F1's unending financial woes; or "It's the income, stupid."

[Pup]

“Excellent positioning of clear branding on both the Infiniti Red Bull Racing car, team and drivers in addition to significant airtime thanks to the team’s strong on-track performance throughout the year, gave INFINITI advertising equivalency value of over $1billion from Global TV coverage – an amazing achievement.

I read it slightly, but significantly, different.

They are obviously not getting 1 billion dollar out of it. I think what they want to say that the market value of the 'sponsorship in view' would be one billion dollar. If they would have had to make a regular commercial and send it out for the equivelant amount of time and have to reach to equivelant amount of people, the price for such a commercial might be 1 billion dollar taken over a year.

Yes, that is what they mean.

[xpensive]

Again, and I will try to xplain this without coming across as patronizing

I'm fully aware of FOM's agreement with the FIA, thank you though. This thread is about the teams' income, not theirs.

It's fine if you think they should get a portion of FOM's income, and free pie at the races. But they don't.

There is no "agreement" between between "FOM" and the FIA, there's a 99 year lease, which is not xactly the same.

Believe me, if MrT could, he would renegotiate that Alaska-sale as fast as you can say solicitor.

[turbof1]

“Excellent positioning of clear branding on both the Infiniti Red Bull Racing car, team and drivers in addition to significant airtime thanks to the team’s strong on-track performance throughout the year, gave INFINITI advertising equivalency value of over $1billion from Global TV coverage – an amazing achievement.

I read it slightly, but significantly, different.

They are obviously not getting 1 billion dollar out of it. I think what they want to say that the market value of the 'sponsorship in view' would be one billion dollar. If they would have had to make a regular commercial and send it out for the equivelant amount of time and have to reach to equivelant amount of people, the price for such a commercial might be 1 billion dollar taken over a year.

Yes, that is what they mean.

It's still different from "if this was true then sponsors would be knocking at the door of every team". It's merely a measurement of cost. The real benefit, the extra profit generated by marketing, is what determines if it's worth the cost. Marketing isn't merely about getting to as many people as you can; it's about reaching your segment of the market you are aiming for. A company of air refresher for example might find zero utility in having brand exposure on a F1 car, even though he reaches one of the biggest publics in world.

[Pup]

I think you're picking my words apart unnecessarily. I agree with you - let's leave it at that.

[turbof1]

You're making the same argument I am. The 'value' they've calculated is an illusion.

Then I think it's merely a difference in acceptance . I'm used to such twisted realities and over-optimistic representations. I take it as a normal by product of society. Certainly not a F1-exclusive; even very small companies in belgium hire accountants and consultants to twist number in similar fashion to look nice.

[xpensive]

Indeed, the "marketing value" that MrE so geniously has created is more in the line of providing a haven of celebrities, booze, half-naked women and superficial self-importance for the different corporations' big cheeses to indulge in.

Once that is accomplished, the "market value" becomes a self-fulfilling prophecy, clients and sponsors will claim it themselves.

[Pup]

Agreed. Of course, the glamour is part of F1's value, and an important part. My problem is that FOM hasn't promoted the sport beyond that.

[Pup]

You're making the same argument I am. The 'value' they've calculated is an illusion.

Then I think it's merely a difference in acceptance . I'm used to such twisted realities and over-optimistic representations. I take it as a normal by product of society. Certainly not a F1-exclusive; even very small companies in belgium hire accountants and consultants to twist number in similar fashion to look nice.

The problem is that I've seen this press release touted by a few journalists as evidence of the value of F1, when it really says nothing of the sort. Potential value, perhaps. To some.

It's the discrepancy between this potential value and what sponsors are apparently willing to pay that confuses me. With such an audience, why aren't more companies willing to come into the sport? I mean, the number of sponsors in the sport is really small, when you think about it; and only a handful of those are true title sponsors, in the vein of a Vodafone or Marlboro. When you see blank cars running around the track, like a Marussia or a Sauber, you really have to wonder.

