Hollis Sponsorship Bulletin

After weeks of speculation, F1 World Champion Jenson Button has joined Woking-based McLaren on a £6 million a year deal. In doing so, he creates a British F1 dream team alongside Lewis Hamilton, who was F1 Champion in 2008.

The risk for Button is that he will be forced to play second fiddle to Hamilton – who is still regarded as the hotter property, both on the track and in the commercial arena. But for McLaren title sponsor Vodafone, the 2010 season looks like it could be a good one. Internationally, the mobile company will benefit from having two of the strongest and most charismatic drivers on the circuit. And domestically, it will be able to develop an activation strategy which promotes its strong UK associations. 

McLaren’s other sponsors include Diageo, Aigo, FedEx, Hugo Boss, H&R, Hilton Hotels, Mobil, Santander, SAP, Lenovo and Reebok. The question now is whether any Brit-based companies will be tempted to join the McLaren fold.

There’s still some uncertainty about which F1 team World Champion Jenson Button will race with next year. Although Button would like to stay with Brawn GP, his decision to do so depends on the fee that the team are able to offer him.

In his title-winning season, Button took a big pay-cut to race for Brawn. But now he wants his earnings to be more in line with his status on the grid. Brawn would like to oblige – but their ability to do so depends on the calibre of commercial partners that the team is able to bring in.

Current reports suggest that Mercedes is thinking of buying a stake in Brawn – a move which would provide the funds to secure Button’s services. Failing that, he might move to McLaren – which raises the intriguing possibility of him racing alongside Lewis Hamilton. That could represent a mouth-watering combination for a Brit-based sponsor.

This week saw confirmation that Formula One team Ferrari is to be sponsored by Spanish bank Santander. In a press conference on Thursday, Ferrari president Luca di Montezemolo and Santander chairman Emilio Botin unveiled a five-year deal which will commence in 2010. 

Observers expect the new deal to signal the end of Santander’s sponsorship of McLaren. However the bank is expected to remain as the title sponsor for the Italian Grand Prix, British Grand Prix and German Grand Prix.

Spanish banking giant Santander has been a big backer of motor racing circuit Formula One in recent years. Now there are rumours it is poised to announce a multi-year sponsorship agreement with Ferrari at the Italian Grand Prix in Monza.

Having virtually ruled out a title sponsorship deal with Brawn GP, there are reports that Richard Branson’s Virgin may choose to sponsor the Manor F1 team – which debuts on the circuit from next year. Manor is already established on circuits such as F3 – but the move into F1 would greatly increase its international exposure. Virgin will be hoping Manor might have the same immediate impact as Brawn.

Meanwhile, the threat of an F1 breakaway appears to have receded following a meeting between FIA president Max Mosley and the eight rebel teams. Although the two sides seem to have different versions of how the meeting went, the upshot is agreement over matters such as budget caps and governance of the sport. For sponsors, the compromise is good news – since a split in F1 would have destroyed one  of the sports sector’s key communications platforms.

In another twist to the power struggle that threatens to send Formula One spinning out of control, FIA president Max Mosley has strongly denied claims that he has lost control of motorsport. Responding to a rush of stories in the international media, he denied that he had been forced out of office following a showdown with the rebel F1 teams. He also left open the possibility that he might stand for re-election to his current post in October 2009. 

F1 sources don’t seem to be taking his threat too seriously. But it has to be remembered that Mosley has a powerbase which stretches far beyond F1. With FIA representatives in 122 countries, the risk now is that Mosley’s loyal supporters around the world will react adversely to the way the eight rebel teams have tried to force the FIA’s hand. That could reignite the dispute which has threatened to engulf the F1 circuit in the last week. Without clarification, this is a controversy which could rumble on right through until the October elections.

In the end, it couldn’t have turned out any other way. After the threat of a team-led breakway from Formula One, Max Mosley – the controversial head of motor racing governing body the FIA – is quitting his executive role.

Mosley’s decision to step back from his executive function came at a meeting in Paris involving the eight rebel teams and F1 commercial chief Bernie Ecclestone. As a result, the teams which had planned to form a rival circuit are now expected to line up for F1 again next season.

