The evolution of a Formula 1 sponsorship deal

From the hazy, heady days of tobacco giants to the cryptic crypto currency courtships of recent years, Formula 1 has always relied on sponsorship revenue for a significant slice of the funding required to go racing.

Ask any fan what their favourite car is, or who they feel is the greatest driver of all time, and the picture they paint will invariably contain a detailed description of the livery linked to the team or individual of the era.

Since 1968, teams have devoted certain sections of their cars to be emblazoned with sponsorship decals and fill up the coffers in the process.

Tobacco advertising went hand-in-hand with a boom period for the world championship but, even when it started to be slowly banned across the world, F1 teams would simply hint at their smoking sponsors in regions where their cars could no longer bear the name of their most prominent backers.

Think Jordan’s ‘Buzzing Hornets’ or McLaren replacing the cigarette brand West with the names of their drivers – fans still knew that as Mika Hakkinen and David Coulthard roared past, ‘Mika’ or ‘David’ were placeholders for the true sponsor.

Money makes the world go round, as well as F1 cars, but sponsorship deals have moved on to become symbiotic partnerships aligned to achieve the best outcome for the team and, as a result, for the brands now so deeply associated with them.

“With these really important partnerships like Komatsu, it is much more than the stickers on the car; it is making sure that we really bring great value to the partnership,” Williams chief HR officer Ann Perrins told Autosport during the recent launch of the Komatsu Williams Engineering Academy, the two entities coming together to support the finest up-and-coming STEM minds across the world.

Where once tobacco sponsorship reserved space on F1 cars, today teams seek partners that can improve their performance

Photo by: Sutton Images

Partnerships are now more popular than sponsorships. Whereas teams in past years would happily take money to plaster logos over their cars, overalls and peripherals, now they want deals that can help them in their quest to move up the grid.

That means getting the right fit is more important than ever as Marc Cutler, head of communications at sports marketing agency Right Formula, explains.

“[F1] has never been more popular in terms of brands wanting to get involved; what that has meant is that there are more brands involved in the sport than ever before,” he told Autosport.

“Over 300 brands are now sponsors or partners and they need to work harder to get their message out there and to stand out from the crowd.

“That’s where it’s so important what the brand does at the start of their sponsorship journey, because that will affect everything over the next two-three or five-10 years that they’re sponsoring that team or the championship.

“The best sponsorships and the best partners that we work with are the ones that have a brand narrative that directly links what they do in the sport. A company like SAP provides their software to Mercedes and that software helps the team to become more efficient, more sustainable and eventually, it helps them to be more competitive, so to be able to use that to tell the story [is valuable].

“I encourage all sponsors to identify that brand narrative even before they come into the sport and actually, I think a lot of brands do this really well. They are coming into the sport not with a view of, ‘how can I use the sport to just be an advertising board for my brand’, but it’s more, ‘how can I actually be a key participant in this sport?’”

Cutler’s sentiments are echoed by motorsport and marketing specialist Matthew Marsh, a two-time Le Mans 24 Hours starter and sponsorship broker specialising in the Asian market.

The array of sponsors on modern F1 cars are all vying to stand out from the crowd, and storytelling is an important way of doing this

Photo by: Lionel Ng / Motorsport Images

“It is a little less about global TV audience and a bit more about storytelling,” he told Autosport. “That’s logical given the shift in the media landscape with more subscription models against free-to-air television and the same with print to social media.

“Before the turn of the century, F1 was a global media platform. Slap your logo on a McLaren and it was seen around the world, theoretically and there were not many other platforms like this. You’d have to buy TV advertising in each market, for example.

“Today brands have a wide range of options for delivering a message – and more directly to their target audience. These should be more efficient than a logo on a race car. It should be more targeted and you can take the sponsorship relationship and wrap it in a story before delivering it.

“It isn’t always just about the fastest car either. You can argue that the winning car gains more brand exposure or that you benefit from association with winning. But I think it’s more that those deciding which team to be a partner of want to be proud.”

It is not just the role of sponsors that has changed drastically in recent times. The brands being attracted into F1 are almost unrecognisable to those of a decade ago.

The Formula 1 Partnership Network Analysis Report, compiled by Spomotion Analytics, found that the United States is now the dominant country when it comes to company partners.

Some 46.8% of partners at the start of the current season were based in the USA, more than doubling the number that were involved when Liberty Media took over F1 in 2016.

By comparison, the report found less than 14% of MotoGP partners come from the US – a number that will no doubt increase following Liberty’s takeover as it seeks to mirror its F1 success on two wheels.

Most partners in modern F1 herald from the US, mirroring the world championship’s drive for more races in the country

Photo by: Mark Sutton / Motorsport Images

While new brands, 40 of which entered F1 before the start of the 2024 season, clamour to get on board could the journey of one long-standing partner be replicated in the future?

Red Bull was a sponsor of Sauber as long ago as 1995, but in 2004 it acquired the Jaguar Racing team from Ford to take its place on the grid for the following season.

Now the energy drink company is a major player involved in two teams, buying out the Minardi team, today known as RB, in 2005. It finds its own backers and sponsorship in ultimately achieving the goal of winning drivers’ and constructors’ championships.

Oracle is one such example; the US tech giant has since 2022 been the title partner of Red Bull, but also an important cog in the team’s recent successes – including Max Verstappen’s record-shattering third world title in 2023.

“Oracle Cloud played a critical role in helping our team deliver the most dominant performance in F1 history, and I can’t wait to see what we accomplish next,” Red Bull team principal Christian Horner said.

As recently as Wednesday, Red Bull announced an extended and expanded partnership with telecommunications giant AT&T, summing up the new approach to such deals.

“Oracle Red Bull Racing and AT&T’s partnership goes beyond branding,” its announcement stated. “By combining AT&T’s state-of-the art connectivity solutions with Oracle Red Bull Racing’s pursuit of excellence, the collaboration promises to keep pushing the boundaries of what’s possible.”

Oracle and AT&T are huge multinational companies in their own right and are blue-chip partners of a F1 outfit Lewis Hamilton once infamously derided as “not a manufacturer, they are a drinks company”.

Red Bull owns two teams and has cultivated an array of partners to support both its main team as well as RB

Photo by: Steven Tee / Motorsport Images

That “drinks company” wiped the floor with the opposition in 2023 yet, in Horner’s estimation “it sits uncomfortably with various companies that we are a subsidiary of an energy drinks company. Do we really belong alongside the likes of Ferrari and Mercedes and some of the longer standing brands of the sport?”

So could another brand look at Red Bull’s success and elect to go above and beyond a standard sponsorship/partnership by aiming for their very own team?

“Brand-owned teams is an interesting question,” opines Marsh. “I suspect the reality is that [Red Bull founder] Dietrich Mateschitz wanted to own an F1 team, or two! So he could obviously justify the huge outlay – much as Luciano Benetton did in the late 1980’s. Who is to say that couldn’t happen again?

“Dietrich and Luciano both loved F1 and wanted to own teams. That’s the reason they did it – I believe. Luckily, they could justify the spend as an efficient marketing solution.

“This is what I think still drives most sponsorships in general – someone wants to do it. These days there are more people who want to do it, because F1 is more popular and it is perhaps easier to justify because the measurable metrics of audience, demographics and engagement are all moving in the right direction.”

Even if we do not see the next Red Bull enter the fray, F1 teams and the relationship with their partners are only going to become more entwined and collaborative than ever. The age of the straightforward sponsorship, at least for the biggest deals, is essentially over.