RBS reduces sporting sponsorship
The impact of RBS' decision to cut its sponsorship of sport by half by next year should not be underestimated.
In the last decade RBS has used sport to reach areas of the world it had never reached before, and project itself as much more a world bank than the parochial British bank it was perceived to be.
The bank's investment in sport has been perhaps the most significant example of how the financial services have bankrolled sport in recent years. And it is easy to see how this business philosophy would have found Formula One so attractive.
Bernie Ecclestone has been pushing the sport into new markets and seeking to build its reach beyond the traditional sporting enclaves. So sponsorship of the Williams team chimed nicely with RBS' ambition.
But with the downturn changing everything, RBS and Williams have been in talks since October.
Both sides are keen to make out what they have agreed is now an orderly withdrawal and Sir Frank Williams responded to the BBC in characteristically bullish mood, insisting the team will survive.
But as Nigel Currie, director of Brand Rapport, put it to me, this is a major blow for Williams, and indeed Formula One and sport in general.
Just like the financial industry, the years of expansion are now catching up with F1, and other sports too.
RBS's other global ambassadors are already feeling the heat. It is believed the bank has lavished £200m on sponsorship, from Andy Murray, through to Sir Jackie Stewart, Zara Phillips, Jack Nicklaus and Sachin Tendulkar.
Tendulkar, for example, was given a lucrative contract only a few months ago, with the recent India-England Test series played for the RBS Cup. RBS employs some 10,000 people in India. There will be cutbacks there and, like all sponsorship activity, the sporting investment in India will also now be reviewed.
The reaction from those global ambassadors has been mixed. Murray, who has had RBS support since he was 13, recognises the bank is in trouble and that he has to take a pay cut. But Stewart expects the bank to honour its reputed £4m-a-year sponsorship deal. Expect hard talks in the week and months ahead.
The one sponsorship RBS is keen to continue is Six Nations rugby, which it renewed last autumn until 2013 for £20m. For the bank, this fits in with its desire to now revert to concentrating on its core banking business in the UK and Ireland.
Nevertheless, cost cutting at the bank is now the prime focus of its Strategic Review. This will see a 25% reduction in sponsorship and related costs in 2009 and around 50% by 2010. Non-contractual costs in F1 have already been reduced by over 50%. And it has cancelled trackside advertising for 2010. In all RBS sponsorships, hospitality costs in 2009 have been reduced by around 90%.
The message could not be clearer.
Sports like football may still be able to do lucrative deals with television companies, but in the current climate, the days of businesses throwing money at sport are at an end.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~17~RS~)
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Maybe now fans will cease to be treated as 'markets' and treated with the respect they deserve. I don't hold much hope though - money makes the world go round.
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Again, this is not a massive scoop/breaking story. And as far as I can see it misses the point completely, and it's a fairly mischievous portrayal of events.
RBS have had well-documented trouble for ages, and they're very much struggling. They, more than just about anyone, don't have money to throw at sport.
So the news that they will only end their deal with Williams at the end of 2010 is surely very positive news for Williams. It gives them the best part of two years to secure new sponsorship for 2011. That's a lot of time to do some planning for the future, as well as a chance for the economy to pick up. How much worse could it have been?
So why paint the Williams story as doom and gloom when it appears to give them something tangible for the next two years?
Care to respond?
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withthe current credit crisis going on would it not be a good idea to relax the rules for tobacco money to reinvest in sport for 5 years,iknow this would be lets say not very good lol butit wouldfree up some very needed money for sports teams
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"but in the current climate, the days of businesses throwing money at sport are at an end"
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You don't say Sherlock !!
JEEZ !!
STATE THE OBVIOUS WHY DON'TYA
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Mihir:
It is sad that RBS is reducing sporting sponsorships, but they are like most companies, in this current economic downturn...They are cutting down the costs of their expenses...
