Six hundred and seventy million euros. That is what Ferrari earned in 2024 from its “sponsorships, commercial and brand” segment — an aggregate that includes sponsorship on Formula 1 cars, a share of the F1 Concorde commercial revenues, merchandising, licences and royalties. Up seventeen per cent year-on-year, according to the annual report published in February 2025.

There is something worth reading carefully in that number. It is not simply the performance of an exceptional brand. It is confirmation that a sports brand, when managed with rigour, becomes an autonomous asset — separate from the physical product, separate from on-track results, capable of generating revenue streams from product categories that Ferrari has never directly manufactured. Fragrances, watches, apparel, toys, sunglasses. The brand produces. Others manufacture.

This mechanism is called licensing. Its second-generation cousin — the structural partnership between brands — is called co-branding. Both deserve separate analysis, because they carry different risk logics, different contractual structures and very different returns. And because in 2025 motorsport, both are becoming front-line commercial levers.

Licensing: the sports brand as an independent asset

Licensing is the temporary, contractualised transfer of the right to use a brand, name, logo, technology or body of knowledge. The party granting the right is the licensor. The party receiving it is the licensee. Compensation can be fixed — the so-called minimum guarantee — or variable, in the form of a royalty calculated on sales. In most well-structured contracts, it is both.

In sport, this mechanism has worked for decades on a very simple logic: the sports brand already has a loyal audience in one category; the licensee accesses that audience without having to build it from scratch, and the licensor enters product categories it would never directly occupy.

In motorsport there are very concrete examples. Ducati manages licensing agreements with global partners across dozens of categories: Peg Perego, the historic Italian toy manufacturer, has produced a line of electric three-wheel motorcycles under the Ducati brand for years — the brand transfers its values (speed, design, Italian identity) to an audience that has nothing to do with motorcycles yet, but soon will. In 2024, Ducati Corse signed a licensing agreement with MotoGP Authentics for the production of official memorabilia — a category combining collectables, fan engagement and communication with commercial partners.

A case that came directly through our office: in 2012 we assisted Grimaldi Industry, an Italian fashion brand, in becoming the Italian-market licensee for Dovi4, the personal brand of Andrea Dovizioso, then a front-runner in MotoGP with the Monster Yamaha Tech3. The logic was sound: a brand with an already-loyal audience enters a category it does not occupy; a clothing company reaches that audience without having to build it from zero. Minimum guarantee, royalties, quality control clauses, territorial extensions. Standard structure, applied to a very Italian case.

The economic structure of the contract: minimum guarantee and royalties

Understanding the structure of a licensing contract helps evaluate the opportunity in concrete terms, not just theoretical ones.

The minimum guarantee serves a dual purpose for the licensor. First: it ensures the licence is actually used — anyone paying an upfront amount does not keep the brand in a drawer. Second: it covers the legal and organisational costs the licensor faces in getting to signature. For the licensee, it is a fixed access cost that also purchases category exclusivity — the certainty that the licensor will not assign the same space to a competitor.

The royalty is the variable component: a percentage calculated on the net sales of the licensed product. Licensor and licensee both have an interest in the product selling well. This is the incentive structure that makes licensing a genuine partnership, not simply a rental of the brand.

The global licensed sports merchandise market was estimated at approximately 35.75 billion dollars in 2024, with growth projections to around 54 billion dollars by 2033. This is not a niche segment. It is an industry with sustained growth rates, driven by the expansion of top-tier sport — Formula 1 included — into new markets such as the United States, Asia and the Middle East.

The licensor always retains the right to audit accounts and control quality. Contracts include clauses governing prototype approvals, production standards, geographical extensions and renewals. This is not bureaucracy: it is the minimum protection of brand value.

Co-branding: when two brands create something neither could make alone

Co-branding is a different operation. Here no brand is ceded: something is built together. Two — sometimes three — brands design, produce or distribute a product or experience that carries both logos, accessing each other’s audiences and combining their respective cultural relevance.

The most significant example of 2024-2025 is the partnership between LVMH and Formula 1. In October 2024 the luxury group signed a ten-year global deal with F1, estimated at around 100 million euros per year. This is not a sponsorship in the traditional sense: it is structural co-branding. Louis Vuitton is the title partner of the 2025 Australian Grand Prix; TAG Heuer is Official Timekeeper for ten years; Moët Hennessy presides over the podiums. Three maisons with distinct positions, a championship that in 2024 surpassed 750 million cumulative viewers in a season. Translated into commercial language: LVMH is not buying visibility. It is buying the cultural overlap between European luxury and motorsport performance on a global scale.

Another case worth citing: Atlassian and Williams Racing, officially “Atlassian Williams Racing” from 2025. A software company for development teams becoming naming sponsor of an F1 team is not a casual choice — it is co-branding between two brands that share the values of engineering, precision and performance under high pressure. The message to Atlassian’s enterprise customers is clear even without being stated explicitly.

Co-branding can take very different forms:

• Capsule collections — limited production combining the visual codes of both brands (the Adidas/Palace collaboration for Wimbledon 2024 is a recent example).
• Naming and title partnerships — the partner’s brand becomes part of the team or event name (Atlassian Williams Racing; Formula 1® Louis Vuitton Australian Grand Prix 2025).
• Shared product — joint development and distribution, with benefits on the supply chain and access to both partners’ distribution channels.

The flexibility of co-branding is also its greatest risk: without a clear audience overlap logic, two brands with large but distinct audiences produce noise, not signal.

Three mistakes I see brands make

Over thirty years of work — and many licensing and co-branding negotiations that went well, and some that did not — there is a recurring pattern in the mistakes.

First: confusing licensing and merchandising. Merchandising is the internal production of products under one’s own brand. Licensing is the transfer of that brand to third parties for categories the brand does not occupy. Control systems, contractual structure and incentives are completely different. Confusing them leads to contracts that do not work — or margins that disappear where they should not.

Second: underestimating quality clauses. The licensor puts its brand on a product it does not directly control. If that product is poor, the reputational damage falls on the licensor, not the licensee. Prototype approval and production standard clauses are not optional — they are the minimum non-negotiable protection of the brand.

Third: evaluating co-branding on the basis of generic audience, not overlap. Two brands with ten million followers each can produce a perfectly useless joint operation if their audiences do not overlap. The right question is not “how large is your audience?” but “how much does it coincide with mine, and at which stage of the funnel?”

The role of an agency like RTR

When a brand contacts us to explore licensing or co-branding opportunities in motorsport, the work begins before the contract. Long before.

We define the positioning of the asset — team, championship or athlete — in terms of perceived value by product category. We identify the categories where there is space (available exclusivity) and those where there is a risk of cannibalisation with existing licensees. We build the basic economic structure — minimum guarantee and royalty range — starting from market comparables. And then we follow the negotiation through to signature, which is often just the beginning of the operational work.

If you are evaluating a motorsport sponsorship or licensing operation and want to understand whether the economic structure holds, we are available for an initial conversation with no commitment.

Licensing and co-branding are powerful tools. Like all powerful tools, they work only when used with precision.

A brand is not rented. It is managed. Always.