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Mayor’s letter reveals details of Emirates cable car sponsorship deal

November 3, 2011 by Martin Hoscik

New details of the sponsorship agreement have emerged: TfL
Londoners could receive less than the promised £36m cable car sponsorship if construction and performance targets are not met, a letter from Boris Johnson has confirmed.

Last month Transport for London announced Emirates Airline as the scheme’s sponsor in a ten-year, £36m deal which will see it named the Emirates Air Line.

Although TfL subsequently took issue with some reporting of the agreement, it failed to publish full details of the deal with Emirates.

However the Mayor has confirmed some details in a letter to Liberal Democrat London Assembly Member Mike Tuffrey.

Johnson’s letter confirms the £36m is “an absolute figure” which is “all cash”, but reveals that “there are terms in the contract whereby TfL may suffer deductions from the sponsorship payment.”

These include “situations where the opening of the scheme encroached on the advertising blackout period leading up the 2012 Games, where there was a significant delay to the opening of the Emirates Air Line or where there was a period of poor performance once operational.”

The Mayor says such penalties would be “mitigated” by penalty clauses in the contract with scheme operator Mace.

The letter also confirms that the sponsorship will be received as “payments on an annual basis” but that such payments will not be upgraded in line with inflation.

Although he confirms the payments will be “font loaded”, Johnson says the “profile” of payments will not be published “at the sponsor’s request”.

The contract also gives Emirates “the right to enter into exclusive negotiations with TfL to discuss terms for renewing the sponsorship deal for a short period of time prior to TfL entering into negotiations with other parties” however the Mayor says this clause “does not place TfL under any obligation to renew” the deal.

Emirates have also been given a commitment that “another airline brand may not figure as the secondary sponsor of the Emirates Air Line or sponsor another cable car scheme led by TfL” for the duration of the sponsorship agreement.

A fares plan for the scheme is expected to be published later this month for consultation with Greenwich and Newham councils and the Mayor says these fares are expected to cover all the annual operating costs.

Although the fares package has not yet been finalised, Johnson’s letter says the cable car “is not likely to be part of the Travelcard scheme”.

Even if a bid for £8m in European regeneration funds is successful, TfL will need to find an additional £18.6m to cover the project’s £62.6m costs if it is to deliver on the Mayor’s promise of a scheme cost free for Londoners.

In his letter Johnson says “there may be scope for additional funding through secondary opportunities and letting out of the retail spaces associated with the scheme, although if fulfilled these are expected to be materially smaller amounts”.

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Filed Under: News Tagged With: Cable Car

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