F1 finds sponsors thin on the ground

As the big players in Formula One offer greater discount to sponsors, the small teams find themselves fighting over the scraps

<b>F1 sponsorship investment 2000-2001</b> Team Title sponsor Total sponsors Total value per annum McLaren West 5 £123.5m £29m Ferrari Marlboro 6 £122.5m £75m BAR BAT 4 £118.5m £50m Jaguar HSBC 3 £90.5m £15m Williams Compaq 5 £82.5m £20m Prost Gauloises 4 £66m £16m Jordan Deutsche Post 4 £46m £8.5m Benetton/Renault Mild seven 5 £41m £20m Arrows Orange 2 £31m £25m Sauber Petronas 3 £20m £11m Minardi Telegonica 1 £14m £14m

F1 sponsorship investment 2000-2001

As the Formula One circus gears up for the start of the championship in Australia next month, the sport, which for so long has been associated with fast-living and high-octane characters, is also having to deal with the label of crisis-hit.

Last month, former racing driver Alain Prost’s team went into liquidation, and Sportsworld Media Group’s shares crashed by almost 60 per cent, after it issued a profit warning partly caused by difficulties in finding sponsorship for Toyota’s Formula One team.

Unveiling the gloomy figures, Sportsworld chief executive Geoff Brown said at the time that the slowdown in interest in sponsorship was the worst he had seen in 20 years, and admitted that he was unsure of when the market would pick up.

But while smaller teams are still searching for sponsors, others such as Ferrari – which won the constructors’ championship and the drivers championship last year with driver Michael Schumacher – are more than weathering the global downturn.

Teams such as Ferrari and McLaren are able to draw on packages ranging from £20m to £75m for title sponsorship and a range of multi-million pound second-tier deals, while others, such as Minardi and Sauber, are reliant on fewer sponsors paying cheaper rates.

Last season, Ferrari secured sponsorship worth £122.5m and for the start of the forthcoming season the team has signed a three-year sponsorship deal with Vodafone reportedly worth $50m (£35m) a year.

M&C Saatchi Sponsorship chief executive Matthew Patten says that teams like Ferrari have “found a market outside Formula One, in the same way that Manchester United appeals to fans beyond the Premiership’s normal catchment.”

Not all the teams have met their sponsorship targets for the 2002 to 2003 season, which starts on March 3. According to industry insiders, some teams could face a 20 per cent drop in sponsorship revenue this year.

Chris Britcher, editor of the sport information services group Sportbusiness.com, says: “If you are not involved in one of the big teams you are going to be thinking hard about whether you want to invest.”

Britcher points out that the cars belonging to the less successful teams spend so little time on air that sponsors question the value of striking deals with them. According to Sportbusiness, while Ferrari took a 29 per cent share of the total TV broadcast time others, such as Minardi, only took a two per cent share.

But industry commentators say that simply being part of the glamorous international Formula One circuit is reason enough to pay up.

Patten says: “It gets more TV coverage than football’s World Cup and it is a huge global factory. Whichever team you are involved with, you still get that lustre.”

He adds: “Traditionally teams sold their sponsorship on performance, but over the past five years we’ve seen the teams that are not able to win a race sell themselves on the individual brands. A sponsorship can also span global and local markets, so German companies may want to attach themselves to Ferrari, an Italian company, because of Schumacher.”

However, it is a widely held view that getting companies to buy into Formula One is not as easy as it once was. Jordan’s marketing director Mark Gallagher says his team, which in total made about £55m in sponsorship last year, will probably take a drop in sponsorship of less than ten per cent. He says that potential sponsors have told him that some teams, which are heavily backed by the car manufacturers, are actually offering free deals to entice sponsors, but he condemns the move for devaluing the market as a whole.

Gallagher says: “The biggest threat is that the manufacturers are prepared to discount sponsorship to an extent that they could destroy the market for independent teams.”

Attracting sponsors to Formula One has become difficult, says Patten, because “other sports are getting better at competing for sponsors”.

Gallagher says that another reason why teams are having problems is that the type of sponsors they have attracted in the past are going through their own difficulties. He says: “Between 1999 and 2001 there was an influx of dot-com and telecom companies that are now in trouble. These were the sectors that Formula One was hoping would replace tobacco companies.”

The FIA, the international motorsports governing body, has outlawed tobacco sponsorship globally from the end of 2006.

Sportsworld head of brand marketing Tony Simpson says Formula One teams should consider brokering tie-ups between their fellow sponsors, in order to fully exploit their association with the sport.

He says: “The biggest problem is that there are only ever going to be two to three winners. Because of this sponsors want more than just a logo on a car.”

In 1991, there were 18 teams. With the entrance of Toyota into the market and the loss of Prost, there will be 11 starting on the grid next month. While it may not seem a concern for the likes of Ferrari and Williams, if the smaller teams are unable to survive, then Formula One will cease to be the event it is – a concern for all teams regardless of their size.

<b>F1 sponsorship investment 2000-2001 </b> Team Title sponsor Total sponsors Total value per annum McLaren West 5 £123.5m £29m Ferrari Marlboro 6 £122.5m £75m BAR BAT 4 £118.5m £50m Jaguar HSBC 3 £90.5m £15m Williams Compaq 5 £82.5m £20m Prost Gauloises 4 £66m £16m Jordan Deutsche Post 4 £46m £8.5m Benetton/Renault Mild seven 5 £41m £20m Arrows Orange 2 £31m £25m Sauber Petronas 3 £20m £11m Minardi Telegonica 1 £14m £14m

F1 sponsorship investment 2000-2001

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