Wonga worries raised as football club signs new sponsor

The big-money world of Premiership football may seem a long way from the harsh realities of life for many of those following the clubs. While the players are millionaires and clubs earn and spend fortunes, others struggle to make ends meet.

Yet these two extremes may have come together yesterday (October 8th) as Newcastle United announced a new four-year sponsorship deal with payday loans firm Wonga.

The firm arrives with a series of commitments, pledging £1.5 million towards youth development and a scheme to involve fans in club issues more, including the design of the kits. It has also signed up the naming rights to the stadium and opted to revert this back to the St James’s Park moniker by which it was always known, until it was named the Sport Direct Arena by controversial owner Mike Ashley last year.

Speaking of the development, managing director Derek Llambias said: “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.”

Yet the fact remains that the club has joined forces with an organisation representing a segment of the financial services industry widely accused of pushing consumers into ever deeper debt.

The decision was certainly not welcomed by insolvency professionals’ association R3, which noted the north-east of England has the highest rate of personal insolvency anywhere in the country at 35.2 per 10,000 adults.

R3 president Lee Manning said: “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.”

He added that the body’s own research has found 71 per cent of people in the north- east think the advertising of payday loans should be more strictly regulated.

Instead of that, the blue and white logo will now be plastered across the famous black and white shirts, to be paraded around Tyneside, Durham, Northumberland and beyond.

Mr Manning also pointed out that R3’s studies show 26 per cent of people in the north-east are struggling to make it to payday, compared with 21 per cent nationally.

He concluded that consumers should seek the best advice available and “not compound their problems by taking on more credit”.

It may not go down well if more of Newcastle United’s followers find themselves needing individual voluntary arrangements or seeking bankruptcy as a result of taking on loans they cannot afford from payday lenders.

Of course, Wonga is not the only company of this type – otherwise the tribalism of football fans would ensure Sunderland followers never take out such loans – but it has been a high-profile firm. It has already been sponsoring a Premiership club – Blackpool were in the top flight two years ago – as well as Scottish side Hearts.

Wonga’s activities also included funding the free new year’s eve public transport in London two years ago, a move that saw Boris Johnson receive plenty of criticism.

Some may also consider that the main reason so many are struggling to the extent that they may seek a payday loan is the gloomy economic situation, which arose from the financial crisis of 2007-08. And when that storm broke, Newcastle United’s shirt sponsors were none other than Northern Rock.

By Joe White