Formula 1 sponsors come and go. Many investors go due to legal changes, economic downturns and financial cycles. Those that stay find great relevance in Formula 1. They make money through their partnerships and see a great future in the league.
Gambling sponsors are a great example. They spend millions of euros on F1 teams for exposure to sports fans. What's more, they do it because motorsport is about speed, energy and risk - akin to sports betting.
But what are the benefits and drawbacks of gambling sponsorships in F1?
#1: Lowers the Costs of Hosting Events
Organizing an F1 event is expensive. In fact, it's not unusual for countries to withdraw from F1 events because they can't afford hosting and promotional fees. Forbes estimates the average Grand Prix weekend costs $40M.
While the price of hosting an F1 event is expensive, this money can be covered with the help of a sponsor. Many countries partner with multiple sponsors to host racing events successfully. Some sponsors cover catering. Others deal with official costs while some pay for venue hires.
Of course, financiers demand their brand colours and logos to appear all over the place. A betting firm sponsoring an F1 team will probably have its logo on the cars and the drivers' kits. If they're sponsoring an event, they will display their colors throughout the tracks.
#2: Reduces Drivers' Costs
Most F1 drivers start their careers at the junior levels of prominent F1 franchises. After they become adults, they acquire licenses to drive professionally. Some drivers are lucky to get absorbed by a large motorsports brand.
Others partner with sponsors, such as betting websites. The sponsoring brand takes care of your kit, travel and accommodation expenses. They can also pay your competition fees and hire a trainer.
What does the sponsor get in return? Sponsors love to be associated with successful athletes. All they need is your permission to use your images for advertising. You can also don kits with the company's brand logo.
Additionally, you'll need to appear in your sponsor's adverts. For example, you can promote a site's free bets no deposit UK through a TV advertisement. Or you can post a sponsorship advert on your Facebook, Instagram or Twitter channel.
#3: Subsidizes F1 Team Costs
In the spirit of fair competitions, Formula 1 introduced a $145M budget cap for the 2021 season. Not everyone is happy about it, especially the biggest teams; Red Bull, Ferrari and Mercedes.
However, big F1 brand still got more money to spend compared to the smaller companies. What's more, they will benefit from bigger annual payouts, of course, based on the league's annual income.
That said, the teams can lower their costs with the help of gambling sponsors, say money for coaching, equipment, clubhouse maintenance and talent development. Many of the brands already generate millions of dollars from official sponsors. As such, money from betting firms helps lower their costs further.
#4: Brand Exposure for the Sponsors
The primary reason gambling companies are partnering with F1 teams is to get exposure to the millions of fans that watch the sport. According to NBC News, Formula 1 attracted at least 87M viewers in every race last year.
Formula One's biggest markets are Europe, and Asia. Unsurprisingly, most gambling sponsors in the league target customers in the aforementioned customers. F1 is presently fighting to get a share of the US sports market.
Indeed, the league now runs the US Grand Prix in Austin, Texas every year since 2012. Miami, Florida will add a race in 2022. F1's efforts to conquer the US market will probably not threaten NASCAR. But the widening exposure will be a boon for gambling sponsors.
#5: Increased Revenues
Study after study shows sports sponsorships generate massive revenues for brands. Take Red Bull as an example. The energy drink generates 63% more income from soccer fans in the US than through the general public.
That's because Red Bull owns one of the largest MLS teams. What's more, it has multiple endorsement deals with soccer players through the league. In F1, many sponsors don't leave until there's a change in laws or they can't see the benefits of their deals.
Fortunately, gambling brand benefit tremendously from their motorsport deals. For starters, F1 is a supported league at all leading betting site. As such, sportsbooks whose names appear on F1 teams and events have a great chance of winning new customers.
#6: Sponsorships Increase Engagements
Another reason betting firms sponsor F1 is because they league attracts engagements on social networks. These interactions are great for F1 and its fans. But they also increase a sponsor's appeal to players.
Brand mentions on Facebook, Twitter and Instagram play a massive role in converting prospects. People are more likely to bet on bookie sites that appear on their social media feeds regularly than those that don't.
#7: Reduced Income for Small Teams
When you think about it, most of the F1 money goes to the large brands-McLaren, Mercedes, Ferrari and Red Bull. The smaller teams barely make money, and that's because they find it difficult to attract sponsors.
In all fairness, small F1 teams also attract gambling partners. They just don't make the same amount of money Mercedes and McLaren make from similar partnerships. This in turn makes it difficult for the smaller franchises to hire the coaches, drivers and buy engines that can help them win races.
F1 is trying to address the issues of unfair competition by introducing budgetary caps. But we mentioned earlier, the bigger teams will still be allowed to spend more money than the smaller teams.
Summary
The biggest impact of betting sponsorships in F1 is that it's brought more money in the league. This money helps nurture young drivers, pay for coaching, equipment and kits. In turn, betting firms benefit from the exposure.
More importantly, they win new customers, bettors who add revenues to the gambling brands. The companies also earn increased brand mentions on social media and opportunities to advertise with famous race drivers.
