F1 Finance - What is going on?

[Moneyseeker]

Originally Posted by JacobP

One thing I don't understand is where have all the good sponsors gone? How come the teams besides the most affluent four can't find a good sponsor? Why won't more of these companies advertize in F1?

Internet search engines
Social networks
Smartphone manufacturers
Apple, Dell, etc
Oil companies
Financial institutions
Software companies, anti-virus, etc.
Drinks companies (Monster, Coke, Pepsi, vodka, rum, etc )
Apparel
Tourism agencies ("Visit country X, or "Invest in X")

There are several reasons IMO.

Global reach is easier now - you don't need to sponsor an F1 team to get global reach any more - this was a thing of the late 90's early 2000's IMO. There are easier, cheaper and more effective ways to do this and more importantly ways you can control. There are many more routes to market now.

Costs - the fee paid to the team is just the start - the costs of effectively activating and managing a global sponsorship property are huge.

ROI - budgets are under massive scrutiny these days and in many large corporates these sort of campaigns will be signed off by a governance board that has nothing to do with marketing and will look only at value for money, ROI and any legal issues. Sponsorships are notoriously hard to quantify, despite what anyone says and companies are increasingly wanting these types of campaigns to directly and immediately impact on sales, not just pure brand building.

Corporate Responsibility and Governance - some large corporates have a CSR policy that is focused on carbon reduction/sustainability aspects of their business which F1 no longer sits well with. Also from our own experience of corporate clients, often their employees are prohibited from accepting 'gifts' from companies they do business with under bribery and corruption clauses. We literally have had to sell hospitality to people we do business with and who want to come along to one of our own events.

Age - a lot of the brands you mention are targeting 16-35 max age band, F1 I would suggest has an older core audience.

Trend - brands that do actively sponsor sports want to be linked with individuals so or active sports (rugby, football, athletics) where they can get better exposure at the top end and alignment with 'athletes' plus run grass roots campaign in support, which gives them a feel good/community support factor and promotes healthy lifestyle, etc. F1 is still seen as too elitist for many brands I suggest.

All in all I think commercially F1 is in a 90's time warp that teams probably don't know how to get out of, hence the rush to bring investor type or driver related sponsors on board who do it for different reasons.