McLaren loses TAG Heuer? What’s going on over there?

Don’t misunderstand my commentary as being written from the perspective of a man who has never made mistakes or had challenges. That simply isn’t the case but I’d be remiss in not suggesting that the challenges McLaren are facing are some real head-scratching situations and they make you wonder how a team that has won eight Constructor’s title and 12 Driver’s title can be in the situation it is now.

Perhaps you could draw solid or dotted lines back to the Spygate incident of 2007. The Liegate of 2009 in Australia or the removal of Ron Dennis from the role of team principal in 2009 and the toll Spygate may have played on ending Ron’s marriage of 22 years. The ownership investments from the TAG Group and Mansour Ojjeh which may be part of the boardroom struggles we read of these days.

It could be fair to say that Ron Dennis suffered some serious life-altering changes from 2007 onward with Spygate, divorce, the removal as team principal and more. He had reduced his ownership substantially in McLaren but has since returned with the intent on buying back the team.

During all of this, McLaren cars have become devoid of title sponsors or any major sponsor profile. That happens in F1 and since the departure of tobacco money in F1, sponsorships have become more difficult to find.

One would have thought that the technology sector would be a perfect fit for the pinnacle of motorsport technology and racing but that hasn’t come to fruition and perhaps due to the lack of any need for brand exposure from tech giants who are still riding a wave of automatic brand awareness. Those who can afford it in the tech industry don’t need it and those who need it can’t afford it as they struggle to become the next disruptive tech on angel investment stipends. Formula 1 may be an industry of the Have’s and the Have Yachts but truly the tech industry gives them a run for their money.

Having lost Vodafone and experienced a reduced investment from Santander, McLaren is now losing another 30-year sponsor relationship in the form of TAG Heuer watches. Now the confusion is the name TAG as Mansour Ojjeh used to be the owner of TAG Heuer watches but sold his interest. Still, it’s a hard impact for McLaren.

I have maintained that McLaren is going through a boardroom war of control and ownership that permeates everything at McLaren including who will drive for the team. I may be completely wrong but it sure feels like this is the situation from the outside looking in with our noses firmly pressed on the spotless windows of the McLaren Technology Center.

Mansour Ojjeh had a double lung transplant in 2013 and had relinquished his role in McLaren to recuperate handing the reigns to his younger brother Aziz. I can’t imagine that went well with the likes of Ron Dennis but who knows? Maybe they get along famously.

Bahrain’s Mumtalakat had owned 50% of the group but according to reports, Dennis bought them out nearly a year ago. Mumtalakat did retain ownership in the McLaren Automotive group at 41%.

So now Dennis is faced with orchestrating the acquisition of Ojjeh’s shares as well as finding sponsorship. Dennis values the title sponsor very highly but so far, no one has ponied up the big dollars Dennis feels the opportunity deserves.

What we may be seeing is a battle for the control of McLaren and a complete restructuring as well as house-cleaning in order to get the ship headed in the right direction. Honda’s new power unit hasn’t helped matters in 2015 and with Vodafone, TAG Heuer and others leaving, it does make you wonder if they sense a sinking ship or simply are looking for new demographics that they feel McLaren doesn’t appeal to. Tag Heuer CEO Jean-Claude Bivet said:

“We have just signed Red Bull Racing in F1 for next season.

“It is a young, dynamic, go-getter, perfectly consistent with the TAG Heuer strategy.”

Ouch! That doesn’t say much for McLaren’s brand appeal as part of their sponsors marketing activations or efforts. I’m not sure Kevin Magnussen would have helped matters either. At this point, let’s hope McLaren have the cash reserves to weather the storm and survive F1’s black hole designed to suck millions out of a team’s bank account. McLaren’s Mr. Bishop was quick with a nice response on the TAG Heuer issue:

“McLaren’s partnership with Tag Heuer has been one of the most successful and enduring sponsorships in sporting history.

“It has lasted 30 years, during which time both parties have achieved enormous success together.

“On track the team has won grands prix and world championships with such iconic racing heroes as Alain Prost, Ayrton Senna, Mika Hakkinen and Lewis Hamilton.

“Off track Tag Heuer’s association with the team has caused its watches to become globally synonymous with high technology, precision and speed – three principal hallmarks of the McLaren brand.

“It is therefore with gratitude we announce the end of our 30-year partnership, satisfied as both parties are with a job well done.

