12 October 2012 Last updated at 08:07 ET

Article written by Richard Moss Political editor, North East & Cumbria

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Is MP right to say Wonga's wrong for Newcastle United?

 

Wonga already has its name on Newcastle United's training ground

Newcastle United's decision to sign a sponsorship deal with pay day loans company Wonga has outraged some local politicians.

Wansbeck Labour MP Ian Lavery - who is a season ticket holder - says he won't set foot inside the ground while the company's name is on the club shirts.

The Newcastle City Council Labour leader Nick Forbes has also condemned the deal and said Wonga should put money into debt advice in Newcastle.

But given this is actually a private deal between two businesses, what right have politicians to criticise it?

Stadium name

For one thing it does look like good business for Newcastle United.

It's thought the contract is worth around £8 million a year - more than any previous sponsorship deal.

Around £1.5 million will go into the club's academy, and Wonga has decided that the stadium name should revert back to St James' Park after its brief time as the Sports Direct Arena.

The company will also put money into a club scheme to find jobs for young people.

In addition, it's not as if Wonga is a new name in football sponsorship. The firm also has deals with Blackpool and Hearts.

And although some people might not like the fact that Wonga's loans come at an astronomical annual interest rate, they are a legal business with many customers.

You might also ask if they are any worse than many other shirt sponsors.

Aston Villa and Swansea are sponsored by casino companies, Bolton, Wigan and Wolves by online bookmakers, Everton by a Thai beer.

In addition, as journalist Julian Knight pointed out in The Independent, previous sponsor Northern Rock may have had a charitable foundation, but it was also a company that sold people 125% mortgages, and cost the taxpayer billions in a bail out.

Community relationship

But it really comes down to whether you think a football club is purely a business or whether it actually has a wider responsibility in the community.

The local Labour politicians who've been so critical of the club certainly believe Newcastle United should take its responsibilities seriously.

The club has an intimate and long relationship with the city - its shirts can frequently be seen on the streets even outside match days.

Fans and politicians were outraged when St James' Park was renamed the Sports Direct Arena

Opponents of the deal argue Wonga is cynically buying into that community relationship, selling more loans to more people who can't afford them.

MP and fan Ian Lavery said: "A city like Newcastle and the region should not have any ties with an organisation like Wonga.

"This business makes profits off the back of deprived people who are desperate and who are the most vulnerable in society."

City council leader Nick Forbes said: "I'm sickened. It's a sad indictment of the profit-at-any-price culture at Newcastle United.

"We are fighting hard to tackle legal and illegal loan sharking and having a company like this on every football shirt that's sold undermines all our work."

And there is some history here.

Local politicians were also similarly outraged when St James' Park became the Sports Direct Arena, and their relationship with owner Mike Ashley is hardly a constructive one.

Satisfied customers

The club's fans though appear to be more divided.

A survey by the Newcastle Journal found 59% in favour of the deal, and 41% against, although I stress this was no scientific study.

Wonga has also been defending its business, saying it has thousands upon thousands of satisfied customers, who are shut out of finance by the high street banks.

And Newcastle United managing director, Derek Llambias, told the Newcastle Journal: "Wonga is a legal company with 30,000 customers in the region, and yet their complaints are next to zero.

"Banks and other institutions get far more negative feedback. People are not forced to take out loans from Wonga and I believe North East people have enough brains to know what they are doing."

So it seems Wonga is here to stay both as a company, and on Newcastle United shirts. Ian Lavery then won't be seen at St James' Park for some time.

I suspect a mass fan boycott is unlikely though.

Instead, this week is just a reminder - if fans needed one - that modern day football clubs are first and foremost businesses.