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Will Branson put real money into Brawn?
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Will Branson put real money into Brawn?
Posted By:   |  29 Apr 2009   |  10:08 am GMT  |  0 comments

There seems to be a division of opinion about what is going on between Brawn GP and Sir Richard Branson’s Virgin Group.

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There are stories that a deal has been done for this year and next, while there are strong suggestions coming out of the team that other parties are interested and Branson should pony up some more serious money if he wishes to go forward.

Branson was in the Bahrain paddock at the weekend, holding a press conference to announce that Rubens Barrichello and Niki Lauda had both paid €200,000 to fly into space on the Virgin Galactic spaceship. Lauda, who is on crutches after a hip replacement, is due to take a turn at flying the craft.

The Real Honda website, which has close links with the Brackley team, is reporting that a deal is done for Virgin to sponsor the car for the season at less than £1 million.

However in the Times today, Brawn CEO Nick Fry gives a very interesting quote,

“Richard has made an offer. The issue for us is whether or not it is the best offer we can get.”

Fry goes on to say that,
“We’ve got between 20 and 25 companies talking to us either about sponsorship or some wanting to buy into the team. Ross and I need to come to the correct decision, not the quick decision.”

Branson has a track record of getting the maximum exposure for the minimum spend. Already the media value to his brand of the exposure from the first four races plus his appearances in Australia and Bahrain is estimated at £10 million. That proves to him on the one hand that F1 and Brawn in particular, is a great way to get exposure, but it also shows him that he can do it very cheaply.

But this is not going down very well with the powers that be in F1 and Brawn is now coming to the point where they are asking him to invest serious money for the long term.

They have a ‘budget to impress’ in Ross Brawn’s words, from Honda to get them through the 2009 season, but they need more money to develop the car to stay ahead of the rest and win the world title and they also need money to get started on next year’s car.

The word I heard in Bahrain is that Brawn are looking for a three year commitment from any prospective partner. The discussions with Virgin have revolved around the rest of this year and a commitment to fund the development of the 2010 car.

Discussions will of course have been hanging in recent weeks, waiting for the FIA to set the level of the budget cap. Many teams are nervous about sponsors’ reactions if the budget is set at £30 -50 million, as they fear the sponsors will be asking for the price to come down proportionately.

However the price they pay is not related to the team’s needs, it is related to the media value of the exposure they get, based on camera time, press cuttings and so on, something Branson and his team will be all to aware of given their success in that area in the last month.

The budget cap will redefine the business model of F1 and if the price is low enough it may make it attractive for Virgin to consider more than a sponsorship, but to buy an equity stake in the team. F1 teams are set to become profitable under a budget cap, so as an owner/partner you still get your exposure and you make money too. Time will tell.

As Honda the team was very close to a deal with Emirates airlines, a deal which was linked to the Earthdreams concept. But it never happened. The team has not been the market leader in attracting sponsors at any time in its history. As BAR they didn’t really need sponsors as the whole thing was bankrolled by a tobacco company. When it became Honda and BAT pulled out, the same attitude continued.

Fry and his new commercial team are under pressure to deliver a full roster of sponsors to take the Brawn team forward and make sure that this year’s championship leading performance is not a flash in the pan.

An announcement about Virgin’s ongoing involvement is expected at the Spanish Grand Prix in a few weeks time.

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