I’ve seen a fair bit of negativity around Williams lately in the media. I guess you can see why on one level, when you look at some of their sponsors; Royal Bank of Scotland, which is 70% owned by the British government, Baugar the Icelandic investment vehicle which was hammered by the credit crunch and Phillips, which recently announced thousands of redundancies.
They also burned through a fair bit of cash in the last few years trying to keep up with the front-runners. So on the face of it, they seem to be a target, a team which must be under threat.
But Williams is actually quite well placed to weather the F1 recession. Because of the deal it did with Bernie Ecclestone and its long history in the sport, it’s share of the commercial revenues is fairly high and as budgets come down, forcing the front running teams to learn how to do it with less, Williams has a head start in the area of running a tight ship. But they need to rediscover the art of building fast cars.
The team is quite dismayed by the impression being given at the moment that they are in trouble. I’m told that four of their partners have upgraded with sponsorship deals, with Phillips leading the way.
And 2010 sponsorship is already at 90% of the 2009 level, which is more than Renault can boast at the moment, following the news that title sponsor ING is pulling out. So if there is such as thing as an ‘at risk’ list in F1 at the moment, I think Williams is some way down it. What you have to admire is that the team refuse to accept playing in the second division, they still have top team ambitions even if they cannot afford to back them up with cash at the moment.
ING’s deal is a great example to companies of how you can use F1 make a huge difference to your worldwide brand recognition. It’s been a very well managed sponsorship, which is coming to an end because of the crisis in the banking sector.
What will be very interesting in the next few seasons will be what the teams tell the sponsors when they ask for a discount because the team’s budgets have been slashed by up to 50%. The value of a sponsorship is based, not on a team’s budget but on the return on investment they get from the media value of their on-screen time. That figure won’t change in the coming seasons, even if the budgets come down. So teams argue that the sponsorship fee should remain as high as ever. It’s a lot cheaper than advertising, basically.
This particular point is one of the main reasons why McLaren are always cool on talk of budget cuts, because they don’t want their blue-chip sponsors asking them for half their money back..!