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Cazoo to Cancel All Kit Sponsorship Deals in EU

Update: It is now very likely that several mainland European clubs will have to find a new main sponsor. On Thursday, the UK online used car retailer Cazoo announced that it will shut EU activities including sports sponsorships in a cost-cutting overhaul to refocus on key market Britain.

Cazoo want to orderly wind down all their European mainland relationships"

"Cazoo propose to wind down operations in mainland Europe to focus on (the) core UK market," it announced in a statement after a strategic review.

Cazoo sponsor France's Lille and Marseille, Italy's Bologna, Germany's Freiburg, and Spain's Valencia football teams.

"In terms of sports sponsorships, Cazoo has a number of partnerships in mainland Europe and will work with their partners to ensure an orderly wind-down of these relationships," a spokesman told AFP.

August 10, 2022: Cazoo to Cancel All European Kit Sponsorship Deals?

Doubt has been cast over Cazoo's many football kit sponsorships after the company announced plans to "right-size" the business in order to conserve cash.

Online car retailer Cazoo was founded in the UK two-and-a-half years ago and expanded to Europe starting last year. France and Germany were added in 2021, with Italy and Spain following in January and May of this year, respectively. To promote the new business, Cazoo betted heavily on sponsoring football teams - first with Aston Villa and Everton in 2020-21 and even more this season when they added a total of six high-profile teams - Olympique Marseille, Valencia, Freiburg, Lille, Bologna and Real Sociedad.

The new plans, which see Cazoo aiming to make cash savings of £200 million, will likely affect the mainland European operations the most. Cazoo only makes 10 percent of its income in those markets, and big investments would be required over the coming months to grow there.

Speaking about the possibility of closing some markets, Cazoo chief executive Alex Chesterman was quoted saying: "If we were to shut some markets there would obviously be some costs associated with that, but they would obviously be significantly lower than the investment that is required over the next 12 to 18 months in those markets”

Cazoo's chief financial officer, Stephan Morana, added that Cazoo's earnings before interest, taxes, depreciation and amortisation (EBITDA) loss rate in Europe was “roughly around £25 to £30 million a quarter.”

If Cazoo were to exit markets such as France, Germany, Italy or Spain, there would not be much point in providing sponsorship for teams in those countries. While it's likely that clauses are included in the new deals, allowing Cazoo to cancel them early, the company would still likely have to pay a hefty penalty for that.

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