The changing landscape of Formula 1 team sponsorship

McLaren stands out as one of For­mu­la 1’s most suc­cess­ful and biggest teams, win­ning a total of 20 world cham­pi­onships work­ing with the likes of Ayr­ton Sen­na, Alain Prost and Lewis Hamil­ton.

But in recent years, its for­tunes have tak­en a hit. The team has not won a race since the end of 2012 or even record­ed a top-three fin­ish since 2014. A new rela­tion­ship with Japan­ese man­u­fac­tur­er Hon­da that start­ed in 2015 was intend­ed to restore the team to its for­mer glo­ry, only for the fraught part­ner­ship to end after just three years with McLaren sec­ond from bot­tom in the F1 stand­ings.

The depar­ture of Hon­da was agreed to secure a more com­pet­i­tive engine sup­ply, yet it left a big hole in the team’s finances. Hon­da was under­stood to be inject­ing around $70 mil­lion per year into the McLaren team, and the loss of this, com­bined with a drop in prize mon­ey as a result of the lack of per­for­mance, meant McLaren entered the 2018 sea­son fac­ing an even greater task to bal­ance the books.

Spon­sor­ship has been a grow­ing chal­lenge for F1 teams

Spon­sor­ship has been a grow­ing chal­lenge for F1 teams. Gone are the free-spend­ing days of the 1990s and 2000s, when tobac­co mon­ey result­ed in big bud­gets. The ban on such adver­tis­ing has meant a big squeeze on spend­ing for teams.

McLaren raced with title spon­sor­ship from Voda­fone between 2007 and 2013 and, despite attempts to secure a replace­ment, it failed to find a com­pa­ny will­ing to pay the top rate. This prompt­ed for­mer team boss Ron Den­nis to say that title spon­sor­ship did not “exist any­more as a con­cept”.

Den­nis left McLaren at the end of 2016, and the task of turn­ing round the team’s for­tunes was hand­ed to Zak Brown. Brown was the founder and chief exec­u­tive of Just Mar­ket­ing Inter­na­tion­al, the world’s largest motor­sport mar­ket­ing agency, mak­ing him the ide­al can­di­date to boost the team’s com­mer­cial for­tunes.

Brown remained a real­ist after Honda’s depar­ture, admit­ting it was “not going to be easy” to make up the lost invest­ment from the man­u­fac­tur­er. How­ev­er, he was con­fi­dent of fill­ing the gap: “I’ve done it before. We’ve got a great com­mer­cial team, we restruc­tured the com­mer­cial depart­ment, so it won’t be easy, but it’s pos­si­ble,” he said.

Brown is encour­aged that the mar­ket is ripe for bring­ing in fresh spon­sors under F1’s new own­er, Lib­er­ty Media: “I think the sport is in a great place to sell it. TV rat­ings are up, live atten­dances are up. The vibe in the pits is good. So I think the sport is in a good sell­ing envi­ron­ment now.”

The off-sea­son saw Brown work hard to bring new spon­sors into McLaren, with sev­er­al deals being announced. The most notable part­ner­ship was signed with tech­nol­o­gy giant Dell. Small­er agree­ments came cour­tesy of CNBC and Kimoa, the brand of McLaren dri­ver Fer­nan­do Alon­so, under­stood to part­ly com­pen­sate for a reduced con­tract fee.

Despite the agree­ments, McLaren still has no title spon­sor – six of the 10 F1 teams do – and its new car for the 2018 sea­son has a lot of blank space. But Brown is not wor­ried about the finan­cial out­look for the team.

“We don’t want a title spon­sor per se,” he said. “What we would like is a prin­ci­pal part­ner, so title-lev­el brand­ing as every­one in here would think of it. But we want to retain our name McLaren, so we are not real­ly inter­est­ed in sell­ing the name to the team.

“Spon­sor­ship takes a long time to get. We brought on five new part­ners dur­ing the off-sea­son, which is more than any oth­er team, so I’m quite hap­py with our progress.

“It’ll take time. Obvi­ous­ly the more mon­ey we have brought in we can put into the rac­ing team but we haven’t bud­get­ed for [a title spon­sor] this year, so we are on course finan­cial­ly.”

In the ever-chang­ing land­scape of F1 spon­sor­ship, the typ­i­cal spon­sor agree­ment is becom­ing increas­ing­ly rare as more tech­ni­cal part­ner­ships akin to the deal between McLaren and Dell emerge.

The deal will see McLaren har­ness Dell tech­ni­cal solu­tions across its organ­i­sa­tion, includ­ing design and man­u­fac­tur­ing, track­side oper­a­tions, teleme­try, safe­ty-crit­i­cal ecosys­tems and stor­age, and aspects out­side of rac­ing, includ­ing eSports, sim­u­la­tion, fan engage­ment and guest expe­ri­ence.

“McLaren’s agree­ment with Dell Tech­nolo­gies expands beyond the tra­di­tion­al spon­sor­ship mod­el,” Brown said. “We are like-mind­ed organ­i­sa­tions led by the key prin­ci­ples of tech­ni­cal inno­va­tion and human progress at the cut­ting edge of data-dri­ven tech­nol­o­gy.”

He added: “F1 is a relent­less envi­ron­ment, and part­ner­ing with Dell pro­vides us with class-lead­ing capa­bil­i­ties and sup­port to dri­ve invalu­able effi­cien­cies that will enable McLaren to per­form at the high­est pos­si­ble lev­el across our entire busi­ness oper­a­tions.

“Dell is the per­fect part­ner and our two brands share the same ethos, which will pro­pel us towards our busi­ness objec­tives for 2018 and beyond.”

As F1’s spon­sor­ship land­scape con­tin­ues to shift, more and more of these tech­ni­cal part­ner­ships that reach beyond a com­mer­cial agree­ment are becom­ing com­mon­place. But as Brown recog­nis­es, there is still lots of work to be done to bring brands into F1 in the future.

Now teamed up with Renault, McLaren expects a boost in its on-track per­for­mance. Get­ting the rip­ple effect to reach its off-track for­tunes will be the real chal­lenge though.