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Why does F1 need a sponsors' organisation?

NEWS STORY
11/08/2010

Formula One seems to spend so much time in committee meetings that it is sometimes a surprise any racing ever happens. We have had the Grand Prix Manufacturers Association, the Formula One Teams Association,the Technical Working Group and even an Overtaking Working Group. However, one group which has been absent is that of F1's 175 sponsors. It seems hard to understand.

According to F1's industry monitor Formula Money, in 2010 sponsors are spending a total of £458m ($723m) on F1 and this is the highest single source of investment in the sport. In contrast, team owners are investing around £352m ($556m) with car manufacturers providing just £156m ($247m) of this. Nevertheless, sponsors have traditionally only been in it for exposure and so they have had little need for a voice in the sport. That all looks to be changing.

The economic downturn has put greater pressure than ever on sponsors' budgets and at an average deal price of £2.5m ($4.1m) it is little surprise that partnerships with F1 have been coming under the microscope. To help them make the most of their involvement a new organisation called Formula 100 broke cover last week.

Pitpass' business editor Chris Sylt came up with the idea of an F1 sponsors' association last year and discussed this with Richard Bracewell, Shell's general manager of global sponsorship, at an awards event in December. The rationale behind it is simple: the more that F1 changes, the greater the effect it has on the sponsors' return on investment.

The impact can be positive or negative. For example, adding Korea to the calendar provides huge local promotional opportunities for LG, one of F1's global partners, since the company is based in the country. However, the race may be less valuable to the Etihad airline, which sponsors Ferrari, since it does not yet fly to Korea. A development such as cutting in-season testing can have a uniformly negative effect on sponsors as it has reduced the number of opportunities for entertaining their clients at F1 events.

F100 is a club comprising the top 100 sponsors and deal-makers in F1. The first event takes place on 1 September at the Waldorf Hilton in London and members will hear presentations from speakers such as Ekrem Sami, managing director of McLaren Marketing, Bracewell and Chris Burton, vice president of global sponsorships at the software firm SAP which sponsors McLaren.

The speakers will then take part in a panel discussion covering current themes in F1 such as how to secure sponsorship in the current economic climate and the best ways for companies to overcome sponsorship hurdles. Crucially, members will be able to take part in a question and answer session with the speakers and the minutes will be submitted to F1 boss Bernie Ecclestone giving a platform for the sponsors' voices. Members will also be able to network with the speakers and with each other without the kind of glare which is found in the F1 paddock since media and agencies are barred from becoming members of F100.

Sylt and his colleague Caroline Reid together own a third of F100 with the remainder split between Simon Berger, the owner and CEO of the Motor Sport Business Forum, and Robin Fenwick, owner and managing director of the Right Formula sports marketing company.

F100 is a brand extension drawing on the owners' experience with their businesses which are well-established in F1. The Motor Sport Business Forum has been hosting annual events since 2005, Formula Money has been publishing its annual report since 2007 and although Right Formula was only established in the past 12 months it has quickly made a name for itself and now works with F1 sponsors including Williams partner Power Plate, XTB and Hilton whose logos appear on McLaren's cars

In March this year Sylt approached Fenwick and Berger about forming an association for F1's sponsors and hosting an event which can be held repeatedly during the year to cover breaking issues in the sport. The owners were carefully chosen.

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