The Barclays sponsorship scandal

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This topic contains 16 replies, has 6 voices, and was last updated by  Matt 5 years, 5 months ago.

Viewing 15 posts - 1 through 15 (of 17 total)
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  • #75028

    urban
    Participant

    The London Cycle Hire scheme has been totally over-branded, and undervalued.

    Selling out for just £50 million, and getting thousands of logos and moving advertisements, plus getting their corporate colour painted on to miles and miles of London’s roads. Shameful. Emirates paid £36m to brand the cable car, and they get far less advertising.

    So, what’s the future for their sponsorship. TfL seem to be saying they could break the contract with Barclays and find a new sponsor.

    http://www.politics.co.uk/news/2012/06/28/boris-under-pressure-to-scrap-barclays-bike-sponsorship

    #85454

    Bimbles
    Participant

    As much as we like to lampoon the TfL (and Serco) managers for hiccups in the operation of the scheme, I think we all need to be realistic here. If another company had offered more money than the initial £25m contract don’t you think TfL would’ve taken it?

    I simply can’t believe that for a project costing £150m+ that they wouldn’t have tried to get as much money as possible out of a potential sponsor.

    As with everything – the price paid (in this case “sponsorship offered”) is limited to only what the customer is willing to pay at the time and how much perceived worth they attach to it.

    Remember: This was a new scheme with no historical precedent for setting value. If it had turned out to be a complete turkey, the sponsor would have had their name plastered all over it.

    #85455

    Matt
    Participant

    Yeah, sounds like Barclays did a gamble and got a wheely good deal… :p

    #85456

    urban
    Participant

    TfL has made mistakes like this before – they sold the Metro licence for £1m when it started in 1999.

    But actually City Hall sets the price and Barclays paid it. And unlike the newspaper distribution rights, this scheme has a very clear precedent: Velib.

    The Paris scheme started with 10,000 bikes and cost JCDecaux €90/£80m. By that measurement, London’s scheme (6,000 bikes) was valued at £50m. But the big difference is the amount of branding. In Paris, the bikes are unbranded but JCDecaux gets to sell billboard rights, in London, Barclays gets 15,000 of its logos all over town and roads painted in its colour.

    Also, let’s not forget that Boris said that: “We will broker a deal with a private company to bring

    thousands of bikes to the capital at no cost to the taxpayer.” Well, the scheme cost £165m, and the ‘private company’ only pays for 15% of that. The taxpayer is paying the other 85%.

    All you have to do is look at how much Emirates paid for the cable car naming rights, and Barclays £50m starts to look very, very cheap.

    #85457

    footsteps
    Participant

    Agreed.

    How many opportunities are there to effectively brand a city with your corporate identity and associate your company with a healthy lifestyle, the green agenda, etc.

    Hopefully lessons will be learned next time this is up for negotiation.

    #85458

    Bimbles
    Participant

    Replying to @urban‘s post:

    Just because it worked in Paris, didn’t necessarily mean it would work here (and I’m not going to get into the same arguments as we’ve had before re. Parisians living in the centre of town and the bikes not moving in the tidal pattern that we see). London is a different city.

    Also, how much revenue do JCDecaux generate? I’d wager they’re turning a profit from that contract. Barclays get to bleat about their association with the scheme, but the direct benefits are very difficult to quantify. It’s brand awareness for sure, but it’s not actually selling a specific product.

    Boris’ statement about providing the whole thing for free suggests that they wanted a JCDecaux-style deal, but it wasn’t forthcoming. Perhaps JCDecaux (or whoever) also realised that London is a very different city to Paris.

    #85459

    urban
    Participant

    And I’d wager that Boris didn’t talk to TfL during his 2008 election claim before he made wild promises about the cost of his various projects (London Cycle Hire, New Bus for London, Thames Airport…). In fact, TfL said as much this time around.

    As an example, Barclays would pay £5m-£10m for a two-week billboard campaign. So for the price of five billboard campaigns, Barclays gets five years’ worth of advertising on 6,000 bikes, the TfL website, leaflets and even gets roads painted in its corporate colour.

    #85460

    Bimbles
    Participant

    Replying to @urban‘s post:

    Of course he didn’t consult TfL – he’s a politician!

    You’re ignoring the fact that there was no guarantee this whole thing was going to work. It could be argued that due to the on-going problems at the start there was a negative impact on Barclays due to their sponsorship association.

    A two week billboard campaign would almost definitely be selling a product rather than just brand awareness and would therefore have a quantifiable payback. £5m-£10m? Where does that figure come from?

    Cycle Super Highways were going to happen. Would you rather TfL spent their own (OUR!) money, or someone else’s?

    #85461

    urban
    Participant

    You’re ignoring my original post. There was no guarantee the Emirates Air Line would work either, but the naming rights were sold for £36m. You do the maths.

    #85462

    Bimbles
    Participant

    There’s no maths to do – they’re different projects.

    The cable car was always going to be linked to the Olympics (whether it was ready or not) and would therefore get more coverage – the “Olympics factor” will be part of that £36m.

    £36m won’t have been a TfL figure – it will have been how much Emirates believed the sponsorship to be worth & they will have therefore offered accordingly.

    #85463

    urban
    Participant

    Wrong. TfL’s agency sells the sponsorship and sets the price. Of course there will be negotiation in there, but TfL sets the bar depending on how much they think it’s worth.

    Also, you think the cable car has got more coverage than the bike scheme? Are you serious!

    #85464

    Bimbles
    Participant

    Yes, they’ll have minimum values that they’re prepared to accept, but you listen to offers rather than showing your hand…

    The cable car WILL be seen globally during the Olympics. The bikes aren’t allowed on the Olympic park, so yes, I’m serious.

    We obviously have 2 differing opinions and have reached an impasse, so I’m not going to argue with you. Let’s agree to disagree.

    #85465

    Matt
    Participant

    Oh please carry on!

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    #85466

    radii8
    Participant

    Apparently, Boris Bikes have LIBOR tyres.

    Self inflating!

    :D

    #85467

    Matt
    Participant

    Replying to @radii8‘s post:

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