F1 - where has all the money gone?

[RS]

With even decent teams like Lotus and Sauber struggling for cash, it really makes me wonder why there are very few "real" sponsors involved in F1? It has a fanbase of hundreds of millions around the world, probably of a good demographic, yet there seem to be very few big brands interested in F1 these days.

By "real" sponsors, I mean ones which don't either

- own the team (Red Bull)
- Are owned by the owner of the team (Kingfisher e.t.c.)
- Are linked specifically to the driver (PDVSA, Venezuela e.t.c.)

It seems not only is F1 too expensive, but the corporate world is not really interested.

I think it's a problem when even relatively successful teams like Lotus can't pay their bills.

[Mark]

The world is still basically in recession.

Sponsoring F1 teams is exceptionally expensive in terms of the return you get for your investment.

Back in the day there was a ready supply of cash from companies that needed to boost the profile of their brands but we're heavily restricted in advertising in other ways. But we don't allow tobacco sponsorship any more.

[steveaki13]

My head spins really.

I mean on the one hand all of the limiting rules to save cash and F1 as it is now, leads to large portions of races being cruisey save fuel, tyres, gearbox, engine races. Which I hate and would prefer unlimited engines, gearboxes & tyres to allow more pushing in races.

On the other hand costs are so high already, that new and existing teams are already struggling and suggests that costs need slashing.

Maybe the answer comes with slashing the technical side of F1 for more basic cars? Allowing more racing for less money and new teams to enter.

[webberf1]

The world is still basically in recession.

Sponsoring F1 teams is exceptionally expensive in terms of the return you get for your investment.

Back in the day there was a ready supply of cash from companies that needed to boost the profile of their brands but we're heavily restricted in advertising in other ways. But we don't allow tobacco sponsorship any more.
Well that will spell big problems if (as looks like it will happen) the western economies slide back into another massive recession.

[555-04Q2]

One word......Bernie......he has all the money!

[zako85]

I don't think that things are much different now compared to 20-30 years ago, despite of changes in rules, etc. It's the same cycle of birth, life, and death now as before, often driven by recessions. Back in 80-90s many previously strong teams suddenly struggled and went out of business or were bought out (Lotus, Ligier, Prost, Tyrrell, etc). Now we have something similar going on as well. Some people think you could somehow equalize all teams by reducing everyone's budget to the level of Marussia and then end with a 10-way title tie to the last race, but this can never happen IMHO.

[Malbec]

I don't think that things are much different now compared to 20-30 years ago,

One thing has changed. F1 and FOM are far more aggressive in getting sponsors to sponsor either the sport itself or individual races than teams.

The argument is difficult to fault. Sponsoring a team is very risky. You might sign a 5 year deal with a top team only to find it slide down the grid and get less exposure (like McLaren). The team might get caught up in a major scandal and dirty your name (like McLaren). The team might go bust. At any race the cars might spin out on the first lap reducing your exposure.

Instead if you sponsor a race or the sport your title's exposure will be guaranteed and will be more visible to the casual viewer.

Thats why Sauber lost UBS to F1, the chief exec wanted to sponsor the team but the board realised it made more sense to sponsor F1. Apparently if FOM hear of a major sponsor lining up to sponsor a team they try to get them to sponsor the sport instead, so its a wonder that any of the teams get good deals these days.

[dj_bytedisaster]

On top of that, the big sponsors of yesteryear aren't allowed anymore - tobacco companies.

[Whyzars]

Ummmm, an F1 sponsor can go a whole season to see a glimpse of their logo on CNN. The vision that was captured when Alonso gave Webber a lift back to the pits was a rare moment and very rewarding for their sponsors. The camera's followed the pair as they made their way around the circuit. Every news program had it as a major vision for the race. It will be played over and over.

That one exceptional event is why sponsors pay for their logo on an F1 car. I'll bet sponsors would want to see more rare moments like that.

Instead of turning a blind eye and giving the drivers a dressing down for being naughty - nobody was killed -, the governing body slaps them both down and sends one of the top drivers in F1, who is racing in his last season, back in the pack at his next race. Red Bull must be livid and every sponsor of an F1 car should be protesting the decision to penalise Webber.

The teams should demand the Webber decision be overturned for the sake of potential sponsors who might be discouraged to see F1 as a sport where nothing interesting is allowed to happen.

You ask where the money has gone, the regime of mediocrity and blandness that has evolved could be a pointer...

