Why Wonga just isn’t worth it
Posted on July 20th, 2013 | 43 Comments |
In a piece I wrote on here back in October of last year I asked the question “Wonga and Newcastle United – Is it worth it?”
Apart from the damage to the club’s dignity and self respect, not to mention it’s “brand value” because of associations with downmarket Sports Direct and even worse, Wonga, we are now seeing another kind of damage caused by the latter. Of course, I am referring to the current situation with Papiss Cisse and his refusal to wear a Wonga branded shirt.
The way things stand currently, the club could lose one of it’s most valuable players, not to mention last season’s joint top goalscorer before the first season under wonga’s sponsorship has even started. However in this piece I will look at what the club is receiving in return.
“The best deal we’ve ever done…”
Newcastle United’s ex-managing Director, Derek Llambias, described Wonga’s sponsorship as “the best deal we’ve ever done” and when asked if it was worth around £8 million per season, he replied that figure was “not far off.”
Putting Llambias’s biased PR hyperbole to one side, let’s put this into perspective. The mean figure for all 20 Premiership shirt sponsorship deals is now £7.36 million and that figure is just for shirt sponsorship only. Newcastle United’s shirt deal with Wonga is suppsosed to be £24 million over four seasons, or £6 million per season, which is actually LOWER than the mean figure I mentioned above. On top of this there are two further parts of Wonga’s sponsorship, as Llambias explained at the time:
“There’s three parts to the deal. One part is investment in the Academy, one part is the shirt deal, and the third part is naming rights.”
Wonga will be investing “up to £1.5 million” in Newcastle United’s Academy at Benton, which leaves the rest, around £500,000 which must be for the stadium’s naming rights.
It was sold to the fans that sacrificing over 100 years of tradition would bring £8-10 million into the club. It was repeated over and over again by Llambias that this would bring another top class player into the club. However, after three years of turmoil including two renames where Newcastle United looked like a laughing stock, all the club have to show for it is £500,000 per season on top of a fairly average shirt sponsorship deal. Now there’s Cisse, and you can bet that there will be more as yet unknown controversies which will reflect on the club over the next four years at least. On top of this, you can bet that the club’s replica shirt sales will go down too as fans eschew the embarrassment of being seen as a walking billboard for poverty and desperation.
But before I sign off there’s one more thing: The previous shirt sponsorship deal we had with Virgin Money, a regulated bank which both has it’s roots in the North East and still provides many jobs in the region, had a shirt sponsorship which was supposed to be worth £20 million over two years, or around £10 million per season. This was terminated under a clause in the contract half way through by Mike Ashley in favour of a deal which has already been damaging to the club and will be in future, all for a deal which seemingly is worth even less per season.
Is it all worth it? I certainly don’t think so.
* – This piece was originally supposed to be for my Metro.co.uk blog.