Mercedes F1 investment questioned

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You may recall the criticism leveled at Daimler Mercedes when they purchased Brawn GP a month ago:

“In these economically difficult times, the company should invest in better marketing of its real cars,” said Erich Klemm, head of Daimler’s works council.

Mercedes petronas

Those same sentiments are being echoed with the announcement yesterday that Mercedes GP Petronas has signed veteran driver Michael Schumacher. The question at hand for the Works Council is the money spent by Daimler in light of a recession and many workers being laid off. The recent protests over the E Class manufacturing duties being moved to the US has been a catalyst for concern with Daimlers recent spate of spending in a sport that many consider less relevant when compared to the carbon sensitive crowds.

With Honda, BMW and Toyota leaving, Daimler labor leaders are wondering why the company is not following suit to spend its dollars elsewhere. The answer from Daimler Chief Executive Dieter Zetsche is that “it would be a missed opportunity” to not take advantage of the world stage of F1.

His reasoning may be best described in this article at the Wall Street Journal. The lack of major manufacturers in the series, due to the exodus of all but Mercedes, Ferrari and to a lesser extent Renault places them in a more prominent position for the world stage. This will not go unnoticed as the sport travel the globe and Mercedes is seeking emerging market sales.

The criticism of commercial rights holder Bernie Ecclestone’s desire to eschew traditional European circuits for Asian and Middle East countries may well upset fans but it also could be a lucrative market should Ferrari and Mercedes seek emerging market penetration.

Is Mercedes right to sign Schumacher to a multi-year deal for a princely sum? There is little doubt that it was not coincidence when Petronas committed to a 5-year deal for 30 million Euros a year the day before the Schumacher singing was announced. In that light, perhaps Schumacher has already paid for himself and a substantial amount of the purchase price of the former Brawn GP team. Can the criticism continue to be leveled at Daimler executives if the balance sheet is looking rather robust?

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