[AndyL]

Instead of turning a blind eye and giving the drivers a dressing down for being naughty - nobody was killed -, the governing body slaps them both down and sends one of the top drivers in F1, who is racing in his last season, back in the pack at his next race. Red Bull must be livid and every sponsor of an F1 car should be protesting the decision to penalise Webber.

A dressing down is exactly what they got isn't it? That's pretty much the definition of a reprimand. Webber's grid penalty is for 3 reprimands - for this incident, and speeding under yellow flags, and colliding with Rosberg.

[NaBUru38]

I don't think that things are much different now compared to 20-30 years ago,

One thing has changed. F1 and FOM are far more aggressive in getting sponsors to sponsor either the sport itself or individual races than teams.

That's true. Plus, only a few teams get to the podium (unlike IndyCar, for example). Sponsoring a mid-pack team isn't good business, except for national companies.


Ummmm, an F1 sponsor can go a whole season to see a glimpse of their logo on CNN. The vision that was captured when Alonso gave Webber a lift back to the pits was a rare moment and very rewarding for their sponsors. The camera's followed the pair as they made their way around the circuit. Every news program had it as a major vision for the race. It will be played over and over.

I doubt that a 30-second newspiece is worth the money. By sponsoring an F1 team, viewers associate those companies as major and established. Seeing the same sponsor on a car for years is even better for the company.

[Mark]

It works better in cycling IMO. Where the name of the team is the name of the sponsor, so they are called like, Sky, Garmin etc, not McLaren / Ferrari. So the sponsors get a name check in the commentary.

[dj_bytedisaster]

It works better in cycling IMO. Where the name of the team is the name of the sponsor, so they are called like, Sky, Garmin etc, not McLaren / Ferrari. So the sponsors get a name check in the commentary.

Technically the sponsors are part of the F1 team names, too - Vodafone McLaren Mercedes, Scuderria Ferrari Marlboro etc. but it would be too cumbersome to always say the full team name in the commentary, or we'd end up with NASCAR-esque hillarity

"It's time for an update on that rack, sponsored by Maco Autobody shop. Let's try to get a word with the driver down there in Zagnut infield communication center."

[Malbec]

It works better in cycling IMO. Where the name of the team is the name of the sponsor, so they are called like, Sky, Garmin etc, not McLaren / Ferrari. So the sponsors get a name check in the commentary.

Sponsoring an F1 team has hidden benefits though. If Vodaphone uses McLaren imagery to advertise then all the other McLaren sponsors get exposure on the advert without paying a penny. I don't think any sport outside motor racing gets this level of cross-advertising.

Also because of the prominent positioning of logos and the fact that historic F1 seems to get more exposure than past seasons of other sports, sponsorship is likely to get returns many years down the line. Imagine all the free advertising Honda, Malboro and Nacional bank get whenever there's a Senna tribute film or programme.

[Mark]

And tobacco sponsors too. Which looks very strange these days.

[jens]

The money has gone or disappeared into recession blackhole. So has the F1 money, which is just a small part of the wider world context.

As pointed out, the ban of tobacco sponsorship has dried further avenues of sponsorship possibilites.

[steveaki13]

Bring back Tobacco advertising. :smokin: I don't smoke or want to smoke, So why the hell should I care. :devil: :|

[BDunnell]

On top of that, the big sponsors of yesteryear aren't allowed anymore - tobacco companies.
And quite right too. It was ridiculous that one sport became so dependent upon sponsors from a single field.

[BDunnell]

Bring back Tobacco advertising. :smokin: I don't smoke or want to smoke, So why the hell should I care. :devil: :|
Because it's not just about you. Anything that can be done to stop people from taking up smoking is fine by me.

[BDunnell]

Technically the sponsors are part of the F1 team names, too - Vodafone McLaren Mercedes, Scuderria Ferrari Marlboro etc. but it would be too cumbersome to always say the full team name in the commentary, or we'd end up with NASCAR-esque hillarity


It used to be much more the case that commentators referred to sponsors' names. Watch a GP from the '70s and one often hears of the 'UOP Shadow', 'Olympus Hesketh', 'Elf Tyrrell' and so forth, to say nothing, of course, of JPS. The names were less long-winded than they often are today, I suppose, and tripped off the tongue that bit better.



"It's time for an update on that rack, sponsored by Maco Autobody shop. Let's try to get a word with the driver down there in Zagnut infield communication center."

Ah, memories of the Bathurst coverage in years gone by, with the 'Toyota Track-Cam', 'Ferodo Replay' and similar nonsense. I seem to recall that one one occasion this got so bad that the BBC had to pull its highlights coverage. But I digress.

