Northern Rock defends signing of Newcastle sponsorship deal

NATIONALISED bank Northern Rock has signed a four-year sponsorship deal with Newcastle United football club, its home-town team.

The total value of the renewed contract will vary between 1.5 million and 10m depending on the Championship side's performance on the pitch. The maximum value will be realised only if the team fulfils expectations and is promoted to the English Premier League – and stays there for the whole of the four-year period beginning next season.

Northern Rock, which was taken into public ownership in 2008 after it became the first major British victim of the global credit crunch, claimed 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 state-owned. "Brand awareness and promotion are important elements in the continuing development of the company," he 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. The football deal is between the "good" bank and Newcastle United. Reported suitors for the bank include National Australia Bank and Virgin Money.