So what’s going on with sports sponsorship? It seems, given the current economic climate, that a number of companies are withdrawing their support for sports teams or leagues. Below are some of the main movers and shakers:
- ING (the Dutch based bank and insurance company) confirmed that they will not renew their three-year sponsorship contract with Renault F1 and will end their presence in F1 beyond the 2009 season. http://www.telegraph.co.uk/sport/motorsport/formulaone/renault/4641581/Renault-lose-ING-sponsorship.html
- RBS have also withdrawn their £20m F1 sponsorship deal from 2010 (although this is hardly a surprise given the bank’s recent financial meltdown). Although more controversial was Sir Jackie Stewart’s refusal to renegotiate down his £4m per year contract as ambassador for the bank (http://www.telegraph.co.uk/sport/motorsport/formulaone/4807981/Should-Sir-Jackie-Stewart-take-public-money.html )
- Williams are doubly hit though, in that one of their other main sponsors was Icelandic investment firm, Baugur, which collapsed under the weight over its debt. http://www.telegraph.co.uk/sport/motorsport/formulaone/williams/4807378/RBS-abandons-Williams-as-Honda-find-hope.html;
- BMW-Sauber’s partnership with the Swiss Bank, Credit Suisse, has also ended (although it has now been replaced by leading currency exchange broker, FxPro). http://www.f1network.net/main/s491/st141065.htm
- Anheuser-Busch (the world’s biggest brewer and supplier of Budweiser) will discontinue its sponsorship of the National Hot Rod Association, and its 30-year sponsorship of the Kenny Bernstein Racing team. According to IEG research, in 2007, the brewer spent an estimated $360-365 million on sponsorship! http://www.reuters.com/article/sportsNews/idUSTRE52G3V720090317
- General Motors (the US carmaker) is launching a major cut back of its support of NASCAR, in particular, the Associated press reports that teams in the top-tier Sprint Cup series, the second-tier Nationwide Series, and the Nationwide and third-tier Camping World Truck Series will all lose funding. http://www.sportbusiness.com/news/169684/nascar-braces-cut-gm-support
- NIKE withdrew three athletes (Kelly Sotherton, Hannah England & Greg Rutherford) from the inaugural Super-8 Athletics event in Cardiff in a row over logos and kit (more detail to follow on the blog next week). http://www.sportbusiness.com/news/169627/sponsorship-row-ruins-uk-athletics039-super8
- The US PGA Tour had to reduce its prize money for the St.Jude Classic Golf tournament in Memphis from $6.1m to $5.6m after Stanford Financial Group cancelled its title sponsorship of the event following the arrest of its founder, Allen Stanford. http://www.sportbusiness.com/news/169605/pga-tightens-purse-after-sponsor-pullout
- The New Zealand PGA Championship tournament is seeking a new title sponsor after the HSBC banking group decided not to renew its agreement, http://www.sports-city.org/news_details.php?news_id=8167&idCategory=31
- Garnier (part of the L’Oreal Group) has discontinued its sponsorship of the Australian Open Tennis in Melbourne. The event has also lost deals with GE Money and Mastercard, although its headline sponsor, KIA Motors is committed until at least 2013. http://www.sports-city.org/news_details.php?news_id=8120&idCategory=31
- Car maker, Volvo has withdrawn from the Asian Golf tournament in Bangkok this December, causing the event to be removed from the calendar. http://www.sports-city.org/news_details.php?news_id=8070&idCategory=31
- Although Virgin were announced as sponsors of Brawn GP, it may be that this sponsorship deal will not be renewed next year. The Virgin owner, Richard Branson, suggested recently on Radio Five Live that this was because the value of Brawn when they agreed this year’s deal was next to nothing, and now Brawn’s value has shot upwards of £50m, Virgin would not be able to afford a new deal with the team. http://www.guardian.co.uk/sport/2009/jun/21/virgin-brawn-sponsorship-formula-one
It is not all doom and gloom though for sports teams as:
- McDonald’s has recently confirmed that it does not plan to cut its 2009 global sponsorship budget. Johan Jervoe (corporate VP for Global Marketing) explained that while the company was not looking to cut any existing deals, they would adopt a more strategic and focused approach in future to supporting teams or events. In 2007 though, the firm was reported to have spent $125-130m on sponsorship! http://uk.reuters.com/article/idUKN0945981520090309?feedType=RSS&feedName=motorSportsNews&sp=true