~Dennis Junior~
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I agree with Stinpake, most sponsorhips in Formula 1 only last a few years anyway, sometimes as little as 3 years for some big sponsorhips. The media is trying to rattle everyone as usual by saying that its a disaster - as ITV news seemed to be putting it.
The sponsoship will come to an end, nothing unusual other than the media pounces on it because it is RBS.
For the record, Wiliams will survive, Sir Frank has had the balifs round too many times in the early days of Williams to let that happen. Long live Team "Willy"
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Mihir,
I have read a fair few of your blogs now and have yet to learn anything that I wouldn't expect to learn from any journalist worth even half their salt...let alone a Sports Editor for a world famous broadcasting company.
This blog in particular seems to take one fact and spin it in several ways, yet at the same time could be applied to countless companies wanting to reduce their expenditure. It just so happens that sport sponsorship is an "easy" target for the cost cutting.
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What enschede says about tobacco advertising is probably not the worst idea i've ever heard, in the current economic climate.
Ever since it's been banned a new from of sponsorship far more dangerous and appealing to the majority of vulnerable society has entered the scene. Namely Online Gambling Sponsorship!!
Yes i understand smoking can ruin your life after many years and therefore the reasons why most governments have banned its advertising, however gambling can ruin a lot more peolpe's lives in an instant, yet governments seem to be even promoting this from of sponsorship almost shamelessly. With businesses pulling out of sports advertising all it is going to do is create more space for advertising from the likes of these companies. In turn more people are becoming attracted to the idea of gambling due to the economic conditions, vulnerable parts of society in particular yet no one in power seems to have the courage to speak out against online gambling companies.
Can someone please explain why prohibiting tobacco sponsorship is more important on the social, moral agenda? And Mihir what are your views on the rise of online gambling sponsorship in sport, and how it affects fans of sport negatively?
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but in the current climate, the days of businesses throwing money at sport are at an end"
-----------------------------------
You don't say Sherlock !!
JEEZ !!
STATE THE OBVIOUS WHY DON'TYA
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Hold on they may well still throw money at sport but how they do it is going to be more controlled, better spent and promotional activities are going to be maximised. If a business works out that it will gain substantial business that will cover the cost of the sponsorship then they will continue spending money on sport.
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Mr Bose, this is yet another nothing blog. Why not talk about the players? If business pulls sponsorship then you're going to end up with sporting people on contracts that are unaffordable. Finally reality might hit sport. All the overpaid footballers, the ludicrous sums in the IPL, France now being the new hot spot for the mercenary rugby player, Formula 1 throwing cash left right and centre... it's time to come back down to earth.
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'Maybe now fans will cease to be treated as 'markets' and treated with the respect they deserve. I don't hold much hope though - money makes the world go round.'
If you support a team it is the sponsorship and TV revenue that will bring in the players. Filling a stadium with fans is not going to give you the same money. If you want the best players, then you are going to have to respect the sponsors.
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Good news at last.
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"The media is trying to rattle everyone as usual by saying that its a disaster - as ITV news seemed to be putting it."
ITV bitter at losing the live coverage mayhaps?
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Thanks mihir I found that blog really interesting, probably because I am studying business and this is a business related topic. However can someone clear up why jackie Stewart is getting paid £4,000,000?
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Umm -- the impact or RBS' decision to cut sponsorship cannot be underestimated?
If it cannot be underestimated then the effect must be very, very small.
I think you mean "cannot be //over//estimated"?
And even then, cannot? So if I say that it'll result in the end of the world -- everyone gone in a huge ball of flame, that still wouldn't be an overestimate?
How about "must not be underestimated"?
Mark
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What I found interesting is that, there are people on this forum who constantly critisize blogs written by journalist for the sake of it.
Not every blog will satisfy everybody everytime. People should read articles with open mind , instead of looking for something to moan about.
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I think this is one of Mr. Bose's better blogs and people are comlaining for the sake of it. It seems to have become a sport in its own right!
