McLaren’s Title Sponsor: Worthy or Rich?

McLaren left in the lurch

For those rubbing their hands at the potential financial demise of the Woking based team following the announcement that Vodafone are pulling out of F1 – I suggest you apply plenty of hand cream. Yes, Vodafone have been paying a whopping £50m a year for the privilege of being McLaren’s title sponsor and this amount is believed to be a record sum since tobacco advertising/sponsorship was banned.

Despite their woeful start to the year and their incompetence demonstrated by not being able to do the simple Meccano like assembly instructions for their suspension, McLaren are still a very sexy and desirable place to stick a corporate logo and the contenders for 2014 are already jostling for position in line.

untitledOf course the first of these was rumoured to be Telmex. Sergio Perez was not a ‘no brainer’ decision to replace Lewis Hamilton and many F1 folk in the know have questioned this decision based upon ability alone. This raised the spectre that McLaren have agreed a deal with Mexican owned global telecoms business Telmex, to title sponsor the team from 2014.

Sergio Perez commented in Melbourne, “I’m a little sad they [Telmex] are not with me this year, because the team still has a contract with Vodafone. I would love to see the blue on my car again.”

Perez recruited for cash

TJ13 reported some while ago that John Allert, McLaren’s Group Brand Director admitted the following when questioned whether marketing opportunities played a part in choosing Perez as McLaren’s new driver.Yes. I’ve sat in some interesting meetings where we’ve discussed the pros and cons of different drivers, as any Formula 1 team does. There is always consideration given to how quick the driver is, and how attractive the driver is in playing a role to attract funds to the team. To be a successful team in Formula 1 you need significant amounts of sponsorship funding”.

Admittedly in 2013 there appears to be no Telmex associated branding on the car, drivers or pit crew. I do believe there is however an ‘arrangement for hospitality’ which has been agreed and in return a certain consideration will be paid to the team.  If this is true, it demonstrates the power of McLaren as a brand to control sponsors and investors.

Whilst the choice of Sergio Perez was not the most obvious one, it surely is not the case that the McLaren Group are contemplating a long term title sponsorship relationship with a an external corporation who wish to exert influence on McLaren’s decision on who will drive their cars.

If Telmex are to be the new associate with the McLaren F1 racing marque then it will be for the reasons Vodafone considered this to be worthy marketing spend; for should Perez not be ‘at the races’ this season one could easily see him dispatched for 2014 regardless.

Another Partner

untitledThere is another global giant lurking in the background, GSK (Glaxo Smith Kline). McLaren and GSK formed a partnership in 2011 when the 2 business announced they were joining forces to share knowledge and expertise with the aim of improving GSK’s business performance and driving a more dynamic business culture.

Already the pharmaceutical company has begun utilising McLaren’s engine modelling system and applied it to Glaxo manufacturing processes to reduce breakdowns. Analytical tools have been developed to help decide where and how much to invest in Glaxo’s brands that include Lucozade, Panadol and Sensodyne.

McLaren’s system of in-car driver communications is being replicated to facilitate a method of making minor changes during drug trials, while Glaxo also wants to recreate McLaren’s ‘Mission Control’ operation during a race at its London HQ to respond faster to competitor moves.

There is a joint R&D facility being developed at the MTC at a cost of some £20m and GSK report that already they have delivered efficiencies of a staggering 60% to a number of their 80 worldwide factories from lessons already learned.

“We are learning from McLaren to enhance our processes. During a racing season, 80 per cent of an F1 car will change between the first and final races with 22,000 upgrades being applied to each car over just 9 months. This pace of innovation is a stark contrast to our industry but there are applications of this real time innovation that have already helped us become more efficient in some of our business areas”. 

We have seen the Lucozade , Boost and Maximuscle – all brands specific to certain global GSK markets – adorn the McLaren Formula 1 cars and Industry specialists observe this relationship is founded deep and looks to be for the long haul.

Cool kids

untitledToday AMuS announces the candidacy of yet another mammoth corporation as a possible suitor for McLaren-Honda (sorry, that slipped out). ‘Gillette’ is owned by Proctor and Gambol and they spend some $800m worldwide on marketing what is now their core brand. P&G announced a ‘refocusing’ of their marketing in the fall of 2012.

According to adbrands.net, Gillette It has long reigned as the world’s biggest shaving and razor business, now with an estimated 70% share of the global market, and a dominant position in both the men’s and women’s segments.

