THE prospects of Amanda Staveley’s Saudi Arabia-backed consortium resurrecting their interest in Newcastle United have suffered a major blow after the Gulf state’s Public Investment Fund (PIF) entered into formal talks with Italian club Inter Milan.

The PIF, which is the Saudi Arabian government’s overseas investment arm, were the major financial backers of Staveley’s bid to buy out Mike Ashley, which collapsed last July.

Mike Ashley is currently involved in a court battle with the Premier League over the collapsed deal, and while High Court proceedings last week revealed that the arbitration process has not yet begun, it is hoped that a positive result could lead to Staveley’s PCP Capital Partners returning to the negotiating table.

Sources close to the Staveley camp have consistently claimed that a deal to buy Newcastle is not dead, but this week’s events in Italy appear to have significantly reduced the likelihood of last year’s proposed arrangement being dusted off and reoffered.

With an end to the current impasse on Tyneside still some way off, senior figures from the PIF have opted to switch their attention to Inter Milan as they continue to look for a footballing investment opportunity in Europe.

Inter are valued at around £850m, but their parlous financial position means there is the potential for a sale to take place at a much lower price, something Middle Eastern analysts claim has captured the attention of Saudi officials.

While Inter have been impressing on the pitch this season, boasting a six-point lead over Juventus at the top of the Serie A table, their finances have nosedived in the wake of the ongoing coronavirus pandemic.

The Italian media have claimed Inter are saddled with debts of around £650m, and their Chinese owners, Suning Holdings, are looking for an exit route that would enable them to wash their hands of the Italian league leaders.

The Chinese authorities have been putting pressure on their leading firms to reduce their foreign debts, and the PIF are hoping to push through a deal with Suning before the end of the season.

Legally, there would be nothing to prevent them making a move for Newcastle even if they were installed as majority owners of Inter, but such a scenario is believed to be unlikely.

Instead, if the PIF were to complete a deal for Inter in the next couple of months, their acquisition of such a high-profile European club would almost certainly mean the end of any ongoing interest in buying Newcastle.

Staveley could attempt to put together a new package with the support of brothers David and Simon Reuben, who were involved in last year’s unsuccessful takeover attempt, and the North Yorkshire financier also boasts extensive Middle Eastern contacts that could lead to new sources of investment.

However, the loss of PIF’s support would be a major blow to her ambitions of buying Newcastle no matter how Ashley’s ongoing legal proceedings with the Premier League play out.

Aside from the PIF’s position, the single biggest factor influencing Newcastle’s long-term future is, of course, their battle to avoid relegation from the Premier League.

If the Magpies were to find themselves in the Championship next season, the club’s valuation would change dramatically overnight. With 11 games of the season remaining, they currently find themselves one point above the drop zone ahead of Friday night’s home game with Aston Villa.