NEWS BROKE on Tuesday afternoon that Newcastle United has signed a four-year sponsorship agreement with online loan company Wonga.com.
After much speculation surrounding the terms of the contract, the club confirmed that Wonga will become “the lead commercial partner” of Newcastle United and shirt sponsor as of the beginning of next season.
Although Wonga also acquired naming rights to the stadium under the deal, the company will not enforce these rights. Rather, the company has elected to revert to the historic St James’ Park name after it became known as the Sports Direct Arena last year.
This move may be designed to reduce cynicism towards the Premier League club’s new lead sponsor, but Wonga’s involvement with Newcastle United remains controversial.
According to British newspaper the Guardian, the north-east of England has the highest rate of insolvency in the UK and the club’s association with a company which offers loans carrying an interest rate of over 4,000 per cent, has been heavily criticised in the media.
Regardless of moral complaints, the deal is likely to be highly lucrative to the club. Estimates of the value range from £4m to £8m per year, which suggests valuations of £10m as paid by incumbent shirt sponsor Virgin Money to be highly inaccurate.
Wonga will also be contributing £1.5m to support the club’s youth academy and the Newcastle United Foundation Enterprise Scheme – a programme to help 15-16 year-olds find employment by developing skills and experience through practical and educational courses.