Sponsorship tittle-tattle

There has been a lot of talk in recent weeks after McLaren losing Vodafone and looking to Mexico for money. It has been suggested that the signing of Sergio Perez was decided in order to give the McLaren marketing people the opportunity to delve into new markets in central and south America. These rumours need to be properly examined.

Firstly it is fair to say that Telmex and the other Mexican sponsors that appeared on Sauber in 2011 and 2012 got to that position without paying large sums of money. The deal was struck in the autumn of 2010 and at that time the team was in dire need of cash. A year earlier, you may recall, BMW announced that it was pulling out of F1. Peter Sauber agreed to buy it back, on the basis that BMW would pay the bills for the first year. The search was thus on for money for 2011 and Perez and the Mexicans popped up at the right moment.It was probably the only sensible deal in town, but that does not mean that there were truckloads of cash involved. Carlos Slim Jr, who runs Telmex, has not shown any tendencies to throw money around, preferring to encourage Mexican firms to get involved, presumably as B2B deals.

What is clear from all of this is that McLaren is not going to want to swoop in and pick up the kind of money that was on offer to Sauber. Perhaps the silver-tongued ones at Woking can talk some of the Mexican firms into digging deeper into their pockets, but Telmex is going to have to dig very deep to replace Vodafone, even if the UK telecommunications firm is looking at downsizing its sponsorship. The firm has been with McLaren since 2007 and the current deal was agreed in 2010. It runs until the end of 2013. The deal is believed to be worth in excess of $75 million a year to the team and Vodafone has been doing some work to figure out its sponsorship strategies, which seem to suggest that it is downsizing a lot of its activities. It remains to be seen whether the F1 budget gets a haircut. If it does, McLaren is pretty well-placed with GlaxoSmithKline (GSK) to be a replacement. GSK is charging forwards with a policy to double its revenues in emerging markets, as it chases to catch up with its rivals in places like India and China. With revenues flat in its traditional markets in Europe and the United States, GSK is looking to fresh fields where drug companies are falling over one another to win market share, with some pretty impressive price-cutting going on. These are the markets where F1 is strong.

It is worth noting also that a few weeks ago GSK ended its long-running association with the English Premier League soccer competition, which it has supported for 20 years. The company said that the move followed a change of strategy that will see it investing more on research into the nutritional impact on athletes’ performance.

The McLaren-GSK relationship goes beyond sponsorship as the pharmaceutical and consumer healthcare company is working with McLaren in what it calls a “ground-breaking collaboration” which will apply McLaren’s winning expertise to the needs of GSK, the aim being to help it to function more efficiently with more efficient planning processes and better modelling tools to drive faster decision-making. This includes the construction of a learning facility called the ‘McLaren GSK Centre for Applied Performance’, which is under construction at McLaren’s Headquarters in Woking. The relationship has led to GSK sponsorship for the team from Lucozade, Maximuscle and Boost.

Among the brands that GSK has in its portfolio are a number of toothpaste brands, such as Macleans and Aquafresh, anti-smoking products such as Nicorette and Niquitin, drinks products such as Horlicks and Ribena and remedies from Beechams and Panadol. Not all of these would fit with F1, but there is clearly potential for sponsorships.

In the interim Sauber is believed to be working on sponsorship deals to expand its portfolio beyond the Mexicans. It remains to be seen what will happen with the second driver. The Mexicans are keen to see Esteban Gutierrez in F1, but the team is weighing up whether a more experienced driver would bring better results.

In the meantime, Lotus has announced some one-off sponsorship for the United States GP promoting Angry Birds Star Wars, a new game that is a partnership between award winning programmers Rovio – founders of the chart topping Angry Birds game and Lucasfilm – the creators of iconic films Star Wars and Indiana Jones franchises. The relationship between Angry Birds and Lotus F1 Team began in Monaco this year.

Lucasfilm has just been purchased by the Walt Disney Company for $4.05 billion.

22 thoughts on “Sponsorship tittle-tattle

  1. Times have certainly changed since the days when being sponsored by Durex meant a van-load of free contraceptives!

  2. Do GSK have any products similar to the one featured on the Surtees “small family car” all those years ago? Or can we look forward to a Pandol sticker on the side of a screaming engine?

