Pirelli want long-term deal from F1

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AUTOSPORT ran an interesting story regarding Pirelli’s future prospects as Formula One’s sole supplier today. In the article, Pirelli motor sport boss Paul Hembery said that they are certainly interested in F1 in a long-term posture but the deal has to be right in order for the Italian tire maker to stay:

“We’d love to stay longer in the sport, because that’s the only way you can really leverage the investment,” Hembery told AUTOSPORT. “The costs are significant.

“We get a contribution from the teams and like everybody we have to go back every time and answer to our board as to why we are doing something and what return do we get. A lot of the return is coming from the trackside advertising.

“That gives us visibility and so far that has stacked up. But we are not immune to the world economy.

“We are a global business and when there are issues in some geographical markets you need to compensate.

“Big companies have to make big decisions in motorsport, and you always have to justify it. So if it’s not the right thing to do you have to bite the bullet.

“We are no different to car manufacturers that have come and gone. We are trying to maintain our position but there are limits and we can’t exceed those.”

What I found interesting is the notion of Pirelli being similar to a car company in that they can come and go with fluidity based upon the criteria set forth from the board. This is the notion that Sir Jackie Stewart referred to in questioning the risk of Lewis Hamilton’s move to Mercedes.

I’m intrigued by the notion that track-side hoardings are the mainstay of Pirelli’s ROI in F1. Sure, brand awareness and brand development is important regardless if you’re a new-media or old-school marketer but I have to assume that will taper off over time if not continually nurtured and given the short attention spans of consumers these days, sometimes remaining relevant is only through a little controversy.

Suffice to say, Pirelli will need a financial package that recognizes its involvement and delivers and ROI that based on more than just brand awareness, in my opinion, and it will need to find a way to deliver meaningful value back to the board.

If I were on the Pirelli board, I would be looking for value creation in technological development that advances the tire technology we use for our road car tires, a financial arrangement that covers our costs of producing 10’s of thousands of tires for the series and the logistics of moving those tires to events around the world and a way to work within F1’s established corporate sponsorship’s to leverage our investment.

Corporate hospitality being one of the initiatives as well as co-branded content development that is contextually relevant to our fans and consumers. If Pirelli can’t have access to F1’s brand and fans in a meaningful way, it is little use in sponsoring the series. Track-side hoardings and race sponsorship is a given.

I’m sure they’re all over it and time will tell whether Pirelli can get the deal they want but in the mean time, we have the 2013 season to contend and Pirelli says they’ve got a new tire that will be an exciting element to the series. What do you think of Pirelli’s long-term aspirations? There is little doubt in my mind that FOM (Formula One Management) will want Pirelli to pick up the tab for the sport with the teams paying a little and the upside being track hoardings/advertisement. That doesn’t seem like enough if I were a board member.

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