Lack of sponsors on certain cars?

[Stupidlikeafox]

The Sauber car has practically no sponsors adorning it, and Renault has a big blank space on the side pods. HRT are also hardly plastered with logos, which is understandable given they didn't exist until about a fortnight ago.

But the other two have had all winter to sign some deals, so why haven't they done so? Renault have signed up HP, but still have spaces to fill, and Sauber has none, just a plain car.

Surely it can't be that hard to find a company wanting to advertise on their car. Even if they won't be paying top dollar, some money is better than no money and a plain car, surely?

[Racefan_uk]

There's only Petronas on the side of the Mercedes too, none of the teams save for McLaren seem to have a huge amount of sponsor decals. Sign of the times?

[andyps]

I would guess that the trouble is that the teams don't want to get a reputation for doing deals to fill space which could undermine the ability to strike a full price sponsorship deal. I guess there may be a few deals like Brawn had last year which are one offs and relevant to the location or a particular event at various races.

[Holst]

Stupidlikeafox said:

The Sauber car has practically no sponsors adorning it, and Renault has a big blank space on the side pods. HRT are also hardly plastered with logos, which is understandable given they didn't exist until about a fortnight ago.

But the other two have had all winter to sign some deals, so why haven't they done so? Renault have signed up HP, but still have spaces to fill, and Sauber has none, just a plain car.

Surely it can't be that hard to find a company wanting to advertise on their car. Even if they won't be paying top dollar, some money is better than no money and a plain car, surely?

I guess that they wont want to "cheapen" the car by selling cheap sponsorship for a single race unless they are desperate for the cash.

Why they dont have sponsors is a different question. You can see why the front running teams have the big names as they get the most exposure. Sponsoring Renault or Sauber is a big gamble.. after the first race sponsors will be able to see how well the car performs. If they are quick then more exposure, if they are slow then the sponsor can offer less money.

[belleair302]

The Winter Olympics absorbed what American money was floating around, and NASCAR is struggling with commercial backing. The summer World Cup has taken money from Asia and Brazil / Mexico two strong economies and some of the commercial directors of F1 teams would struggle to find their way out of a paper bag, let alone negotiate a multi million pound, euro, or dollar deal in today's marketplace.

The Indian Cricket League has taken asian money and China is struggling with inflation so no cash from there as manufacturing struggles with low US demand and issues with T-Bond prices.

Tough times and the presentations need to show more exposure away from TV and into the business community and online / viral / mobile...not just fluffy commercials.

Finally the prices over the last few years have scared a number of potential sponsors away and F1 today is expensive if priced in pounds or euros for many economies.

Whatever you spend on the initial Rights purchase multiply by two to leverage correctly. Hospitality and trackside advertising are just the tip of the iceberg.

[skwdenyer]

belleair302 said:

The Winter Olympics absorbed what American money was floating around, and NASCAR is struggling with commercial backing. The summer World Cup has taken money from Asia and Brazil / Mexico two strong economies and some of the commercial directors of F1 teams would struggle to find their way out of a paper bag, let alone negotiate a multi million pound, euro, or dollar deal in today's marketplace.

The Indian Cricket League has taken asian money and China is struggling with inflation so no cash from there as manufacturing struggles with low US demand and issues with T-Bond prices.

Tough times and the presentations need to show more exposure away from TV and into the business community and online / viral / mobile...not just fluffy commercials.

Finally the prices over the last few years have scared a number of potential sponsors away and F1 today is expensive if priced in pounds or euros for many economies.

Whatever you spend on the initial Rights purchase multiply by two to leverage correctly. Hospitality and trackside advertising are just the tip of the iceberg.

Funnily enough, an across-the-board budget cap would have relieved the pressure upon teams' finances. Never mind...

[Semi hemi]

Renault have the backing of the Russians, this is why Lada graces a F1 car... the reason there is no other major sponsor could be "product association"
As for Campos/HRT.. its still not certain they will start a GP... so who is going to sink money there...
Same goes for Lotus
remember last season in Melbourne, Brawn was not exactly a rolling bill board.

Edited by Semi hemi on Friday 12th March 22:53

[FourWheelDrift]

Perhaps BMW are still contributing for the Sauber to help them continue.

