just bought a football club and they want to run it in exactly the same way as it’s always been run, then nothing will change. If we were, however, to look at the two most obvious direct comparisons – Manchester City and Paris Saint Germain – then it is almost inevitable that things must change. Not just in terms of structure but also in terms of the numbers of people working at Newcastle United.
Potentially we’re on the cusp of something quite dramatic happening at the club – new jobs, new job roles in areas like research and innovation certainly but also areas like finance, marketing and international development. Until we know what the hopes and aspirations are of those running the club, it’s hard to say who else will be involved in the club. But definitely there’s going to be some up-skilling required and the scale, diversity and sophistication of what is required to extract value from the assets, will mean the club can’t continue in the way that it always has.
There needs to be a cultural change, not just within the organisation – if Newcastle fans want a changed club, successful, signing big name players they will need to compromise what the club has always meant to them and what it needs to become in order to progress and take advantage of the opportunities ahead.
The way in which St James’s Park was constructed has been both an enabler and an obstacle. It’s been an enabler because its location allows United to remain true to its Victorian working class roots, still in the city centre when other clubs have moved out of town.
But a consequence of this is that it’s been incredibly difficult to develop. The listed houses on one side of the stadium mean it’s a really lop-sided, strange looking venue. Plus, its capacity is limited. If you look at the nature, scale and the sophistication of the infrastructure at Manchester City or at a city centre site like Anfield, and what they have had to do, then it is clear that Newcastle is not going to be able to generate the types of revenues it needs using the existing facilities they have.
I don’t think it’s entirely impossible that Newcastle could actually move, potentially out of Newcastle city centre. I would estimate we’re looking at easily £500m worth of investment to get the infrastructure up to scratch but I would probably suggest it is likely to go beyond that, perhaps even stretching towards £1bn if Newcastle really is going to compete in commercial terms.
Saudi Investment In The City
If we look at the PIF and the Reuben brothers and what they’re investing in, there are two areas that are converging. The first is renewable energy. The Tyne and the Tees are competing against each other to become the North East’s renewable capital. Clearly the Tees is helped by its Free Port status which the Tyne doesn’t have, but what the Tyne does have now is Saudi Arabian investment. It’s not inconceivable that the Saudi Arabians may use the lever of football, not just to invest in renewables in the Tyneside area but also in Wearside and Teesside as well. The pay back for Saudi Arabia is this very prominent position as a renewable energy champion and manufacturing and distributing renewable energy equipment across the world. And that really ties in with the next thing which I think is really important to mention which is Saudi Arabia is trying to compete as a country, it wants to become an Afro-Eurasian transport hub, particularly for sea traffic and containers. The River Tyne will become a node in a Saudi Arabian network of container ports across the world and the football club becomes a part of enabling that.
If you look at central Manchester, Abu Dhabi has underwritten some significant real estate developments and you will see these gleaming glass skyscrapers that have been constructed under the auspices of the City Council and their relationship with Abu Dhabi through their investment in Manchester City. However, because a lot of this development has been into premium priced accommodation there is not enough social housing provision. It has therefore exacerbated problems with homelessness and pushed people out of the city centre towards the margins. If this is going to happen in Newcastle there are some significant socio-cultural issues that the City will have to contend with.
Fan Engagement & Representation
Kevin Rye, Think Fan Engagement
The new owners need to understand what they’ve bought, that as much as it’s a global sporting brand, it is, at heart, a regional football club adored by thousands. The problem with pledges at the start of ownership is that they can be forgotten, or even ditched, when the unforgiving reality of football hits. Probably the most effective way of mitigating this is to provide formal and legally structured representation at board level – sometimes even underpinned by a meaningful stake in the ownership of the club. This more effectively protects the very special role of fans, ensures that the club is held to account, and incorporates them formally into the decision making processes. This is especially important when, as will happen with Newcastle United as with every club, you have plenty of other people competing for your attention.
A Roadmap For The Future
Olivier Jarosz, Managing Partner – Club Affairs: An Advisory Group Focused On Football Strategies
The peculiarity of Newcastle is that it is a very local club. It has a very strong identity and a connection with the local community so their road to achieving global success is still quite long. For them to become a giant they need to do a bit more. It will take them time to build a powerhouse but there is room for growth beyond the borders of the game. How they achieve that is certainly the challenge.
