Will the Prancing Horse rise?
Monza 2014
Italian Grand Prix
The changing face of sponsorship in Formula 1
News
UBS China XPB
Posted By: James Allen  |  07 Aug 2013   |  6:13 pm GMT  |  65 comments

Formula 1 has seen a number of business sectors come and go since the championship began more than 60 years ago. An analyst for UBS, a global partner of Formula 1, has looked into those changes and come up with a number of interesting conclusions.

There are two main reasons why companies decide to engage in sponsorships: the specific nature of the product and its relevance to sport. Therefore companies such as oil, tyres and automotive are more inclined to spend money sponsoring an F1 team.

Those companies will be more resilient to downturns in the business cycle, and therefore a team could expect longevity with the sponsorship. In contrast, telecoms or utilities companies are more likely to pull sponsorship when market conditions go against them. An example would be Vodafone withdrawing their title sponsorship of McLaren at the end of the 2013 season.

For companies with a direct relevance to the sport, sponsorship is something which interests them because they want to create a close connection between their product and the values of the sport. Red Bull would be a good example. The energy drinks company wants a brand that promotes energy, speed and risk – much like Formula 1.

Tobacco companies were huge spenders in Formula 1 for close to three decades. Because of their budgets, they could afford to become a title sponsor – something that is rare in Formula 1 nowadays with just four of the 11 teams having a title sponsor.

From the 1970s, John Player Special, Marlboro and Benson and Hedges are just some of the iconic brands which created some pretty special liveries.

A ban on tobacco in the European Union saw companies leave the sport, however, Philip Morris continues to partner Ferrari even though their Marlboro brand is no longer present on the Ferrari. Instead, the company uses the partnership as an entertaining platform for Business to Business – something other teams are increasingly doing nowadays to increase their budget.

When it comes to energy and oil, it’s the product which encourages them to join the sport. Fuel and lubricant companies like Shell, Mobil 1 and Total are likely to be resilient to market conditions because they are such a fundamental part of the making Formula 1 happen.

Banks and financial services were quite prominent in the 1990s and 2000s, and their involvement has remained despite the banking crisis. They tend to sponsor the sport to target clientele – as the sport attracts middle to high-end followers – and obtain global reach – with the sporting expanding into emerging markets like Asia, Middle East and South America.

Telecoms and technology companies have gone through rises and falls in the sport as they look to align themselves with technology and innovation.

Companies like Telefonica, Orange and Vodafone have all spent a large amount of money in F1, but most of them have pulled out. However, Blackberry is working with Mercedes to improve communications bwteen team and driver during a race, Tata Communications are a technology partner to F1 and provide the sport with high speed connectivity via its fibre optic ring around the world.

While telecoms companies’ presence decreases, we have seen an increase in Fast Moving Consumer Goods (FMCG) companies – which are focused on shampoos, shaving creams and hair products – enter the sport. An example would be Unilever’s sponsorship of Lotus via its Clear and Rexona brands.

It seems sponsorship has become far more sophisticated than a simple sticker on the car for advertising purposes.

To read more on the subject, visit the Formula 1 pages of UBS.

Featured News
MORE FROM JA ON F1...
Share This:
Posted by:
Category:
65 Comments
  1. Cozza says:

    -10 points for failing to mention Xena warrior princess on the Tyrrell lol

    1. Paul Robinson says:

      This is interesting but a lot of the teams are unable to retain or attract new sponsors because they are not geared up to understand and handle the real needs of big ticket business – many of the current teams expectation are unrealstic given the resource skils and experience invested by them in this area.

  2. Steven L says:

    The Marlboro brand is clearly visible on the Ferrari, it might not say Marlboro anymore, but it is clear to everybody what the white slash across the red signifies.

    I am amazed that no rivals, or EU busybodies have said or done something, it is blatantly unfair for them to be bending the rules like this.

    No surprises from Ferrari though, they have for long given up any attempt at gaining respect, they openly campaign for a better deal, are happy to take cheated points and championships from Mad Max’s farce FIA and sold out all the other teams more than once in their negotiations with dodgy Bernie, all to gain an unfair advantage.

    1. So how about the current ‘JPS’ Lotus, ‘Rothmans’ Williams and the ‘West’ McLaren liveries? They are doing free tobacco advertising for people with age and memory.

      1. Steven L says:

        Are either of those 3 getting any cash whatsoever from the Tobacco companies you mention ?

