It is being reported that Newcastle United want to hold talks with their shirt sponsors, Northern Rock.
Freddy Shepherd – sleight of hand with Newcastle’s sponsorship money
This follows the UK Government’s decision to nationalize the bank this week after a couple of offers from Richard Branston’s Virgin Group were finally turned down.
Northern Rock and Newcastle negotiated a 5 year deal back in 2005, that was supposed to pay Newcastle United Â£5M a year. But apparently none of that money will come into the club now, since Freddie Shepherd has already spent it.
In a bizarre tale of business living above your means, Shepherd used the money, which was to come into the club in subsequent years, as money to help buy Michael Owen.
And this is one of the pieces of financial wizardry that Ashley and Mort were not aware of, until they sorted through the books, and got Shepherd’s verification that was indeed what he had done. 🙁
Very bizarre business practices, to say the least, and it’s not something that is generally regarded as good financial best practices. But that’s the way the club was run under Shepherd and his cronies – very badly.
Northern Rock is now surprisingly in public ownership, and there are valid questions about whether tax payer money should be used to sponsor Newcastle United, and in addition the Newcastle Falcons Rugby Team and the Durham County Cricket Club.
Northern Rock insisted yesterday they were not about to rip up any of their existing sponsorship deals, but that may not be their decision to make.
The question is whether Newcastle should try to opt our of the agreement, before it runs out in 2 years time. If we did we’d presumably have to pay Northern Rock Â£10M back, but we may also be able to negotiate a better deal with another sponsor.
Normally after 3 years of sponsorship we should be able to get a better deal from a new sponsor, but our performances have been so poor over the last 3 years, since Bobby Robson left, that may not necessarily be the case.
It would seem better to wait until Keegan has an opportunity to get us back on the right track. We could then negotiate an improved sponsorship deal, hopefully from a a position of strength rather than weakness, which is the position we are in at the moment.
Comments very welcome.