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Show me the Wonga: EPL shirt deals reach new heights

By Chris Murphy, CNN
updated 1:04 PM EDT, Wed October 10, 2012
Newcastle's shirts will carry the name Wonga next season after the club signed a four-year deal with the loans company
Newcastle's shirts will carry the name Wonga next season after the club signed a four-year deal with the loans company
STORY HIGHLIGHTS
  • English Premier League leads the way in lucrative shirt sponsorship deals
  • EPL clubs near $200 million per year mark, Europe's top clubs make $643m annually
  • Newcastle sign controversial shirt deal with loans company called Wonga
  • World's biggest shirt deals sees Qatar Foundation pay Barcelona $38m a year

(CNN) -- On a day when a report showed English Premier League clubs attract nearly EUR 150m ($193m) through shirt sponsorship deals, Newcastle United announced one of the biggest -- and most controversial -- in their history.

The club has signed a four-year contract with 'digital finance company' Wonga, a pay-day firm one MP claims is nothing more than a "legal loan shark."

Named as the number one company in the Sunday Times Tech Track 100 list in 2011, Wonga lends money with an annual interest rate of 4,124%. The company, which is named after a slang term for money in Britain, declined to comment when contacted by CNN.

"We are completely transparent about the total cost of repayment and we make money when our customers repay us quickly, not by continually extending a growing line of credit," says Wonga's website.

"Like all companies we make the odd mistake, but we are serious about our commitment to responsible lending and try to put customers at the heart of what we do."

As well as sponsoring Newcastle's shirts, Wonga has also bought the naming rights to the Magpies' stadium, reverting it back to its original St James' Park name.

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The club's owner Mike Ashley sparked a huge wave of protest from fans when he discarded 119 years of history by calling the ground the Sports Direct Arena, after his sports goods firm, back in 2011.

Several key figures have criticized Ashley for striking the deal, saying it is irresponsible for such a big institution in a traditionally deprived area to carry the name of a firm that preys on vulnerable people.

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The partnership -- said to be worth $38m over four years -- underlines how increasingly important shirt deals are to top clubs, with a study by Sport+Markt showing they had pushed through the EUR 500m ($643m) barrier in Europe for the first time in 2012.

Sport+Markt's report also reveals the most common shirt sponsor of Premier League clubs are firms from the betting and lottery sector, products of which are featured on the strips of six teams.

British sports business expert Simon Chadwick told CNN one of the most important goals for sponsors is getting as many people as possible to see their brand name.

The Premier League, with its estimated 4.7 billion viewers a year, is the perfect vehicle, he said.

"Such is the global prominence of the Premier League and the clubs within it, that shirt sponsors predictably and inevitably secure the 'eyeballs' they seek by engaging in sponsorship deals.

"In particular, there is a preponderance of gambling companies, largely because of the convergence of consumer interest in both football and gambling.

"In the case of Newcastle, there would appear to be an alignment of club and company expectations.

"For the club, the deal is an immediate source of revenue and also a smart way of returning United's stadium back to its St James' Park name; for the sponsor, given the socio-demographic and economic conditions of certain parts of the north-east, it is one way of targeting actual and potential customers."

Barcelona currently holds the record for the most lucrative shirt sponsorship deal -- the Qatar Foundation pays the Spanish giants $38 million a year to have their logo emblazoned on the famous red and blue strip.

English clubs Manchester United and Liverpool both attract $32 million a year in shirt deals, from AON and Standard Chartered respectively, while Barca's Spanish rivals Real Madrid receive $29m from betting firm Bwin.

Newcastle's commercial income trails way behind those clubs despite their windfall from Wonga but according to Labour's Newcastle Central Member of Parliament Chi Onwurah, it is the wrong message to have on their shirts.

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"Some of the richest young men in Newcastle to wear shirts calling on the poorest to go to a legal loan shark," she said on micro-blogging site Twitter.

Her Labour colleague, Catherine McKinnell, agreed and called on the government to cap the interest rate companies like Wonga could charge.

"Pay-day lenders prey on the most vulnerable people in society, namely those on low incomes or unemployed," she said on her official website.

"I know of many cases where constituents have turned to pay-day lenders in desperation and find themselves trapped in a cycle of debt at excessive interest rates of over 4,000% per annum.

"During this double-dip recession, Wonga have seen their profits soar as many households struggle to make their income stretch to cover the rising costs of living.

"I am disappointed that the board has chosen to associate our club, brand and city with practices which too often penalise struggling families.

"I worry that by associating the club with such a company, it could normalize their practice and plunge many more families into the cycle of debt. Many will see this deal as money from misery."

Over the last two years Stella Creasy, the Labour MP for Walthamstow -- who dubbed pay-day loan companies as "legal loan sharks" -- has led a campaign against Wonga, including its sponsorship of the Blackpool and Hearts football clubs.

Creasy want the government to impose a legal cap on lending rates as happens in most other European countries.

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