        They are not as far as I know, however Marlboro still clearly have branding with Ferrari as well as a direct connection financially.

  3. IanC says:

    Interesting that Philip Morris has cancelled the 2014 Wrooom event for financial reasons.

  4. Sebee says:

    Personally, I miss Marlboro branding. I don’t smoke, and always found it funny that the healthiest non-smoker on the grid had the branding on his suit (Schumi). But that word and that logo just looked so right on those McLarens and Ferrari rear wings.

    Also, there was something cool about Rothmans and Williams cars.

    I also liked Benetton quite a bit. Red Bull is very much running their business model partially as well as Ferrari circa 1998-2004. I think their sponsorship case is most interesting, in that they own the “vehicle” of branding deliver, instead of just paying to be a sticker on the side. It would be very interesting to know much Red Bull actually spend each year on F1 as an expense line total.

    Any brands you “miss” in F1?

    1. Marco says:

      Schumacher is a smoker.
      He was known to smoke cigars together with Sid Watkins, and in the time between his F1 stints, a friend of mine saw him at the Kerpen kart track chain smoking cigarettes.

    2. Andrew C says:

      I miss the gold Bensons colours of the Jordan’s and also their reptile and hornet graphics on the nose cones. They were just plain fun to look at and gorgeous in gold.
      The 7up green Jordan’s were actually gorgeous too.
      I do miss the Rothmans Williams cars too. For me I think they represent the end of the more innocent, fun and less corporate times of F1.
      The branding I miss the least were those Winfield Williams cars which were just gross! It was like someone said let’s design the ugliest colour schemes to complement the worst mechachrome engines to ensure there was nothing good about the package to highlight.

      1. Louis says:

        i completely agree with your assessment on the Winfield livery.

      2. Rudy says:

        Uglier livery: The BAR Hondas with the Earth logo on them. An d also the one form the same team half the car Lucky Strike and half the 666 brand.
        Best livery: mmmm…. Has to be the original JPS. Those cars were elegant and looked cool. Also the red and white from the 60′s with the Leaf branding.

    3. Scuderia McLaren says:

      Sebee, Schumacher was a smoker actually. Not habitual / daily smoker of course, but certainly in social environments. Many a time was he pictured with a cigar.

      1. Sebee says:

        I smoke cigars here and there. I don’t consider myself a smoker.

        Cigars are usually a celebratory thing. Schumi sure had a lot to celebrate. If he only smoked one each for poles, wins, WDCs then you’re right – he would be considered an addicted smoker. :-)

    4. RobInVictoriaBC says:

      Someday, hopefully, someone will write a book about the efforts to get around the tobacco advertising ban. Remember ‘Buzzin Hornets’ (B+H)? I think Mild Seven became ‘Wild Style’. ‘West’ became ‘Mika’, but unfortunately I never saw a ‘Dave’(Coulthard), just plain ‘David’. ‘Camel’ on the Williams became a set of swollen, vaguely readable letters. The best though, was Marlboro. They slowly changed into a set of vertical lines in the height of the letters in ‘Marlboro’, until they became what they are now, simply a white space on the Ferrari engine cover. ‘Silk Cut’ was always a nice look too on, I think, the Jaguars at Le Mans. On a slightly different subject, a colour I would love to see return is the ‘orange’ McLaren’s. Enough with the silver already.

      1. RobInVictoriaBC says:

        But here’s one I will never miss, Honda’s ‘Earth Car’. I remember Jensen flying back in his personal jet from pre-season testing, I think in Bahrain (?), to London to announce at a press conference that he truly cared for the environment and to prove it he said that he always turned his tv all the way off now – never to ‘standby’ anymore. Then back on the jet to the Gulf. That was when I knew that Honda were well and truly running out of ideas, at least as team owners. Sorry Jensen, but that one did sniff of desperation.

      2. Sebee says:

        Well called.

        Maybe we should look at ugliest liveries we are glad are gone too!

      3. Random 79 says:

        Well on the bright side at least by turning off the TV while he was away he offset all the emissions put out by the jet (not to mention the testing) ;)

        @Sebee

        For me the original 2010 HRT is still the bog ugliest F1 car I have ever laid my eyes on. If you can beat that I’d be impressed…if impressed is the right word ;)

      4. Sebee says:

        Honestly Random, those patchwork Minardis always lookes like you dumped a bunch of decals out of the misc. drawer to me. I don’t remember those HRTs, wasn’t hard to miss them and avoid them really. They usually got 15s of screen time each GP.