- Michael Phelps has signed his first endorsement deal since the infamous ‘bong’ photograph earlier this year, with San Diego-based H2O Audio (a maker of waterproof headphones and audio accessories) http://www.sports-city.org/news_details.php?news_id=8443&idCategory=31
- Although AIG gave notice of their intention to end their £56.5m sponsorship of Manchester United earlier this year (following the company’s $85m bailout from the US government), the Premier League Champions have now agreed a four-year shirt sponsorship contract, starting from the 2010 season with Aon Corporation (another American financial giant). The contract is worth £80m and represents the biggest shirt sponsorship deal in football history. Ironic, given the fuss that has been made following Ronaldo’s ‘excessive’ transfer to Real Madrid. http://www.sports-city.org/news_details.php?news_id=8290&idCategory=31
On a similar governance note, it was reported that the eight members (BMW Sauber, Brawn GP, McLaren, Red Bull Racing, Renault F1, Scuderia Ferrari, Toyota Motorsport, Force India F1 – now suspended, Williams F1 – now suspended) of the Formula One Teams Association (FOTA), wrote to the FIA on the 13th June complaining of a conflict of interest affecting the sport’s permanent chairman of the stewards (Alan Donnelly) and seeking a separation of his roles.
Donnelly currently oversees the race stewards (who enforce the FIA rules: for example in relation to the Diffuser controversies, or on track incidents). Apparently, it is alleged in the letter that the teams have suggested that Donnelly is also undertaking a political role for the FIA by going around from team to team telling them to abandon the FOTA stance and sign up for 2010.
The FOTA letter suggested that: “This situation raises serious doubts on the autonomy of the judicial functions from the executive functions of the FIA, that need to be separated for a proper governance of the federation. In the FIA’s role as regulator it is imperative that the chairman of the stewards remains totally impartial and we therefore respectfully request that these roles are separated.”
Reuters also reported that Donnelly was not immediately available to comment but an FIA spokesman said the governing body “utterly rejects the suggestion made by FOTA in their recent correspondence”.
If this was true though, it would represent governance issues. Indeed as we saw from the recent political scandal engulfing the UK parliamentary system, it is not just enough to be within the letter of the rules, rather officials should be seen to be beyond reproach. For much the same reasons, this was why UK Sport devolved its doping functions to a new independent organisation.
Here’s an interesting idea, from GaryM on the Times Online Blog, which I haven’t seen repeated elsewhere. He argues that with all the furor about governance issues and how Formula One actually belongs to the fans, not the FIA, FOTA or the teams, why is there not a Formula One Fans Association (FOFA)?
Indeed, following Gary’s suggestion, if motor-racing truly wishes to take the views of fans into account, then there needs to be a mechanism where this can occur. This already occurs at a media level, and fans can post threads and discuss the latest news on broadcasters websites or on blogs like this, however will these really be taken in account when policy is being made? The cynic in me says that F1 is viewed at times by the governing body more as merchandise consumed by spectators and any surveys or view-finding by officials smacks of tokenism. Instead, what is needed is a partnership model where fans can actively engage in dialogue and have an impact on the running of the sport. I am not by any means suggesting that fans should be signatories to the Concorde Agreement, however there should be a mechanism that their views can be represented to the decision-makers at all levels of the sport. See for example the findings of the recent Global Audience Survey from FOTA: http://www.teamsassociation.org/sites/default/files/press_release/FOTA%20Press%20Release%20-%205%20Mar%202009.pdf
Football has official, and unofficial, fan associations and every major club has forums available for fans to engage with, challenge and help form opinions, where are these for F1 or motor racing?
As a number of posts have shown over the last couple of days, following F1 in person in both an expensive and dangerous pursuit! Isn’t it time that fans were received recognition for this (and I don’t mean simply with a branded credit card!)
