The Value of Sponsorship in Formula 1

To the casual spectator, the early days of Formula 1 was a very different scene to what can be viewed today. Cars were plain and painted in the teams national colours, and drivers wore racing overalls with little more than oil stains on them. These were the days when sponsors had no part in Formula 1.

However, this was always set to change.

The nature of the competition meant that the costs to go racing continued to rise as manufacturers tried to keep their cars at the front, and it was this desire to win that created the need for external cash injections.

Towards the end of the 1960’s, manufacturers realised the potential of advertising on cars and as such started increasing the size of their logos to gain more exposure. It wasn’t until 1968, however, when Lotus teamed up with Imperial Tobacco and displayed the Gold Leaf brand on the side of their car that corporate sponsorship was born in Formula 1. Since then, sponsorship has been a mainstay of the sport.



The Need for Sponsors

Fast forward to today and the top teams deal with budgets in the hundreds of millions. This money has to come from somewhere. Some will come from TV revenue, some will come from race winnings, but as much as 80-90% of the team’s budget will come from sponsorship.

Straight away this puts the role of sponsorship at the forefront of the whole Formula 1 operation, and it is the sponsorship that goes to the teams, drivers, race events and the sport as a whole that keeps that operation going.

Sponsors put the money in so they can position themselves to better connect with their target market, and to go where other businesses are doing business, and it is this money that allows for the teams to develop their cars, and in turn, stay competitive.

You could go as far to say that the sponsors are indirectly enabling the advancement of motor vehicle technology by helping the teams continue to compete.



Influence on Driver Seats

As controversial as it is, sponsors also have a part to play in who fills what seat at what manufacturer. Put simply, if the driver can bring money to the team (through sponsorship) then they are more likely to get signed, over someone who can’t.

Sergio Perez is a perfect example of this. It was the Mexican telebrand Telmex backing their compatriot that allowed a deal to be done for a seat at Sauber. It’s not in the true essence of racing, but Formula 1 teams cost a lot of money to run, so it is a necessary evil to help run the show.

In more recent years, rules have been brought in to help cut the costs of the sport, and this has, in turn, alleviated some of the pressure to find sponsors, but they are still essential. You only have to ask McLaren how essential they are now they’ve lost Vodafone, as well as the £40m+ that they put into the team each year.



We’ve arrived at the stage now (and have been here for many years) where sponsorship in Formula 1 is an absolutely critical part of the operation. Sponsorship has allowed Formula 1 to position itself as the pinnacle of motorsport, and without it, it would not be where it is today, nor would it be able to continue if it dried up.

RTR Sports Marketing
Pictures from the web

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