It appears that reports of the death of Formula One were greatly exaggerated. Less than 18 months ago the vultures were beginning to circle around what many assumed would be the carcass of Bernie Ecclestone’s global leviathan of a motor racing series.
With many of the world’s leading economies in a state of near meltdown, the financial sector in complete disarray and companies across most business sectors looking to cut costs as a hedge against an increasingly uncertain future, F1 was marked down as a potential victim.
When Honda decided it was pulling out of the series the move sent a further shock wave across the sport and around the world. For a moment it appeared that F1 was trapped in a prefect storm. Motor manufacturers were among the first victims of the credit crunch, potential sponsors were becoming frightened to embark on anything which might be considered ostentatious spending - particularly if it involved hospitality - and then there was the environment.
At a time when many sports governing bodies had decided to jump on the sustainability bandwagon with a vengeance, appointing themselves guardians of our changing eco-system, there was something slightly unnerving about the notion of a bunch of cars and thousands of personnel criss-crossing the globe to stage races between hi-tech cars which simply guzzle carbon fuels. So as the obituary writers sharpened their pencils, what happened next was…
Well nothing much really. Last season was one of the most exciting in the sport’s history and new measures to reduce costs went a long way to attracting new teams which gave the 2010-11 grid a glow it hadn’t had for some time.
In fact, according to Dominic Reilly, Head of Marketing for the Williams F1 team, “Formula One is probably in better health today than at any time in the last five years in terms of the levels of competition and its viewership.”
And that has to be good news for Reilly and his opposite numbers at every one of the teams. They have the task of selling the sponsorships which make up a massive chunk of the minimum of €40 million a year it requires to keep an F1 team on the road. F1 is no longer simply a rich man’s game.
The teams employ hundreds of people and the sums of money involved are so huge that most have evolved as highly sophisticated and complex businesses in which sales and marketing play an essential role. Without money, not a single spanner turns in the garage, not one component is designed, and not one car makes it to the track. As the commercial world has developed, selling partnerships in F1 has become significantly more complex in many respects.
A more sophisticated approach towards sponsorship and the inter-relationship between brands means that teams themselves have to be seen to have a clear brand identity and values which link with those of their partners. Reilly for one believes that is more of an opportunity than a challenge, particularly against the backdrop of what he sees as a more exciting and compelling product.
“We are having exciting, fascinating racing with at least four or five drivers in with a chance of winning each race. There are twists and turns at every race and a whole host of micro-stories around the sport and the drivers,” he says. “We have seen a dramatic uplift in viewing in key territories such as Germany, Italy and Spain and that has been helped by the new teams which have done an amazing job to come into the sport.
“Lotus went from four to 120 people in just 12 months, they’ve delivered a team and a competitive car.”
For the full interview see the latest edition of SportBusiness International published May 1.
