TfL needs to tighten up approach to sponsorship deals, says Assembly.

Transport for London’s (TfL) approach to sponsorship deals – like those for the cable car and Barclays cycle hire scheme – needs to be clearer, more consistent and transparent, a new report from the London Assembly says today (20th February 2012).

Whose brand is it anyway? by the Assembly’s Budget and Performance Committee, recognises sponsorship creates an opportunity to bring in extra investment for new transport infrastructure, but highlights the potential ethical and reputational risks to TfL.

The Committee notes there are signs TfL now recognises it got it wrong in the past, having strengthened aspects of its sponsorship policy following criticism of its deal with high interest payday loans company Wonga. A lack of transparency has also fuelled public speculation and criticism of sponsorship deals with Barclays and Emirates.  

So Londoners can be confident they are getting the best deal in the future, the report calls on TfL to conduct deals in the open and show it can effectively manage both the benefits and risks of using private sponsorship to fund projects.

John Biggs AM, Budget and Performance Committee Chair said: “Sponsorship offers a chance to bring in large sums of money for London’s transport network, which might make the difference between new infrastructure going ahead or remaining on the drawing board.

“However, so far Transport for London seems to have taken an ad hoc approach to sponsorship, which could expose it to unnecessary risk if a sponsor suffered serious reputational damage. This is something you can’t always predict – look at what happened to BP.

“TfL has acknowledged the need for a new single policy on sponsorship but it must also take a more consistent and transparent approach so Londoners can be sure any future deals are in the best interests of the capital.”

The report highlights a number of concerns that have been raised about current sponsorship deals:

Barclays Cycle Hire Scheme

• 
  TfL rejected bids for the cycle hire scheme that met the independent valuation, raising questions about the quality of information provided at the approval stage and methods used to set a benchmark price.
• Questions have been raised over whether TfL secured the best deal with Barclays, especially when it extended the contract to 2018 for £25million. The scheme was already proving to be popular and TfL has not demonstrated why this was better than going back to the open market.
• The terms of the contract with Barclays could mean TfL will not receive the full £50 million agreed for the cycle hire scheme.
  
  Cable Car

• It is unclear whether TfL’s initial expectations for sponsorship income were met and is likely to mean that some of the construction costs will have to be found from TfL’s own budget unless future private income is found.

• Awarding station naming rights and the inclusion of the Emirates brand name on the Tube map is at odds with TfL’s reasons for not seeking sponsorship for Underground stations. It also has not revealed whether TfL received a premium for allowing the cable car sponsor onto the Tube map.
• The actual value of the 10 year deal for £36 million is likely to be less because of the effects of inflation.

The Committee’s recommendations are intended to inform TfL’s new sponsorship policy before it enters into any further sponsorship arrangements.

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