Newcastle was purchased by PIF for 305 million. They have assets of 250bn.
Newcastle United is the latest Premier League club to be taken over by a large-scale takeover. There has been a lot of excitement at Tyneside.
Despite all the talk about the Premier League title challenges, the reality is that the Magpies are currently 19th on the table and have not won this season.
Nineteen of the 20 Premier League teams are currently under new ownership, which includes every club that has won the title.
What can Newcastle's fans and owners learn from the previous buyouts, the money spent and the changes in fortunes that followed?
Takeovers of Chelsea and Manchester City are easy comparisons, given the potential amount of money Newcastle has. These clubs weren't fighting against relegation when they were bought by their new owners and the Magpies have never finished higher than 10th in 15 seasons.
These two clubs have won the title along with Leicester, Liverpool, and Manchester United after a takeover. However, others have had difficulty even breaking into European places on an ongoing basis such as Everton and West Ham United.
The theory is that there should be one formula: change manager, change players and continue to spend. But, is this the right approach?
In 2005, Jose Mourinho won the first Premier League title for Chelsea.
On average, the five victorious clubs switched managers within 10 months of the ownership change. United with Sir Alex Ferguson remained in charge until his retirement.
Newcastle's new management team dispensed with Bruce faster than any other club.
After the changes were made to those five clubs, the new owners had a better experience. Their appointments lasted an average 35 months. The incumbent managers of the other clubs that were subject to takeovers vanished in an average of six months, while their replacements only lasted 13 months. This should be a warning for the new Newcastle boss.
Although successful clubs may give managers more time, title winners had a high turnover of their players right after they took over. Chelsea, Liverpool, Leicester, and Manchester City all lost more than half of their core first-team squads within two seasons.
The boardroom is bound to be impatient to see a return on large investments. However, history shows that the immediate results of large-scale squad overhauls tend to be modest with little impact on league positions. Season after season, money must be spent:
Season before takeover Time until first title. Four seasons in Manchester City, Manchester City. Nine seasons in Liverpool. Seven seasons in Liverpool. Six seasons 75m Manchester United. Three seasons in Manchester City*.
Owners tend to want more after a title. But what about the cost of keeping their spot at the top?
Chelsea, Manchester and Manchester have won five titles each since their takeovers. However, the United figures must be prefaced with the fact Ferguson had the Red Devils at the time as a strong club. Chelsea had been waiting for the title since 1955 and City since 1968.
Leicester is the only team that has managed to rise from the bottom half of the Premier League. They have not been able finish higher than fifth since their 2016 victory. Although it may sound cliché to say that staying at top is more difficult than getting there, there is truth to this statement.
Year since takeover PL titles after takeover Net spend cost per title Chelsea 18 648m 190m Manchester United 13 5 917m 183m Manchester City 12 5 1264m 253m Liverpool 1 332m 332m Leicester City 1 164m 164m
Newcastle's immediate priority is to remain in the Premier League.
To avoid the drop it could require significant investment. But beyond that, how big cheques will need writing?
CIES Football Observatory stated that transfer fees have been increasing at a rate of more than 20% per year. Chelsea spent a net $450m to increase an average of four positions (2003-2006), while Manchester City spent a net $352m to raise seven spots (2010-2013).
Average position before Average situation after Difference Three year net spend before Cost per place won Chelsea 188.8.131.52 +4 43m 405m +407m 102m Manchester City 12.7 6. +6.7 44m 352m +308m 46m
Newcastle could aim to be in the top four but this will require a rise by 15 places. If the transfer inflation rate and previous clubs' spending are any indication, then a net spend of more than 1bn is required.
It will be 100 years since Newcastle won its last title. The new owners have the money to compete before then. It remains to be seen if the new owners will use this amount and if they are allowed.