“Our relationship with Tag Heuer’s parent company LVMH continues via our new partnership with Chandon, announced last month.”

Perhaps a little wordy given they are being jettisoned and TAG Heuer themselves were relatively tight-lipped about the departure. Mr. Bivet is a notorious maker of cheese. Yes, he’s a cheese maker in his off time and he has turned around many watch companies including Omega and Hublot. It’s hard to argue with his track record of making otherworldly cheese while being able to determine the moves needed to bring success to an industry that quite honestly has had its share of downward trajectories.

TAG Heuer needs to sell mechanical watches to Millennials and McLaren need to sell sponsorships and perhaps the two are no longer a fit. On a personal note, I will say that I am very bummed about the mass exodus of sponsors from F1. Now no one may care but I miss the iconic brands that used to be such a comprehensive part of a team and car. The Gulf, Elf, JPS, and others were terrific.

It’s comforting to still see Shell on the Ferrari’s and the return of Martini to Williams F1. Perhaps Williams F1 is on the right trajectory where McLaren are stumbling? Perhaps Williams charged much less for Martini’s sponsorship while McLaren are still holding out for $20-40 million for the privilege?

Hat Tip: AUTOSPORT

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Nigel@CassRacing

I just….wow. It seems very silly looking back on it, but when I was a younger and just getting into F1, I saved up and worked extra shifts for months on end so that I could afford a Tag Heuer F1 watch. As a McLaren fan I couldn’t help myself! I know this sounds crazy, but this news actually hits me in the heart….the power of branding is amazing!

Brent Wilcox

I wonder how long the mechanical watch industry has left, considering everyone has a clock on their phone. I suppose watches are basically like jewellery now.

I was confused by this sentence:
“On a personal note, I will say that I am very mass exodus of sponsors from F1”.

Joe Mama

Brent, mechanical watches are bigger than ever. It seems the extinction of the wristwatch as a source of any useful information has simply cemented its status as luxury jewelry.

It’s very uselessness is its value, because only truly “awesome” people with lots of disposable income can afford to own and maintain wearable precision machinery crafted in precious metals and exotic materials…for no reason whatsoever.

That may sound cynical, but I’m a watch guy, and man I wish I could afford to keep my Omega running.

Patrick Chapman

1966 Rolex GMT Master, 1999 Omega Saemaster, Tag Heuer series 2000, 5000 and F1 and about 25 others and when I kick off they will all be left to my children which is more than I can say for my cell phone.

Brent Wilcox

You make a very good point, I dont understand the market, nor the appeal. You have to upkeep an omega? Interesting.

Joe Mama

To be fair, I’ve worn my Omega daily for the last 15 years, and. about 3 years ago, I dropped it. (that still makes me cringe) Ever since it has required a few hundred dollars of professional care every year to keep it in good working order, and the intervals between needed care are getting shorter. People like Patrick Chapman (below), with lots of options, inherently put less stress on any one watch, so they only have to deal with periodic cleaning and light maintenance. Even so, adding up the cost of maintaining 25 automatic watches over a decade or… Read more »

Patrick Chapman

Joe, you need a better watchmaker because your current one is definitely not getting to the root cause of your problem. Your Omega is shockproof so the drop shouldn’t have done much damage. Save up your pennies and send it to Omega/ETA in Switzerland and it will come back as good as new. Thats where I send my Seamaster and honestly it doesn’t cost much more than having it serviced locally. Email Omega and talk to them. Hope this helps. Regards

Negative Camber

Oh…that was an edit point that somehow didn’t get corrected. Here is what it should say:

I will say that I am very bummed about the mass exodus of sponsors from F1.

I fixed it. Thanks for pointing it out, it was confusing as *&$#

Patrick Chapman

Wrist watches took over from pocket watches so what makes you think that a pocket phone is going to take over from a wrist watch. And I am definitely not going to wear my phone on my wrist.

Tom Firth

Losing Tag Heuer is a blow to Mclaren, on the back of losing Hugo Boss and Vodafone in recent years. On the flipside though, ExxonMobil signed a new deal back in 2011 (not seen an extension) so believe that is through to end of 2016 for now at least. Hilton Worldwide signed a deal with Mclaren to stay through to 2019 last month. Chandon is coming onboard to replace outgoing Johnnie Walker. CNN is a multi-year deal, KPMG is a huge alliance incorporating the whole Mclaren Group, and set for many years to come and I’m not certain about SAP… Read more »

Negative Camber

Interesting, I was reading a comment Mr. E made in that Ron bought them out and that they still owned 41% of the automotive group. The article was back in December of 2014.

