06/08/2012
NEWS STORY
This year hasn't exactly been a bumper one in terms of sponsorship in Formula One with very few new deals of any note. The most high-profile deal has been the signing of Tata Communications which didn't join a team but instead became an official F1 partner. Things were different last year and it wasn't just the teams which benefited.
In 2011 three new car manufacturer brands got involved with F1 as Lotus became title sponsor of the former Renault team, Russian sports car manufacturer Marussia gave its name to the Virgin Racing team after buying into it at the end of 2010, and Renault's luxury brand Infiniti signed a sponsorship with world champions Red Bull Racing. This deal sees the brand's logos appear on the Red Bull cars alongside those of the team's engine supplier Renault and it costs Infiniti around $10m annually. According to an article in the Mail on Sunday by Pitpass' business editor Christian Sylt, the wealth was spread around and Infiniti's F1 deal gave a big boost to the revenues of the sponsorship agency Prism.
Sylt's article reveals that revenues at Prism, the largest sponsorship agency owned by advertising group WPP, increased more than four times last year thanks to a string of new client signings including Infiniti. Revenues for the year-ending 31 December 2011 accelerated from £4.1m to £17.5m bringing Prism back into the black with a pre-tax profit of £250,000 up from a loss of £800,000 in 2010.
Prism was founded in 1993 by its managing director, American marketing executive Steve Madincea, who was previously commercial director of Benetton's F1 team. Prism's key clients are still focussed on F1 with its roster including Shell and the sport's official insurer Allianz alongside Infiniti.
In 1999 Prism was bought by WPP whose chief executive Sir Martin Sorrell is one of F1's independent non-executive directors. Prism's biggest single financial liability is £7.8m owed to group undertakings and this led to it recording a shareholders' deficit of £7m last year.
However, the accounts state that "the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future." The road ahead appears to be smooth as the accounts add that Prism made a profit in the first half of 2012 and is expecting another revenue boost in its full-year results.