A roundup of sponsorship: the 2014 season brought both good news and tough challenges for the sponsorship scene. It was great to see Martini back in Formula 1, but now there is pressure to eliminate alcohol sponsorships. Senior sponsorship execs are tapped for new roles and there are numerous changes in team sponsorships. Let’s take a closer look.
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The 2014 Formula 1 season started with the announcement from sports marketing firm Repucom that Infiniti, a Red Bull Racing partner, became the first Formula 1 team sponsor to gain more than the US $1 billion in advertising value. This is based on the amount of time the brand was visible during TV broadcasts of qualifying sessions and races. While team title sponsorships are estimated to cost as much as £70 million (approximately US $100 million), Infiniti seems to have gotten their money back and gained extensive exposure during the years of Red Bull dominance.
F1 series sponsorship changes
UBS reduced its sponsorship commitment following a change in the chief executive at the Swiss bank. Swiss newspaper Blick reported that UBS reached a new agreement that reduced trackside advertising and also ended title sponsorship of the Chinese Grand Prix. The paper said UBS is scaling down its annual spend on Formula 1 from $54 million to $32 million. The loss of revenue from UBS seems to have been offset with the announcement in September of whiskey company Johnnie Walker as Formula 1’s Official Whisky. The partnership has been estimated at a rather staggering £155 million by the Mirror newspaper. Johnnie Walker’s Formula 1 connection goes back to the 1950s and they continue to sponsor the McLaren Mercedes team.
Unfortunately at season-end, we’ve seen a call for the end of alcohol sponsorship in the sport, reminiscent of the ban on tobacco sponsorship. The European Alcohol Policy Alliance (Eurocare) provided FIA president Jean Todt with this salvo in November. Johnnie Walker is joined in Formula 1 by Smirnoff’s sponsorship of Sahara Force India and Martini’s sponsorship of Williams. The concern is the role of drinking in road accidents and the visibility of alcohol in the premier motorsport series. The FIA have sought to distance themselves from the issue and pointed to their Action for Road Safety as evidence of FIA commitment to road safety and prevention of drunk-driving.
Diageo, the parent company of Johnnie Walker and other alcohol brands, joined the fight by claiming that Formula 1 sponsorship provides the platform for their Join the Pact campaign. Diageo state the program has reached half a billion people worldwide with its “Don’t drink and drive” message.
So the battle has been joined, putting the FIA in an awkward position given its road safety program and relationship with the World Health Organisation, where the FIA are responsible for both road safety and alcohol control. No conclusion to the issue is yet in sight, it appears to be a tough slog ahead.
Is sponsorship the route to the top?
Diageo is also in the news at the end of the season due to reports that former Diageo chief executive Paul Walsh has been approached about becoming the next chairman of Formula One Group, replacing Peter Brabeck-Letmathe who is already planning to step down. Walsh had a successful career at Diageo and the idea seems to be that he is the man to build up the Formula 1 business in preparation for a future share flotation. A decision on appointing Walsh could be made by publication time.
The controversy over sponsorship by alcohol drink companies is a sword hanging by a thread. It perhaps puts the sport in a more delicate position than the tobacco controversy provided.
After the conclusion of the season, a similar situation played out at Scuderia Ferrari, seeing the team replace team principal Marco Mattiacci after just eight months with former Phillip Morris executive Maurizio Arrivabene. Arrivabene was a senior executive overseeing Marlboro’s long-lasting and multi-million dollar sponsorship of Ferrari. Arrivabene also has represented all sponsors on a Formula 1 sponsorship commission since 2010. His level of engagement in both Ferrari and Formula 1, in general, appears to have won the day for him; Fiat Chrysler chief executive Sergio Marchionne lauded Arrivabene’s understanding of Ferrari and the governance mechanisms and requirements of the sport.
Wins and losses
There was a fair bit of activity in 2014 with team sponsorships; perhaps the most notable news was what happened for Williams and what didn’t happen for McLaren. Here are the highlights of the season’s sponsorship changes:
Many long-term fans were pleased to see the return of drinks company Martini to Formula 1. The Williams livery featured the iconic Martini colours on a white background and no doubt Martini was pleased with their exposure given the resurgence of Williams. In fact, Martini attributed the growth in market share in 2014 to the Williams partnership. Williams also started the year with new sponsorships from Petrobas, Banco do Brasil and insurance business Genworth, and gained support from the Esquire magazine brand. The team’s sponsorship managers didn’t rest on their laurels though, at the end of the season they picked up two sponsors that had been with the Lotus F1 Team – Unilever’s Rexona brand and Avenade, a technology business.
