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.”