What it entails is the end of their sponsorship of the Williams Formula 1 team when the current contract expires in 2010. Also a reduction of the contribution to their sports ambassadors including Andy Murray, Zara Philips and Jack Nicholas as well as other lesser deals. The net effect is a 50% reduction of their tens of millions in sponsorship.
Dr Andrew McLaughlin, RBS group director said:
"We recognise that we are now operating in a very different economic
environment and have been reviewing all of our activities since
October.
"It is imperative that we respond to the reality of the situation we face
and that we do so in an orderly way that respects the commercial agreements we
have in place and the implications for our partners and the jobs they support."
As a sportsman in my past I well recognise the benefits that sponsorship can bring to events and individuals. But as an Economics graduate I also realise that investment in sponsorship does not have a direct impact on the money making potential of a company and when times get tough will be seen as needless luxury that is hard to justify. Therefore RBS are making a sound business decision for themselves. Those they have sponsored will have to get on the treadmill and find out if anyone(s) else will take up the slack and the hole left in their budgeting.
Although Williams will have to replace their £10m per annum deal Sir Jackie Stewart is beleived to he holding out for his £4m deal, unlike Andy Murray who is happy to renegotiate his deal.
I seem to recall Malc blogging about this a wee while ago and I agree with your observations in principle. However, I can't help but feel that if I was unfortunate enough to be losing my job with RBS it would stick in my throat a far bit to know that they were continuing to sponsor sports to the tune of millions of pounds, whether or not that was reduced by 50% or 5%, it's still money that could have saved jobs being used to effectively market a bank that is making people redundant.
ReplyDeleteI realise they are playing a long game here and thinking about their profile and market presence etc but it still seems tactless somehow.
From what I see PJ some of the remainder after 2010 is contractually bound, such as the Six Nations, therefore there may be penalty clauses that make total withdrawal of support at this time not the shrewdish financial move. It may indeed result in it costing RBS more. Without known the full details we cannot judge.
ReplyDeleteThe fact that Jackie Stewart is holding out suggests that may well be the case. Thnaking some seem prepared to negotiate to help RBS out of the legal maze they may find themselves in.
I do recall Malc's post. In fact I should really find it again and link through.
Yeah, fair point. But scaling down evokes a very different response to cutting back to the bare mimimum of contractual obligations.
ReplyDeleteVirgin Atlantic have announced they envisage 600 job losses almost in the same breath as the announcement that the Virgin group are looking at sponsoring the Honda F1 team. Again, it's easy to be critical from an ill-informed viewpoint (and I admit I don't know the ROI or legal minutae pertaining to those decisions) but as a customer of both companies I feel entitiled to my ill-informed view until such time as I am persuaded otherwise.
They both have an uphill struggle to either gain or retain consumer confidence. Effective handling of issues such as these are going to be crucial to them both in the long and short term.
That is indeed a fair point PJ. I recall trudging off to Almondvale and rubbing shoulders with some of the former employees of Motorola after the Bathgate plant closed down. Motorola was still on the Livi team shirts (and indeed for years after in the seats in the South Stand).
ReplyDeleteThere is certainly more than could be done in informing customers at this time just why the remaining contracts have to remain in place.