[andyps]

FourWheelDrift said:

Perhaps BMW are still contributing for the Sauber to help them continue.

As Honda did for Brawn of course. Or maybe there is already a Mercedes equivalent in the wings.

[flemke]

Other causes of the problem are:
- We now have 12/13 teams competing for funding, whereas we used to have 10 all together.
- A number of the biggest sponsors/subsidisers have dropped out, causing healthy teams to seek alternative funding more aggressively than they did.
- The stench of the Mosley Era will take time to clear. Until it does, some potential sponsors will stay away.
- In his over-eagerness to squeeze out the big teams, Mosley gave potential new entrants only a few months to conceive and develop their entire businesses. He cleverly coordinated this with the most difficult time in the last several decades to raise funding. If the FIA had announced that they would accept applications at the end of '09 for '11 entries, there would not have been the farce of teams' being accepted and then, in effect, folding before the first race. All new teams could have gone into their first race with more sustainable foundations, because they had had three times as long to build them.

[andyps]

Interesting that Virgin seem to have done pretty well selling space on their car. No idea if they sold the space for the full asking price of course.

[StevieBee]

FourWheelDrift said:

Perhaps BMW are still contributing for the Sauber to help them continue.

Not according to Peter Sauber in an interview in F1 Racing.

Many of these new teams have non-brand backing, in other words, investors or groups of investors who do nothing other than invest in the hope of seeing a return at some point in the future, usually through the sale of the team and/or TV revenue, etc. As such, there is no need to place a brand on the car (although the additional money this would bring would of course be welcome).

Also, something like 40% of all team sponsors don't actually appear on the cars. These are "partners" who provide goods and services to the team either at a reduced rate or free, in return to paddock club access, the right to use the partnership in their own marketing and so on.

[andyps]

flemke said:

Other causes of the problem are:
- We now have 12/13 teams competing for funding, whereas we used to have 10 all together.
- A number of the biggest sponsors/subsidisers have dropped out, causing healthy teams to seek alternative funding more aggressively than they did.
- The stench of the Mosley Era will take time to clear. Until it does, some potential sponsors will stay away.
- In his over-eagerness to squeeze out the big teams, Mosley gave potential new entrants only a few months to conceive and develop their entire businesses. He cleverly coordinated this with the most difficult time in the last several decades to raise funding. If the FIA had announced that they would accept applications at the end of '09 for '11 entries, there would not have been the farce of teams' being accepted and then, in effect, folding before the first race. All new teams could have gone into their first race with more sustainable foundations, because they had had three times as long to build them.

Flemke, whilst I agree with you on those points, what do you think went wrong for USF1? Whilst not an absolute, I did feel that they had tacit agreement for an entry at the end of '09 yet they appear to have been the least prepared of the new teams.

[belleair302]

USF1's problems were simple....NASCAR and a lack of European knowledge. Yes there were planning to develop a facility in Spain but being based in Charlotte NC is going to make life very difficult. F1 in the USA has no real following, the timezones for TV do not work, and there are few US sponsors looking for global exposure when the domestic market is so attractive.

Finally the US dollar is very weak internationally and USF1 did not market themselves professionally....a US team needs US drivers and massive US PR and marketing. They had nothing. E- for effort.

[skwdenyer]

flemke said:

Other causes of the problem are:
- We now have 12/13 teams competing for funding, whereas we used to have 10 all together.
- A number of the biggest sponsors/subsidisers have dropped out, causing healthy teams to seek alternative funding more aggressively than they did.
- The stench of the Mosley Era will take time to clear. Until it does, some potential sponsors will stay away.
- In his over-eagerness to squeeze out the big teams, Mosley gave potential new entrants only a few months to conceive and develop their entire businesses. He cleverly coordinated this with the most difficult time in the last several decades to raise funding. If the FIA had announced that they would accept applications at the end of '09 for '11 entries, there would not have been the farce of teams' being accepted and then, in effect, folding before the first race. All new teams could have gone into their first race with more sustainable foundations, because they had had three times as long to build them.

In the nicest possible way, I think you're trying hard to find reasons which detract from the obvious one: global recession, which has been on the cards for years. The road car industry have been heading for a fall for a while, especially, given the quite obvious over-capacity and reliance upon cheap credit.

