Everyone knows that Sports Direct pay nothing to Newcastle United for the ubiquitous advertising around St James’ Park, but less is known about what Puma pay the club for the rights to producing and selling kits. In my view, fans should be more concerned with the latter, it’s a far more valuable asset and looking at the commercial income since 2007, we seem to be getting less from it than you’d expect.
First some context, as a current example, let’s examine Everton, they ended their deal with Nike this year and switched to Umbro. This saw them reportedly double the amount they receive for their kit rights from £3m to £6m per season.
Looking at the accounts for previous Newcastle deals, almost a decade ago, back in 2005 Newcastle earned £9.4m in total from sponsorship (which is only part of the commercial income), that included both the ongoing Adidas kit deal and the Northern Rock sponsorship, as well as other advertising. The following year that increased to £11.2m, almost a £2m growth on the existing deal which the club told us reflected the new 5 year deal we signed with Adidas that year.
It’s simple common sense that you would expect a kit deal to add to the coffers. These examples show what a new kit deal can and should add to income, even a decade ago and at a club with 60% of the match-goers Newcastle has. Unfortunately we cannot compare the deal signed with Puma this week to see how well the club are doing in this area, because the club announce no financial details. We can look at the accounts when the previous 2 deals with Puma were announced though and make some assumptions about how much the club benefit.
So, Puma took the kit deal from Adidas in 2010/2011 and there was no increase in income, this is to be expected, Adidas had chosen not to extend their 14 year association with the club following relegation and commercial income was dropping in every area. However, once Newcastle were back in the Premier League, and the deal was renegotiated in 2012, you would have expected some recovery in commercial income from that new deal, at least a couple of million.
There’s no evidence of any growth whatsoever though. Newcastle had qualified for the Europa league, more games, more TV coverage, higher profile, yet commercial income actually went DOWN £2m! How could that be?
Compare this to 13/14 when the Wonga sponsorship clearly coincides with a £3m growth in commercial income at the club, it’s easy to see the additional value they bring compared to what Virgin Money offered. But Puma kit deals don’t show any corresponding increase.
This opens up a host of questions that it would simply be conjecture trying to answer, but as long as the club will not provide details, we are only left to ask. Have Puma ever increased the amount the club receive in any of their deals with the club? If not why not? Like the stadium advertising, do the deals with Puma somehow benefit Sports Direct and Mike Ashley more than Newcastle United?