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SBD Global/October 10, 2012/Marketing and Sponsorship

Newcastle's Sponsorship Deal With Wonga Met With Fury By Fans, Politicians

Newcastle's Sports Direct arena will revert back to its original name, St. James' Park, next week.
Premier League side Newcastle United’s announcement that it has agreed to a four-year sponsorship deal with loan company Wonga.com, unleashed "a wave of criticism," according to Chris Tighe of the FINANCIAL TIMES. The deal, rumored to be worth £20M ($32M) over four years would be "the biggest in the club’s history." It means Newcastle’s shirts for the '13-14 season will bear the name Wonga.com. The news provoked "an immediate response" from insolvency industry trade body R3, politicians and trade unions. Many fans also "expressed distaste." However, "the deal was sweetened" with news from Wonga.com that the club’s ground, renamed the Sports Direct arena by Owner Mike Ashley, "despite a storm of protest," will revert next week to its "much cherished original name," St. James’ Park (FINANCIAL TIMES, 10/9). The PA's Damian Spellman reported that Newcastle let its new sponsor reveal the name change to the stadium, ending "a controversial period in the club's recent history." Newcastle listened to the reaction of fans when news of a potential agreement emerged last weekend. A Wonga spokesperson said, "We listened over the last three days, and we saw what really matters to the fans. Football is an emotional sport, and it is obviously really important to them. We listened to what they wanted, and that is why we did it" (PA, 10/9).

PROFIT AT ANY PRICE: In London, Burrows & Caulkin reported that FA General Secretary Alex Horne reiterated the association's desire to prevent "inappropriate" companies becoming sponsors of football clubs. Horne: "If these companies are charging the wrong rates of interest then legislation should help us out. The leagues have clear rules about certain inappropriate advertising for children. We are talking to the leagues on Friday about it. If you consider it as in the category of things that are inappropriate for children like gambling and alcohol, it feels like it is in that category to me." Newcastle City Council Labour Leader Nick Forbes said, "I'm appalled and sickened that they would sign a deal with a legal loan shark...It's a sad indictment of the profit at any price culture at Newcastle United" (LONDON TIMES, 10/9). Also in London, James Callow reported R3 claims that the fact that the northeast has the highest rate of insolvency in England makes Wonga an "inappropriate choice of sponsor." R3 President Lee Manning believes the deal "has the capacity to do more harm than good." Manning: "Wonga has chosen to target a region that has comparatively high numbers of people experiencing financial difficulty" (GUARDIAN, 10/9). The London DAILY MAIL reported that Newcastle fan and True Faith fanzine Editor Michael Martin warned the proposed tie-up "would be bad for the club." He told the London Daily Mirror, "The people who run Newcastle, for the fans, have a social responsibility. I would love them to honestly answer one question: Would you, Mike Ashley, seriously recommend borrowing money from Wonga at those interest rates? If you can't answer yes then they shouldn't be our shirt sponsors." Labour MP for Wansbeck and Ashington FC Chair Ian Lavery said, "Newcastle United will be sponsored by the money of deprived people up and down the country. If Wonga gets this sponsorship through, I will not set foot in St. James' Park until it is off the shirts. To have those players running around on that turf endorsing Wonga is an absolute outrage" (DAILY MAIL, 10/9).

RELIGIOUS UNDERTONES: In London, Martin Hardy wrote the issue was "engulfed in fresh controversy" Tuesday night when the club's Muslim players "were warned that wearing the new shirts would infringe Sharia law." The edit from the Muslim Council of Britain will add to the pressure the club is facing over the deal. Four of the players who took the field against Manchester United on Sunday are practising Muslims – Demba Ba, Papiss Cissé, Cheick Tioté and Hatem Ben Arfa. Under Sharia law, a Muslim can not benefit from lending money or receiving money from someone (INDEPENDENT, 10/10).

THE BUSINESS OF FOOTBALL: In London, Luke Edwards opined, "Before we get on a high horse about Newcastle United’s new shirt sponsorship deal with Wonga, we should remember if football ever possessed a soul it sold it a long time ago. From rocketing ticket prices, to television control of the fixture list, to corporate sponsorship of all the major championships, to oil-rich sovereign states owning clubs, football has been on its knees praying to its cash god for decades." Edwards added that there are two "silver linings" to the Wonga deal. The first is that it will "bring in more money each season than the current deal with Virgin Money." The second is that the deal is for the shirt sponsorship only and "will not lead to the club’s home ground being known as the Wonga Arena, or my personal favourite, the Wonga Dome." Edwards concluded, "This is football as a business, not football as a sport. It is about revenue streams and balance sheets. It is cold, it is hard and it is ruthless. It isn’t guided by a moral compass, it is guided by the law of the jungle, the economics of success and failure" (TELEGRAPH, 10/9).

SIGN OF THE TIMES: Also in London, Thom Gibbs opined that "there was a time when Premier League football clubs were sponsored by innocent, sometimes cuddly things: classical music radio stations, companies that made radiators and in Portsmouth’s case an actual manufacturer of cuddly toys." Beginning next season, the word Wonga will be "plastered across Newcastle’s black and white stripes." It is "an ugly word, and an ugly company to be advertising." Newcastle United pursuing a sponsor that "so blatantly profits from the misery of not having enough money tells you plenty about the current state of football and the ownership of Mike Ashley." It would be "such an easy public relations win" for Ashley to make a stand against Wonga "by not allowing them to further legitimise their morally dubious businesses by appearing as shirt sponsors." It was "never a route the man that renamed St. James' Park after the website of his shinpad and tracksuit trousers emporium was going to take" (TELEGRAPH, 10/9).

ART OF THE DEAL: Also in London, George Caulkin opined the deal "was just business." While the hierarchy at Newcastle "acknowledge that their decisions can be contentious -- or 'off the wall,' as [Newcastle Managing Dir] Derek Llambias put it recently -- their argument has always been that they are taken for long-term gain." That they "have to compete with the big boys somehow and if Wonga or St. James’ brings them a new player or investment, then so be it." Changing the name back is "just business too, if only because it softens the Wonga deal." Caulkin continued, "Whatever the concerns of MPs and campaigners, Wonga also sponsors Blackpool and Hearts and does the same for a primetime television show on ITV; should Newcastle be judged any differently? And, really, aren’t most clubs complicit in some way? Aren’t they happy to take money from bookmakers and banks and investment companies?" He concluded, "If you want to improve and grow, it has to come from somewhere. If you want to buy new players -- and occasionally compromise on fees -- it has to come from somewhere. If you aren’t subsidised by a state or a willing sugar-daddy, then it has come come from somewhere. If you want to hold your nose and say that this isn’t for you any more, then I wouldn’t blame you. But it’s not personal. It’s business; business as usual. I don’t like it very much, but I get it" (LONDON TIMES, 10/9).
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