When the sun sets on a year, be it calendar or fiscal, a team has to face the balance sheet and answer for its gains or losses. Such is the ultimate goal of an F1 team–to make money. Williams F1 is no different and while they haven’t seen the fizzy side of a podium finish in a long, long time, they still have a balance sheet, owners and sponsors to keep happy. That is until the end of this season when they will be one partner short as long-time sponsor Royal Bank of Scotland ends their relationship.
You may recall that we discussed this issue here many months ago. The signs of economic stress were tangible and RBS was heading for a government bailout that nearly mandated a re-think of their more extraordinary expenditures like F1 sponsorship and personally propping up Sir Jackie Stewart for a life in the paddock as an “ambassador”. You’ll recall that Sir Jackie also got in a little hot water when he attempted to cover his own backside by saying, â€˜Iâ€™m sorry people are losing jobs but I have a contract and I have done my bitâ€™. That’s didn’t go over very well and was one of his more Ecclestone like moments of foot-in-mouth disease.
The termination of the RBS sponsorship deal is near and UK citizens can feel comforted that the bank will now be ending its extravagant investment in motorsport. That should make the hard working people of the Great Isle breathe a sigh of relief that their hard-earned tax dollars won’t be going to waste for some frivolous sponsorship. They can know their government funded bank is frugal with their marketing dollars and that handing out fliers on street corners off Fleet Street is a much better use of the cash. Here is hoping that at some point in time they will de-colonize their heads and realize a few simple truths about RBS and F1.
I am going to say this one last time and I think I may believe this more than Bernie Ecclestone himself: F1 is, in my opinion, the single best global marketing vehicle, outside of football, there is…period. To spend $20 million on sponsorship to reach over 500 million people is a bargain by anyone’s measure. That’s $20 per person. Sure, we can argue about the number, 500 million, and just who absorbed the message and what frequency and reach as well as what the return on message was but in the end, to spend $20 a head even to attempt to reach a global audience is a real deal.
Two examples, RBS and ING. There are a huge amount of Americans who had never heard of ING or RBS and now they have ING savings accounts and RBS services. F1B’s own Grace has an ING Orange investment account. ING left Renault but they still have Grace’s cash earning interest in their safe. The scope and reach is amazing and one need look no further than the outrage over Philip Morris and their “barcode” to see just how tangent F1 sponsorship is.
While the rank and file complain about RBS’s investment in Williams F1, they miss the idea that lives depend on their sponsorship. They miss the nuance of just how lucrative a Williams F1 sponsorship is even though the team is not at the sharp end of the grid. Millions of Williams fans put on Williams F1 gear and wear their Williams F1 team shirt, hat or other team wear with RBS on it. That goes out into the Tube, the street, the world. Thousands of eyes see the RBS logo every day in places that aren’t usually associated as advertising locations for the RBS marketing campaigns. I saw the RBS logo on a Williams hat in the middle of America just the other day.
The armchair government watchdog who is concerned over his tax money being used to prop up RBS needs to realize that RBS’s ability to repay the government is based upon a simple factor of eliminating toxic assets in favor of cash and deposits. Cash is king in the new economy. The way to increase deposits and get RBS back to bread-and-butter banking is through good, old fashioned roll-up-the-sleeves work. The $20 million or so spent on Williams F1 and Sir Jackie is chump change compared to the size of the toxic assets that need to be eliminated from the balance sheet. If memory serves correctly RBS put over 282 billion pounds of high-risk debts into the governmentâ€™s toxic-asset insurance scheme. That number may be low as I am working from memory.
It seems Williams F1 is now looking for a replacement for the RBS sponsorship and while slow going, Sir Frank Williams tells ITV that he is confident of finding a large replacement:
â€œI wouldnâ€™t say there are an enormous number of leads, but thereâ€™s a lot of talking going on between us and various companies.
â€œI think we will land something pretty big despite the difficulties.â€
You may recall that JMI’s Zak Brown has just negotiated a new sponsor for F1 and that would be UBS which is, of course, a bank. That’s good news to be honest and Sir Frank feels the same:
â€œI think itâ€™s fantastic news,â€ he said.
â€œItâ€™s making our job easier.â€
Perhaps yesterday F100 Sponsors association should have spent a lot of time talking about the goal of reaching out to other financial institutions and investment companies about the benefits of sponsoring F1 instead of garnering the condemnation of F1’s commercial boss Bernie Ecclestone. The direction of F1 is not the biggest concern of the F100 crowd, its the direction of cash flow. A healthy F1 is a better vehicle for their sponsor dollar.
If a sponsor got in to F1 only to now realize they are racing at circuits that are not in the company’s marketing scheme then shame on them–do more due diligence next time. There is no secret Ecclestone has been moving toward the flow of cash over the last 5-8 years with races in Asiapac and a sponsor who says they are perplexed by the lack or dwindling number of European races is just being obtuse. RBS should not leave F1. They should embrace it as a real marketing potential to create new accounts and deposits. Then what do I know, I’m not working for Bernie Ecclestone although some days I think I should be…someone has to wake him up to where the next major revenue stream for F1 is.