Ah, remember this one – ‘Gillette. The best a man can get’ – and now these days apparently the best for a woman too, if we’re to believe P&G’s marketing department. Gillette have been rolling out a nicely gendered line in product marketing for years now and the different names for what is essentially just a device for removing hair are quite inventive.

Here’s one – “The Gillette® Fusion® ProGlide™ Power Razor is Gillette’s most advanced blade ever. Thinner, finer blades with a low-resistance coating glide effortlessly through hair for less tug and pull**, providing incredible comfort, even if you shave every day”.

The products are incredibly profitable as these small but allegedly ‘cutting edge’ (pardon the pun) technological shaving solutions  cost a mere 5-6 pence to produce but sell for several English pounds per unit. However, clearly Gillette is all about marketing and this makes it both loved and despised by business analysts and marketeers across the spectrum.

So has the world’s largest purveyor of toiletries created fantastical visions of bathroom machismo but really conned us all into paying premium prices for what is after all a cheap shaving blade? Is this a classical case of form over substance?

Woking can be selective

untitledTo partner with McLaren is no whimsical matter and for the historic Woking team their selection will be given proper consideration, due diligence and the public perception of a title partner will not be a matter of insignificance.

As Joe Saward notes, “To put that into perspective it is necessary to remember that since 1974 McLaren’s title sponsorship has been available only twice. The first switch came in 1997 when Marlboro left the team after 25 years; the second came eight years later when Vodafone replaced West”. Prior to that Yardley had the honour for just 2 years and we are then back to the days when it was simply – ‘Bruce McLaren Motor Racing’.

Of course there was no honour in having cigarette manufacturers as partner’s though we do forget that they were a product that was marketed by the rich and famous as cool, masculine, feminine and from many of other angles. Further, they were ‘enjoyed’ by the masses and to smoke in the 60’s, 70’s and 80’s was not unusual and in many places smokers were in the majority.

A New Breed of Partner

Along came Vodafone, to replace those terrible cigarette companies and to some this ushered in the dawn of a new era were brand that grew worldwide in almost the blink of an eye and became such a powerful corporate stock on the London Stock Exchange, that in the late 90’s and early 2000’s a shift in the Vodafone share price moved the entire FTSE index.

Then there was the ‘more honourable’ Vodafone – replacing those nasty cigarette companies as a facilitator of individual communications across the planet. Was this a new dawn of responsible partnering?

untitledFirst up staking a claim for the nose of the MP4-29 is the parent company of Telmex, the real telecommunications powerhouse, América Móvil, and the world’s 4th largest mobile network operator with some 250m subscribers. They are chasing down Vodafone who when they last reported in December 2011 had a stella 450m customers worldwide.

Is it the case that Telmex (AM) are looking to grow and challenge Vodafone and they perceive F1 as the global marketing strategy to deliver this? It is true many F1 commentators see Telmex as a natural replacement on the McLaren cars for Vodafone.

Telmex bigger ambitions

Yet Carlos Slim was heard by an F1 reporter to reveal in Austin last year that their ambition is in fact to own an F1 team. Why then spend $100m sponsoring McLaren.

If it is not Telmex (AM) to partner McLaren then what of the others?

Gillette has a history of sponsoring Bruno Senna at Lotus and Williams and they have been truly global in the their use of sports marketing through the likes of David Beckham, Tiger Woods and a host of galactico sports personnel from the world’s most glamourous sports.

On the other hand we have GSK who finds its origins in St Helens, Lancashire, England, 1843 and is a British multinational pharmaceutical, biological vaccines and consumer healthcare company. They are the world’s 4th largest such business behind only Pfizer, Novartis and Sanofi.

untitledGSK and McLaren announced their ‘scientists in sport’ programme just 2 days ago. This is designed to encourage 11-14 years olds to understand that science and maths are a contemporary field to which they should aspire to belong. the simple message is that to be a geek may actually mean working in a pretty cool environment like F1.

Let’s not forget the McLaren Group is positioning itself as a 21st century ‘responsible business’, part of the community in which it resides and has made great efforts to break new ground in reducing Carbon emissions and being exclusive as the only team to win so far environmental awards.

On the basis of worth, it would appear to be a forgone conclusion. GSK would be McLaren’s title partner of choice. The roots have been set deep for a lengthy relationship.

But in the cold hard world that is F1, if push comes to shove and GSK feel they’ve already received sufficient benefit from their partnership with Woking, it could be Gillette who cough up a record busting $100m a year.

