Interviews

Selling off the family silver?

London Assembly member Gareth Bacon AM, author of ‘Untapped Resource: Bearing down on fares through sponsorship,’ talks to RTM about the potential for raising revenue through sponsorship of the Tube network. 

Burberry by Bond Street, Virgin Euston, John Lewis at Oxford Circus – could this be the future of the Tube?

If the London Underground network was opened up to sponsorship opportunities, it could generate a huge amount of revenue, which could be used to cut or cap fares for passengers. A new report by the Greater London Authority (GLA) Conservatives sets out the case for sponsorship.

Its author is Gareth Bacon AM, who is also cabinet member for the environment and public realm for the London Borough of Bexley, where he has been a councillor since 1998, and who sits on the Transport & Environment Committee of London Councils.

He spoke to RTM about the benefits of sponsorship, and how arguments against it can, and have, been previously rebutted – while admitting that TfL is unlikely to introduce such changes in the short term.

An iconic brand

The new commercial development director at TfL, Graeme Craig, has recently reaffirmed the organisation’s opposition to sponsorship deals, warning that changing station names is “in danger of looking tacky”.

Bacon said that Craig “regards the Tube map as an iconic brand of London… the equivalent of the family silver”. Sponsorship is seen as “almost an act of vandalism against our heritage”.

But Bacon sees sponsorship as something that TfL “really do need to think about” and argues that the idea that sponsorship would ‘cheapen’ the historical legacy of the Tube is to ignore firstly the existing examples of advertising like the Barclays cycle hire scheme and the ‘Emirates Air Line’ cable car over the Thames, and its use in other industries, without detriment to the public, or the product’s reputation.

Breaking with tradition

“These arguments are the same that have been used in a whole range of different things in other walks of life,” Bacon said, highlighting criticism of the approach as nothing more than a “long, sentimental attachment to the Tube map”.

The England Rugby team switched from plain white shirts to labels and sponsors, despite significant opposition at the time, and football teams are now considered “a bit naff” if they cannot attract a big sponsor.

Meanwhile, the Emirates brand name appears three times on the Tube map as part of its sponsorship deal.

Bacon argued: “If it’s done in the same font that TfL use for the Tube station names, it wouldn’t necessarily make it look incongruous and tacky, or clutter it up at all.”

Calculating value

He continued: “TfL has recently developed a corporate sponsorship policy, setting out guidelines for the sorts of companies they would allow to sponsor various parts of the operation.

“It’s written in such a way that gives sufficient leeway to allow some sponsors and disallow others on fairly loosely-drawn lines.”

London Mayor Boris Johnson has the power to make TfL introduce sponsorship, but has also voiced his disapproval for the idea.

Bacon said: “Why would we not do that?”

The Emirates deal showcases the company to 30,000 people a week, for a sum of £36m over ten years.

xtrapolating the value of such exposure, sponsorship packages for busy central London stations such as Oxford Circus could raise an “absolutely enormous” amount of money.

“Over a million and a half people go through that every week.

“How much would that station be worth if we were to market that, and sell naming rights, branding rights or associated naming rights, for example ‘John Lewis at Oxford Circus’?”

Public support

The GLA Conservatives commissioned a poll to see if the public would be receptive to the idea, and how they think the money should be spent.

Bacon explained: “The clear message that came back was that they would cope with that, provided it was linked to fares.

“If you can raise substantial alternative revenue, then you can either bear down on fares – which is what we argue in the report – but depending on how much you raise you could even cap fares, or potentially reduce them slightly.”

He added: “We’ve stayed away from putting any kind of hard-and-fast figure on it because we don’t want to limit TfL’s ambition; we think the amount could be massive. We do think they need to embrace the idea and at the moment, sadly, I don’t think they are going to. TfL have held fast to their line that they don’t think it is something that should be done.”

The report shows 74% of 531 Londoners either agreed or strongly agreed that TfL “should expand their use of sponsorship across public transport in London and use the money generated to freeze or cut fares.” Only 6% disagreed with the statement.