Tom Firth

Yeah, I read the same thing, which is why I’m also confused, but it appears not to have happened or at least not concluded, as Christian Slyt confirms here (dated Nov 8 2015) that the shares in Mclaren Group remain as 50%/25%/25% in favour of the Bahrain investment. http://www.forbes.com/sites/csylt/2015/11/08/downturn-in-formula-one-performance-fuels-25-million-loss-at-mclaren/

It does seem the amount of influence in Mclaren Automotive has increased too, but that has more small stakeholders so things have probably changed a few times, a lot more than the overall Mclaren Group.

Patrick Chapman

Excellent post Tom. Very informative. The informed posts on this site is why I come here so thank you. I imagine that if Casio want to stay in F1 they will find another team to sponsor. I hear that there will be a bit of bodywork available at Mclaren soon,

runnah

Sounds like Mclaren is running out of time.

MichaelB

Ron needs to rethink the value proposition of a McLaren sponsorship – especially with the team under-performing. It’s one thing to demand premium prices when you’re mixing it up at the front and your cars and drivers are constantly in the news because of the accolades they are receiving…. But when almost every mention of McLaren-Honda is preceded by the words “another disappointing performance by…” the brand isn’t nearly as attractive to be around. Is there really a company that’s interested in paying upwards of $40m to be the title sponsor for a team that when they even finish are… Read more »

Shaolin

I think this is partly an F1 wide problem, not specific to McLaren. You mention the inability of F1 to attract the wealthy tech companies money, I am sure that is because of F1’s old school content delivery model. F1 is still of the old school mind set that everything is about selling the content to TV networks. Modern tech companies want their brands seen through social networks, viral content sharing, you tube, instagram etc. F1 actively tries to stop fans from sharing content containing the sponsors brands through cease and desist, in order to protect their TV networks monopoly.… Read more »

Tim C

At this moment in time, I’m inclined to believe that Ron thinks way too highly of the McLaren brand. It’s a great brand no doubt, but the current situation doesn’t allow for such a high asking price.

Schmorbraten

In Germany, RTL has the TV license to broadcast qualifying and the race live free-to-air for every race – Sky Germany cover every session live just like Sky UK does, but RTL’s concurring FTA license is not a castrated one like the BBC who can only show half of the events live, quali + race. But starting this year, for timeslots like the US + Mexican GP, RTL chose not to show quali live, which would have been in a prime time saturday evening slot around 8-9 pm, but instead to show it late at night around 1-2 am. The… Read more »

Tom Firth

Interesting choice by RTL, out of interest, what would RTL be showing at that time?

Schmorbraten

I don’t know, I hardly watch any TV. My TV set hibernates from December til March, and it’s a ~30 years old Black Trinitron CRT. On the RTL website they only show the past schedule for one week so I can’t check back. Probably RTL showed something like Germany’s Next Topmodel, or worse. In general, german saturday evening TV culture traditionally is world class cheesy.

mini696

If you have been a sponsor for over 20 years you tend to be forgotten. TAG seem to just be changing trains as a refresh of their F1 sponsorship.

JP

I am somewhat torn, I have two Tags from 99 and 2011 and four Casio Red Bull limited editions from the Webber era. Somehow energy drinks and luxury watches don’t mix in my mind, but I guess young Kvyat will help sell watches in Russia that the likes of Button can’t. McLaren now looks like it might be going down the Tyrrell path. Sad that it is so terminal for McLaren, I feared that the return of Alonso might spell the beginning of the end, now it appears to be coming to fruition. I guess my Casio’s are now truly… Read more »

Schmorbraten

Ron Dennis is going to run this team down. His McPride clashes with reality, but he’d probably say they’re “perfectly prepared to not let ourselves be impeded in any way by challenges concerning a possible disconnection from facts from our side” or something like that.

WinstonSmith84

Could the under-performance of the team on track and in recruiting sponsorships be related to Ron Dennis’ desire to buy out the other owners? The team is certainly cheaper now than it was when they won their most recent championship.