Regular readers will know my views on the state of Formula One, commercially speaking, and that it currently represents a potentially very sound investment.

I am not quite as bullish as Kevin Eason of The Times who sees “Sponsors rushing to join Branson on board the Brawn express” but I am certainly more optimistic than Mark Kleinman, City Editor of The Sunday Telegraph, who claims “The F1 formula is failing”.

Kevin Eason’s arguments are easy to follow:  a new British team wins (and takes second place too) in its first ever race, becoming a magnet for sponsors in the process. The story is given added spice by the fact that the car is essentially devoid of sponsor logos with the exception of one, that of the ever-prescient Richard Branson and his Virgin Group, who made what now appears to be a visionary investment in sponsoring the team before its first race when, presumably, the price of doing so was cheaper than it is today.

Irrespective of the detailed facts of the story (other sponsors are present, though less visibly; the actual amount of money paid, if any, by Branson) it’s a feel-good piece, a story of British success in a highly competitive field. I like it.

Mark Kleinman’s comments are harder to understand, though I presage criticism with the caveat that his piece was written before the Australian Grand Prix won by Brawn GP. He sees a mass exodus of sponsors in the sport, led by ING and RBS whose forthcoming departures were recently announced. There is a clear implication that other sponsors will follow. I do not agree.

F1 commercial managers understand that it can appear irresponsible for publicly-owned financial institutions to engage in high profile sponsorships just now, maybe for ever.  This is exactly the same situation that the industry faced when it realised it would be irresponsible to continue to court tobacco sponsorship. Formula One will reinvent itself in the seasons to come, as it reinvented itself seasons ago, in order to remain relevant to the environmental conditions that prevail at the time.

Mark Kleinman would be quick to point out of course, that the environmental and financial conditions that prevail today are more challenging than those of yesteryear, and he would be right. But he underestimates the resilience of the industry and the moves afoot to change it from within.

Regulations are radically different this year and if Australia is indicative, it will be an exciting season on the track (how can you say, Mr Kleinman, that “…the 20 cars gathering on the starting grid in Melbourne for the first race of the 2009 season will look much like those that finished the last campaign…”? The cars are clearly different and the racing will be more exciting.

Away from the track, we are starting to see F1 teams talk with one voice via FOTA, begin to take environmental concerns seriously with KERS, and recast their operating cost models to comply with the FIA’s proposed £30m limit.

This may not be enough to keep motor manufacturers in the game, but no matter. Under the new cost models, the price of entry into the sport will be radically reduced, opening the field to private individuals or automotive companies beyond the household name brands.

In this way, the recession will be good for Formula One, driving the sport to be different, vibrant, more accessible, more relevant to a cost-conscious, environmentally sensitive society. 

By Scott Garrett on April 2nd, 2009

Tags: Formula 1, Jenson Button, Media, Sponsorship

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