The end of the 2013 season signalled the end of Vodafone’s title sponsorship at McLaren. McLaren had intended to announce a replacement sponsor at that time, and the announcement still has not yet taken place. The non-announcement of a new title sponsor could represent one or two things: one item could be the difficulty of securing a title sponsorship investment in the current economic environment; the other is Ron Dennis’ reported reluctance to lower the cost of the sponsorship in light of the team’s recent performance. Dennis reportedly is holding fast to his belief in the value of McLaren and isn’t willing to accept less than historic amounts for title sponsorship. Only Dennis and McLaren management know how long they can hold out with that position. In lieu of a title sponsor, McLaren gave more prominence on its sidepods to existing sponsors Johnnie Walker and SAP.
Another rock got in McLaren’s path as their apparel sponsor Hugo Boss announced a change of allegiance to Mercedes AMG Petronas. The McLaren / Boss partnership began back in 1981, making it one of the longest running sponsorships in the industry. Boss made the change as they had begun to work with Mercedes Benz on promotions outside Formula 1, leading to a conflict with their McLaren sponsorship.
Toymaker Lego recently decided to pass on the opportunity to sponsor McLaren driver Kevin Magnussen. Lego CEO Jorgen Vig Knudstorp stated that “the sponsorship did not fit Lego’s brand”. That seems like the right decision in light of Bernie Ecclestone’s preference for older Rolex-wearing fans…
Not all was grim for McLaren though. The 2014 season marked the 20th anniversary of McLaren’s partnership with ExxonMobil, focused on the Mobil and Mobil 1 brands. And we also saw the return of Segafredo Zanetti, the Italian coffee brand, after a 20-year absence from Formula 1. Segafredo sponsored McLaren between 1984 and 1986 and was involved with the sport in other ways until the death of Aryton Senna in 1994.
Prior to picking up the Hugo Boss sponsorship, Mercedes announced new sponsorships from UBS and Swissquote, a Swiss bank. UBS seem to have diverted some of their prior spending on the F1 series sponsorship to partner with the Mercedes team. A multi-year extension to the existing partnership with Petronas, the Malaysian oil and fuel supplier, was announced in May. Then late in the season Mercedes announced the extension of three other partnerships – with Puma and Starwood, the hotel business, and timepiece company IWC Schaffhausen.
Force India had a virtual turnover of their sponsorship partners, having secured new sponsorship from Smirnoff, the Mexican telecom group Claro, Kazakh sports club Astana and drinks company Gatorade. The team also gained sponsorship from international pharmaceutical group Auden McKenzie. And thanks to helping from driver Sergio Perez, Mexican companies Consorcio Aristos, a construction firm, and FICREA, a financial institution, partnered with the team.
Lotus F1 announced sponsorship from Saxo Bank, a Danish investment bank, at the beginning of the season. Saxo sponsors a well-known pro cycling team and entered Formula 1 for the first time with this partnership.
Sauber F1 announced Unifin as a new premium sponsor of the team along with the extension of their existing partnership with Interproteccion, both financial institutions from Mexico. The companies joined the team in alignment with the presence of driver Esteban Guitierrez. Those sponsorships may be at risk since Sauber has not retained Guitierrez for 2015.
The 2015 season will definitely bring new cars along with new sponsorships. Some changes will be “natural” as contracts come to a close and new partnerships are formed. Other changes will be driven by changes in driver line-ups, such as at Sauber with Marcus Ericsson and Felipe Nasr replacing Esteban Guitierrez and Adrian Sutil. In fact, it has already been announced that Banco do Brasil will have a presence on the Sauber cars due to the bank’s partnership with Nasr.
The controversy over sponsorship by alcohol drink companies is a sword hanging by a thread. It perhaps puts the sport in a more delicate position than the tobacco controversy provided. Clever thinking, programming and positioning will be needed to maintain the status quo on that topic.