Wonga Group will remain as Newcastle United sponsor until at least 2017, despite a major restructuring and cost reduction programme that will see it shed half of the workforce supporting its UK arm.
The company has announced a strategic refocus on its consumer business, which will see its UK headcount drop from 650 to 325 as its alters its business model in light of the rapidly changing short-term credit market.
A spokesman confirmed that all marketing is under review as part of the process.
However, he added:
“As far as Newcastle United is concerned, we have a contractual obligation until 2017.”
It is expected the phased reduction in roles will primarily impact teams that support the UK business from London, Dublin, Cape Town and Tel Aviv.
The remaining roles are expected to be based in London and Cape Town, with plans to close the Tel Aviv office by mid-2015 and the Dublin office by mid-2016.
Wonga will immediately launch a formal 30 day consultation period for those at risk of redundancy and expects all changes to be complete within 12 months.
Andy Haste, who was appointed group chairman in July, said:
“Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes.
“We’ve already made significant changes, including appointing a new leadership team, implementing a new risk decision engine and tightening our lending criteria.
“However, Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market.
“Regrettably, this means we’ve had to take tough but necessary decisions about the size of our workforce.
“We appreciate how difficult this period will be for all of our colleagues and we’ll support them throughout the consultation process.”
As part of the restructuring plan, Wonga – which has also agreed to sell its small business lending brand Everline to Orange Money Ltd – will now focus on its core consumer businesses in the UK and overseas.
It has likewise filed an application for authorisation with the Financial Conduct Authority in the UK, beginning a regulatory process that can last up to a year.
Source – Newcastle Evening Chronicle, 24 Feb 2015
Labour leader Ed Miliband is to turn his fire on Newcastle United owner Mike Ashley’s Sports Direct chain, in a major speech attacking “zero hour” contracts.
Mr Miliband will accuse the chain of “Victorian practices” in the way it treats staff.
And he will highlight plans to change the law – so that workers with regular shifts have the legal right to a regular contract, if Labour wins the next election.
It comes as the Labour leader continues his fightback following reports that some MPs had concerns about his leadership of the party.
Earlier this week he delivered a speech pledging to stand up to “vested interests”, to ensure hard work was rewarded and to stamp down on tax avoidance by the very wealthy.
Today he is set to focus particularly on zero hours contracts, in which work is not guaranteed and staff are called in as needed.
Mr Miliband is to say:
“A graphic symbol of what is wrong with the way this country is run is the army of people working on zero-hours contracts with no security while a few people at the top get away with paying zero tax.
“This zero-zero economy shows we live in a deeply unequal, deeply unfair, deeply unjust country run for a few at the top, not for most people. It is a country I am determined to change.”
And he will highlight Sports Direct, which has 400 stores and is estimated to have 17,000 people on zero hours contracts.
“Sports Direct has thousands of its employers on zero-hours contracts, the vast majority of its workforce.
“Sports Direct has predictable turnover, it is a modern company with stores on many high streets and, judging by its success, where many people shop.
“But for too many of its employees, Sports Direct is a bad place to work.
“This is not about exceptional use of zero-hours contracts for short term or seasonal work which some employers and workers may find convenient. This is the way Sports Direct employs the vast majority of its workforce.
“These Victorian practices have no place in the 21st Century.”
Mr Miliband will set out plans to legislate to give employees the legal right to a regular contract if they are working regular hours; to refuse demands that they are available over and above their contracted hours, and to compensation when shifts are cancelled at short notice.
An inquiry commissioned by Labour and conducted by businessman Norman Pickavance, former HR & Communications director at supermarket chain Morrisons, reported earlier this year:
“Sports Direct has expanded dramatically since 2008 and gained a large share of the sports retail market. About 17,000 of their 20,000 strong staff are employed on zero-hours contracts.”
Last month the firm said it would make its employment terms clearer in job adverts for zero-hours posts, following legal action brought by a former employee.
Mr Ashley, an entrepreneur who built up his business from a single sports shop in Maidenhead, bought a majority share in the club in 2007.
