Shareholders are Getting a Grip on F1
By: Nickolaus Stringfellow
With an influx of American viewership, sponsors are diving headfirst into Formula 1 and are eager to slap the biggest and costliest stickers on the cars. Heading into 2023, 6 out of 10 teams are operating with title sponsors, including the newly partnered MoneyGram Haas F1 Team and Alfa Romeo F1 Team Stake.
These title partnerships give sponsors a high priority in the team’s branding and marketing decisions. They also provide the sponsors themselves with access to utilize Formula 1 within their own marketing initiatives.
F1 teams and owners have seldom been discouraged to share the cost of operations, all in exchange for making their car look slightly more like a billboard. The costs of running a Formula 1 team are difficult to withstand alone. Although teams would and have gone through drastic measures to spend more, F1’s budget cap for 2023 provides what smaller businesses would consider a comfortable $135 million ceiling.
This ceiling, however, does not include the millions of dollars teams spend on paying their drivers and replacing engines. Relieving these still bloated budgets requires the myriad of stickers on each car and piece of merchandise that jockey for the largest spot. The cost of getting a company’s sticker on an F1 car sees the tiniest logos and deals valued in the six-seven figure range.
If checks can’t be cut, players won’t get a seat at the table or, not even access to the casino at all. With astronomical prices and potential equally as high, only large and winning investors have survived the filtration of the sport into its exorbitant posture. At the level of a title sponsor, millions of dollars per season are spent on the biggest logos on the car and the biggest contributions to the team’s budget.
The sport is expanding at an unprecedented rate and the results are paying off. Since Liberty Media’s acquisition of F1 in 2017, the sport has seen 23 races in 5 continents, a 1.96BN accumulative TV viewership, and the highest digital interaction of any major sports rights holder. These ambitious expansion plans include the most Grand Prix on United States soil in F1’s history, including Miami, Austin, and the brand new Las Vegas circuit.
Expansion and awareness are the catalysts to a velocious increase of partnerships in the sport. An F1 car and team is a unique and effective way to advertise. Partnerships with Formula 1 teams heavily legitimize brands and simply make them look “cool”. Hence, it would be rather difficult for logos to look lame on 200 MPH race cars. Within this increase in partnerships is a diversified portfolio of deals that encourage brands far outside of motorsport to get their faces on track.
Fashion brands Palm Angels and Kappa, Texas’ MoneyGram, and Google, make up a very short list of recent entrants into the F1 space. Importantly and with the help of accommodating technical regulations, Ford has announced its new partnership with RedBull Power Trains after a 22-year hiatus in the sport. An American entrant of this size is crucial. Along with the sport’s first full-time American driver in 17 years in Logan Sargeant, a benchmark for F1’s American identity is setting.
As television becomes elastic along with the mediums in which it is watched, F1 has seeped its way into the eyes of viewers who otherwise wouldn’t know who Lando Norris is. Netflix’s Drive to Survive has been and will remain instrumental in the American introduction to Formula 1. As the show approaches its fifth season, it might continue a ricochet that has put the sport in front of other nationalities as well.
Nielsen Fan Insights data tracker has attributed 2.3% of the sports live television viewership growth in the past 2 years to the Netflix show. The tracker also provides that an enormous 41% of Drive to Survive viewers watched the first three race weekends of the 2022 season on live television.
The results are impressive and the growth in viewership has been directly related to the influx of F1 sponsors and partnerships. As F1’s growth continues in America especially, we foreshadow a rush of investors who are just as interested in each pit wall strategy as we are.