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HSBC, British Cycling and the implications of ‘societal’ partnerships

  • New HSBC deal has roots in LTA-AEGON sponsorship
  • Claims that ‘societal partnership’ model could become standard
  • Commercial blueprint set to be rolled out across other NGBs

“This is a huge moment for cycling in Great Britain,” said Ian Drake, then CEO of British Cycling, announcing its eight-year ‘lead partnership’ with the UK arm of HSBC, the world’s eighth-largest bank, last September.

The last decade has been huge moment after huge moment for cycling in the UK, so Drake cannot be using his hyperbole lightly. Wherever you are – from the streets of the City of London to the deepest, darkest country lanes in the north of Scotland – men and women from a span of ages, normally dressed head-to-toe in lycra, are on their bikes at all times of the day.

More than two million UK people are cycling at least once a week – an all-time high, according to British Cycling. Its growth has been driven by a number of factors, including, although not limited to, a wider impetus towards healthy living and fitness; inspiration from world and Olympic-beating British cyclists, who have won four out of the last five editions of the sport’s annual showpiece, the Tour de France; and the growth of the wearable technology market, making the pursuit more fun and competitive for peers.

The eight-year partnership between British Cycling and its previous lead partner Sky, from 2008 to 2015, also played a major part, putting on city-centre mass-participation events such as Sky Ride, which saw 1.2 million take part over eight years. Separately, the broadcaster has also been – and remains – the backer of Team Sky, the British professional cycling team whose riders have dominated the Tour de France in recent years.

Blueprint

However, as Drake’s comments suggest, British Cycling’s new partnership hasn’t just seen HSBC get into Sky’s well-worn saddle, it’s seen the bank come into, and already start to activate, a newly-cut ‘societal partnership’ that could well be the commercial blueprint for national governing bodies (NGBs) going forward.

“NGBs have a huge breadth of assets, from the elite level to a recreational, participation level,” says Bruce Philipps, chief executive and founder of the Altius Sports agency, the architects of the British Cycling-HSBC partnership. “We believe the future is combining an NGB’s commercial assets from top to bottom and packaging them as a whole for a brand to own completely and activate across.”

Philipps is the former commercial director of the Lawn Tennis Association (LTA), the governing body for tennis in Britain. He set up Altius in 2012 and began working with British Cycling around two years ago, providing strategic and sales support for the governing body’s commercial programme.

The basis for British Cycling’s new ‘societal’ partnership with HSBC can be traced back to Philipps’ time at the LTA, which pooled its assets in a similar way to forge a ‘lead partnership’ with pensions provider AEGON.

The rationale for doing so is relatively simple, he says. NGBs need the support of big brands not only for the cash that they can invest across their elite programmes, but for the power they have to activate a partnership at a grassroots, recreational level. And if the power of a blue chip can help an NGB achieve medals and raise participation numbers in tandem, the public sector funding it will receive (from Sport England in the UK) will be protected. It is therefore a model that satisfies the objectives of all public and private entities involved in an NGB’s activities.

It is also an effective model for NGBs who don’t have large amounts of broadcast coverage, and aren’t able to satisfy the exposure demands of companies looking to use sponsorship to raise brand awareness.

The tennis test

The challenge comes in an NGB’s ability and willingness to pool its major assets, which Philipps illustrates by explaining the genesis of the LTA-AEGON deal.

Before 2008, the LTA’s main assets – from the top-end Queen’s Club Championships to grassroots programmes – were commercialised through a number of diverse brands including Stella Artois (Queen’s) and Barclays (grassroots). Through a mix of letting partnerships run to an end of their contracts and negotiating deals to end early, the LTA’s portfolio was pooled together to create a proposition to attract a brand who would not only pay a significant rights-free, but throw its activation power behind the LTA hitting its participation targets.

Consequently, AEGON came in to support British tennis across community programmes (primarily the LTA’s parks and schools initiatives), back key junior elite athletes, and sponsor international grass-court events held in the UK including the AEGON Championships (Queen’s), the AEGON International (Eastbourne) and the AEGON Classic (Edgbaston). The initial five-year deal was worth around £5m (€5.8m/$6.2m).

