Newcastle United yesterday unveiled a sponsorship deal with loans company wonga.com, sparking criticism and concern because of the firm’s reputation for sky-high interest rates.

Wonga will sponsor the club’s shirts from the start of next season and will also invest £1.5 million (€1.85 million) in the club’s academy and a social scheme helping to equip local youngsters with workplace skills.

The Magpies, currently sponsored by Virgin Money, added the deal, whose overall value was not revealed but which British media suggested was around £24 million, will include a fans’ forum to foster closer links with the club hierarchy.

Newcastle managing director Derek Llambias said in a statement: “We are building a club that can regularly compete for top honours at the highest level.

“Throughout our discussions Wonga’s desire to help us invest in our young playing talent, the local community and new fan initiatives really impressed us and stood them apart from other candidates.”

But local politicians and R3, a trade body for insolvency professionals, questioned the appropriateness of the choice as the northeast of England, of which Newcastle is the main city, has the highest rate of insolvency in Britain.

Wonga offers short-term business loans for an annual percentage rate of up to 360 per cent while its “representative” annual rate for payday loan for struggling households is more than 4,000 per cent.

Those rates have seen the opposition Labour Party speak out against the deal.

Local Labour lawmaker Ian Lavery told UK newspapers that “if Wonga get this sponsorship I will not set foot in St James’ Park (which club owner Mike Ashley has rebranded the Sports Direct Arena) until it is off the shirts.”

He dubbed the deal “an outrage.”