I can't see how RBS pulling the plug on their sponsorship will help Williams, as posters #3 and #8 have stated. The current sponsorship money has been cut by half. This will have an immediate impact on the running of the team.
A new sponsor will have to be found by the end of 2010. Are there going to be many companies in a position to offer sponsorhsip money then? I doubt Williams will be able to find a company willing to back them with the same level of money that RBS did.
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Hi Timmy-went-missing,
Hope this gets through to you, I seem to be having difficulty getting my posts through today...
To address your point, there's no mention in the BBC article that William's funding will be cut by half. It says that RBS' funding of British sport has been cut by half - ie they're cutting a lot of deals, but still sponsoring some teams/individuals/events. You may have the halving idea from that, but I can't see where it says that Williams funding will be halved, just that the deal will run as per contract and finish at the end of 2010.
Is that good news for Williams? Well, obviously they'd rather RBS bankrolled them forever, but as RBS posted a £24bn loss today, I'd say it's an unbelievable result that they've got two years to seek alternative sponsorship. The alternative could have been so much worse.
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Apologies Stinpake, I didn't read the penultimate paragraph correctly. It states that non-contractual costs in F1 have been reduced by 50% - I'm not sure how mich this amounts to? I would hazard a guess and say that is not too much.
I still think is a major blow for a privateer team like Williams. Nascar teams are feeling the pinch with one team only being cobbled together a couple of weeks before the start of the season.
Stinpake, you say that the alternative could have been a lot worse but there is no alternative. They are contractually bound to pay this sponsorship. The only way it could be worse is if they went bust (like West Ham's sponsor XL) and we all know that the Government won't let that happen.
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Thanks for the reply - nice to have a bit of dialogue on here!
I take your point about their contractual obligations, but again, this announcement would not have come as a shock to Williams - they read the news, they've seen what happened to Honda, they'll be well aware of the financial climate. Frank Williams ought to be bullish as a result.
The environment is tough now, but things may change and improve, and they do have a good amount of time on their side.
It's my opinion that presenting this information any other way is inaccurate and mischievous, and that was why the original article was so frustrating.
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This is pretty old news, Mihir.
People in and around F1 knew this was going to happen and it has. There's no huge catastrophe in it, no earth-shattering scandal.
Please, if the BBC is to cover F1 in a mature and proper way, let the sport do the talking and let the economic downturn be a depressing page for those who want to find the news about the economy. It only makes people feel worse if they see something they treasure (sport, in this case) get saturated in bloated news stories that have little or no significant impact on the sport as a whole.
Williams will survive, F1 will survive, and the economy will survive. Cheer up, ok?
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Mihir
This was one of your better blogs in recent times. I know most of it was in the public domain as everyone knows about the banking crisis.
What might be more revealing and interesting is the extent/level of sponsorship generally.
Of course the 'king' of sponsorship is Becks. But the figure of £4M for Jackie Stewart is mind boggling.
Business issues are less sexy than sporting ones for most. That aside, there is most certainly an interesting piece waiting for publication on the subject.
The construction of contracts and 'force majeure' stipulations are clearly lacking in these agreements; given that Jackie Stewart's stance in wanting his contract honoured appears to be legally sound.
It seems that the banks were as incompetent at drawing up contract T&C's as they were at everything else.
It would be interesting to have more depth on the subject in one of your future blogs.
PS Andy Murray's position on this issue shows more long term image consciousness than Stewart's. Whatever the motives he has done the right thing and is to be applauded.
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I have been taking note of Mihir's blogs for a while and have seen the tendency of many to criticise every piece. Anyone who does not wish to read it should not do so. I also believe that these people may have another agenda that is not based on the quality of Mihir's work
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Once again Mr Bose has missed the point.
While sport as a whole will inevitably suffer from the economic environment, to focus on the pull out of RBS and say that " The impact of RBS' decision to cut its sponsorship of sport by half by next year should not be underestimated" is simply lazy journalism again.
