Dome economics

When Rupert Murdoch visited Prime Minister Tony Blair before Christmas, it was assumed the two men were meeting to discuss the issue of predatory pricing and the media baron’s newspapers.

But Lord McNally, the Liberal Democrat peer who has campaigned against what he sees as unfair price competition by Murdoch’s News International papers, has another view. “Maybe the Prime Minister was shaking him down for the Dome,” he says. McNally admits it is impossible to know what was discussed behind the closed doors of 10 Downing Street.

But following Blair’s announcement last week that Murdoch-owned BSkyB would pour 12m into sponsorship of the Dome (MW February 26), McNally says: “This is a good example of how Murdoch plays the game – he uses his power and influence very effectively.”

The amendment to the Competition Bill, proposed by McNally, to outlaw predatory pricing in newspapers was carried in the House of Lords on February 9. But the Government has always vowed to face down the amendment when the Bill goes to the Commons.

Obviously BSkyB has an interest in broadcast rights for the millennium events; note also its former chief executive Sam Chisholm is now deputy chairman of the New Millennium Experience Company. And clearly, Murdoch is taking it all very seriously. Referring to The Sun newspaper’s sudden demonstration of enthusiasm for the Dome project, an NMEC source says: “Murdoch could have issued some instruction that he doesn’t want it criticised: he’s sponsored it, so he wants them to get behind it.”

Blair is linking his chances of winning the next general election closely to the success of the Dome. He has tied his personal reputation, and the reputation of his Government, to the Dome’s success.

The PM announced three other “founding partners”, companies putting in up to 12m each over three years to sponsor some of the Dome’s 13 zones, if that’s how many it turns out to be, and support a programme of national events.

Blair shared a platform with directors of the sponsoring companies, such as Sir Peter Bonfield, chief executive of BT, whose involvement was already known. Blair added the names of Tesco and Manpower to the list of 12m sponsors. BA and airport operator BAA, which had also pledged support two years ago, will each put in 6m. National Lottery operator Camelot is to distribute tickets to the Dome through its network of 26,000 retailers and make other payments in kind.

The total of 59m of pledges is to be augmented shortly by two more sponsorship deals worth 16m, taking sponsorship so far to 75m. This is half of the total 150m sought from the private sector to sponsor the Dome. Blair says: “These businesses are showing the rest of the world that Britain is the natural home of the 21st century company.”

It may surprise businessmen to learn that these forward-thinking companies have pledged such huge sums of their shareholders’ money without knowing exactly how it will be spent.

The founding partners don’t know what their sponsorship “spots” will be at the exhibition, or how they will be able to build their brands through the celebrations. They have yet to find out how their logos will be represented in the Dome. They don’t know exactly how their funds will be spent.

And it has emerged that they have not even signed contracts before making their very public pledges at the Royal Festival Hall last week. The NMEC will not allow them to renege on them.

Take the case of Tesco: a company with a reputation for tough negotiating and financial astuteness It has agreed to pay 12m, without knowing how quite a lot of it will be spent.

True, we know some 6m of Tesco’s 12m will be used to fund the “SchoolNet 2000” project, where children compile a “Domesday Book” of their local community, and put it on the Internet to be displayed at the Dome. But the rest will pay for the “Learning Curve” zone. On the details of how Tesco’s brand will be promoted at the Dome, a spokeswoman for the supermarket chain admits: “We don’t know. It is still in the hands of the designers. Quite how it will be spent is still being worked on.”

The money will come from the existing marketing budget. But another spokeswoman admits: “We haven’t signed a contract, we are still in discussions.”

NMEC commercial director Kevin Johnson is thrashing out the details of the deals with the sponsors, and says the rest of the 90m sponsorship funds needed will be signed off by the end of the year.

But Johnson’s former boss, sponsorship agent API director John Perera, says: “We have not seen a package of rights marketing, which is usually a very thick book. My view is that the Government clearly needs positive PR, and it has gone early in getting the companies’ names in lights. There is still a large amount of work to be done. These companies are giving Blair positive PR in announcing figures for the sponsorship packages.”

No doubt Tesco will be hoping to generate a warm feeling in Government circles as a result of its generous gesture. There are many matters on which Tesco legitimately needs to talk: from the implementation of the minimum wage, to planning permission for new stores.

The news that Camelot has come forward to help the Millennium Dome was of little surprise to Perera. He says: “Camelot is trying to be involved as it needs a strong profile.” On February 20, National Lottery regulator Oflot announced it was investigating G-Tech’s 22.5 per cent share in Camelot, following the Branson libel case and the resignation of G-Tech chairman and founder Guy Snowden.

Just four days later, Camelot chairman Sir George Russell was sitting down to breakfast at table 17 at the RFH to hear Blair heap praise on Camelot as a “21st century company”, following its offer to distribute and sell tickets for the Dome. The company will be trying to get its licence to run the National Lottery renewed as the Millennium celebrations commence in the year 2000.

Not all sectors of the business community are so eager to pledge funds before knowing how they will be spent. The Corporation of London says it will contribute 6m “on the basis that it is matched by the City”. But the pin-striped City accountants want details of what the sponsorship will buy them. A spokeswoman for the Corporation of London says: “People want to see the plans, but we can’t tell because there are no finite figures.” So why will the likes of Tesco and BSkyB commit sums before the details are finalised? “Maybe they are less cautious,” she says.

The 40 companies which are in talks with NMEC about committing up to 12m of sponsorship will be watching very closely over the coming months as more details emerge.

The NMEC fiercely denies that the sponsors have signed up for any other reason than the explicit sponsorship opportunities. “That is a very cynical view,” says spokesman Gez Sagar. “It is not what it is about. They see it as a business opportunity that will give them an edge in their markets.”

This is clearly an opportunity that did not appeal to supermarket chain Sainsbury’s, which pulled out of a deal with the NMEC saying: “We want to celebrate with our customers and staff across the nation and not limit celebrations to those who visit the Dome.”

There is no doubt that there are real sponsorship opportunities – especially for those who are seen to sign up first – within the Dome; with the Millennium Challenge; and the programme of national events. With 12 million visitors expected to attend, the Dome has good opportunities for brands to build their profiles.

But it is expensive compared with other sponsorships. Perera says: “It intuitively seems a lot of money for what the sponsors are going to get. They could buy a sponsorship of the Rugby World Cup or cricket for 2m. Comparatively, it’s a lot of money.”

The sponsors themselves say that they see great commercial opportunities from the deals with the NMEC. There may be other spin-offs, for example Manpower will manage the hiring of staff for the Dome.

But it is not just business opportunities that the big sponsors are after – they also see their involvement as a way of presenting themselves as socially responsible companies, stimulating edu- cation and encouraging skills training. Areas which have traditionally been left to government.

The Dome sponsors are certainly taking a bold step. Such an event, by definition, has never been staged before. It is a journey into the unknown. But its success or otherwise could define the way business relates to government in the next century.

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