[steveaki13]

Bring back Tobacco advertising. :smokin: I don't smoke or want to smoke, So why the hell should I care. :devil: :|
Because it's not just about you. Anything that can be done to stop people from taking up smoking is fine by me.

I was joshing man, I despise smoking and fully agree with you.

Although I dont drink either and think similarly about that. I bet not many would agree with that though. :)

[webberf1]

Is it possible that F1 teams are losing revenue/sponsors because the sport has focussed way too much on entering emerging markets (who often don't even appreciate the sport that much) rather than staying true to its core markets? E.g. Europe losing most of its races...

[call_me_andrew]

Racing is a lot more expensive than it used to be. Name another open-wheel racing series that allows teams to build their own chassis.




Technically the sponsors are part of the F1 team names, too - Vodafone McLaren Mercedes, Scuderria Ferrari Marlboro etc. but it would be too cumbersome to always say the full team name in the commentary, or we'd end up with NASCAR-esque hillarity


It used to be much more the case that commentators referred to sponsors' names. Watch a GP from the '70s and one often hears of the 'UOP Shadow', 'Olympus Hesketh', 'Elf Tyrrell' and so forth, to say nothing, of course, of JPS. The names were less long-winded than they often are today, I suppose, and tripped off the tongue that bit better.


I've heard of some networks that will not aknowledge sponsors unless the sponsors pay them.

[zako85]

Is it possible that F1 teams are losing revenue/sponsors because the sport has focussed way too much on entering emerging markets (who often don't even appreciate the sport that much) rather than staying true to its core markets? E.g. Europe losing most of its races...

Europe hasn't lost most of its races yet. Compared to the early 90s, French, San Marino, and Portuguese GPs are missing. All other European GPs are still active. The sport wouldn't have expanded into emerging markets if this didn't generate additional revenue. The teams get approximately half of TV rights revenue. Yes, the distribution is more skewed towards the top teams. Bernie's organization picks up the tab for some of the transportation costs (e.g. each team supposedly has several containers available). Certainly, teams like HRT and Marussia could probably be more strained because of the long calendar. I personally suspect that Lotus and Sauber may also be in trouble because up to 2009-2010 they were well funded works teams. It could be that their spending and ambitions remained high even after losing the manufacturer umbrellas.


BTW, this is an interesting discussion. I wonder what the "insiders" would have said about this topic. I watched the 4-part "Patrick Dempsey: Racing Le Mans" mini-series on Velocity. And really like half of it was about how hard it's to find money for racing and how much it sucks to be broke.

[steveaki13]

It must be hugely costly, I mean money is flooding into Football so there is money around, but just not enough money to fund F1 adventures anymore.

There used to be a few eccentric rich guys having a go at F1. No more though.

[henners88]

It must be hugely costly, I mean money is flooding into Football so there is money around, but just not enough money to fund F1 adventures anymore.

There used to be a few eccentric rich guys having a go at F1. No more though.
The teams get more money now from TV rights as they are being sold for a higher profit since the switch in many countries to pay TV. The downside is less viewers are tuning in. In Britain they've seen an overall decline of around 3 million since the end of 2011 and that must be something sponsors are thinking about. Why invest in a team if the exposure you once had is diminishing? I think it will take a while for it to really affect the sport, but I feel with F1 they need as many people watching as they can. Its not like football when that went off terrestrial, as F1 is a little more complex and harder for kids to relate to in the playground. The interest is harder to maintain for the younger generations if they don't have exposure to it IMO. F1 is already suffering in terms of smaller teams not being able to attract money and when you have teams relying more and more on pay drivers, I feel it limits the quality in the field. We've always had pay drivers, but even some of the bigger established teams are using this route simply for more funding. Its interesting to watch it all change.

[webberf1]

It surprises me that oil companies are taking a backseat with sponsorship. Companies like Shell, Mobil, Petronas for example used to be much more heavily involved in the sponsorship of teams.

[Malbec]

It surprises me that oil companies are taking a backseat with sponsorship. Companies like Shell, Mobil, Petronas for example used to be much more heavily involved in the sponsorship of teams.

Shell/Ferrari, Petronas/Mercedes, Mobil/McLaren, Total/RBR/Lotus/Caterham, CEPSA/STR and $50 million a year from PDVSA to Williams. Don't think they could get more involved do you think?

[AndyL]

To an extent the cigarette companies have been replaced by gambling companies in sports sponsorship generally. But they are not very evident in F1. I guess one problem is they tend to be national/regional brands rather than global ones so they're less interested in globe-trotting sports like F1.