You and I are going to differ here: I think the budget cap was the right approach, and should have been forced through. Sometimes the world just changes, and all of the hand-wringing cannot turn back that tide.

[Northern Munkee]

skwdenyer said:

flemke said:

Other causes of the problem are:
- We now have 12/13 teams competing for funding, whereas we used to have 10 all together.
- A number of the biggest sponsors/subsidisers have dropped out, causing healthy teams to seek alternative funding more aggressively than they did.
- The stench of the Mosley Era will take time to clear. Until it does, some potential sponsors will stay away.
- In his over-eagerness to squeeze out the big teams, Mosley gave potential new entrants only a few months to conceive and develop their entire businesses. He cleverly coordinated this with the most difficult time in the last several decades to raise funding. If the FIA had announced that they would accept applications at the end of '09 for '11 entries, there would not have been the farce of teams' being accepted and then, in effect, folding before the first race. All new teams could have gone into their first race with more sustainable foundations, because they had had three times as long to build them.

In the nicest possible way, I think you're trying hard to find reasons which detract from the obvious one: global recession, which has been on the cards for years. The road car industry have been heading for a fall for a while, especially, given the quite obvious over-capacity and reliance upon cheap credit.

You and I are going to differ here: I think the budget cap was the right approach, and should have been forced through. Sometimes the world just changes, and all of the hand-wringing cannot turn back that tide.

Without starting an argument Haug mentioned in the broadcast intro, that they are spending only a quarter of the budget than they were 2 seasons ago, I'm guessing say £60m rather than £250m, also Bernie is handing over a bit more of the TV money. I remember Mosley stating that part of the budget cap was to get the costs down much closer to the team's slice TV/commercial rights. Even if TV money still doesn't equal team budget, the pressure to bring lots and loads of sponsorship, isn't quite as pressing. No?

[skwdenyer]

Northern Munkee said:

skwdenyer said:

flemke said:

Other causes of the problem are:
- We now have 12/13 teams competing for funding, whereas we used to have 10 all together.
- A number of the biggest sponsors/subsidisers have dropped out, causing healthy teams to seek alternative funding more aggressively than they did.
- The stench of the Mosley Era will take time to clear. Until it does, some potential sponsors will stay away.
- In his over-eagerness to squeeze out the big teams, Mosley gave potential new entrants only a few months to conceive and develop their entire businesses. He cleverly coordinated this with the most difficult time in the last several decades to raise funding. If the FIA had announced that they would accept applications at the end of '09 for '11 entries, there would not have been the farce of teams' being accepted and then, in effect, folding before the first race. All new teams could have gone into their first race with more sustainable foundations, because they had had three times as long to build them.

In the nicest possible way, I think you're trying hard to find reasons which detract from the obvious one: global recession, which has been on the cards for years. The road car industry have been heading for a fall for a while, especially, given the quite obvious over-capacity and reliance upon cheap credit.

You and I are going to differ here: I think the budget cap was the right approach, and should have been forced through. Sometimes the world just changes, and all of the hand-wringing cannot turn back that tide.

Without starting an argument Haug mentioned in the broadcast intro, that they are spending only a quarter of the budget than they were 2 seasons ago, I'm guessing say £60m rather than £250m, also Bernie is handing over a bit more of the TV money. I remember Mosley stating that part of the budget cap was to get the costs down much closer to the team's slice TV/commercial rights. Even if TV money still doesn't equal team budget, the pressure to bring lots and loads of sponsorship, isn't quite as pressing. No?

I agree, this is getting there. But what are the relative shares of the TV money?

[flemke]

belleair302 said:

USF1's problems were simple....NASCAR and a lack of European knowledge. Yes there were planning to develop a facility in Spain but being based in Charlotte NC is going to make life very difficult. F1 in the USA has no real following, the timezones for TV do not work, and there are few US sponsors looking for global exposure when the domestic market is so attractive.

Finally the US dollar is very weak internationally and USF1 did not market themselves professionally....a US team needs US drivers and massive US PR and marketing. They had nothing. E- for effort.

I don't know that you should say "E- for effort". It's not as if they did not try.

