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Mercedes lands €30 million Petronas sponsorship
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Mercedes lands €30 million Petronas sponsorship
Posted By: James Allen  |  21 Dec 2009   |  11:51 pm GMT  |  96 comments

The Mercedes GP team has won the hotly contested battle to secure the sponsorship of Malaysian oil company Petronas, in what it describes as a “long term deal”. The deal is a significant one, worth €30 million per season. Combined with the prize money the team won this season as Brawn GP, which is of the order of €50 million, this gives Mercedes an €80 million budget for 2010 before they themselves have injected anything, or any other sponsors have contributed.

Alongside Ferrari and McLaren, this team is starting to look like a new powerhouse team for Formula 1, something it never was under BAT or Honda ownership.

The team will be known as Mercedes GP Petronas F1 team, so it is basically a title sponsorship, although the sponsor name comes after the Mercedes name.

This is a great coup for the new Mercedes team, which was Brawn GP this year until Mercedes acquired a 75% stake.

In addition to the media value that Petronas will derive from being on a car which is likely to be pretty high profile in 2010, particularly if Michael Schumacher is driving one of the Silver Arrows, there is a strong business to business deal behind it. One of the incentives Mercedes can offer a company like Petronas is a deal to put its lubricants into its road cars, as Ferrari does with Shell, but clearly Mercedes is a far larger volume seller of cars, vans and trucks. Equally, Mercedes will look to leverage Petronas’ networks in Asia for business growth. With McLaren, Mercedes had a long association with Mobil.

“Within the limits of the new Formula One resource restrictions, the Mercedes GP PETRONAS Formula One Team will be well positioned to achieve our goals, “said Mercedes’ Norbert Haug. “We will all strive to present efficient success in the future knowing at the same time that the new Formula One season with some fundamental rule changes will be a particularly challenging one.”

The deal is a blow to Sauber, which has a relationship with Petronas stretching back overy 10 years. Since being forced to take back the team from BMW, Peter Sauber is battling with not having any prize money rights and now has lost a major sponsor. It is also a blow to Lotus, which is Malaysian owned and which has strong political associations in Malaysia.

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1

There is an assumption in the article that I would question: namely that Brawn GP gets to keep all of the FIA prize money that the team won in 2009.

If I was Honda, and I was agreeing to provide most of the funding for the team for a season after I was withdrawing from F1, I would want to minimize the financial exposure, since there is no promotional upside for Honda for Brawn GP winning races and championships. Ideally I would want to keep all prize money won by the team, so that I can net it off against the money provided to keep the team operational in 2009, for which I get no promotional value. At the very least I would want a split between Brawn GP and myself for the prize money. This would give Brawn GP a powerful financial incentive to win, but would also provide Honda with a return on its investment.

I do not believe that Brawn GP/Mercedes GP gets to keep all of the 2009 prize money. They may well get to keep some of it, but I refuse to believe that Honda were ill-advised enough to not stipulate that some of the money would be returned to Honda as an offset against their emergency 2009 funding for Brawn GP.

2
Paige Michael-Shetley

It looks like the rumors of the new Mercedes/Brawn title sponsor being an Asian company were correct.

Surely, they’ll bring a whole hoard of new sponsors on board given the brand name of Mercedes, the fact its the defending world champion, and that they will now have Schumacher driving for them.

3

I got my copy of the JA book today 😀

Though I was only allowed a 10 minute browse before it was swiped off me for wrapping, the 10 mins i saw was a top read!!

Merry xmas JA

4

Cheers. Happy Christmas

5

Schumacher has signed! can’t wait for racing in 2010

6

Schumi HAS signed. woop woop!!

7

The BBC and Times are reporting Schumi as having signed for Merc. Deal done.

8

James news is just breaking that accordind to Bild online Schumacher has signed a deal with Mercedes!

Can you comment on this?

9

Off the subject i know but James can you shed some light on the USF1 name.I seem to recall that Bernie told them they couldnt use ‘F1’ in the title and they confirmed that they would be known as USGPE.Does Bernie think that as they wont be on the grid it doesnt matter what they are called….!?

10

That was until they had their entry accepted. But I think that there are still some problems with the name and particular in the use of it as a URL.

