Struggling RBS commits £20 million to Six Nations

Published on Tuesday 20 January 2009 22:17

IN SPITE of reporting an unprecedented loss in 2008 of £28 billion, the Royal Bank of Scotland has agreed a new four-year deal to sponsor the Six Nations which will extend the bank's involvement with the championship until 2013.

The new arrangement, which is thought to be worth about 20million, was due to be formally announced at the official launch of the championship on Thursday week.

Although the deal may be open to misrepresentation during a global downturn as evidence of corporate schmoozing in the hospitality suites at Murrayfield, RBS insisted last night the decision to renew the contract was taken on strict commercial grounds.

Discussions about a new contract began after the 2008 championship had been won by Wales in March. Talks took place over several months and an agreement was reached in principle before Christmas, which is understood to provide the tournament with improved terms.

The TV audience for international rugby since RBS started sponsoring the tournament in 2003 has grown by nearly 30 per cent. The opportunity to beam the RBS logo into the homes of so many high demographic potential customers was just one of the factors which influenced their deliberations.

RBS also undertook a study last year into the economic impact of the Six Nations and established it generates around 400million for the UK. It says its continuing support is not about hospitality opportunities or even raising awareness of the bank and its operations.

"We have been in discussion with the Six Nations committee about the renewal of the title sponsorship and agreed to extend this through to 2013," a spokesperson for the bank confirmed. "The RBS Six Nations sponsorship has been selected to meet very specific business objectives within the six competing nations."

Although the Six Nations is safe, it has emerged the multi-million pound budget spent by the bank each year on sports sponsorship around the world will face a comprehensive review within the constraints of contractual obligations.

"We recognise the need to ensure that our sponsorship activity reflects the process of restructuring," a spokesperson for RBS explained. "We are trying our best to strike the appropriate balance within the constraints of both contractual obligations and, of course, maintaining the benefit of some key activities to our customer businesses."

RBS is a heavy backers of events and people in international golf, Formula 1, cricket and tennis as well as rugby. Stephen Hester, the chief executive of RBS, indicated to The Scotsman earlier this week that the amount the bank spent on AT&T Williams, the Formula 1 team, was due to come under close scrutiny.

When Williams tested their car for the 2009 season in Portugal for the first time earlier this week, the RBS logo was prominently displayed. For how much longer remains to be seen.

Although there's a view sports sponsorship deals are a soft target, it's already clear increased government intervention won't stop RBS from continuing to operate as a commercial entity with a strong marketing budget.

What seems likely to happen next is economies will be implemented around various sponsorships in terms of hospitality and marketing rather than breaching contracts.

On the golf scene, RBS is an official patron of the PGA of America, and also became a partner last year of the United States Golf Association.

Closer to home, RBS is the main sponsor of golf coverage on Sky Sports, and will again be the official bank of the Open at Turnberry in July.

While all of the bank's golfing ambassadors are based in America – TV commentator Jim Nantz, Jack Nicklaus, Paula Creamer and Britain's Luke Donald – it's closely associated in other sports with native Scots such as Andy and Jamie Murray in tennis and Sir Jackie Stewart in Formula 1.