      5. Ric J says:

        I think the best euphemism was when the “West” cars were labeled “East”

      6. rob in victoria bc says:

        ‘Lucky Strike’ became ‘Look Alike’.

      7. captainj84 says:

        my favourite was “buzzin hornets” on the jordan.

    5. Dino says:

      Rizla and Penthouse!!!!

    6. CunnyFunt says:

      I think everyone misses Marlboro mate ;) Those damn P/C do gooders ruined it, just as they have ruined many other things in this world.

    7. Tim says:

      The black and gold John Player Special Lotus cars looked fantastic – even still seeing them at historic/masters GP events you can’t help but be impressed with them … the new Lotus just doesn’t quite match them.

      Also, as a kid I remember “Parmalat” emblazoned on cars … despite having absolutely no idea at the time who they were or what they made, but it is a name that has stuck in my mind!

      1. Schnell! schnell! says:

        I recall discovering the Surtees with Durex sponsorship from the 70s. Even if I had no idea why mum slapped dad for saying they did well in the wet……

    8. Tony says:

      I think we’ll always miss the tobacco brands, they all had such distinct colour schemes and patterns. There are very few brands these days that are as closely linked to colours and patterns as they are (or were if you are an Australian).

      1. Andre says:

        While I’m not a smoker, one think I acknowledge is the fact that tobacco have been a reliable source of sponsorship dollars. Sadly though with with the war on smoking we now a condition where governments are banning the advertising/displaying of tobacco thus choking away what has been a reliable source money for motorsports the world around.

        To further continue the discussion of sponsorship, I remember back in december of 2011 PepsiCo had signed $50 million deal with singer beyonce. So what does have to do with motorsports? to put it straight if I were the one writing that $50 million check, I would’ve directed that money towards some form of motorsport team sponsorship and simpily because it makes alot of business sense as most sponsorship dollars these days are coming energy drink and soft drink companies as oppose to someone who in no way have any relevance to the brand.

    9. Spyros says:

      An odd footnote about the Marlboro-clad Ferrari was that it forced a change to the color of the ‘Ferrari-rosso’ (red). If you look at Ferraris from the 80s and early 90s, they were a much darker, almost burgundy shade of red. Some said they lightened the tone to make the car look better in the cameras, but really, they simply split the difference from the almost day-glo orange/red of the original Marlboro logo.

      The irony of this is that if you look some 10 year-old Ferrari road cars, they seemed to adopt the same Ferrari/Marlboro color! Thankfully, some of the newer ones seem to have a darker shade of red, much closer to the original.

      1. JackFlash says:

        Ferrari offers more than one form of ‘red’ paint colour for roadcar/sportscar customer orders.
        Scuderia red = lighter brighter red of Marlboro SF F1 livery form
        Monza red = traditional Ferrari darker scarlet
        + Another variant if I remember.
        A lot of Ferrari supersportcars (Enzo, 458 Italia) look best in Scuderia red, accenting the yellow of badging and yellow Brembo disk calipers. The 599 is best in traditional Ferrari scarlet, in contrast. IMHO. Personal tastes… JF

      2. Spyros says:

        Aaah, so it has a different name? That’s very good to know. I feel a bit better now. Thanks for setting me straight!

    10. Heinzman says:

      I’m a Ferrari fan; even I miss the West McLarens. Favourite colours of all time were Fernando’s championship Renault cars

    11. iceman says:

      In the last year or two an “electronic cigarette” manufacturer called E-lites has appeared as a big advertiser at British Superbike events, with branding that’s very reminiscent of Marlboro. Swan and Rizla either are or have recently been big sponsors in bike racing too so the tobacco link is not completely severed.

      Booze firms have been major sponsors in the past: the classic Martini liveries spring to mind. There are still a few booze sponsorships around, e.g. Force India.

      I quite like the Penthouse sponsorship that Hesketh had in the 70s :)

    12. Hendo says:

      I really didn’t like the West McLarens or the Mild Seven Bennetons. Although the early green/red/yellow Bennetons would be among my favourites.
      And of course the Gold Leaf & JPS Lotus colours were great too!
      It’s hard to go past Martini on any car, in any event!

    13. Johny says:

      Honda’s Lucky Strike / Look Alike was interesting especially since the team started with cars that didn’t look alike when they were BAR.

