The City of Philadelphia’s bike-share program is slated to launch in the spring of 2015 with 60 stations and 600 bikes. In cities around the world, finding solid financial footing for bike-share has proven challenging. Philadelphia is paying start-up costs with taxpayer funds and grants, but to cover operational costs, the city wants to employ the same aggressive approach you’d use to secure backing for a new Major League Baseball stadium.
“We’re going to prove,” says Andrew Stober, the chief of staff in the mayor’s office of transportation and utilities, “that you do well by hiring a professional sponsorship broker to sell the system for you. There are probably a number of cities that left money on the table. We plan not to do that.”
The city hired Philadelphia-based Front Row Marketing Services, a subsidiary of Comcast-Spectacor, which owns, among other things, the Philadelphia Flyers and the Wells Fargo Center in which they play, and is itself part of the Philadelphia-headquartered communications giant Comcast. Front Row has sold naming rights for PNC Park in Pittsburgh, Campbell’s Field in Camden, and the RBC Theatre in Ontario, as well as sponsorships around high-profile sports events like the Army-Navy game.
Not surprisingly, given the relative newness of the field, Front Row has never sold a bike-share program before.
Front Row’s Bryan Furey says his firm is aware of how other cities have approached selling bike-share, but “we’re not really focusing so much on what other groups have done.” Instead, they’re drawing from their own experience selling sponsorships to arenas and events. “It’s a combination,” says Furey, “of eyeballs and the emotional attachment consumers can have to a product.”
Philadelphia is, for sure, eager to find a backer for the Big Kahuna: the brand itself.
“The first and foremost thing we’re selling,” says Furey, “is the naming rights to the program,” similar to Barclays Cycle Hire in London or Citi Bike in New York City. (Alison Cohen, who was involved in the New York City naming rights negotiation, now heads the company that will operate Philadelphia’s system. The thinking at the time, she recalls, was “we either have a system or we don’t. And if we want a system, it’s going to be called Citi Bike.”) Says Furey, “Certainly those cities, from the sponsorship perspective, we think have done a good job.”
And from the city perspective, those contracts have been profitable in the short term. But is it destabilizing for bike-share when these named sponsors pull out, as is happening in London? Furey doesn’t think so. The city gets necessary funds, the banks get great attention, and the customer is untroubled by any rebranding that might take place, argues Furey. “Why would they care?,” says Furey.
Named sponsorship of Philly’s bike-share system, says Furey, should go for somewhere in the neighborhood of “seven figures a year,” but to nail down that figure, Front Row is conducting an analysis of the bike-share system’s value to a would-be funder that will be completed in the next few weeks.
Asked if Front Row has enough time to properly set up a lucrative sponsorship package before the 2015 launch, Furey responds with a laugh and “we’ll find out.” He adds, “you never have enough time when you’re selling partnerships of this size, but we certainly hope it’s enough time.” Experience in other contexts tells him it is. “A typical naming rights partnership can be anywhere from six to 18 months of the property being launched.” Still, “we’re going to move quick,” he says, and the ability to do exactly that, he adds, is likely part of why Philadelphia hired Front Row.
For the named sponsor, at the top of the list of consideration, says Furey, are major employers in Philadelphia with “an emotional investment in the city.” The Philadelphia-based Comcast seems a natural fit, but Furey demurs. It’s too early in the process to say anything concrete, he says when asked about Front Row’s parent company parenting Philly’s bike-share, too. “We’ll decide if they should be approached or not,” he says. “I’m sure they’re on the list.” The city of Philadelphia, at least, seems open to it. When asked about the possibility of Comcast Bikes, Stober half-jokes that “it would probably be XFINITY Bikes,” referring to one of Comcast’s consumer brands.
Comcast aside, banks and other financial services are logical choices for this kind of sponsorship, says Furey, but Front Row also has an eye on which companies would particularly mesh well with bike share’s healthy vibe — health insurance companies, say. He points out that earlier this month, Chicago partnered with Blue Cross and Blue Shield of Illinois to expand its Divvy bike-share system.
So would Front Row, then, say no to Tastykake Bikes, named for the Philadelphia maker of such treats as Krimpets and Kandy Kakes? Furey isn’t eager to offend anyone. But he offers that, “our job will be to use our best judgement to bring the best opportunities to the city of Philadelphia, but we’re really kind of the broker here.” (City rules won’t allow advertising that involves alcohol, tobacco, firearms, or anything related to “sexually-oriented businesses.”) Furey adds, “We’re going to stay away from the obvious do-not-touch categories and ones that don’t fit the brand attributes of the bigger mission of bike-share.”
Furey warns that Philadelphia’s bike-share system likely isn’t in line to reap the same sort of sponsorship dollars that other, bigger cities have pulled in with theirs. Citi paid $41 million for five years of naming rights and sponsorship for Citi Bike, but the company also paid $400 million for 20 years of sponsorship rights to the Mets’ Citi Field. Meanwhile, in 2003 naming rights to Citizens Bank Park, where the Phillies play, went for about a sixth of that, at $58 million. That calculation will likely hold when it comes to bikes, says Furey. A very rough back of the napkin estimate, then, suggests that when Furey says that naming rights in Philadelphia will be seven figures per year, even with the firm’s experience in boosting sponsorship values, it will be on the very low side of that range.
Is that concerning at all, given that the costs of operating bike-share aren’t as elastic from city to city?
“In our opinion, the costs have nothing to do with it,” says Furey. How much it takes to run the program is for the city to focus on, he says. Front Row’s job is to maximize the value of sponsorships, full stop. “The finances behind the actual bike-share system shouldn’t be playing into the value from an advertising or sponsorship perspective,” he says. “This is a marketing buy. It’s not a philanthropic donation. It’s not, ‘We’re here to fund the city.’”
Nancy Scola is a Washington, DC-based journalist whose work tends to focus on the intersections of technology, politics, and public policy. Shortly after returning from Havana she started as a tech reporter at POLITICO.