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.

pumaFirst some context, as a current example let’s examine Everton, they ended their deal with Nike last 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 in August 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.

pumaSo, 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 Puma 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?

Thanks to Chris Holt for another excellent piece and you can visit his blog HERE, plus you can follow him on Twitter @MikeAshleyLies

  • Paul Ben

    Nice article.   I had assumed the reason that the club wouldn’t be up for sale until the end of next season is that there were commercial contracts that benefited a part of the business that would not form part of the football club being sold that couldn’t be terminated before then.  So my guess would then be that Puma deal was structured to maximise the benefit to the owner as a whole (e.g. a bulk deal on shirts for sale via a retailer), and it would have to be brought back into the club before the sale could proceed.

  • A lex

    Paul Ben Exactly – there’ll be a nice, cunning set-off arrangement between Puma and SD for the sale of merchandise. Again, another area of lost income and effective subsidies to SD by NUFC.

  • Paul Ben

    A lex Paul Ben That would only really be a problem if we were up against financial fair play rules; as it stands i am not sure if it really matters whether he takes the money via SD or NUFC.  

    I’d love it if he let the money go to NUFC and be invested in talent, facilities and building up the commercial side, but that doesn’t seem to be the current plan :-(

  • RexN

    A little confusing to start with, the 2013-14 figures aren’t out yet but the graph has a figure of £17.1m which relates to 2012-13 Nonetheless, it is a perfectly valid question to ask, what DID happen to commercial income? Was it anything other than recession pressures?

  • Paul Patterson

    I’m sure Mike doesn’t care about having a decent sponsor (Samsung, Ford, etc) paying a couple of million more than W***a, while he’s clawing in £80m+ tv money every season and then flogging fotballers for four and five times what the club paid for them . .
    Also, I’m sure he doesn’t care about the fact that the old Adidas kits were popular with fans (Why would he?) because he’s in dispute with Adidas over stocking the sportswears stuff in his tacky stores. Thats the reason he goes with his own brands like Puma, Lonsdale etc . .

  • A lex

    RexN Football at the highest level was immune to the pressures of the recession. The money just kept on rolling in.

  • MikeAshleyLies

    RexN Well spotted. Every year is one out. Apologies

  • RexN

    A lex RexN Fair point for income overall, although in that period, 3 clubs had a reduction. Of the 17 non-promoted clubs, 6 had a drop in commercial income, or at least elements of it (Sunderland’s catering down £2m) whilst 2 others did not break the income down in the same way.

  • RexN

    MikeAshleyLies RexN Cheers and not a problem. If it looks like I’m going mad, I try to double check why.

  • amacdee

    RexN A lex You know whats happened to the Puma money Rex, just like the NUFC Direct money its gone straight into the Fatman’s business. Dont say the other greedy grabbing SoB Hall didnt tell you though.

  • ash1001

    Paul Ben A lex 2 Points
    1 As the shop at the ground is a Sports Direct outlet the football club gets very little income from it.
    2 Puma have an agreement with club, but their shirts etc have to be the lowest seller of a club strip for years,  – so not a good investment for them and that’s apart from the crap design and quality.

  • Seventy2

    A challenging thing to do would be to set up a merchandising brand that clearly did not replicate, but was of better quality and with no official (may need unofficial) sponsorship.

  • Paul Ben

    Seventy2 Plain B&W stripes with a fanzine logo on the front, True Faith or the Mag?  Could anyone complain.

  • A lex

    http://www.toffs.com/retro-football-shirts/english-teams/newcastle-united
    This is what you want. And you support a local business,; too.

  • ToonSim

    Paul Ben Seemingly for the Rangers kit deal which MA has bought up (for £1 from memory), Rangers got £289k out of a £15m overall sale of shirts – I’d imagine Toon shirts would have much the same structure with Puma

  • ToonSim

    Seemingly at Rangers, where MA has the kit deal sewn up, Gers only got £289k out of a £15m overall kit sales. You’d imagine there’s something similar going on with SD at the Toon. I got my kids strips at the independent place off the Monument the last few seasons to avoid SD!