As we are all too aware, we are lagging way behind the vast majority of Premier League clubs when it comes to commercial partners and sponsorship revenue,   something which has been confirmed starkly by our most recent accounts. We will never really know why Mike Ashley and Lee Charnley chose not to invest the time and effort in bringing partners in that could add revenue and even more global exposure to the club.

When Ashley took over 14 years ago, we were comparable to Spurs in terms of commercial income.  However, in recent years we have been left behind by the top-tier teams – even Brighton are now ahead of us commercially. Putting to one side the reluctance of Ashley & Co to go shopping for partners, the deals that they did strike are paltry in comparison to what their value should have been, both in terms of revenue and rights given away.  The Castore deal is dreadful, and you can read more about my analysis of that in last month’s fanzine.

With increased scrutiny on how Newcastle United spend their money since the PIF/Reuben/PCP takeover, bringing on board new sponsors has to be seen as a priority.  We must consider FFP for the first time – clearly not something anyone connected to NUFC has ever had to worry about for the past 14 years!  Due to the new Premier League rules on ‘Associated Party Transactions’ the potential for a Manchester City style Etihad deal is out of the window, and every deal over the value of £1m will need to be scrutinised to ensure the revenue is at ‘market value’.

Quite how this will work is still very opaque.  I would imagine that the PL will look at League position, media value, and sponsorship values at comparative clubs – it’s not an exact science and I am convinced that there will be some arguments as deals get rejected/accepted across all Premier League teams.  We could argue, and in my opinion we would have a very good case, that the previous owners massively undervalued our commercial value due to the national and global reach that the club has and, as a result, have set us back. To peg our value at those levels would not reflect the immediate transformative effect of the takeover in releasing that potential and sparking interest in the club even before any on-field success.

Newcastle United currently have twelve existing sponsors in its portfolio. I would assume that most of them are considerably below market value, and certainly below where we are likely to be next season and beyond. I would therefore think that the first option for the club hierarchy is to try and renegotiate these deals or explore early exit/buy out clauses.

Although the ‘Etihad’ style deal is out of the question, the club could do well to look at a few ways of driving the revenue up with new sponsors that could increase income whilst still trying to play the game in relation to Premier League scrutiny.

For example:

Firstly, Newcastle United are likely, based on the last 6 months, to enjoy fast-tracked success in the not too distant future.  If we brought on board a new shirt sponsor, which is historically the ‘major’ sponsorship income, we would be selling that based on Ashley’s commercial legacy – 14 years of mediocrity & battling relegation.  As such, anything deemed as ‘too rich’ could be kyboshed as being above the perceived market value.  However, you could structure a deal that triggers bonuses based on League position – much like the Premier League’s own prize money.  A team that finishes 14th would gain around £15m in Prize money – however, finishing 7th would bank a club around £30m.  You could therefore structure a commercial deal and bonuses around league position and success against the Ashley era backdrop.  It is already common practice to have bonuses within contracts for winning the FA Cup, League Cup etc so it’s not beyond the realms of possibility that this could be a way forward.

Another option could be to look at a similar sliding scale of revenue based on media value.  Every  year the PL provide the clubs with a report on how much exposure the clubs gain from being in the PL. This incorporates exposure across UK and global TV.  Clearly there will be far more media exposure for the club in the future, which in turn will attract more sponsorship opportunities and exposure for them, which would drive the value upwards.  Once again, incorporating a sliding scale based on media value to boost income with sponsors could be a way to drive up the value of our sponsors quickly without falling foul of PL scrutiny.

Finally, perhaps we could look at volume over value.  As mentioned earlier, Newcastle United currently have twelve commercial partners.  In contrast, Manchester United have a whopping 49.  They have 23 global sponsors, 3 regional partners, 13 financial partners and 10 media partners.  Although the big value sponsors are the kit sponsor and manufacturer, we could bring on board a plethora of new partners each paying less than the £1m threshold.  If we were to bring in 30 of them, all of a sudden, we’ve got an additional £20-30m per year in revenue!  I’m not an idiot, brining in 30 sponsors overnight is fanciful and unrealistic in the short term, but you get my point.

The elephant in the room, though, is who precisely is going to bring the new partners in or negotiate with our existing partners? If we get the new partners on-board then who is going to manage them to ensure that they get the sponsorship rights executed to keep them happy?  We would need to be looking at a well-structured commercial team including a commercial director and a team of partnership managers.  This, unfortunately, is yet another Ashley hangover that the new ownership will have to overcome, as we simply don’t have anything suitable in place. In a summer that will be over before we know it, we can’t afford to delay a day longer.

Tim Wood @Geordie2Step