This cash of course enables McLaren to do what they were fundamentally created to achieve – fight with all their might the power of Ferrari and now new kids – Red Bull – for supremacy in the world’s greatest motor sport competition ever conceived. Forza Formula One!

13 responses to “McLaren’s Title Sponsor: Worthy or Rich?

  1. Fascinating article, but I wish to question a specific item.
    Surely, Marlboro is the single biggest sponsor of an F1 team in history. After all, even to this day, they sponsor Ferrari for a reputed $200 million per season without any signage on the car…
    And, iirc, didn’t Vodafone want to take over complete signage of the Ferrari from 2006 onwards, having formally been secondary sponsor on the Ferrari, which is when Marlboro stepped up to takeover the car completely?
    I remember reading this in an edition of F1 Magazine, edited by Tom Rubython, back in the early 2000’s.
    I believe he went on to edit F1 Business magazine, and the breakdown of sponsor deals for all F1 teams and their revenue stream from merchandising was staggering. Ferrari was in a different league to all the others put together.

    • I should probably say ‘in the modern era’.

      There are many rumours about how much some cigarette sponsors paid to F1 – but in those days the figures could not be substantiated – even today though it is far better, it’s not always straightforward knowing exactly how much certain teams receive in present times.

      I find it highly unlikely Marlboro pay Ferrari $200m a year for nothing in return. Maybe they get a fleet of Ferraris for their execs in exchange 🙂

      • Morning Judge, writng from my laptop rather than iphone at 2am!
        Ok, I tried to find a copy of Business F1 that I managed to get at Autosport International some years ago, but have had to rely on the web for details.
        Here’s a link from Forbes that may be of interest.

        http://www.forbes.com/sites/chrissmith/2012/11/20/red-bull-soars-but-ferrari-is-still-formula-ones-most-valuable-team/

        Some of the figures may be pie in the sky, but there is confirmation of Vodafone paying $75,000,000 to Mclaren which equates to the £50,000,000 you stated in the main article. In the same paragraph, it quotes Marlboro as paying $160,000,000 per season to Ferrari.

        I believe this goes back to the fact that tobacco sponsorship was banned, and Marlboro went to using the bar-code then the chevron design, as these are both subliminal messages which still suggest Marlboro.
        Also, as far as I remember, wasn’t Ferrari officially known as Scuderia Ferrari Marlboro in press conferences?

        • The article also states – “Overall, the health of Formula One has never been stronger”. Mmm

          Also why this?

          Anne Edwards, director external communications, at Philip Morris International, declined to comment on the value of the sponsorship deal.

          “We believe that our partnership agreement with Ferrari complies with all applicable laws,” she said. “Today, there is no Marlboro branding on any Ferrari cars, driver uniforms or track signage in any Formula One races.”

          http://www.guardian.co.uk/society/2011/jul/03/ferrari-marlboro-formula-one-sponsorship

          A most generous company then…

  2. Great article TJ!

    One comment on: “it surely is not the case that the McLaren Group are contemplating a long term title sponsorship relationship with a an external corporation who wish to exert influence on McLaren’s decision on who will drive their cars”.

    The longlasting McLaren-Marboro partnership started in 1974 after Marlboro stepped out of earlier sponsorship arrangements with BRM and Iso, and after McLaren agreed to give its #1 car to Emerson Fittipaldi who enjoyed a close relationship with Philip Morris and Havoline/Texaco.

    There is of course no point in comparing Perez with Fittipaldi who was a proven WDC when he joined McLaren, but still I wouldn’t underestimate Carlos Slim who already got a foot in the door without having to pay a whole lot for it…

    • Mmm. I have it on good authority Slim wants a team – surely they’ll not commit to a 4-5 year mutli-hundred million dollar deal with McLaren who are not about to sell.

        • No – but that would appear the most obvious choice – there’s VJ’s crew and Caterham up for grabs too apparently – it depends on how much he wants to spend.

          Same old choices as buying a car. – Trebant, Ford or General Motors. Mmm

  3. I’m a bit sceptical about GSK being the sponsor. Unfortunately, people do not like Big Pharma. All it takes is for a drug patent to go off, some clinical trials to go wrong, and suddenly sponsorship runs dry within weeks.
    Gillette again is not the most appealing sponsor. At the end of the day it’s just a razor. Although their marketing machine is incredible and maybe that’s what McLaren need if they want to compete with Ferrari in the road car industry too.
    Maybe Telmex is the natural successor, just like West took over from Marlboro, but in the end who knows. Maybe it will be GSK

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.