11

James, it would be fascinating to read a blog on how you see the future shaping up for McLaren. I know they recently announced a multi-year Merc supply deal but it seems improbable that they will be happy to be merely a ‘customer’ team for too many seasons. A few weeks ago there was talk of McLaren buying the BMW engine dept with a view to building their own power-plant – is this likely to happen?

Whilst writing, many thanks for all the excellent blogs this past 12 months and best wishes for 2010.

12

Big financial crises always create big oportunities for some people to get a lot almost for free from those who were severely caught.

Honda was in big trouble after having poored huge money into the actual champion car which was rebranded as Brawn. They took long time and a lot of money to develop something very special, with the advantage of having developed it from the beginning with the double difuser in mind.

We will never know wether it would have won with the Honda engine. Maybe yes IF the engine had been upgraded in order to match their competitor’s ones, but this just speculation.

Ross Brawn got some more millions with all the 2009 success by selling his share of the team to Mercedes.

Mercedes had a good engine but without the withdrawal of Honda they would not have had a competitive package. Mc.Laren was a bad car…

Honda’s pull out was a blessing to Ross (more millions in his already deep pocket) and for Mercedes which bought a good team for cheap.

This is life, big failures represent a fortune for those who take over the business and have luck.

There were many lucky coincidences in all this affaire. I´ll not talk about them all because it doesn´t matter anymore. F1 2009 season came to an end and the “winners”, with or without luck, were Ross and Mercedes (Brawn doesn´t exist anymore).

13

Forget it Red Bull or McLaren for the title next year the rest will be in their slip streams

14

That’s a good spot, makes sense to me since Panasonic themselves stated their intent to remain in F1.

15
Stuart the Old Geezer

James

You mentioned some time back the possible entry into F1 of Audi. With the resurgence of the now mighty Mercedes Benz Team are we about to see a return to pre-war German dominance, MB versus Auto Union? Scary.

Merry Christmas and thanks for the most interesting F1 Website; pity you lost the seat alongside Martin Brundle.

Stuart

16

Cheers and Merry Christmas to you

17

Full marks to all parties for this deal as I can’t see a loser, unless next year’s car turns out to be a complete dog which is unlikely given the pedigree of the engineering team.

Daimler buy Brawn GP for a snip (did I read €200 million?) and inheret €50 million 2009 prize money, Mercedes GP get €30 million a year from Petronas, Petronas supply lubricants to Mercedes-Benz, the employees of Brawn GP must be feeling pretty secure and Brawn GP’s one careful owner(s) won’t be left out of pocket either.

After this, anyone less than Schumacher is going to be something of a disappointment.

18

Blue chip brands like Mercedes will always find sponsorship easier to acquire than independents, especially from companies connected to the automotive industry, because of the association with a prestige product.

Yet, in terms of true impact, the graphics on the car are vital. Does Joe Public really associate Shell with Ferrari? I’m not convinced, but for example, Marlboro (or even Yardley) McLaren are much more marketable than Vodafone or West (somebody tells me they made cigarettes) McLaren. Silver McLarens smacked of Mercedes and so will silver Mercedes, which suits me very fine indeed but the sponsors may have a different view.

19

I think this makes 110% sure MS is back…being a proof and a cause at the same time…

20

Makes you wonder if this deal has been in the works for a long time. And the only way to get it done was to get Schumacher there. They needed Nico there in case it didnt get done. And with Jenson there in the way of a Schumacher deal they had to get rid of him the most political way they could. In which they did and once that was done to the surprise of everyone the schumacher rumors started. Kimi stated on November 19th this “I feel they will run two German drivers next year, now that Mercedes are involved.” Just something to think about.

21

Credit to Ross and the team.

A lot of this goes back to Nick Fry (not always popular) having the sense and courage to employ Ross. Credit where credit is due.

22

It’s the only good thing he ever did……

23

James, completely off-topic but I’m off to brave the snow for Christmas break now and see if I can get through to my poor old ma’s house.

Just wanted to say thank you for a year of fantastic journalism. Your articles are second to none and your interaction with us on this blog is ground-breaking in my opinion.

Hope you have a well deserved break and a good Christmas and I’m looking forward to your company on here through 2010… it’s going to be a cracker and your hard work is a very big part of that for many of us. It is noticed and it is appreciated.

