SBD/Issue 87/Sponsorships, Advertising & Marketing

Northern Rock Renews Newcastle United Shirt Sponsorship Deal

Northern Rock Renews Shirt
Sponsorship With Newcastle
English soccer club Newcastle United has "signed a new four-year" shirt sponsorship deal with Newcastle-based bank Northern Rock plc, "which could earn the club" $16.3M (all figures U.S.), according to the PA. It had been thought Northern Rock "would not be renewing" its five-year, $40.8M deal set to expire after this season, as it is now "government-owned." But the new bank, "formed after the recent restructuring of Northern Rock business, will continue to be the club's main sponsor until the end of the 2013-14 season." Northern Rock CEO Gary Hoffman: "We remain mindful of our responsibilities under government ownership and only consider those advertising and promotion channels that deliver a high return on investment and good strategic fit. We believe that the sponsorship deal with Newcastle United provides both of these" (PA, 1/18). The BBC noted the bank was "taken into public ownership in 2008," but Hoffman "defended the decision to renew the sponsorship deal." Hoffman: "Brand awareness and promotion are important elements in the continuing development of the company." The "maximum value of the contract would only be realised if Newcastle" plays in the EPL "for the whole of the four-year period." The club currently plays in the Championship, England's second division (BBC.co.uk, 1/18). Meanwhile, Northern Rock Small Shareholders' Group Founder Robin Ashby described the move as "bonkers." Ashby: "This is not a sensible use of taxpayers' money. It is not a sensible commercial decision. I really do not understand it. They have got a lot of explaining to do and I think they are going to be doing that explaining in Parliament. British taxpayers clearly should not be sponsoring football clubs as a publicly-owned, nationalised bank" (London TELEGRAPH, 1/19).

EASTERN PROMISE: The BIRMINGHAM MAIL's Colin Tattum reports EPL club Birmingham City yesterday "became the first English side to appoint a Chinese firm as kit and leisurewear supplier" after signing a five-year, $12.8M deal with Xtep, China's "leading fashion sportswear brand." The club will receive $11.5M from Xtep and $1.3M "worth of sportswear bearing the Xtep logo during the five-year period to May 2015." Xtep also will pay up to $650,000 "should [the] Blues win league or cups, domestically or in Europe." As part of the deal, a "minimum of eight Blues matches will be televised on China's CCTV5 sports channel and players will participate in promotional activities for Xtep in China during the close season." Also, "eight 'mega advertising billboards' bearing Xtep's logo and products will be made available" at St. Andrew's Stadium. Birmingham City Vice Chair Peter Pannu said players will "undertake product endorsements and that in itself can be an incentive for them to work hard and produce for the club on the pitch." Pannu said the Xtep deal is "just the tip of the iceberg as far as what [Owner] Carson Yeung is doing for us in China" (BIRMINGHAM MAIL, 1/19). Tattum noted Birmingham "had been negotiating with Italian manufacturers errea to replace current suppliers Umbro, whose contract finishes at the end of the season," and had "promised to ask supporters to help choose the design of the jerseys for the 2010-11 season" (BIRMINGHAMMAIL.net, 1/18).

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