F1: The World’s Wealthiest Sport

F1: The World’s Wealthiest Sport

$RACE,$PM

F1 status as the world’s wealthiest sport has been revealed in research which shows that it has received $30-B from sponsors over the past 15 years

F1 is setting up for its Top event, the Monaco Grand Prix, which takes place this weekend and is the backdrop for blockbuster sponsorship announcements by the racing teams.

The deals comprise 1 of the 4 Key categories of F1 sponsorship with the others being track-side advertising, series partnership and payments from team owners.

Last year team sponsorship accounted for 44.7% of F1’s total take with the biggest payments coming from title sponsors which get naming rights and decals on the most visible parts of the racing cars.

Payments by team owners comprise the 2nd-largest source of sponsorship in F1 and are made in return for branding on the cars and engines. This represented 38.9% of F1’s sponsorship haul last year followed by 12.6% from series partners. There are 13 in total with the global partners, they include Heineken and Rolex which pay estimated annual fees of $50-M and $45-M respectively.

Global partners get benefits such as use of the F1 logo in their advertising campaigns, title sponsorship of races and banners around the track throughout the season.

Other brands, like Gulf Air and Singapore Airlines, are track-side advertisers and title sponsors of individual races and revenue from them represents 3.8% of F1’s sponsorship take. It came to a total of $1.7-B last year but has declined from a peak of $2.8-B in Y 2007.

The decline has been driven by 2 factors: 1) the financial crisis in Y 2007 drove out auto giants BMW, Honda and Toyota which were pumping hundreds of millions of Dollars annually into F1 teams, and 2) the decline in team sponsorship due to its high cost.

It is a particular problem for F1, as the average price of a team sponsorship deal came to $3.3-M last year. This exclusivity has a halo effect on F1 sponsors in a booming market but when times are tough it stands out as an easy way to cut costs.

In Y 2018 208 companies fueled 239 team sponsorship deals with the biggest being Malaysian Crude Oil giant Petronas’ title sponsorship of MercedesAMG which comes to an estimated $75-M annually.

This did not make MercedesAMG the best sponsored team.

That title belongs to Ferrari (NYSE:RACE), as its total sponsorship budget is calculated at $176.6-M with its biggest sponsor being tobacco manufacturer Philip Morris International (NYSE:PM) which pays an estimated $50-M annually.

See the evolution of Ferrari in F1 here.

Total team sponsorship was up by 11.3% on Y 2017 driven by Swiss team Sauber’s new title partnership with auto maker Alfa Romeo and Aston Martin’s expanded deal with Red Bull Racing.

Nevertheless, last year’s team sponsorship total was still the 3rd-lowest over 15 years and the decline has not just been driven by brands being put off by the cost.

There’s also F1’s reversing exposure; over the past 11 years its total number of television viewers has crashed by 18.3% to 490-M as it signed more contracts with Pay TV networks which can usually afford higher fees than their free-to-air counterparts but have fewer viewers.

F1 itself admits that it has found it harder than it expected to boost its sponsorship tally.

In Y 2017 investment firm Liberty Media bought F1 in a $4.6-B takeover adding about $50-M to F1’s overhead.

Ferrari is the Aristocrat of the automotive sector.

The iconic Italian Supercar manufacturer claimed the title according to the latest Brand Finance Global 500 2019 report launched at the World Economic Forum in Davos.

HeffX-LTN overall technical outlook for RACE is Bullish to Very Bullish, there is light resistance now at 143.38, and strong support at 139.88, all of our Key indicators are Very Bullish in here

Monaco Grand Prix is this weekend, the Top race on the calendar, stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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