When we work with clubs we ask them to look where their strengths and weaknesses are. If we were to advise Newcastle I would say they have a huge opportunity to continue to develop the next Alan Shearer or Paul Gascoigne. They need to create a pathway into the first team for the next generation of players. They are sitting on a potential gold mine of talent in the area which they need to take complete control of.
The owners are going to have to face the reality of the ‘citizens trying to elect the best policies’. You can imagine how many clubs struggle with a roadmap. They think they have a strategy and a plan and when they lose three games in a row the owners start to stress. This is something that is going to happen to Newcastle. We have seen plenty of examples and they will not be the first or the last. It’s about clarifying what the owners want to achieve and by when. Based on that they can build a strategy and once they have a strategy, they can build a structure and once they have a structure they will have a plan.
If they want to go in the direction of buying and acquiring players, that’s not really a strategy, it’s consumption in a transfer window. It could work and they might have the best players on the pitch but this is not what makes a team. What makes a team is the 95% of the things the fans cannot see, the hidden part which could be the rationalisation of the strategy, the role of the Sporting Director or the structure of very simple details behind the scenes. This is the plan and when they realise that all the people in the club are fully engaged, the players will give it on the pitch too. Fans need to understand that there is no single recipe but there are ingredients and if those ingredients are presented well then it will work out.
Newcastle clearly have potential, that’s without doubt, but the problem is that a lot of clubs want to go too fast in the sports arena and they can forget other areas such as commercial or the community aspect. It’s a longer process that needs to be well thought out. But the reality is that all clubs have huge potential to certain limits. Certainly the limitations to Newcastle, ie, its location, can be quickly turned into a strength because of the players they can develop. If you look at a club from a 360 perspective you start to realise how in some areas they may have under-invested and in some areas over-invested. It’s our role to help them mitigate and create balances to achieve long-term success.
Whatever they do, ultimately, they need to have a clear plan in their minds, and particularly a method for measuring productivity and good performance. They will not have a shortage of resources, but also they will not have a shortage of people who would like to get access to these resources, and without having a clear measure of success it could be difficult to measure how well these resources are being utilised. However, they have a clear advantage due to the financial situation in football they can easily shop in Europe for a much lower price than two years ago as the football transfer market is screaming for liquidity and as FFP rules undergo reform.
A Blank Canvas
Mark Jensen, Editor – The Mag: The Leading Independent Newcastle United Site
It has been quite embarrassing in terms of how Newcastle has been run under Mike Ashley. Any equivalent club, or even those in the Championship and lower, will have a board that oversees the business decisions of the club and potentially a football board to oversee on the pitch matters. If you compare us to Leicester City or West Ham United, we need to recruit a board for both the business and the playing sides. Newcastle is a blank canvas but the biggest problem is this is happening a couple of months into the season and one where yet again Newcastle are in relegation trouble. Ideally this should have started in May before the new season started so it’s just another challenge.
Infrastructure: where does it need investment?
Because there is so much do it’s a case of looking at every single thing that they do as a positive. If the Saudis are willing, there is no limit (within reason) to how much can be spent because Financial Fair Play rules (FFP) don’t cover infrastructure spending. The stadium underwent a huge redevelopment in 2000, a lot of it was state of the art then, and it went up to 52,000 making St James’s Park the second biggest stadium in the Premier League. Sir Bobby Robson was manager at the time and he had great pride in what had been done. It was the attention to detail that Newcastle United apart from the rest. But when you stand still you don’t stand still, now we’re the 7th biggest stadium and others have overtaken us in terms of money generation and the quality of facilities. In 2013 there were plans for a state of the art training complex which was essential if we were going to compete in the future. That’s never got started in the 8 years since. Leicester has recently opened a new £95m training facility. This is a priority or we will continue to lose ground to our rivals.
Getting fans back on side?
Again it’s a blank canvas. The most important thing to get fans back onside is to produce the goods in terms of following through with investment in the playing side, the facilities and business side of the club. I hope that they will work with the fans through the likes of the Newcastle United Supporters Trust. It’s a no brainer; they’ve got thousands of members and are democratic organisation. The Trust started the 1892 Pledge about 8 months ago, and that has people donating to a fund so that if the club was ever taken over the new owners might let fans own a stake collectively through the Trust. Would the new owners be willing to have fans collectively as part owners? Overall it’s about them not just paying lip-service but actually working with the fans. The new owners have so much work to do but we remain positive and will watch their actions closely.
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