  5. andrew says:

    GE has re-entered(used to support Ferrari)the sport via Caterham, presumably to sell jet engines and their service contracts to Tony Fernandes’ airlines. I don’t think the team gets any direct financial support, though, they may get in-kind technical consideration?

    1. Hendo says:

      I think a lot of the Automotive industry sponsorship (such as Total, etc) is in-kind – and that’s why they tend to hang around longer, as its not jut a cash outlay for them.

  6. Skan says:

    I would love to see more technology companies sponsoring F1. I see a natural intrigue in companies like Apple, Microsoft or Google being associated with F1 cars.

    1. Nick says:

      Nah, those tech companies are better suited to movies and TV…where they can put iPhones, iPads, Surfaces, WP8 Phones, iMacs in practically every scene and saturate content with them….

      Then again, Microsoft does have space on the Lotus this year with their Microsoft Dynamics.

    2. Stuart says:

      That would be interesting and you think Google and Apple would have the money.. I think that sector as a whole would be quite unreliable as a sponsor due to their sensitivity to market volatility

    3. woodframer says:

      Google would want one if those silly mapping cameras on the car, not very aero… but the 360* race photos would be awesome!

      1. Ash says:

        Haha! Nice one!
        Not to mention that every race would have a different ‘Google’ logo on it like their main search page… Not that its a bad thing though, would be awesome!

        I really miss the ‘British Racing Green’ Jaguars with the leaping cat on the air-box, and (as already mentioned) the ‘Buzzin Hornet’ Jordans, that wasp looked ace!!!

        Favorite car/livery combo is the Ferrari F2008 in Marlboro livery at the Monaco GP.
        All those slits, gills, flutes and aero-swept angles combined with the true Marlboro branding was a knock-out.

        (PS I somehow replied to this comment by posting a new oneat the bottom, sorry guys… Ignor my next one!)

      2. Hendo says:

        Yes please

    4. Kris says:

      You’d imagine it’d be a little risky for Apple or Google, the latter especially given their dedication to being carbon neutral and promoting the type of IT that supposedly helps reduce CO2 emissions elsewhere. While an e series might be appealing, I fear F1 is a long way from being aligned to Google thinking on green.

    5. David Young says:

      Those companies are doing fine without F1. What would they gain by involving themselves? Blackberry is tied in with Mercedes but they’re desperate. And so far it hasn’t produced any positive results for them.

  7. Erik says:

    James, have all teams readjusted their budget forecasts taking into account the economic climate, or are the larger teams still aiming to run on $200 million budgets like in the early noughties? I’m curious to find out if today’s larger teams can legitimately find Toyota F1 levels of finance hence their resistance to cost-cutting. As you say, a Petronas for example is sitting pretty in today’s economy?…

  8. Chris says:

    The next big sponsors will come from the middle east. I’ve always been perplexed though why we don’t see teams getting different sponsors from race to race? You would think every time the circus comes into town, there would be big local sponsors queuing up to get their branding on the cars for their home gp’s!!

    1. Sugar Water says:

      I want to believe F1 needs to garner a larger footprint in the USA. Despite financial challenges the US economy drawfs all others by magnitudes. How they do that in the face of existing racing programs is the 64 million
      ( er billion ) dollar question.

  9. franed says:

    Sponsorship is about to become the limiting factor, deciding in 2014 which teams survive and which disappear. Next year the budgets required take a large hike due to the cost of the new engines.

    At the same time, in the major F1 centric countries the FTA tv audience has diminished, effectively cut in half, whilst the Sky F1 audience is minuscule. One has to wonder why it is worthwhile paying tens of millions to sponsor a team when the viewing audience is being restricted by the commercial rights holder.

    Two or maybe three teams could disappear in the next few years. The financial crisis is a very long way from resolved. Countries temporarily emerging from recession have 10 or 20 years of debt to pay off. Of course devaluation (quantitative easing) reduces the debt but makes the budgets required much bigger.

  10. Horno says:

    Could it be that Red Bull will start sponsoring Ferrari once Vettel will join them.. haha that would be strange, but the best of both worlds.

  11. CTP says:

    As long as FOM continues not to acknowledge the existence of the Internet – and thus those that follow F1 become a shrinking, aging group – sponsorship will continue to decline.

