The original Barclays deal was mired in controversy – secrecy clauses which made it virtually impossible for journalists and Assembly Members to scrutinise the true value of the tie-up, revelations that the much lauded £25m was a maximum contribution from which the bank could and did make deductions and, of course, the eventual discovery that the equally well publicised extension had never been signed, allowing the bank to walk away earlier than expected.
From day one the Santander deal has been carefully crafted to avoid all of the negative headlines generated by the Barclays deal – the contract was proactively published, the bank can’t walk away early, it doesn’t have the right to levy penalties for low ridership or poor performance, and it’s paying significantly more per year – £6.25m versus £5m – than its predecessor.
When measured against every objection I and others raised against the Barclay deal, the Santander partnership is an unequivocally better deal for London fare and taxpayers.
But beyond the headline sponsorship sum, it’s actually an even better deal than most people realise.
Not only does the bank pay £6.25m per year for naming rights, it also committed to providing £1m per year – with any underspends guaranteed to be rolled over to the next year – to be used to promote the scheme and help boost take-up.
When the £1m ‘Activation and Promotion Fund’ cash isn’t enough to deliver initiatives it thinks will help achieve that aim, it digs even deeper into its pocket and provides more money.
So keen was the bank to be an active partner in the hire scheme’s growth, a clause was included in the contract allowing it to spend as much extra money as it saw fit.
Where provded, this extra cash isn’t offset against any future year’s sponsorship or promotional funding, it’s wholly additional to the contracted sums.
This is how the current roll-out of laser safety lights – announced last December and reaching the milestone of 4,000 installs last week – is being funded.
The cost of the lights exceeds what the Activation and Promotion Fund will cover, TfL doesn’t have the cash so the bank’s shareholders have made up the shortfall.
While no-one’s willing to discuss sums, TfL’s contribution is said to be no more than 10% of the total cost. With the rollout being extended to rest of the fleet’s 11,500 bikes Santander has clearly been incredibly generous.
“The project is largely funded by Santander UK as part of the partnership with TfL”
however it seems they and the bank are significantly downplaying the scale of its investment.
But it’s not just the willingness to spend which is pleasing TfL – they’re also relieved to finally have a partner which is determined to get more out of the scheme than just brand exposure.
Members of the bank’s management team routinely use the bikes which means they experience firsthand any frustrations and annoyances which deter usage and this means they’re always quick to bring forward suggestions and ideas for improvement.
This proactive approach appears to be at least part of the reason why the scheme’s app gained route planning functionality and I’m told many more – unspecified – innovations in the pipeline stem from their feedback.
The early departure of Barclays has turned out to be a blessing for TfL which now has a partner committed to the scheme’s success, rather than one which benefited from a contract which allowed it to reduce spending as and when bumps were encountered.
Or, as one Johnson-era figure said to me: “The best thing Barclays ever did for the scheme was to walk away from it”.