The news will come as a relief to sponsors – who were faced with the prospect of F1 being torn apart at the seams. That would have made strategic planning around top flight sport virtually impossible. It would also have led to a mass of litigation between various overlapping vested interests. 

As it is, Mosley no longer has any say over F1 and will not stand for re-election as FIA president in October. However his departure does not necessarily mean that F1 is set for a period of calm. It remains to be seen what will happen to the budget caps that Mosley wanted to impose on teams. There is also likely to be a tough debate between Ecclestone and the rebel F1 teams over how to share power and money in the post-Mosley era.

The world of sports sponsorship is dominated this week by developments surrounding motor racing circuit Formula One. With eight leading teams (Ferrari, McLaren, Renault, Toyota, BMW Sauber, Brawn GP, Red Bull Racing and Toro Rosso) threatening to launch a rival circuit from next season, hundreds of brands ranging from main team sponsors to official suppliers will be watching like hawks.

It is not easy to predict how things will unfold in the coming months. Look at the above names and you can see that there is enough commercial muscle behind the eight breakaway teams to create a rival franchise. But that doesn’t mean a) it will happen or b) that it would be successful.

Looking at a) first. There is a school of thought that the manufacturers will stay with the circuit if Max Mosley, head of motor sports governing body the FIA, quits. It is Mosley’s desire to impose radical rule changes which has led to the current controversy. If he goes, then the teams could return to the fold with someone more sympathetic to their cause at the heart of the decision-making process.

Mosley is not required to leave his post. But the strength of feeling among the rebel F1 teams may persuade him that now is the time to step down. With many F1 fans backing the breakaway teams, the pressure on him must be intense.

If Mosley does move on, then no serious harm will be done to F1 in the short-term. F1 commercial chief Bernie Ecclestone would probably have to cede more control to the teams – but the brand would stay intact. This in turn would probably mean business as usual for sponsors. Longer term, there would be question marks over the teams’ ability to run the circuit – but there would at least be breathing space for sponsors to consider the merits of continued investment.

Far more problematic is if Mosley stays and the teams go. Ecclestone has already said that a breakaway would be a disaster – and he has probably never spoken a truer word. For a start, it would result in a barrage of lawsuits. Aside from contractual commitments within F1 itself, you’d have venues, equipment suppliers, broadcasters and sponsors all demanding some kind of remedy. So even if F1 were capable of replacing the missing teams, it would be dragged into a mess of litigation that would probably kill it off.

The eight breakaway teams would also have a legal nightmare on their hands. And on top of this they’d have to secure circuits, line up broadcast deals, promote their new brand to fans and convince sponsors that they were value for money. That sounds like a 5-10 year project at least.

Which all brings us back to Max. Mosley is not one to duck a challenge – as he has shown on a number of occasions. And he won’t like the idea of the entire FIA family being dictated to by the power players in F1. But if he doesn’t go, motorsports could become a very tricky area for brands.

Still in F1, Virgin chief Richard Branson has said that a title sponsorship with Brawn GP looked increasingly unlikely. Virgin had been in pole position to secure a deal from 2010 – until the team’s remarkable run of success. Now it looks as though the price tag will be too high. Speaking to BBC Radio 5, Branson said: “Brawn’s value has gone from next to nothing to £50 million a year. I suspect, next year, the price will be astronomical and we may have to look somewhere else with a smaller team.”

Honda Formula One racing team has been taken over by team boss Ross Brawn after the Japanese motor manufacturer decided to cut its links with the sport.

The team, which will use engines supplied by McLaren Mercedes, will start the new season in Australia on March 29 with the name Team Brawn. Much attention will now focus on Brawn’s plans with regard to car sponsorship.

Under Honda, the team took the radical decision to dispense with sponsorship – instead using its place on the grid to promote Honda as a green brand. Now there are rumours that Brawn is on the verge of bringing in a major partner. Favourite to step in is the Austrian online betting company Bwin – which has been very active in soccer sponsorship.