With the a couple of exceptions the RBS approach to sponsorship has been to throw big money at big stars. The sport of tennis will not be impacted at all by how much Andy Murray gets paid for wearing a logo on his clothes, nor will golf be any different if Jack Niclaus has to take a pay cut. This is just more or less money to super rich guys in individual sports, the money never was flowing down to either the grass roots or even other areas of the professional game. The 2 prominant team sports that RBS sponsors are Rugby which I am pleased to see it is continuing to sponsor, and F1 racing, a sport which has no grass roots to speak off and which will continue to race whether sporsorship levels are double or half current levels. A few drivers may see their multi-million pound pay packets reduced but I dont see how this really impacts sport in the massive way Mr Bose is suggesting.
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In response to 28 I have criticised Mr Bose Blogs recently because I find them to be of poor quality. I believe that I and others have laid out very sound reasoned arguments as to why this is the case, and the suggestion that there may be "another agenda" is something I personally find insulting and offensive.
That I continue to read and comment on them despite their poor quality reflects a number of issues:
1) I like other users of this website pay for Mr Bose's salary through our License fee. Mr Bose as Sports editor is presumably paid well and I don't like to see my money go to waste. Whether the quality of Mr Bose's contributions are a reflection on his value as a journalist or the amount of time he is spending researching the articles I dont know, bus as a licence fee payer I believe I should have the right to comment.
2) I can't stand hypocracy, and as pointed out by many others for Mr Bose to compare Alan Stanford to Nelson Mandela at a time when Mr Stanford was already widely known be be under an SEC investigation, and then to criticise the ECB for failing to do proper investigations is simply too much.
3) The frequency with which non-offensive comments critical of Mr Bose's articles are blocked by the moderator. As this one will no doubt be.
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Re #28:
I also find your insinuation offensive. You seem to be implying that anyone who critiques Mr Bose has some kind of other agenda - we all know what you're alluding to, and we are offended that you should do so.
Mr Bose is the BBC's Sports Editor. His blogs are in the public domain, and therefore open to public srcutiny and response. If he does not wish to be exposed to this the answer is simple: don't blog.
Mr Bose has frequently been caught out as over-reaching the exclusivity of his pronouncements (he had to withdraw one such remark on this particular blog, I note). He has often implied that he knows more than he lets on, without any evidence. His blogs contain predictions which frequently prove to be very wide of the mark. In the case of Stanford, he clearly let his personal impression of the man's communication with him, distort his view of the Stanford series.
On a wider perspective, his choice of blog subjects do not, generally, tell us "the news behind the headlines" or offer any remarkable insight. Compared to the likes of Tim Vickery (always excellent) he is a journeyman in this regard. The moderation of his blog is, in my view, excessively protective, and Mr Bose almost never replies to comments made (unlike almost every other blogger on the BBC).
These things lead to criticism. Mr Bose's personal background is irrelevant. He may be a fine journalist in many ways; he may be a wonderful human being. As BBC Sports Editor writing a blog, he should be an insightful, interesting and responsive correspondent. We are perfectly entitled to comment if we feel he is falling short in that role.
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#30
I do agree with your response to #28.
I do hope the moderators are now being more sensible.
I too been critical of Mr Bose in the past, but because of the style of presentation of old news. The only time I have had a comment withheld is on a Mihir blog. I still do not know the reason it broke the rules.
There is no agenda whatsoever, most negative comments that pass moderation are well reasoned and articulate. They are rarely responded to by Mr Bose.
The BBC is still renowned for its coverage of sport and the licence paying public demand high standards in this area.
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Well I'm backing #28 here. A lot of you seem to miss the point of the blogs - if it was a major scoop, it would be in the news section. Here is just a section where the sports editor can comment on stories around, and perhaps not be as impartial as you'd get in a bog standard news report.
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