Business of Sport

Newcastle Utd’s shirt kicks off sponsorship rules debate

May 25, 2023, 10:40 AM

Saudi events company Sela are looking to secure a £25m-a-year shirt sponsorship deal with Newcastle United — Newcastle United are looking to replace Fun88 with a deal said to be worth around £25 million a year. Saudi events company Sela are in pole position to secure the sponsorship

Saudi events company Sela in line for purported £25m-a-year deal
Premier League club part-owned by Saudi’s wealth fund, PIF
Shirt deal may fall foul of sponsorship regulations

Saudi Arabia’s sovereign wealth fund is believed to be in talks to award Newcastle United Football Club’s latest shirt sponsorship deal to a little known sports entity it owns.

While the move means the country has decided to leave its major powerhouse brands on the bench, experts believe the deal may still fall foul of Premier League regulations.

The English club, purchased by a consortium including the kingdom’s Public Investment Fund in a £305 million deal in 2021, is said to be in talks with Saudi events management company Sela over sponsoring their shirt.

Sela’s website says the company is owned by PIF, which would attract scrutiny from the Premier League under new rules to ensure third party related transactions are struck at fair market value.

Sela founder Dr Rakan AlHarthy is also on the board of directors for Saudi giga-project Qiddiya, which is owned entirely by PIF.

“One suspects the British media will scrutinise the deal intensely, and that the Premier League and Uefa will monitor arrangements closely,” said Simon Chadwick, professor of sport and geopolitical economy at Skema Business School in Paris.

Launched 25 years ago as an athlete representation company, Sela now puts on sports, entertainment and culture events.

The Jeddah-based operation has organised motorsport’s Race of Champions and is involved with Saudi’s national football team.

The move to replace gambling firm Fun88, who signed a £6.5 million per year sponsorship deal in 2017, could be signed off as early as next month, according to reports.

Although no financial details have officially been released, the UK’s Daily Mail said the deal could be worth £25 million a year.

This would be substantially less than Manchester City’s sponsorship deal with Etihad Airways, which is worth £67.5 million annually.

City, who are majority-owned by Abu Dhabi United Group, have been charged by the Premier League for allegedly breaking financial fair play rules around 100 times between 2009 and 2018.

“Officials in Riyadh will want to make the most of their asset and, one imagines, have a propensity to spend,” Chadwick said.

“However, these officials will presumably want to avoid the pitfalls of alleged rule breaking, which the likes of Abu Dhabi [United Group] at Manchester City are now having to contend with.

“If Sela is a flexing of Saudi Arabia muscles, then for the time being it is in a controlled way.”

It was widely expected that the sponsorship would be taken up by one of the state-related giants such as $5 billion giga-project Neom or the national flag carrier Saudia.

Newcastle previously linked up with Saudia as part of a warm-weather training camp in Riyadh earlier this year, while e-commerce platform noon.com, which is 50 percent owned by PIF, sponsors the club’s shirt sleeves.

Chadwick said the sponsorship opportunities around Newcastle will be lucrative, particularly after they qualified for Europe’s premier club competition, the Uefa Champions League, for the first time in 20 years.

“When one looks at Manchester City and Paris Saint Germain [which is owned by Qatar Sports Investments], clearly first team shirts have become billboards for entities from these countries.”