Newcastle United’s major front-of-shirt sponsorship deal with a company owned by the club’s majority shareholder is set to be cleared by the Premier League.
It was announced in June that the north east club had agreed a £25m-per-year contract with Sela, an events company owned by Saudi Arabia’s Public Investment Fund [PIF]. The PIF became Newcastle’s owner following a £305m takeover in October 2021.
The Sela sponsorship deal represented a 257 per cent increase on the club’s previous front-of-shirt sponsor Fun88, who paid £7m per year, and is seen as the first major test of the Premier League’s new fair market value rules established to prevent the overinflation of sponsorship agreements.
The regulations were established following the Newcastle takeover.
Any sponsorship agreement between a club and company with which it shares ownership triggers the Premier League to closely examine the terms and determine if it is reflective of the market. At the time of the Sela announcement, Newcastle chief executive Darren Eales insisted the agreement followed “a highly competitive commercial process”.
Newcastle are believed to have provided evidence to the Premier League’s assessors explaining and justifying why the club has seen such a huge jump in the valuation of one of its main sponsorship revenue streams.
The Premier League has created what sources describe as a “databank” of sponsorship deal values from the past five years and uses it to compare any new agreements.
Industry experts believe the addition of Champions League football next season and the club’s fourth-place Premier League finish has massively increased Newcastle’s global marketability.
Newcastle also has a large, well-established fanbase. Additionally, St James’ Park, with a capacity of 52,000, is the seventh-largest stadium in the Premier League and is regularly sold out.
The Premier League retains the power to force clubs to terminate or decrease the value of deals — including commercial agreements and transfers — it deems unrealistic. But it is thought that the Sela contract will be given the green light.
While a sizeable leap in value, Newcastle’s Sela deal is still far below the value of the club’s rivals for Champions League football. Tottenham, whose front-of-shirt sponsor is AIA, and Arsenal, who have a long-term deal with Emirates, receive £40m per year and are the next closest in value. Leading the field is Treble-winners Manchester City with a staggering £67.5m per year contract with Etihad.
Nonetheless, £25m per year gives Newcastle considerable spending power in the transfer market. Under amortisation rules clubs can spread the cost of a transfer over the length of a player’s contract, up to a maximum of five years, providing Newcastle manager Eddie Howe with a potential spending budget of £125m every season from the Sela income alone.
The club recently secured a major coup by landing AC Milan and Italy midfielder Sandro Tonali for £52m. The 23-year-old has signed on for five years.
A thing of beauty.
— Newcastle United FC (@NUFC) June 12, 2023
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“This partnership follows a highly competitive commercial process and we believe we have found the perfect front of shirt partner to support us in reaching our objectives on and off the pitch,” Eales said of the Sela partnership.
“We team up at an exciting time in the history of both organisations given both share an ambitious vision to expand their brands globally.
“Fan engagement is central to what we do at Newcastle United and, in Sela, we are partnering with an organisation with shared interests that has delivered incredible events and experiences to millions of people over many years.
“Closer to home, we will work closely on the design and operation of a new fan zone area at St. James’ Park, taking inspiration from Sela’s incredible properties elsewhere.”
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