LONDON (AP) — Nationalized mortgage lender Northern Rock PLC said Monday it has signed a new four-year sponsorship deal with Newcastle United football club, worth up to 10 million pounds ($16 million).
The deal extends Northern Rock’s relationship with its hometown club as both target renewal — the bank is on the hunt for a buyer to return to the private sector while League Championship leader Newcastle is closing in on promotion to the Premier League after a year in the second tier.
The total value of the contract will vary between 1.5 million pounds and 10 million pounds, depending on Newcastle’s performance on the pitch.
The maximum value will only be realized if the team fulfills expectations and is promoted back to the Premier League — and stays there for the whole of the four-year period beginning next season.
Newcastle-based Northern Rock, which was taken into public ownership in 2008 after it became the first major British victim of the global credit squeeze, said that the agreement represented a good deal for taxpayers.
Northern Rock Chief Executive Gary Hoffman added that it was “an important community link” as he defended the decision to renew the sponsorship deal despite being owned by the government.
“Brand awareness and promotion are important elements in the continuing development of the company,” Hoffman said.
“We remain mindful of our responsibilities under government ownership and only consider those advertising and promotion channels that deliver a high return on investment and good strategic fit,” he added.
Northern Rock was split in two at the beginning of this year, forming a “good” bank that is being readied for a return to the private sector and a “bad” bank that is charged with repaying the taxpayer. Monday’s deal is between the “good” bank and Newcastle United. Reported suitors for the bank include National Australia Bank and Virgin Money.
Newcastle United’s managing director Derek Llambias said extending the sponsorship agreement — Northern Rock’s logo has adorned Newcastle’s Adidas-manufactured jerseys since 2004 — would help the club achieve its goal of a return to the Premier League next season.
“This alliance underpins the desire of two of the region’s most well known names to continue to work together over the next four years,” Llambias said. “Newcastle United’s aim is to return to the Premier League next season and we believe that collaboration will help both companies achieve our respective goals in the local, national and international marketplace.”
Newcastle is currently at the top of the League Championship table by two points after 24 out of 48 games, leaving it well positioned to achieve promotion.
The Magpies were expected to struggle after leading players Obafemi Martins, Michael Owen, Sebastien Bassong, Damien Duff and Habib Beye left following relegation on the final day of last season.
But coach Chris Hughton rallied the team and has been appointed manager until the end of next season. Newcastle has lost just three league games all season, all of them away from home.
The club’s owner, Mike Ashley, took it off the market last October after failing to find a buyer at the reduced price of 80 million pounds, a bargain compared to the 134 million pounds he paid for it two years ago while it was still in the Premier League.
Ashley is hugely unpopular with fans after overseeing relegation and failing to keep former striker Alan Shearer on as manager.
Fans were also angered by the club’s announcement in October that it is looking to boost revenue by selling naming rights to its famous St. James’ Park stadium for next season.
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AP Sports Writer Stuart Condie in London contributed to this report.