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Newcastle are about to hand Liverpool another challenge but £30m deal raises questions
Fresh from securing Champions League football for next season, Newcastle United are reportedly in talks over a new front of shirt sponsor that would see them close the gap on their rivals.
According to Sky News, the Magpies are in talks replace the outgoing betting firm FUN88 for a new shirt deal worth a reported £30m per year in the offing with Saudi Arabian events company Sela.
Newcastle have proven to be the disruptors of the current Premier League campaign with their project, following the takeover by the Saudi Arabian Public Investment Fund back in 2021, at a more advanced stage earlier than many had predicted, especially given that the club had not yet truly flexed the financial might that it now possessed.
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With UEFA’s new financial fair play regulations having kicked in last summer, where clubs have to fall in line, following an initial grace period, of having their transfer, wages and agents payment ratio at no more than 70 per cent of turnover, the Magpies’ qualification for the Champions League and the riches that can offer will help them unlock the next wage tier of £200m-£250m to help them establish their place among what is now a ‘big seven’ as opposed to a ‘big six’.
Core to Newcastle’s growth strategy and ability to continue investing in top talent and pay bigger wages and transfer fees is their ability to drive forward commercial revenues, with the club’s front of shirt sponsor the biggest asset that they have to offer in that respect.
The new deal, should it be signed at the £30m per year rate as reported, would represent a significant increase on the £6.5m per year that the club was understood to be receiving as part of the multi-year deal that it had with FUN88.
But with Newcastle now part of the Champions League, and an altogether different proposition, the ‘fair market value’ rule that the Premier League introduced in the wake of the PIF takeover will be argued by St James’ Park chiefs at a far higher rate than what it was previously; likely looking to achieve parity with the kind of sums that Tottenham Hotspur have managed to extract from their deal with AIA.
Liverpool negotiated their own new front of shirt sponsorship last summer during the pre-season tour of Thailand and Singapore, extending the partnership with Standard Chartered that began back in 2009. That deal is understood to be worth more than £50m per year to the Reds.
Such is Liverpool’s positioning as an iconic global brand, any moves to try land deals for the same value Newcastle would likely come under fire from the Premier League for breaching fair market value rules. But in achieving such a huge rise from their last commercial deal for the front of shirt sponsorship, the Magpies have shown the trajectory that they are on, with their qualification for the Champions League likely to open up a plethora of other commercial opportunities to allow them to grow revenues that will, in turn, underpin spend on transfer fees and wages.
What will come into focus is how much Newcastle have been able to lean on the simpatico relationships with businesses that exist in Saudi through ownership. Since the PIF takeover there have been deals struck with firms from the region such as Noon and Saudia, with a potential deal with Sela being the most valuable of them all should it come to pass. Sela is funded by the PIF, which will likely pose a real test for the Premier League’s rules around third party transactions.
For Liverpool, the focus has been on getting global, blue chip brands on board when it comes to commercial partnerships. The challenge moving forward will be extracting more value out of those deals in order to fend off the growing financial muscle of Newcastle, having already lost the battle with Manchester City in those stakes.
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