  3. I don’t think that Mexico means that McLaren has opportunities en Central America…Can’t imagine a McLaren in the streets of Guatemala city or San Jose, don’t even mention Managua or Tegucigalpa…and don’t think they are counting on selling bikes there either. I’ve been there a lot.

    On the other hand, South America is way too far from Mexico (that with USA and Canada form part of North America), and having countries in South America with only Pacific or Atlantic coastline (and others that doesn’t even have access to the ocean) doesn’t seems to put Mexico in an “estrategic” positition for McLaren reaching those markets, it’s my humble opinion that having Perez onboard just for these rumoured reasons is not very likely to be precisely true…

  4. Given McLaren’s history of poaching sponsors from its rivals (most notably Ferrari and Williams), I wouldn’t be surprised if Sauber’s current Mexican sponsors would be joining Sergio Perez after the conclusion of their current commitments.
    I’m hoping Sauber management is indeed working on a contingency plan. Sauber has been a good model of how a small team can effectively deliver good results on track without resorting to throwing money for results and as such has a soft corner in hearts of many fans including me. As such I would be sad to see Sauber struggle due to lack of sponsors.

      1. I’m hoping Sauber management is indeed working on a contingency plan.

        1.5 years later and I still don’t think they’ve figured it out, but in all fairness, FOM & CVC have not made it any easier for non-big teams like Sauber w/ the questionable Strategy Group governance architecture.

        Will be interesting to see if Formula 1 can be made more sustainable, fairer, and equitable (while still incentivizing hard work and innovation), yet also profitable – or at least financially-rewarding for more than just top 4 teams.

  5. When you say that “these are the markets where F1 has been strong”, how does one define “strong”? TV audience alone?

  6. Rovio’s CEO (or similar) is obviously an F1 nut, right? It’s got to be more about having some fun weekends than ROI.

    Not the first time Star Wars and F1 have mixed, obviously – Red Bull got George Lucas on-side back in, 2005? But somehow I doubt this portends Mickey ears on the Enstone entry.

    1. IIRC, Rovio has had some involvment with Enstone earlier in the year, but rather more with Caterham, both of whom had Finnish drivers…

    1. There’s nothing wrong with calling it “soccer”. It’s English public school slang: Rugby football is “rugger”; Association football is “soccer”. The Yanks picked up on the word because they already had their own form of the game, but it was in use on this side of the Atlantic for years before that.

  7. It was certainly big news that Vodafone Aus dumped Cricket (11 years) and V8s (6 years with most successful team) – and you had to wonder whether it was just limited to Vodafone Australia.

    1. All to do with Chris Ghent. At least the cricket. Voda was on the large, having consolidated roaming networks, delaying the real time billing of CAMEL II signalling to run internal cash and FX arbs backstopping the bonds on e.g. carry trades, and about to crash from a insane valuation; Mannesmann / D2 (not pretty and with ramifications that echo now, Bernie may find) and all that about to catch up. Ghent reined in the sponsorships, exiting with a knighthood. GS lamented the M&A fees for a commemorative second . .

      There’s no cachet left in mobile. Spectrum is cheapening function processing power and longer – more useful, longer range – wavelengths being more carefully sold. Sponsorship is for cachet or kudos, or whatever, in my book, more than mass marketing. The UK 4G network (whatever it is actually called) hired Kevin Bacon to pitch their spots. Desperate. Race to the bottom stuff. You end up with Grey Goo for brands.

      Bill Joy, founder SUN Microsystems on a prescient tangent: http://www.wired.com/wired/archive/8.04/joy_pr.html

      The advertising apocalypse is simply that we experience our own emotions, and are no longer sold them.

      1. A comment like this one would’ve been way more interesting – and informative – if it was less jargony and the author made less of an attempt to seem cool by writing w/ an I’m-in-the-Know™ style, and instead explained the various references he cobbled together and contextualized mentions of esoteric or obscure details like foreign exchange arbitrage and the corporate bond market, Goldman Sachs, accounting trickery, Vodafone’s controversial hostile takeover of German operator Mannesmann + rebranding of their D2 Mannesmann mobile service, etc (and that was just the first paragraph!)…

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