NEWCASTLE United’s sponsorship deal with moneylender Wonga came with a substantial sweetener yesterday when the new backers renamed the club’s stadium St James’ Park.
The Magpies revealed the payday loan company as the club’s main sponsor in a multi-million pound deal that will also see it invest £1.5m into the club’s academy and the Newcastle United Foundation Enterprise Scheme.
Wonga also secured naming rights to the stadium, currently known as the Sports Direct Arena, and will reinstate the St James’ Park name.
First reports of the link with Wonga were met with anger on Tyneside and only some of that opposition was drawn out by the return to the traditional St James’ Park name.
Wonga’s founder Errol Damelin said his firm was a fan of football and, as such, understands the club and stadium’s heritage and the passion of the fans.
“Football in the UK is such a strong platform to have a social conversation with people,” the 43-year-old said. “It’s not just about making money and giving out loans.
“We were never interested in the naming rights for ourselves. It’s not what the fans wanted and ultimately football is about them. That is the only way fans would have gotten the name back and I’m proud to have been able to do it.”
Wonga has existing sponsorship deals with npower Championship side Blackpool and Scottish Cup winners Hearts.
And Mr Damelin added: “We are really proud to be involved with Newcastle United.
“It is one of the biggest and most important clubs in the UK by any measure and has a fantastic following around the world.”
However, Newcastle City Council leader Nick Forbes said the deal represented a “profit at any price” culture at the club and warned of the possible social consequences.
“I’m appalled and sickened that they would sign a deal with a legal loan shark,” he said.
“We see the devastating consequences of people getting into financial difficulty and we spend a lot of money each year helping people who are in debt through companies like this.
“It’s a sad indictment of the profit at any price culture at Newcastle United.
“We are fighting hard to tackle legal and illegal loan sharking and having a company like this right across the city on every football shirt that’s sold undermines all our work.” After the ground re-naming was announced, he added: “Everybody always referred to it as St James’ Park so in a lot of ways this is non-news. I would have been more impressed if the club had said they were putting some of the sponsorship into getting debt advice to fund the increase in case work that this irresponsible deal will create.”
Newcastle United’s managing director Derek Llambias defended the deal, saying Wonga had a far higher customer satisfaction rating than most banks, some of whom also sponsor Premier League clubs, but who attract no controversy.
“Wonga are a legal company with 30,000 customers in the region,” he said, “and yet their complaints are next to zero. Banks and other institutions get far more negative feedback. People are not forced to take out loans from Wonga and I believe North East people have enough brains to know what they are doing.”
Mr Llambias said the deal with Wonga would provide the club with the financial footing it needs to compete at the highest level.
“We are building a club that can regularly compete for top honours at the highest level,” he said. “As everyone knows, a strong commercial programme is vital to this goal and I am delighted to welcome Wonga into the fold as our lead commercial partner, alongside Puma and Sports Direct.
“Throughout our discussions, Wonga’s desire to help us invest in our young playing talent, the local community and new fan initiatives really impressed us and stood them apart from other candidates.”
However, United fan Dr Joanna Berry of Newcastle University Business School, which is located right across the road from the St James’ Park stadium, warned that future sponsors might feel the club had been tarnished by the Wonga deal.
“If you were the Emirates, Virgin, British Airways or any of the global, creditable brands, would you want to follow Wonga?” she said.
“From a marketing perspective, the reputational risk is significant.”
Dr Berry pointed out that while it was a “clever” move to rename the stadium, it had never changed in the eyes of the fans.
She also believed it was wrong that those people who were desperate enough to borrow money from Wonga in future would be funding, in part, the salaries of millionaire footballers.
“What is right about that?” she asked.
TWISTS AND TURNS ON UNITED’S HOME TURF
WONGA’S arrival as Newcastle United’s new sponsors will bring to an end a tumultuous three years at the club with regards to the stadium’s name.
Owner Mike Ashley first floated the idea of re-naming the ground in 2009, only for a huge backlash from fans to force the idea onto the back burner.
But the process was revived last November when Mr Ashley and managing director Derek Llambias said St James’ Park would be re-named the Sports Direct Arena as a stepping stone to selling off the naming rights. The club said it hoped to raise £10m a year by selling a combined deal for shirt and ground sponsorship.
Fans widely expected that to be announced when the club said its deal with Virgin Money would lapse at the end of the season, a year earlier than planned. When it became known Wonga was to be the new sponsor, initial soundings from the club were that the deal was for shirt sponsorship only.
But yesterday it was left to the loan company to announce the return of the traditional St James’ Park name.