And when you see Brawn winning the championship in a blank car - well that really makes you wonder.

[turbof1]

Brawn is a special case, having started the year with a car completely and fully funded by a big car manufacturer. The exception also comfirms the rule, as Ross had to lay off nearly half of the original honda f1 staff and the car missed out on updates in the second half of the season.

I'd also bet that that infinity piece would never have reached attention during the f1 season. It's off-season now; more odd things have come by then just that.

Next to that, it's like I said: marketing isn't about reaching the maximum amount of people. It might have been like that a few decades back, but today marketing is way more focussed on a specific group of clients, hitting specific segments of the market. Mass-marketing is hugely ineffective. When getting down to sponsoring and marketing overall, companies will be looking how they can reach their target group in the most efficient way. F1 isn't that attractive in that aspect. Just having a logo on the car isn't going to cut it; there's no interaction between the sponsor's products and F1, nothing to show off.

[Glyn]

There are two points I wish to add.

Firstly I suspect the income is fine. It is the distribution of wealth that is a big problem.

Secondly I feel that we need some sort of F1 action in between races. More behind the scenes. Different kinds of shows and entertainment. And this could be a value added bonus for the sponsors. It would be an ideal way to give the sponsors more "air time"... more eyes looking at them.

But no, all we get is an f1 race and lots of "mystery"

[Pup]

Brawn is a special case, having started the year with a car completely and fully funded by a big car manufacturer. The exception also comfirms the rule, as Ross had to lay off nearly half of the original honda f1 staff and the car missed out on updates in the second half of the season.

I'd also bet that that infinity piece would never have reached attention during the f1 season. It's off-season now; more odd things have come by then just that.

Next to that, it's like I said: marketing isn't about reaching the maximum amount of people. It might have been like that a few decades back, but today marketing is way more focussed on a specific group of clients, hitting specific segments of the market. Mass-marketing is hugely ineffective. When getting down to sponsoring and marketing overall, companies will be looking how they can reach their target group in the most efficient way. F1 isn't that attractive in that aspect. Just having a logo on the car isn't going to cut it; there's no interaction between the sponsor's products and F1, nothing to show off.

Maybe. But when you see Tide clothes detergent or M&M candy on the hood of a NASCAR, you'd be forgiven for questioning the connection/interaction.

But even if you accept that there has to be a connection, or involvement, you'd think that F1 is ripe for the sort of niche marketing that you're talking about: RB can't be the only company that wants to associate it's brand with extreme sports; any company that prides itself on technical performance or execution should be interested; of course, there are the auto and related industries that are directly related. I'd think that travel companies would have a place.

And companies like Vodafone have at least in the past felt that exposure alone was enough. (I never understood the telecoms' interest in the sport). Frankly, I put them with banks in the category of industries that find they have more money than they know what to do with.

[xpensive]

...
And when you see Brawn winning the championship in a blank car - well that really makes you wonder.

I'm sorry Pup, that's it and I'm out, you obviously have an agenda with this thread, I felt it was something funny with it.

[Pup]

...
And when you see Brawn winning the championship in a blank car - well that really makes you wonder.

I'm sorry Pup, that's it and I'm out, you obviously have an agenda with this thread, I felt it was something funny with it.

What are you talking about?

[turbof1]

Pup, I have to ask, and please don't take this the wrong way:

Were you drunk last night?

[munudeges]

FOM doesn't "steal" any money, with or without quotes - at least not from the teams. Just because one party makes a disproportionate amount of money doesn't mean that they are obligated to share it with others.

I'm afraid that is at the heart of it and unless you understand that then this thread is useless.

Put simply, there is more than enough money in Formula 1. When you have a team like Lotus who've finished fourth in the constructors' for two years' running, have beaten teams like Mercedes and McLaren and are going out of business then that tells you there is something very wrong. CVC uses Formula 1 as a cash cow for its wealth, pension and hedge funds. You've got teams running around hunting for 10 million here and there and CVC syphons off billions. Completely disproportionate.

The FOM money is the teams' money.