This statement is heavily biased towards a positive answer – many passengers would be happy for significant changes to the network in exchange for cheaper fares, but perhaps it indicates less resistance to sponsorship than TfL believes.

Potential consequences of such a scheme can be seen in practice in New York, Madrid and Dubai. Bacon said: “It wouldn’t be entirely groundbreaking because it has been done in Madrid and Dubai. But on this scale, in a major world city, it would be almost pioneering.

“But why not? London is one of the leading cities in the world, we’re in financial dire straits and actually this is potentially a massive source of revenue that wouldn’t hurt the taxpayer at all, and wouldn’t harm upgrades.”

Up for grabs

When asked how far is too far, Bacon replied: “We think everything should be up for grabs really. Seriously, why not?

“Why on earth shouldn’t we be looking at things like the District Line sponsored by Coca-Cola? The commercial benefit could be absolutely gigantic, and people would still just call it the District Line.”

This is evident in the Barclays cycle hire scheme, with the cycles almost universally referred to as ‘Boris Bikes’. “I think the sky is the limit”, Bacon added, pointing out that the report was intended to give TfL “a bit of a kick and nudge in the right direction”.

The proposals would depend on a select number of approved companies able to provide the necessary funds. “Let’s be honest about this,” Bacon said, “we’re probably talking about major organisations – not ‘Joe’s Caff’. We’re talking about Harrods, or Burberry; multinational brands that are recognised everywhere because they are the only ones that are going to have the money to do it.”

This could be around eight or nine central stations, he said, and pointed out that mock-ups of a Tube map including sponsorship were not as cluttered as critics suggest.

The map itself is less constant than many realise, with new stations and line extensions added as the structure of the Underground changes.

Frozen fares?

One note of caution might be the lack of transparency around how much of the revenue generated through sponsorship could actually go towards fares, rather than subsidising other parts of TfL’s business.

As Mick Whelan, general secretary of the train drivers’ union Aslef, pointed out: “Who says that such extra revenue would be put to holding fares down anyway?”

Bacon said: “In the unlikely event that they decided to run with it, or if the Mayor told them to run with this, whether or not they then would transfer that money into limiting fare rises is something we would have to keep a very sharp eye on.

“Our view is that they could and should use any money raised from this towards limiting the burden on the farepayer.”

However, he acknowledged that other public realm improvements, including station improvements or the Access for All scheme, could be funded through revenue generated by sponsorship.

“It need not necessarily be fares, but fares is obviously the one to go for because that’s what people feel the pain of most,” he said.

Although endorsement of the scheme may be thin on the ground at the moment, Bacon believes it is an idea that “could have its day”.

“I’d like it to be now. I think the case is pressing, and the moment is right to do it. Provided it’s done right there could be a considerable amount of money raised, with no harm at all to Londoners.”

Reputational risks

In 2012, the London Assembly Budget and Performance Committee produced a report looking into TfL’s approach to sponsorship deals.

Committee chairman John Biggs, speaking to RTM following the publication of the GLA Conservatives report, told us: “In our scrutiny report into sponsorship, whose recommendations were accepted by the Mayor, we recognised that sponsorship is a growing reality but that the approach to it was rather a muddle and not suffi ciently guided by agreed standards and approaches. Such guidelines would recognise the reputational risks associated with sponsorship plus other reasonable questions about appropriateness. At the time of our inquiry TfL were fairly clear that, other than in exceptional circumstances, which I recall would include clarity that the fundamental purpose of names is in wayfi nding, the renaming of stations by sponsors was unlikely to be supported. I would be interested to hear what has changed.

“In my view the fundamental purpose of public transport is to provide a service, funded by a combination of fares and grants whose origins lies in taxation. While sponsorship by private companies may in exceptional circumstances be appropriate, the fundamental public duty of private companies is to pay their taxes and, through these, public transport can be subsidised. Taken to extremes, it would be ironic, to put it mildly, if a company that spent zillions of pounds to lawyers in minimising its tax liabilities was then granted publicity, with a positive glow, from the sponsorship of a public service which, through their avoidance, has been starved of funds.”