Next London bike hire sponsor to pay at least £5.5m per year

bike_hire_400Companies are being invited to register their interest in replacing Barclays Bank as sponsors of the capital’s bike hire scheme.

The existing £25m deal with Barclays comes to an end next August and Transport for London has today formally started the process to find a new partner.

The majority of the scheme’s funding is provided by TfL, with additional funding from London boroughs, but the sponsorship money helps lower runnings costs for tax and fare payers.

Potential new sponsors are being asked to commit to a seven-year deal and will need to pay at least £5.5m per year for the naming rights and to get their logo displayed on the 10,000-plus hire bikes.

A number of major brands are understood to have already expressed interest, opening the possibility of a heavily contested auction.

Although bidding could far exceed the desired £5.5m, TfL says money alone won’t be the deciding factor – the successful bidder will also need to show a wider commitment to the scheme’s success and a willingness to engage with users.

Mayor of London, Boris Johnson said: “This is a unique opportunity for a commercial partner to put their stamp on a mode of London transport that is now as recognisable as our iconic black cabs and red buses.

“We are looking for a sponsor whose aspiration matches our own, one with the passion to take the scheme to the next level and get even more people pedalling.”

The Mayor, who is chair of TfL, has written to the UK’s 200 biggest advertising spenders soliciting bids.

Graeme Craig, TfL’s Director of Commercial Development, commented: “The Cycle Hire scheme is already part of London’s iconic transport network and will give a new commercial partner an exceptional level of exposure for their brand as we develop the scheme further.”

Caroline Pidgeon, leader of the Liberal Democrat London Assembly Group, said “Many lessons need to be learnt from the exclusive sponsorship deal that the Mayor and TfL struck with Barclays Bank.”

She accused TfL of being “unnecessarily secretive” and agreeing a deal which was “far too favourable to the bank” and urged the Mayor and his transport agency to ensure the next deal provided better value for fare payers.

Her comments were echoed by Green Party AM Darren Johnson who said: “I also have serious concerns about the way the scheme has been managed. The flawed procurement process for the sponsorship contract allowed Barclays to benefit from cut price publicity during phase 3 of the scheme. The bank failed to cough up expected extra money but still got full publicity on 2,000 new bikes. Meanwhile, local authorities contributed £4m but were prevented from having logos displayed due to an exclusivity agreement with Barclays.”

“Going forwards, we need the Mayor to select sponsors who really understand cycling and can be genuine partners in promoting it as one of the best, fastest and cheapest ways of travelling in London. We also need a reassurance that this money is additional to the £913m promised in TfL’s ten year business plan.”

What’s On Offer
The successful bidder will receive:

  • Naming rights to the scheme
  • The opportunity to select a colour for the scheme which would also go on the Cycle Hire roundel
  • Adding branding and the scheme colour to all street property including vehicles, docking points and terminals, plus uniforms and membership keys
  • Having the brand on extensive public communications including marketing campaigns, press releases and promotional events

Under the current Barclays contract, sponsorship payments are linked to usage levels with deductions made when the number of hires fell below a specified level.

However the new deal is unlikely to allow the sponsor to claw back money in this way.

The deal would also not include repainting the bikes from their current dark blue unless the sponsor agreed to pay separately for this.

Enhanced Transparency
Scrutiny of the Barclays deal by London Assembly members and the capital’s media was hampered by the inclusion of confidentiality clauses in the contract which prevented and delayed the publication of key information.

As part of its undertakings in response to a London Assembly report into the transparency of City Hall and the Mayor’s agencies, TfL has already pledged not to include such clauses in future contracts.

It has also undertaken to publish full details of the rights on offer and tender documents online, as well as proactively publishing the finalised contract once a new sponsor is appointed.

Comment: A Welcome Change of Approach

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