Top Stories from the Business pages of the International Herald Tribune,
Monday, March 6, 2000
Tech Firms Fill Racing-Sponsor Void
By Brad Spurgeon International Herald Tribune
PARIS - When the Formula One season starts Sunday at the Australian Grand Prix in Melbourne, the joke about the world's most high-tech racing cars being cigarette packages on wheels will be heard a little less often.
Just as the sport faces bans on its primary source of sponsorship -- cigarette makers -- technology companies are swarming in to fill the void.
While equipment partnerships between racing teams and technology companies go back decades, this winter saw the arrival of computer and telecommunications companies -- including Telefonica SA and Marconi PLC -- and even Internet companies such as MTCI of Japan and Yahoo Inc. as primary sponsors.
On Friday, the Arrows team announced a £70 million ($111 million) three-year deal with Orange PLC, the British mobile-telephone company.
But the biggest news came in January when Williams, one of the three most victorious teams, announced that it was dropping tobacco funding to take on Compaq Computer Corp. as title sponsor.
''We made a decision not to continue with tobacco sponsorship,'' said Jim Wright, head of marketing at Williams, ''because we felt that we couldn't see, six or eight years down the road, that this was going to be the right way for us to build financial stability for our company.''
Without tobacco, Mr. Wright said, ''We're in the strongest sponsorship position that we've ever been in.''
To build a car, pay hundreds of employees and travel to the 17 races around the world, team budgets range from $50 million to $250 million per season. Tobacco sponsorship provides one-half to two-thirds of that sum. But tobacco advertising will be illegal for Formula One in 2006 in European Union countries, which hold 10 of the races.
While neither Williams nor Compaq would reveal figures, Sponsor News, a German Web site (www.sponsornews.de), reported that Compaq was paying $25 million although Williams had asked for $80 million. Williams would not confirm the figures, but Nav Sidhu, a spokesman for the team, said that $25 million was ''the lower end of the spectrum for a one-year principal sponsorship deal in F1.''
Many sports have recently turned to technology sponsorship, including yachting, hockey, soccer and football. But technology and Formula One are particularly well fitted.
''One of the reasons we've gone away from tobacco and gone toward information technology,'' Mr. Wright of Williams said, ''is because tobacco companies can only contribute cash. Technology companies can contribute cash and technology.''
Gabriele Zedlmayer, vice president of marketing communications at Compaq, said the company was working closely with Williams on providing technology for car design and race analysis.
''We are really in it for the long term,'' Mrs. Zedlmayer said, adding that the total period of their contract, with options, was five years. ''We're looking forward to bringing our technology to this car, and you can't do that in a few months.''
While five of the 11 teams in the sport now operate without tobacco sponsorship, all the teams have some form of technological sponsorship or partnership -- along with the decals to advertise them on the cars. This branding angle is itself part of the gradual change to nontobacco sponsorship as some sponsors no longer want to be associated with the increasingly negative image of tobacco.
Gavin Green, a director of public affairs at Ford Motor Co., said that when Jackie Stewart founded his team in 1997 with Ford as a principal partner, Jacques Nasser, then president of Ford's auto operations, stipulated that Ford would join the team only if it did not use tobacco sponsorship. Ford did not want to be associated with tobacco, Mr. Green said.
Most teams, however, while taking on technology sponsors, keep their traditional tobacco companies. Last month, Yahoo signed up with the Prost team as one of its three main sponsors, along with PSA Peugeot Citroen SA and Gauloises cigarettes.
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