Saudi Aramco, one of the world’s biggest oil and gas companies, will pay between $40m (€36.6m) and $45m per year for global partner rights to Formula 1 over 10 years from 2020 to 2029.
The largely state-owned energy producer is believed to be the world’s most profitable company. This is its first global sponsorship of a major sporting event.
The deal was negotiated by Formula 1’s exclusive sales agency, CAA Sports. SportBusiness understands F1 executive chairman and chief executive Chase Carey also played a major role in the agreement. Aramco was represented by executives from the company along with a Saudi agency. Negotiations took about 14 months.
The sponsorship does not have a category definition, nor will it, but Aramco is designated as a Global Partner.
Industry sources say the deal is a “pure sponsorship investment” and is not predicated on a Grand Prix race going to Saudi Arabia, a prospect which has yet to be confirmed.
F1 is reported to be in talks with Saudi interests about hosting a race in the kingdom, possibly as early as 2021.
Should Saudi Arabia acquire race hosting rights, however, Aramco is expected to add the Saudi GP title rights to the agreement.
As part of the global package, Aramco has already acquired title rights to the US, Spanish and Hungarian Grands Prix in 2020. The package includes trackside branding at most grands prix and brand integrations across Formula One’s digital platforms and broadcasts.
It is understood that the choice of F1 was based primarily on Aramco’s desire to raise its global profile. Objectives include brand awareness – leveraging Formula One’s broadcast media value – fan engagement via social and digital platforms and business-to-business hospitality opportunities.
Aramco also has long-term ambitions for international investment. Last year, Aramco sought to list five per cent of the company on an international exchange. The projected $100bn capital inflow, intended for the country’s diversification investments, would have valued the company at $2tn.
The international market baulked at the offer price, after which the company changed tack and sold just a 1.5-per-cent stake on the domestic Tadawul exchange in December.
The agreement is the first new Global Partner deal made by F1 under the ownership of investment group Liberty Media. Aramco joins Heineken, Emirates, Rolex, DHL and Pirelli in the top tier.
One industry expert said the partnership with the oil and gas giant was difficult to square with Formula One’s sustainability plans, announced in November 2019.
The two organisations have expressed a shared interest in performance and technology, with the Saudi company looking to “find game-changing solutions for better-performing engines and cleaner energy”.