NEWCASTLE UNITED UNVEILED unveiled a controversial sponsorship deal with loans company wonga.com on Tuesday, sparking criticism and concern because of the firm’s reputation for sky-high interest rates.
Wonga will sponsor the club’s shirts from the start of next season and will also invest £1.5 million in the club’s academy and a social scheme helping to equip local youngsters with workplace skills.
As part of the deal, Wonga are set to restore the name of Newcastle’s home ground to St James’ Park. Club owner Mike Ashley rebranded the stadium the Sports Direct Arena last year to showcase naming rights to potential corporate partners.
British media suggested that the deal is worth £24 million but the overall value has not been revealed.
Newcastle managing director Derek Llambias said in a statement: “We are building a club that can regularly compete for top honours at the highest level.
“Throughout our discussions Wonga’s desire to help us invest in our young playing talent, the local community and new fan initiatives really impressed us and stood them apart from other candidates.”
But local politicians and R3, a trade body for insolvency professionals, questioned the appropriateness of the choice as the northeast of England, of which Newcastle is the main city, has the highest rate of insolvency in Britain.
Wonga offers short-term business loans for an annual percentage rate of up to 360 percent while its “representative” annual rate for payday loan for struggling households is more than 4,000 percent.
Those rates have seen the opposition Labour Party speak out against the deal.
Local Labour lawmaker Ian Lavery told The Times that “if Wonga get this sponsorship I will not set foot in St James’ Park until it is off the shirts.”
He dubbed the deal “an outrage.”
R3′s chairman Lee Manning noted that “Wonga has chosen to target a region that has comparatively high numbers of people experiencing financial difficulty.
“Our experience tells us that many of those seeking high cost credit need professional advice for their financial problems, rather than accruing further debt.”
There was no immediate response from Wonga when contacted by AFP.