  12. Raptor says:

    I started following F1 back in the 80′s.
    The cars had the most beautiful liveries back then, can’t nothing compare to black (JPS) and yellow (Camel) Lotuses and of course Marlboro McLaren (except that ugly yellow/white). And even Ferrari looked good, with darker red and black F/R wings, 1988 Mild Seven Benneton, Camel/Canon Williams and Gitanes Ligier

  13. franed says:

    Ferrari are obviously sailing close to the wind with their continued sponsorship from Philip Morris, perhaps Luca should remember this when attacking Merc.

  14. Somersetracer says:

    I remember when BAR first appeared on the F1 circuit, they wanted to have their 2 cars in different liveries – 555 for 1 car and Lucky Strike for the other I think. They weren’t allowed to do it as it might have confused us fans not knowing which team they were (as if!).

    They got round it by painting both cars with both liveries – one down each side of the cars, not as good as both different, but a good compromise.

    1. rob in victoria bc says:

      I was, and still am, a fan of all the old ‘cigarette pack’ cars, but that BAR 50/50 split was godawful. Ruined the symmetrical look of the car. Sorry.

  15. Me says:

    Was always a fan of the Ligier with the Gitanes sponsorship… lovely car.

  16. Ash says:

    Haha! Great call!!!!
    Not to mention that every race would have a different ‘Google’ logo on it like their main search page… Would be awesome!

    I really miss the ‘British Racing Green’ Jaguars with the leaping cat on the air-box, and (as already mentioned) the ‘Buzzin Hornet’ Jordans, that wasp looked ace!!!

    Favorite car/livery combo is the Ferrari F2008 in Marlboro livery at the Monaco GP.
    All those slits, gills, flutes and aero-swept angles combined with the true Marlboro branding was a knock-out.

  17. Louis says:

    Maybe some of the teams should consider having specific sponsor for different continents of the world. For example, a group of Asian sponsors for the Asian races, another group of European sponsors for races in Europe, the same for the races in South/North America. This gives them more prominent attention for their target markets.

    Instead of having blank spaces on the car where no one big sponsor is willing to sponsor the whole season, this might be easier/cheaper to attract middle size companies to join in. i believe there’s only so many big international companies that have a global market and most of them have been approached one way or another. Instead, some of the middle size companies who don’t have a global presence yet could be good source of income, so sell them the space for races in their continent only.

    the overall revenues could be similar to a big sponsor who’s willing to sponsor for the whole season.

  18. Zombie says:

    My fondest memory of a brand and motorsport creating one seamless image would that of Kevin Schwantz and his Pepsi branded Suzuki RGV 500 in the late 80s putting mid-corner blackies with the rear wheel and pulling a massive wheelie coming out of spoons curve in Suzuka ! Epic !

  19. Leal says:

    Interesting no word about watches (tag-heuer, rolex, etc)…

  20. Kirk says:

    James, do you know if McLaren will change their colors now that Vodafone goes away and Slim companies will arrive? I have already seen the brand Claro Video in the rear wing. Will the new sponsor be a title sponsor as Vodafone today?

    1. Random 79 says:

      Apparently they will have a new title sponsor and I’m guessing a new livery.

      TBA…

  21. Sam Oz says:

    How many teams out there have a legit major sponsor of any kind?

    Red Bull – Nope: owner brand (however, now there is Infiniti)
    Mercedes – Yep: Petronas (or is this b2b?)
    Ferrari – Nope: Santander is Alonso’s, Shell is b2b
    Lotus – Nope: Genii = owner brand. Lotus pay nothing
    Force India – Nope: All owner brands
    McLaren – Yep: Vodafone (at this stage)
    Toro Rosso – Nope: owner brand
    Sauber – Nope (Except now there’s Russia)
    Williams – Nope: PDVSA is Maldonado’s
    Marussia – Nope
    Caterham – Nope (nothing major anyway). Mostly owner businesses…

    Ladies and gents that’s really only McLaren and perhaps Mercedes that really get and REAL, substantial third party dollars.

    That is scary for the sport!

    1. Sam Oz says:

      …and Red Bull by way of Infiniti, but b2b enters into again re: engines…

    2. James Allen says:

      No, you’re well wide of the mark here

      There are plenty of sponsors. Eg Lotus has Clear and Rexona and Total

      You are right that there are very few title sponsors, however

LEAVE A COMMENT

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Top Tags
SEARCH News
JA ON F1 In association with...
Download the chequered flag podcast today
Download the chequered flag podcast today
Multi award winning Formula One photographer
Multi award winning Formula One photographer