‘Boris Bikes’ sponsorship runs out of road

The distinctive blue “Boris Bikes” that dart around London’s roads, ridden with varying degrees of competence by tourists and locals alike, will be sporting another colour and logo from next summer.

Following Barclays’ decision to end to its sponsorship of the capital’s cycle hire scheme, Transport for London (TfL) has now put the contract out to tender. Bids are being invited for a seven-year deal, at a minimum of £5.5 million a year, although the authority is hoping for an even higher figure, assuming enough interest is generated.

While the cycle hire scheme has proved popular with commuters since its launch in 2010, it has been dogged by controversy, not least accusations that the deal with the bank was a stitch-up and that Barclays was awarded the contract on the cheap.

Johnson certainly had close links with then Barclays chief executive, Bob Diamond, who helped run the Mayor's Fund for London, the charitable scheme to help the capital's poor set up by Johnson. But he has always defended the deal with the bank, maintaining few could have foreseen the scheme's popularity.

Reputational risk

It was quite possible, Johnson claimed, that Londoners would throw the Barclays-branded bikes into the Thames, which would have been a PR disaster for the bank. The reputational risk for Barclays in going ahead with the sponsorship deal was a serious one, he said.

In the light of revelations over the bank’s behaviour since then, it was the bikes that were taking the reputational risk, not Barclays. Last month, it was fined £26 million after one of its traders was discovered to have tried to rig the gold price – an incident that took place in June 2012, just a day after Barclays was fined a record £290 million for fixing Libor.

The process by which Barclays was awarded the sponsorship deal was certainly anything but transparent and TfL consistently refused to reveal details of its deal with the bank. We know the initial agreement was for five years, at £5 million a year, later extended by another two years to 2018, also at £5 million a year.

But Barclays’s contribution was also based on usage of the scheme. Although 30 million journeys have been made on the bikes since launch, there was a slump last year after a series of deaths of cyclists on London’s roads deterred users.

TfL has promised the current bidding will be fully transparent and hopes to have the new sponsor agreed by the end of this year. That will allow the new backer to put its own colours and name on the fleet of just over 11,000 bikes in time for the following summer.

Barclays backed out of the deal following a “strategic review” by new management team. But the fact they are universally known as “Boris Bikes” rather than “Barclays Bikes” was probably a big factor in the decision. Given the mayor’s popularity, the nickname looks likely to stick – something potential sponsors will have to take into consideration when they make their bids.

Bad omens

Omens for quarterly sales data today from Tesco, Britain's biggest retailer, are not good.

On the eve of its trading update, industry group Kantar Worldpanel released figures showing Tesco's market share has slumped to 29 per cent, from 31.5 per cent a year ago, figures described as "shocking" by one retail analyst.

David McCarthy at HSBC reckons Tesco has lost a million customer visits a week and the overall market is the weakest it has been for 11 years. Despite this, German discount chains Aldi and Lidl, with up-market Waitrose, still forge ahead.

Even before the Kantar figures, analysts had been expecting grim news from Tesco, with some forecasting a sales slide of 4 per cent or more, its worst performance in getting on for 20 years.

That will pile pressure on chief executive Phil Clarke, who has been struggling to revitalise Tesco's core UK operation. Just how bad could it get for Tesco? McCarthy points to the 1970s and 1980s when the Co-op had a market share of more than 25 per cent, but now has just 6 per cent . . . Fiona Walsh is business editor of theguardian.com