$50M In Sponsorship, Not Enough?
Despite kicking off with a $41 million title sponsorship and an additional $6.5 million from MasterCard, Citi Bike may be facing a serious financial shortfall. That's according to the Wall Street Journal, which reports that price hikes or additional sponsors are needed to rescue the popular bike sharing program, the largest of its kind in the U.S. The root problem though, if Fast Company is to be believed, may provide a case study in contrasting sponsorship structures. Shaunacy Ferro asks the question "Why would any other company want to join Citi as a sponsor?" and writes that the way the initial sponsorships were structured makes it very difficult for other sponsors to co-exist with the the financial institution...
Citi has branded the bike-sharing service in New York so fantastically that trying to separate the bikes from their sponsor can be confusing...The problem is that it can be hard to decipher where Citi Bike ends and Citibank begins, making it difficult to entice additional sponsors to join. When you allow one company to brand your service so completely, there’s little benefit left to offer other potential funding partners.
In contrast, Ferro notes that D.C.’s Capitol Bike Share remains "open to dozens of sponsors" by not taking a title partner at the outset.
It's often easy to get lured in by the big sell, but losing pricing power and/or not drawing a hard line on sponsorship assets at the outset during a negotiation can come at a heavy and sometimes hidden cost down the road. Structure your sponsorships accordingly.