The point regarding Spain is an interesting one. Formula One is based in Europe. Ferrari and Minardi/STR have their thing in Italy, Sauber/BMW in Switz, but beyond that it was considered a radical step for Toyota to set up a (actually, expand on an existing) programme in Germany.
So how do you have a "US" team when it's not located in the US? The notion that you could have a research base in the States and an operating base 6 time zones and 3000 mi away always seemed to be a stretch.

To most Americans, Formula One is nothing special, just as Le Mans is nothing special. They do their thing, we do ours.
To get corporate funding for any of these activities, you need to capture the imagination of the corporate guys calling the shots. This is a large part of the reason why, say, Red Bull thinks it gets value-for-money in F1, whilst Coca-Cola and Pepsico, far bigger international companies in almost the same market, would rather spend more money, but on the Olympics, Tour de France, etc.

Re the dollar, it's been bouncing all over the place. If these guys were sketching out their budget projections 2 years ago, the dollar then was a good 10% weaker than it is today.

[flemke]

skwdenyer said:

flemke said:

Other causes of the problem are:
- We now have 12/13 teams competing for funding, whereas we used to have 10 all together.
- A number of the biggest sponsors/subsidisers have dropped out, causing healthy teams to seek alternative funding more aggressively than they did.
- The stench of the Mosley Era will take time to clear. Until it does, some potential sponsors will stay away.
- In his over-eagerness to squeeze out the big teams, Mosley gave potential new entrants only a few months to conceive and develop their entire businesses. He cleverly coordinated this with the most difficult time in the last several decades to raise funding. If the FIA had announced that they would accept applications at the end of '09 for '11 entries, there would not have been the farce of teams' being accepted and then, in effect, folding before the first race. All new teams could have gone into their first race with more sustainable foundations, because they had had three times as long to build them.

In the nicest possible way, I think you're trying hard to find reasons which detract from the obvious one: global recession, which has been on the cards for years. The road car industry have been heading for a fall for a while, especially, given the quite obvious over-capacity and reliance upon cheap credit.

I'm not sure whether your comment is directed at the poor funding of the new teams or at the overall diminution of sponsorship in the sport.
If the former, the new teams filed their applications less than a year ago, and well after we were into a major recession. They will have had their individual reasons, but they could not blame their subsequent inability to get requisite funding on a global downturn that was unforeseeable!
If the latter (the whole grid), certainly the recession has taken its toll. I would submit that, even without the recession, sponsorship was inevitably going to decline, for two reasons:
- The baseline of spending had become patently absurd, with examples of profligacy that were enough sometimes to turn one's stomach. Contrary to popular belief (not yours), successful multinationals usually got that way only by having at least some appreciation of value-for-money.
- The governance/reputational problems specific to F1 have alienated actual or potential sponsors who simply cannot afford to be associated with something that lends the appearance of being tawdry or illegitimate.

skwdenyer said:

You and I are going to differ here: I think the budget cap was the right approach, and should have been forced through. Sometimes the world just changes, and all of the hand-wringing cannot turn back that tide.

You may read me wrong on this one, my friend.
On these very pages of PH, well before I had heard Mosley or anyone else propose a budget cap, I proposed one. (I am not saying, "I thought of it first"; it may have been proposed 50 years ago.) At the time, folks here made the quite reasonable objection that it would be unenforceable. I remember saying that, if the total annual spend at that time was $2b, you could cap it at $1b ($100m/team), spend $50m per team on independent auditors, and still have a collective savings of $500m.
The idea of everyone's starting from exactly the same point, or at least with exactly the same tangible resources, is appealing.
To my mind, the problems were not intellectual ones (How to account for cross-subsidies?; How to amortise Honda's new wind tunnel?; et al). Rather, the two problems (that I imagined) were:
- How to have a cap that was meaningful and effective, yet did not go so far as to threaten F1's status as the cutting-edge of motor racing technology, and
- The more rules you have in anything, the more dependent the participants are on the integrity of them who enforce those rules. Because, at least in the Mosley Era, the FIA's integrity was ultimately 0.00%, there could never be a cost-cap that was reliably fair.

