Newcastle United can become a "major player" in the transfer window thanks to their new bumper sponsorship deal with Sela - and the agreement should be the launchpad for success on and off the field.
That is the view of sports commercial expert Ben Peppi who believes that United's increase in revenue will eventually see the club move on to bringing in stars on elite salaries. For now, Eddie Howe and sporting director Dan Ashworth will continue to mix things up with new additions and enhanced extensions on existing players signed in the Mike Ashley era.
However, moving forward Howe will see both his transfer funding increase and the club's salary capabilities boosted. As things stand, Bruno Guimaraes would stand to be the highest earner once the finishing touches to his extension are confirmed.
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Peppi, sports commercial expert at JMW Solicitors, said: "Clubs need to spend within their means as a result of Financial Fair Play rules.
"It is no secret that Newcastle United have the money to be a major player in the transfer market, but these deals will help increase revenue which ultimately impacts how much players can be paid in the long term. The two are intertwined, and while this deal reportedly represents an uptake of £18M in comparison to their previous deal, it is unlikely to have such a significant impact on the club’s transfer budget in the near term given the funding it now has.
"However, it does represent a step towards increased value across all future commercial agreements that can be made. "This deal, along with the commercial fees it can now perhaps command moving forwards, is part of a revenue channel that will contribute to a larger budget to spend in accordance with the rules of Financial Fair Play."
With Champions League football now on the table and United's status clearly enhanced, the club can now negotiate deals that offer "fair value" in the market. Peppi added: "European football is attractive to new sponsors, but the size of the club, fanbase and relevance of the brand are also important factors to consider when assessing fair market value. Scrutiny on fair value is subjective – there are so many data points that go into evaluating the value of a brand.
"Newcastle United’s front-of-shirt increase is significant, but traditional ‘Big Six’ clubs are selling their sponsorship for £40m-plus, so this also needs to be held within perspective. Reportedly an uptake of £18M in comparison to their previous deal, the money paid by Sela will be part of an upward growth and trajectory.
"Other brands will be looking at this as a chance to pay big money as a bet on the future direction Newcastle United may head in. I think where we will actually see more scrutiny is from clubs further down the football pyramid because if the disparity is so great, they will think they can never catch up."
United's statue in the global market was already sizeable before the takeover with tours to China, New Zealand and across Europe in recent years. But after multiple trips to the Saudi Arabia and Dubai since the takeover, the club are now starting to crack the Middle East market and the Seal deal will help increase brand awareness significantly.
Peppi said: "Newcastle United’s key commercial figures have said that the intention behind this deal is to assist in growing their brand globally. The club believes having Sela among their commercial partners can help reach audiences both locally in terms of the company’s expertise in fan engagement and further abroad in Saudi Arabia.
"Fan zones in and around St. James’ Park have reportedly been proposed among the partnered initiatives which will help the club better connect with their local community and engage the fanbase closer to home. With regards to Saudi Arabia, Newcastle United want to become the EPL biggest club in the country, in addition to having aspirations of being recognised as a global brand.
"Signing sponsorship deals to the value which their deal with Sela represents puts them on a stepping stone to becoming one of the bigger clubs in Europe from a commercial perspective. "The agreement will also grow their commercial viability moving forwards - the more these types of deals can be made, the more you can demand with regards to other sponsorship agreements and renewals, so don’t be surprised if this upwards trend continues over the next few years.
"This deal puts the club on a commercial pedestal of sorts – it is the first big sponsorship agreement since the takeover and could be considered as the starting point of off-the-pitch development which matches the ambition they have on it."