Sources: http://www.telegraph.co.uk/sport/motorsport/formulaone/williams/5085057/Twilight-racing-dangerous-says-Williams-Nico-Rosberg.html; http://www.telegraph.co.uk/sport/motorsport/formulaone/5135781/Formula-One-drivers-want-twilight-race-start-times-brought-forward.html
As well as the introduction of KERS, this season has also seen the introduction of ‘Twilight’ races (last year’s night race format was abandoned this year for cost reasons).
The reason for the later start (1700 local time) of the Australian and Malaysian F1 races was for broadcasting reasons, as it was thought that this would translate to a more convenient morning time-slot for European audiences, thereby boosting the viewing figures for the race. While this has undoubted benefits for viewers and means that I get an extra couple of hours of sleep, the amended race times do raise a number of safety issues for drivers relating to the light conditions as the sun is setting. In particular, Nico Rosberg suggested that:
“The visibility is so difficult, you can’t even see the edges of the track in some corners. I was driving into the sun and that’s not what racing is about. So I really hope they reconsider that. Even moving it forward by one hour or something will help us massively. It was just the last part of the race that was the really problematic time.”
In Malaysia, the problem was not just light, but rather fading light and the risk of torrential rain. Indeed this year’s race was called off mid-way through on safety reasons as cars were aqua-planing off the track following a thunderstorm.
The Grand Prix Drivers’ Association (GPDA) has therefore included a recommendation for the start times to be moved forward by an hour in their report of the races: “It wasn’t the rain that was the problem in Malaysia, because it can rain just as heavily at 2pm as it did at 6pm. But there was no chance to restart the race when it started so late because it got too dark – and that was the problem. I think even if the races are shifted to one hour earlier it will make a difference. We understand that there are commercial reasons for running the races so late, but safety always has to come first.”
Source: http://uk.reuters.com/article/motorSportsNews/idUKSYD49346020090327?feedType=RSS&feedName=motorSportsNews&sp=true; http://www.crash.net/f1/news/148788/1/bmw_drops_kers_as_domenicali_brands_it_an_expensive_mistake.html
Kinetic Energy Recovery Systems (KERS) was a new innovation this season in Formula One and were heralded as a way of making cars more environmentally friendly (by recycling energy normally lost under braking into kinetic energy) and also providing additional opportunities for overtaking (KERS gives a potential power boost of 6.7s per lap).
Teams were given the opportunity of storing this energy through Flywheel technology, batteries, supercapacitors, or hydraulic based systems (see a good description and pictures of each system here: http://max-rpm.blogspot.com/2009/04/kers-in-f1-basically-explained.html ) KERS has a number of significant problems though. The first is that its weight is at least 35kg (thereby penalising heavier / taller drivers) and the position where that weight is sited on the car (higher on the rear, thereby raising the centre of gravity) can have an effect on the balance of the car. As such a number of teams, like BMW, have confirmed that they have now dropped KERS and will concentrate on improving the aerodynamics of their car instead, viewing the two technologies as mutually exclusive. Indeed, BMW Motorsport Director Dr Mario Theissen has suggested that if KERS isn’t made mandatory next season, then it will disappear from F1. The Formula One Teams Association (FOTA) has also confirmed that they are pressing the FIA to drop the technology for the 2010 season. Given this, it therefore seems crazy to focus on cost-reduction strategies and budget restrictions, while at the same time asking teams to spend a considerable amount of money, research and development on trying to make KERS technology, safe reliable and effective.
In particular, concerns were also raised at the start of the season by drivers as to a possible safety risk caused by the potential for electric shocks from the high-voltage system. This is because the circuit used in the battery systems remains live for around a second after the car has stopped. Reuters reports that the matter came to light when a BMW mechanic suffered an electric shock when he touched a car during testing last year. Marshals and medical teams at the Australian Grand Prix were therefore advised to wear special gloves to protect against the risk of any electric shock. The disadvantage of this precaution though, is that in the event that emergency treatment was necessary, there is a fear that these thicker gloves may prevent trackside medical staff from carrying out life-saving procedures.
Although Mark Webber said the matter had already been discussed by the Grand Prix Drivers Association but there was still some level of uncertainty about how it would work in a real-life crisis: “As usual you do gain knowledge and experience on the front line so we’ll see how it goes”