English Premier League side Newcastle United on Tuesday unveiled a sponsorship deal with loans company wonga.com, sparking criticism and concern because of the firm's reputation for sky-high interest rates.
London: English Premier League side Newcastle United on Tuesday unveiled a sponsorship deal with loans company wonga.com, sparking criticism and concern because of the firm's reputation for sky-high interest rates.
Story first published on: Tuesday, 09 October 2012 19:38
Wonga will sponsor the club's shirts from the start of next season and will also invest 1.5 million pounds (1.85 million euros, 2.5 million dollars) in the club's academy and a social scheme helping to equip local youngsters with workplace skills.
The Magpies, currently sponsored by Virgin Money, added the deal, whose overall value was not been revealed but which British media suggested was around 24 million pounds, will include a fans' forum to foster closer links with the club hierarchy.
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 newspaper that "if Wonga get this sponsorship I will not set foot in St James' Park (which club owner Mike Ashley has rebranded the Sports Direct arena) 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."