“AEGON wanted to both increase its brand awareness and support tennis from a traditional, CSR perspective,” says Philipps. “Climaxing every year at Queen’s, which had 25 hours of live coverage on the BBC in the lead-up to Wimbledon, the lead partnership was able to give AEGON brand awareness with grassroots assets underneath.

“When we started working with British Cycling we felt a similar approach would work well with its assets. We firmly believe it is hard for a major NGB to have a true, rewarding partnership with a brand unless it’s in this model; Ian Drake was very passionate about the power HSBC could bring – he wanted a partner who wasn’t just a sponsor, but had ambition and commitment to activating at all levels of cycling.”

Broader than badging

Philipps is eager to point out that the ‘societal’ partnership model also reflects the evolution of sports marketing, with rights-holders moving away from the typical badging exercises still offered to brands.

“A true partnership for an NGB is with a brand that can, and wants, to engage in the sport from the top to the very bottom,” he adds. “I think too many NGBs concentrate on their elite assets when the value for a major brand can be very much at a participation level.

“NGBs are also realising they have to sell differently. In the ‘shirt sponsorship’ model the rights-holder will be looking for a load of cash from a brand, will stick their badge up, and the brand will measure its increased awareness at the end of year one.

“You can still do that with properties that have broadcast reach – and there’s nothing wrong with it. But for a blue-chip brand like HSBC, which already has huge brand awareness, it doesn’t need that. And for an NGB that has a number of responsibilities from increasing participation levels to securing more international medals, having a brand that can support them at all levels is very attractive.”

Philipps says that the HSBC deal has already seen a number of NGBs investigate how they can structure their commercial assets to adopt the societal model.

And though he wouldn’t reveal exactly who, Altius is already helping pool the assets of another major UK NGB “which has high participation numbers and a strong elite team” and is in advanced talks with a blue-chip financial services brand about a lead partnership.

EXTRA: HSBC-BRITISH CYCLING – DEAL BREAKDOWN

HSBC UK is the ‘lead partner’ of British Cycling in an eight-year deal from 2017. Whilst Philipps refused to be drawn on the deal value, well-placed industry sources say it is worth considerably more than the Sky deal it replaces.

The bank’s activation rights cover six disciplines of the sport – road, track, cyclocross, BMX, mountain biking and cycle speedway – from the elite, performance level (the Great Britain cycling teams) to events and programmes across local communities, towns and free-to-enter mass participation events.

At the end of 2015, Sky decided its eight-year lead partnership, which it entered to become more community-facing and shed some of its corporate image, was coming to a natural conclusion, having contributed towards a huge growth in cycling. Its mass-participation Sky Rides, for instance, boasted over one million participants across 108 events between 2009 and 2016.

Working with Altius, British Cycling created a new commercial proposition that offered a brand more rights at a participation level than previously held by Sky. This included Breeze, a UK-wide programme launched in 2011 to get more women involved in cycling. Altius went to market in the summer of 2016, but Philipps says it soon became clear HSBC was the perfect brand fit.

Though HSBC does hold similar rights to Sky around the Great Britain cycling teams – and will receive on-jersey branding at international events – the sport at the elite-level will not be its major focus. Staff engagement, improving sentiment around the brand and positively supporting the government’s health and transport agenda are all key objectives for the company as it tries to create a more socially responsible image. This is particularly important given its need to comply with new UK government legislation coming into force that demands banks separate their investment arms from their retail and business banking operations after the 2008 banking crisis. The ring-fenced ‘HSBC UK’ bank is currently being set up in Birmingham.

Relatively small community-based HSBC events have been taking place since the start of January, however the HSBC UK City Ride programme – the next-generation version of the Sky Ride – will launch in Birmingham this June and look to engage 125,000 people in 14 events held throughout the year.

British Cycling has invested significant amounts of money researching its customers and fan base and people close to the deal reported that HSBC will be given access to this data for its activities. In the past, the bank focused on a higher net-worth, international demographic but in the UK it wants to touch a wider audience. Cycling with its large, diverse demographic in the UK will help it to achieve this.

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