Newcastle United have already secured upgrade to £40m deal that could make a 'huge difference'
Newcastle United have had a somewhat frustrating season on the pitch so far, but 2024-25 will end with a number of positives for the club...
Newcastle United have had a somewhat frustrating season on the pitch so far, but 2024-25 will end with a number of positives for the club financially regardless of where they finish in the league.
While the astronomical wealth of the Saudi Public Investment Fund (PIF) make Newcastle the richest team in the Premier League on paper, Profit and Sustainability Rules (PSR) mean that isn’t the case in practice.
The battle sine the historic but controversial takeover in 2021 has been to squeeze out as much PSR headroom – AKA the amount Eddie Howe and Paul Mitchell are allowed to spend – by increasing revenue.
They have enjoyed some success in this department so far, with Newcastle’s qualification for the Champions League last season yielding significant prize money and leverage in talks with sponsors.
We don’t yet have the Magpies financial accounts for 2023-24 -they will be released early next year.
However, the 2022-23 accounts showed a notable upswing in revenue compared to the last season of the Mike Ashley era, with turnover totalling £250m, up by £70m on 2021-22.
The projections for 2023-24 suggest Newcastle could surpass £300m and, even without Champions League revenue, stay at that level for 2024-25.
That is thanks largely to a number of new blue-chip sponsorship deals secured by Newcastle’s chief commercial officer, Peter Silverstone.
King among those is Newcastle’s deal with Adidas, worth at least £40m over the next two seasons and likely beyond that.
The German sportswear has produced a range of Newcastle kits that have been very well received by fans.
And the supporters who have been impressed with the deal will welcome the latest news from Adidas HQ.
Newcastle United to join Real Madrid and Bayern Munich in ‘elite’ pantheon
In an effort to squeeze more cash out of fans, kit manufacturers are increasingly tiering their offering when it comes to a club’s kit.
Adidas are not different and have an ‘elite’ pantheon of clubs for whom they produce authentic and long-sleeve versions of their kit, as well the usual replica versions.
It has now emerged that Newcastle will join the ‘elite bracket’ from next season, putting them alongside the likes of Real Madrid and Bayern Munich in what is an exclusive club.
That will see Newcastle’s third kit feature the iconic trefoil logo – sometimes known as the Adidas Originals emblem.
But aside from the relative superficialities of kit design, the upgraded deal is also expected to help Newcastle financially.
Aston Villa are another club who will soon join the ‘elite’ bracket and, speaking about that development, kit expert and designer Rob Warner has explained why it is beneficial.
“Better, more unique product,” he wrote via X.
“Higher marketing spend/profile. More integrated service from the brand. Much wider global distribution. This will make a huge difference.”
How Adidas fit into PIF’s commercial masterplan at Newcastle
At £20m per year, the Adidas deal is the second-most lucrative element in Newcastle’s sponsorship inventory.
The most valuable for the St James’ Park club? Sela, their front-of-shirt partner, who pay £25m.
Significantly, Sela are a PIF-owned.
That deal has still had to pass the Premier League’s fair market value assessment, however, which means they have not found that it has been artificially inflated in any way.
But PIF are able to leverage their near-peerless business portfolio and contact list to source the commercial deals that are right for Newcastle.
And with the fallout of Man City’s partly successful challenge to the Premier League’s associated party transaction rules (APTs), Newcastle may be able to squeeze even more value out of this strategy in future.
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