Vodafone sponsorship deals questioned as phone company prepares to write off billions of dollars

VODAFONE, the mobile phone giant which has committed itself to backing both the Ferrari team and Manchester United football club is tightening its belt for some disastrous trading figures to be announced on Tuesday (13 November).

Its chief executive Sir Christopher Gent is expected to report half year losses of a staggering $14.5 billion which, according to the Sunday Times newspaper, is absolutely staggering even for a company this size. Moreover, even though its underlying earnings are tipped to be a much more healthy profit of $6.8 billion, investors are worried that the company is now suffering from paying too much for acquisitions in the past and there are suspicions that its management team lacks the depth required to handle the challenge of the future.

The Times columnist points out that, amongst those losses, some $9.5 billion will be a charge against the goodwill of past acquisitions, notably last year's takeover of Mannesmann. Moreover Deutsche Bank believes that another $8.7 billion - perhaps more - could be written off the value of Vodafone's investments.

It may also be considered that its sponsorship deals involve excessive outlay set against the current extremely difficult trading conditions. Manchester United is benefiting from a $43 million four year deal while the $75 million Ferrari deal - also for three years - has allegedly been "met with incredulity" according to the Sunday Times who clearly regard the cost of this number three billing after Shell and Philip Morris to be excessive.

However the Sunday broadsheet then goes on to say "For that they could have a team named after them - and a big team at that. Orange got a much better deal commercially with the Arrows F1 team for 80 million," which equals $116m.

Not a considered comment, one would have thought, bearing in mind the relative status of the Ferrari and Arrows team - nor the amount of global TV time they respectively command.

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