Soccer club Newcastle United under fire for Wonga sponsorship

10 Oct 2012, 3:50 am   -   Source: Reuters

LONDON (Reuters) - Newcastle United faced criticism from local politicians and union leaders on Tuesday after the English Premier League club signed a four-year shirt sponsorship deal with short-term loan company Wonga.

LONDON (Reuters) - Newcastle United faced criticism from local politicians and union leaders on Tuesday after the English Premier League club signed a four-year shirt sponsorship deal with short-term loan company Wonga.

The Wonga brand, taken from a slang term for cash, will appear on Newcastle's famous black and white shirts from next season in an agreement that has focused attention on the interest rates the company charges on its "pay-day loans".

In a goodwill gesture to fans, Wonga said that it would not take advantage of the stadium naming rights it had also acquired, but would allow the club to revert to the historic and popular St James' Park name for its home, currently known as the Sports Direct Arena.

However, the sponsorship was proving contentious in one of the poorest parts of England, where many people are facing financial problems.

"It's a sad indictment of the profit-at-any-price culture at Newcastle United," city council leader Nick Forbes said.

A local union leader called on club owner Mike Ashley, founder of the Sports Direct retail chain, to drop the deal.

"Fans and the city will not be fobbed off by the renaming of the stadium," said Karen Reay, regional secretary of the Unite union. "Our city's proud footballing and community culture will be tarnished by this deal - it cannot go through."

MONEY TALKS

Premier League clubs are seeking to maximise sponsorship revenues after Manchester United agreed a record $559 million deal to have the Chevrolet brand on its shirt for seven years from 2014.

Newcastle last week said that it was ending its sponsorship deal with finance company Virgin Money, which was worth only 3 million pounds ($4.8 million) a year.

Full financial terms of the Wonga deal were not disclosed. Wonga will spend at least 1.5 million pounds on supporting Newcastle's academy for young players and a separate scheme to help to train and educate teenagers in northeast England.

"We are building a club that can regularly compete for top honours at the highest level," said Derek Llambias, the Newcastle United managing director.

"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."

Wonga already sponsors the shirts of English Championship (second division) club Blackpool and Scottish Premier League club Hearts, but the link with higher-profile Newcastle has intensified debate about the loan company's business model.

The company offers short-term loans of up to 1,000 pounds, which are intended as an alternative means of finance to credit cards and traditional personal loans.

The annual percentage rate (APR) on Wonga's loans can exceed 4,000 percent, but the company defends its policies by saying that the maximum term for its loans is only one month. ($1 = 0.6240 British pounds)

(Editing by David Goodman)

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