Meanwhile, controversial payday lender Wonga has agreed with Newcastle United to remove its logo from all children’s replica shirts and training wear from the 2016/17 season.
Wonga said it followed a review of its marketing launched by new chairman Andy Haste in July to ensure that none of it could inadvertently appeal to the very young or vulnerable.
It has already ended its puppet advertising campaign.
The company said the logo was being removed from children’s kit at the earliest possible opportunity, and that due to kit production schedules this would be from the start of the 2016/17 season – the last season of the current shirt sponsorship deal.
Darryl Bowman, Wonga marketing director said: “As a responsible lender we believe removing our logo from children’s replica shirts and training wear is the right thing to do. We appreciate the club’s support in this matter.”
Newcastle United managing director Lee Charnley said: “We understand and respect Wonga’s position and are happy to support their decision.”
Source – Newcastle Evening Chronicle, 15 Nov 2014
Wonga is to write off the debts of 330,000 customers after it admitted it has made loans to people who could not afford to repay them.
The move by the pay-day lender comes after an agreement with the Financial Conduct Authority (FCA) that requires it to make significant changes to its business immediately.
The review means that about 330,000 customers who are currently in excess of 30 days in arrears will have the balance of their loan written off and will owe Wonga nothing.
Approximately 45,000 customers who are up to 29 days in arrears will be asked to repay their debt without interest and charges and will be given an option of paying off their debt over an extended period of four months.
Wonga’s new chairman Andy Haste said: “We want to ensure we only lend to those who can reasonably afford the loan in question and during my review, it became clear to me that this has unfortunately not always been the case.
“I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions.”
Source – Northern Echo, 02 Oct 2014
Labour MPs have increased the pressure on payday lenders Wonga to quit their Newcastle United shirt sponsorship deal – but the company say they are committed to the club.
The finance firm’s new chairman Andy Haste announced on Monday he would be reviewing the company’s advertising and marketing “to make sure that we don’t leave any impression that we are trying to influence or target the very young”.
But with thousands of junior Magpies fans wearing Wonga-sponsored shirts, some MPs said they hope he will end to Wonga’s partnership with NUFC.
A spokesman for Wonga said that its chairman had been asked a comment about Wonga’s marketing in general in the wake of the company’s decision to ditch its “puppet” advertising campaign, and had made no specific remarks regarding Newcastle United.
“We continue to be proud sponsors of Newcastle United FC,” she said. “Our new chairman, Andy Haste, was commenting on our general marketing approach – he did not make any direct comment on our sponsorship of the club.”
Gateshead Mp Ian Mearns said: “If Wonga express an interest in disassociating themselves because of a duty to young fans in their new business model then I’d hope Mike Ashley would let them out of their contract and find a new sponsor.
“But it will depend on what Wonga are contractually obliged to do in terms of the longevity of their sponsorship deal.
“It might be very difficult to extricate themselves from it.”
Newcastle Central MP Chi Onwurah said the possibility of Wonga continuing as sponsor would be in direct contradiction of its vow not to target children.
She said: “The idea that Wonga is not targeting children when its logo is emblazoned across toddlers throughout Tyneside would be laughable were it not so serious,” she said.
“I look forward to a day when Newcastle United’s sponsors are not a source of shame for so many fans, until then I will not be attending matches at the stadium.”
One the issue of the ground re-naming, MPs refused to be drawn.
Wonga paid club owner Mike Ashley to “return” the ground’s name to St James’ Park in October 2012 after he had named it the Sports Direct Arena after his sports shop empire.
But Ms Onwurah refused to be grateful for the move.
She said: “I am not grateful to Wonga for retaining the name St James Park. Mike Ashley should never have changed it to Sports Direct in the first place.”
However, Mr Mearns welcomed the new Wonga chairman’s admission that in the past it has made “some serious mistakes” and his desire for the company to operate in a “responsible and transparent manner.”
“I very much welcomed the comments from Wonga and I think some of that comes from a realisation by them that hopefully there will be much more stringent regulation from the FCA,” he said. “They’re waking up and smelling the coffee and taking a realistic attitude.”
Source – Newcastle Evening Chronicle, 15 July 2014