- Cazoo has invested heavily in sports partnerships after expanding into mainland Europe
- Brand has deals with teams in Premier League, LaLiga, Serie A, Bundesliga and Ligue 1
- Car retailer looking to make cash savings of more than UK£200m by end of 2023
Despite its vast sports sponsorship outlay over the last two years, Cazoo’s new business realignment plan has cast doubt on the online car retailer’s partnerships.
The company sponsors soccer clubs in England, Spain, Italy, Germany, and France. Cazoo had partnerships with 11 different rights holders, covering more than 25 properties in nine sports.
The long-term viability of those deals was called into question when Cazoo announced a business realignment plan for Europe.
Improving retail unit economics, reducing costs and maximizing liquidity will be the focus. This includes making cash savings of more than 200 million pounds (US$272 million) over the course of a year. There are approximately 750 roles at Cazoo that will be affected.
The company’s second quarter earnings call shone more light on the situation. Sports sponsorship was seen as an effective way to help establish the brand in new markets when the car retailer first launched in the UK.
Alex Chesterman stated in the earnings call that Europe only accounted for less than 10% of unit sales and revenues in the second quarter. For the rest of the year, he expects that contribution to remain the same.
When asked if Cazoo could sell its mainland European operations, Chesterman said that he was looking at a full range of options and that the company needed to reduce cash burn.
There would be some costs associated with shutting down some markets, but they would be lower than the investment that is required over the next year to 18 months in those markets.
Stephen Morana, Cazoo’s chief financial officer, said on the call that the company’s current earnings before interest, taxes, depreciation and amortisation loss rate in Europe was between 25 and 30 million a quarter.
The call did not refer to Cazoo’s sports partnership commitments, but the company’s head of sponsorship said at SportsPro Live in April that the firm’s model would be “consistent”
Mainwaring said the model of investing early as a brand is consistent.
The scale is something that I think is different. At this time, it is slightly more balanced in Europe. There are two football teams in France and a golf tournament. In Spain we have a couple of football clubs.