It seemed transparent that Mosley (who not that many years previously had been a keen advocate of the big carmakers' joining the sport) tried to force through his budget cap in order to replace the big players who had no economic dependency on F1 with small fry who would be totally dependent on F1. Such a change would have given almost total control to a couple of guys named, IIRC, Bernie and Max.

[skwdenyer]

flemke said:

skwdenyer said:

flemke said:

Other causes of the problem are:
- We now have 12/13 teams competing for funding, whereas we used to have 10 all together.
- A number of the biggest sponsors/subsidisers have dropped out, causing healthy teams to seek alternative funding more aggressively than they did.
- The stench of the Mosley Era will take time to clear. Until it does, some potential sponsors will stay away.
- In his over-eagerness to squeeze out the big teams, Mosley gave potential new entrants only a few months to conceive and develop their entire businesses. He cleverly coordinated this with the most difficult time in the last several decades to raise funding. If the FIA had announced that they would accept applications at the end of '09 for '11 entries, there would not have been the farce of teams' being accepted and then, in effect, folding before the first race. All new teams could have gone into their first race with more sustainable foundations, because they had had three times as long to build them.

In the nicest possible way, I think you're trying hard to find reasons which detract from the obvious one: global recession, which has been on the cards for years. The road car industry have been heading for a fall for a while, especially, given the quite obvious over-capacity and reliance upon cheap credit.

I'm not sure whether your comment is directed at the poor funding of the new teams or at the overall diminution of sponsorship in the sport.
If the former, the new teams filed their applications less than a year ago, and well after we were into a major recession. They will have had their individual reasons, but they could not blame their subsequent inability to get requisite funding on a global downturn that was unforeseeable!
If the latter (the whole grid), certainly the recession has taken its toll. I would submit that, even without the recession, sponsorship was inevitably going to decline, for two reasons:
- The baseline of spending had become patently absurd, with examples of profligacy that were enough sometimes to turn one's stomach. Contrary to popular belief (not yours), successful multinationals usually got that way only by having at least some appreciation of value-for-money.
- The governance/reputational problems specific to F1 have alienated actual or potential sponsors who simply cannot afford to be associated with something that lends the appearance of being tawdry or illegitimate.

I suppose where we differ is in which of the chicken or the egg came first. I believe that it was ineffective governance, in the sense of not curtailing spending early enough, which led to many of the things which followed. I know that there are many things which happened about which you are unhappy, and I respect that. But I was under the impression that you were opposed to Mosley's budget-capping, whereas I think that - painful or not - it was the right thing to do at the right time.

The fact that vested interests prevented it and, ultimately, neutered it, was a symptom of the very problem which needed resolving.

flemke said:

skwdenyer said:

You and I are going to differ here: I think the budget cap was the right approach, and should have been forced through. Sometimes the world just changes, and all of the hand-wringing cannot turn back that tide.

You may read me wrong on this one, my friend.
On these very pages of PH, well before I had heard Mosley or anyone else propose a budget cap, I proposed one. (I am not saying, "I thought of it first"; it may have been proposed 50 years ago.) At the time, folks here made the quite reasonable objection that it would be unenforceable. I remember saying that, if the total annual spend at that time was $2b, you could cap it at $1b ($100m/team), spend $50m per team on independent auditors, and still have a collective savings of $500m.
The idea of everyone's starting from exactly the same point, or at least with exactly the same tangible resources, is appealing.
To my mind, the problems were not intellectual ones (How to account for cross-subsidies?; How to amortise Honda's new wind tunnel?; et al). Rather, the two problems (that I imagined) were:
- How to have a cap that was meaningful and effective, yet did not go so far as to threaten F1's status as the cutting-edge of motor racing technology, and
- The more rules you have in anything, the more dependent the participants are on the integrity of them who enforce those rules. Because, at least in the Mosley Era, the FIA's integrity was ultimately 0.00%, there could never be a cost-cap that was reliably fair.

It seemed transparent that Mosley (who not that many years previously had been a keen advocate of the big carmakers' joining the sport) tried to force through his budget cap in order to replace the big players who had no economic dependency on F1 with small fry who would be totally dependent on F1. Such a change would have given almost total control to a couple of guys named, IIRC, Bernie and Max.