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Despite its huge sports sponsorship spend over the past two years, Cazoo’s new business restructuring plan has cast doubt on the online car retailer’s many partnerships.

The company’s extensive sponsorship portfolio covers clubs in the domestic football top flight across England, Spain, Italy, Germany and France. As of May 2022, Cazoo boasted partnerships with 11 different licensees covering more than 25 properties across nine sports, including cricket, rugby union, darts and snooker.

However, the long-term viability of these deals was called into question in June when Cazoo announced a business restructuring plan for Europe, designed to “right-size” the company and position it for profitable growth.

The focus will be on improving the economics of the retail trade, reducing costs and maximizing liquidity. This includes cost savings of more than GBP 200 million (US$242 million) from June 2022 to the end of 2023. Around 750 roles at Cazoo will be affected.

The company’s earnings report for the second quarter last week shed further light on Cazoo’s situation. After initially launching in the UK, the car dealer has made the leap into mainland Europe, with sports sponsorship seen at the time as an effective way to help establish the brand in new markets.

However, Cazoo CEO Alex Chesterman revealed in the earnings call that Europe only accounted for “less than ten percent of unit sales and revenue” in Q2. He expects the contribution to remain the same for the rest of the year.

Asked whether Cazoo could sell its mainland European operations, or close them entirely, Chesterman said he was looking at “a full range of options”, and reiterated that the company needed to “reduce cash consumption”.

“If we were to close some markets, there would obviously be some costs associated with that, but they would obviously be significantly less than the investment required over the next 12 to 18 months in those markets,” he added.

Stephen Morana, Cazoo’s chief financial officer, also confirmed on the call that the company’s current earnings before interest, tax, depreciation and amortization (EBITDA) loss rate in Europe was “roughly around UK£25m to UK£30m per quarter”.

The call did not directly refer to Cazoo’s sports partnership commitments, but the company’s head of sponsorship Mike Mainwaring said on SportsPro Live in April that the firm’s model would be “consistent”, although Cazoo’s new business direction could pay for it.

“The model of investing early as a brand is going to be consistent,” Mainwaring said.

“Where I think it’s a bit different is the scale. In Europe at this stage it’s a bit more balanced. In France we have two football teams and a golf tournament. In Spain we have a couple of football clubs.”

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