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New report reveals 25% drop in F1 team sponsorship

NEWS STORY
12/12/2018

According to a ground-breaking new sponsorship database, F1 team sponsorship revenues have fallen by more than 25% in the last five years.

Total team sponsorship came to an estimated 616.3m ($772.5m) in 2018, compared to more than 780m ($1bn) in 2013.

Although the drop was partly accounted for by a reduction in the number of teams from 11 to 10, this was not the main factor in the decline as the average sponsorship haul per team also fell by over 18%.

The findings reflect the concerns of several team bosses who have admitted that it is increasingly difficult to find sponsors in a climate where traditional properties such as sports teams are competing against social media.

Although total team sponsorship was up by 11% on 2017 - driven by Sauber's new title sponsorship from Alfa Romeo and Aston Martin's expanded deal with Red Bull Racing - it was still the second lowest annual total since Formula Money started assessing sponsorship values in 2005.

Launching today, the Formula Money Sponsorship Database marks the first time ever that Formula Money has made full access available to its vast database of sponsorship and team owner spending figures from 2005 onwards.

Formula Money calculates that in 2018 198 companies fuelled 229 team sponsorship deals, with an average value of 2.71m ($3.4m). The biggest of these deals was Malaysian oil giant Petronas's title sponsorship of world champion, Mercedes, at an estimated annual 59.8m ($75m).

However, this did not make Mercedes the best sponsored team. That title went to Ferrari, with a total sponsorship budget calculated at 136.8m ($171.5m).

The database covers not only team sponsorship, but also series partnership deals, race title sponsorships, trackside advertising, and team owner spending.

All together the data covers 989 companies, with 5,559 separate entries, generating almost 22.3bn ($28bn) in deals over 14 years.

It enables users to analyse trends over time and see how the sponsorship landscape has changed. Modern F1 is very different to 2005 when the biggest sponsors were tobacco companies, spending almost a quarter of a billion dollars between them in the last full year before advertising restrictions drove them from the sport.

Back then, the average team sponsorship budget was 80.7m ($101.2m) - the highest annual total during the date range of the database - compared to 61.6m ($77.3m) in 2018.

The database draws on the extensive experience of the Formula Money team and incorporates data that has been compiled for reports over the course of more than a decade.

As well as sponsorship values, the database includes information on areas such as nationality, industry sector, sponsorship type and branding locations for every deal.

Subscribers can search the database to find, for example, all German financial services sponsors, all sponsors that joined in 2018, or all title sponsors, and can generate graphs and diagrams of the results.

The database is a crucial tool for making decisions when spending in the sport. It's ideal for anyone wanting to know more about the F1 sponsorship industry, including existing and potential sponsors, agencies, investors in FWONK, team management and owners, and executives from other sports and the teams that compete in them.

The Formula Money Sponsorship Database is available now at formulamoney.com

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READERS COMMENTS

 

1. Posted by george, 13/12/2018 13:30

"Yes, and there is another problem. The pay platforms , at least the majority of them, are not adding subscribers , in many cases they are actually loosing subscribers. That means that they will soon have to reduce the rights fees they are paying. The livestream platforms such as DAZN are also bleeding money. Perform has deep pockets, very deep but they can not keep going buying rights at this rate. Their subscription only model is not sustainable, but when they bring in advertising, they loose subscribers. So, everyone is waiting for the other to implode. Which one will go first, the terrestrials, the pay tv platforms or the livestream guys… but I think the ceilings for tv right payments have been reached , there will be some exceptions but in general, the new rights contracts will be under pressure, particularly the 2nd rank sports. Rugby for one, I think , will have to be very very careful or experience a big bang"

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2. Posted by Editor, 13/12/2018 11:58

"@ alvarezh3

Good post

Thing is, we've been pointing this out for some time. The teams might publicly show concern for Silverstone et al and the fact that the sport is moving behind a paywall... but behind the scenes they are delighted because the money is making up for that which they have lost in terms of sponsors. "

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3. Posted by Tardis40, 12/12/2018 20:21

"Let tobacco advertising back in. Problem solved."

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4. Posted by Steve 666, 12/12/2018 18:23

"The more Liberty move to Pay TV, the fewer the number of viewers there will be and hence the ability of F1 teams to attract sponsorship, short sighted. To run a successful business it helps if you understand your product and the market !"

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5. Posted by alvarezh3, 12/12/2018 17:32

"@ neven.s

I agree with your assessment except for the last sentence.

According to data previously published on this website, the Concorde agreement gives the F1 teams 68% of FOM's profit. Hence the teams are not being "robbed", they are shifting their income base from direct (to each team) advertising customers, to TV and other deals (race promoter's fees) through FOM.

So the percent blame to less viewers do to TV platform change splits to: 32% FOM and a generous 68% for the TEAMS!

I don't feel sorry when a team is under financial difficulties for they are shifting their operating income from companies that advertise, to us the pay TV viewers."

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6. Posted by @R1Racing71, 12/12/2018 14:48

"A very interesting site, but who is the Formula Money Sponsorship Database actually aimed at?
I’d be staggered should the information contained be useful to any commercial department of the F1 teams – many of which have been collating this type of data (and connections) long before long before Sir Tim Berners- Lee legged it down the patent office*

For some of us though with only a slight commercial background would certainly find it useful from a curiosity perspective. To nose around and question why certain sponsors have / haven’t parted with their hard earned cash sounds like a great way to waste an afternoon in the office. But for a yearly subscription fee of 2,000 I suspect the majority of readers of the website won’t be signing up anytime soon.

*Please don’t bother to correct me, I know, I know……
"

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7. Posted by neven.s, 12/12/2018 12:16

"F1 has less and less viewers due to strategic decision by FOM to move to pay TV platforms, so it is only logical that sponsorship money will fall as the number of potential eyeballs is falling. Effectivelly, FOM is transferring sponsorship money to their TV rights income. I am amazedthat F1 teams do not realize that and are quietly watching how they are robbed."

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