Newcastle United could be about to see their hopes of an ultra-lucrative commercial deal dashed amid the landmark developments in the world of politics.
Commercial income is integral to Newcastle’s plan to break free of the anchor that is Profit and Sustainability Rules, which tie the amount they can spend to their revenue.
Income from sponsorship and merchandise is central to that aim, and the Magpies have made significant strides since the Saudi Public Investment Fund‘s takeover in 2021.
Their commercial revenue has already more than doubled to £47m during their ownership, per their 2022-23 accounts.
That figure will rise again when they release their accounts for 2023-24 and again in 2025-26,thanks to their lucrative deals with Sela and Adidas.
But there is one option that may not be in the equation any more.
Oil sponsorship may be off the table for Newcastle
Ever since the start of the PIF era, Newcastle have been linked to a deal with Aramco, the oil and gas company owned by the Saudi state.
The company, which is the second largest in the world by revenue and the largest by profit, have been mooted as a front-of-shirt sponsor and a naming rights partner for St James’ Park.
Using the £25m-a-year deal with Sela as a benchmark, a partnership with Newcastle would easily match or exceed that figure.
As the world’s biggest fossil fuel corporation, that would be a controversial partnership, although they do already have deals in place with FIFA and F1 among other blue-chip sports stakeholders.
But in the long-term pressure from the likes of the United Nations, which is headquartered in New York, might force the company to withdraw from the market
As reported by the BBC, UN Secretary General António Guterres is advocating for a total ban on fossil fuel in order to change the course of climate change.
His comments have been seen as an unprecedented development in terms of institutions with huge political capital directly calling out oil and gas companies for their role in the climate crisis.
As a result, with Premier League clubs under increasing scrutiny in terms of who they do business with, it is unlikely that Newcastle would choose to get into bed with Aramco.
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Newcastle commercial income could be PSR lifeline
In the long run, it could well be that Newcastle move away entirely from doing deals with entities from PIF’s network, which has assets of over £300bn.
That process might be hastened after we learn the outcome of Man City’s landmark case against the Premier League regarding its rules on associated party sponsorship deals.
In the short term, however, Newcastle are leaning on these companies for a significant chunk of their commercial income.
They are already flirting with the upper limit of the Premier League’s Profit and Sustainability Rules and removing these deals would push them over the edge.
The net is set to tighten on the Tyneside club too. The Premier League will trial a new PSR model from next season that introduces a squad cost control and financial anchoring system.
While at this stage the new system is only being implemented on a ‘shadow’ basis (i.e. it will not be enforced), it is likely to be introduced fully in the coming seasons.
This dynamic means Newcastle must balance the competing needs of increasing revenue with satisfying the Premier League’s rules on related-party sponsorships.
The direction of travel would very much indicate that rules out an Aramco deal any time soon.