24

I have to say the projected image of the car (if you see it on other F1 news websites) with Petronas sponsorship does not look so great. What I’m really wondering though is what Michael Schumacher’s helmet will be like next season.

25

Well, it is your opinion but I think it will be great. Come on, please try to accept changes once in a while. I have the feeling that you are not happy that an Asian company from Malaysia is sponsoring a well-known F1 team, Mclaren Mercedes!

26

Not likely. I’m from Asia myself.:) I just think the Petronas green doesn’t go with the Mercedes silver. 😉

27

Well Tarek. You have to get use to silver with green. Glad to know that you are from Asia.

28

This is quite an interesting deal from a marketing point of view and represents a possibly huge shift in what we all associate in our minds as to what is Mercedes. Let me elaborate a little more:

Mercedes are very European, Mobil has been associated with their brand for many many years pretty much to the extent that both brands are positioned in the same area of value that we hold for each, both are seen as a prestigious brand.

Petronas on the other hand does have some work to do to leverage the same respect within Europe. Can this be done? Perhaps yes it can bit it will take many years and does mark a shift in how Mercedes perhaps plan to market their vehicles in the future.

It’s great to see something new happening.

29

I would imagine that Mercedes is eyeing potential expansion opportunities in the Asia Pacific. Malaysia (Petronas’ home) could well be the regional manufacturing/assembly hub.

If I am not mistaken, Petronas is already in the European lubricant market (albeit only a small %) through its purchase of Italy’s FL Selenia.

Both parties can only win from this partnership.

30

Perhaps its more the other way around? Asia is the growth area for cars and trucks these days. Perhaps Mercedes wants more exposure with a known brand in Asia/Pacific?

31

Is using Petronas lubricants in Mercedes road cars a part of this deal? I can’t imagine that Mercedes would take that step, as I’m not sure Petronas products are well known (or known at all) in the US and Europe.

32

Well, maybe it’s high time for people in America and Europe to know that Petronas products do exist and they are also of good quality.

33

Well everyone wants to back a winner… and with Ross, Schumi, Mercedes, Title winning team, etc it doesn’t get better.

It sort of says, what were Brawn doing about arguing over Jensons wages… there’s more money in that team that all the others…. It is also said that Mercedes new that Schumi was gutted about not being able to return… me smells a rat..

Of course all those ingredients do not necessarily translate into titles. If McLaren, Ferrari, Red Bull etc… keep taking titles away from Mercedes what will be evident is there is no whee to hide..

34

James, your comment about the new Mercedes team becoming an F1 powerhouse is an interesting one. Despite all BAT’s money and the others that followed, it took one man, Ross Brawn, to make it happen. Impressive.

35

Oh yeah and dont forget the engine. That didnt help at all.

36

Thanks, GP, my thoughts exactly. All the money in the world is no match for good management.

37

I dont think Ross Brawn should take that much credit I think it was more to Honda spending much more time developing a car built around a car with a double diffuser and no kers. Way before he was there.

38

Wrong. Work started on the BGP001 early – at Ross’s decree. Before the first race of the season, apparently. He told his drivers they’d be stuck with a crap car all year and he wasn’t spending a moment trying to improve it. Because of his reputation, they stuck with it. As to Honda’s credit – they spent equal amounts of money and time in previous years and got nowhere. Ross provided that team with leadership, direction, and according to the people that worked for him, showed them how to get the best out of themselves.

If it was Honda’s car, it was only Honda’s car up to the point where they had to saw 6 inches off the back of it and bodge the gearbox together with spacers, and stick in a new engine. It’s not like dropping an engine into a clio and going to Halfords to get a fake chrome exhaust.

39

How likely do you think it is that Daimler AG will receive some compensation from Henkel over the employee fraud screw up? This Petronas deal effectively matches/replaces what Mercedes GP were hoping to get from Henkel – looks like win/win for both sides, but would be even sweeter if Mercedes GP received some compensation €€€ too!

Also James, have you heard anything more about possible Panasonic sponsorship of Sauber?

I have also enjoyed following your blog this year, thank you and hope you have a merry Christmas.

40

Why would Henkel pay compensation to Brawn/Daimler? From what has been reported, it appears that BrawnGP didn’t do due diligence on the deal, didn’t make the appropriate checks, and caused a massive amount of embarrassment all round. Henkel had a rogue employee, Brawn did not, it had… well.

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