Lessons on the Evolution of F1 Sponsorship – Part 1

Welcome to part one of a two-part series on Sponsorship in Motorsport titled Lessons on the Evolution of F1 Sponsorship by aspiring Motorsport Lawyer, Anirban Aly Mandal. Part one will focus on the stipulations regarding personal sponsors and racing overalls.  

Sponsorship and sponsor engagement play a crucial role in modern motorsport. Formula One, being considered as the pinnacle of this domain, naturally thrives on this aspect. From time immemorial, the F1 paddock has been a very attractive destination for brands to flaunt their goods. And as the appeal of the sport has sky-rocketed, in more recent times, so has the lucrativeness of the business of racing for companies to jump onto this particular bandwagon.

By examining the past driver contracts of Ayrton Senna, Nelson Piquet, and Damon Hill, we can trace the evolution of personal versus team sponsorship obligations within their agreements and infer how these requirements have developed up to the present day.

Introduction

The foundation of sponsor relationships in sport, and more particularly motorsport, is based on a simple bartering equation – money for exposure. But when the equation goes global, like it has in the case of F1, things can get a bit tricky. In the context of F1, the sponsorship market is divided into roughly thirty-one distinct opportunities i.e., the ten teams, their twenty respective drivers and of course F1. The business of motor racing is high stakes – approximately $350 million out of the total sponsorship pool in the sport lies only with four teams i.e., Red Bull, Mercedes, Aston Martin and Sauber Stake. Hence, it becomes important to discuss the innate complexities of the business when navigated from the lens of commercial relationships.

Further, F1 drivers are the single-biggest source of brand association, loyalty and exposure for partners that get themselves tagged to the sport. On the other hand, sponsorship revenue forms a crucial ingredient of commercial viability for any F1 team – oftentimes also dictating who ends up driving for them. For instance, just days after Williams announced the signing of their Academy and F2 driver, Franco Colapinto for the nine remaining races in the 2024 championship, the Argentinian’s backers – Globant (a leading digital transformation company) signed on as the Grove-based team’s official partner. Driver contracts, therefore, play a key role in the sponsorship arrangement with the objective of balancing a wide array of obligations and rights that arise out of this relationship between the sponsors, the team and the drivers.

The unfortunate reality is that F1 contracts are highly confidential and hence, are not readily available to dissect for academic discourse. However, with the benefit of certain older agreements, available in the public domain, this article will try to chart the dynamics of sponsorship in modern F1 and how it has evolved with the sport.  

The contracts in question are:

1. Ayrton Senna’s contract with Team Lotus for the 1987 F1 season,
2. Nelson Piquet’s contract with Team Lotus for the 1988 F1 season,
3. Damon Hill’s sponsorship agreement with RJ Reynolds Tobacco International Inc. (owners of the Camel brand) in 1988; and
4. Williams Grand Prix Engineering Limited’s sponsorship agreement with Brown & Williamson Tobacco Corporation for the 1988 and 1989 F1 season.

Personal Sponsors

As explained above, personal sponsorship plays a key role in revenue generation for the teams. However, they need to be delicately balanced with the interests of the team’s sponsors as well. A lot can be extrapolated from older driver agreements to condense the essence of these nuances.

In terms of personal sponsorships, analysing the contracts of Nelson Piquet and Ayrton Senna gives us a very well-rounded perspective as to the accepted depths that a team can go to for ensuring driver compliance with respect to its own sponsors whilst not stifling a driver’s economic opportunity to benefit from any personal endorsement deals. According to Piquet’s agreement with Team Lotus, no personal sponsors were allowed to be displayed on his race overalls, the cap he was stipulated to wear would be one of Team Lotus’ sponsors and his helmet would also not contain any personal sponsor logos and/or decals. However, Piquet was allowed to take on personal sponsorships which would not be in conflict with or be prioritised over the race programme and would have to be disclosed to the team beforehand. On the contrary, with regards to personal endorsements and sponsorship deals, Senna could enter into such deals provided that;

1. There should be no conflict or competition between the products and services of the personal sponsor and the team sponsor.
2. Should be in good taste and not to the detriment or loss of reputation of the Company, the Driver, Team Lotus its Sponsors and the sport of motor racing.  

According to Clause 3.9 of his agreement, Senna was allowed 3 spots on his helmet for his personal sponsors. Further, the contract also stipulated the availability of 4 patches in front of the race overalls and one on the back for Senna’s personal sponsors.

In other words, we can safely conclude that these clauses will strive to incorporate obligations that ensure that personal sponsorships are:

1. non-competing,
2. non-conflicting
3. in good taste; and
4. non-controversial and apolitical.

You will find that these themes will find continuity in the context of modern day F1 as we discuss the various facets of sponsor engagement and exposure intersecting with driver agreements. 

Racing Overalls

According to Clause 3.9 of Senna’s contract with Team Lotus, whilst at the race-track, he was working exclusively for the team and the sponsors. Moreover, the obligations extended to incorporate stipulations with respect to the racing overalls / race suit that the Brazilian would be wearing during the season. It stated that Senna shall wear racing overalls that contained only those sponsor badges and decals which were approved in writing by Team Lotus. Clause 6 of Piquet’s contract with the team bore resemblance to these obligations inasmuch as he was also stipulated to wear racing overalls which were approved by Team Lotus. Noteworthily, both these agreements, however, were silent with respect to the actual positioning and dimensions of such sponsor badges and decals. Per contra Damon Hill signed a sponsorship contract with RJ Reynolds Tobacco International Inc. in 1988 which had a diagrammatic representation of the positioning of the sponsor’s logo on Hill’s race suit. According to his contract, the front top-left side of the suit would contain a Camel logo with dimensions of 13cmsx8.5cms whereas the backside of the suit would sport a Camel logo with dimensions of 29.7cmsx21cms. Hence, such information too was used to constitute a clause in earlier driver agreements, depending on the situation.

The intent and purpose behind these clauses were era-specific – when drivers had more freedom with respect to how their race-suits were designed. In the context of modern F1, it does not seem likely that such arrangements of ‘approval’ would be made. In essence, drivers are stipulated to wear race overalls supplied by the team – incorporating the team’s sponsors – rather than ones that are approved by them. The majority of the 2024 F1 grid has identical race suits for both their drivers with team partner decals and logos displayed on them.

That being said, certain parallels can still be drawn with the older agreements where certain specifications with respect to a custom race suit could be incorporated in modern contracts. For instance, the Haas F1 team has an almost identical race suit for both, Kevin Magnussen and Nico Hulkenberg; the only difference being that the former’s race suit places a decal of ‘Admin by Request’, one of Magnussen’s personal sponsors, on the top-righthand side of the race suit whilst Hulkenberg’s race suit does not have that sponsor decal.

This is historically consistent with the Kannapolis-based team’s practices. In 2021, Nikita Mazepin’s race suit featured the Moscow State University’s logo – prominently placed in the middle – whereas Mick Schumacher’s racing overalls bore the team’s emblem. Haas’ 2021 racing overalls also serve as an example of the priority certain sponsors get over others. In 2021, the team onboarded Uralkali (a national fertilizer conglomerate from Russia) as the team’s title sponsor. The company was owned by Mazepin’s father and had strong roots with the government of the nation. Therefore, while the Haas emblem featured on Mazepin’s racing overalls, it was designated to the top-lefthand side of the suit. On the flip side, the Haas logo took centre-stage on Schumacher’s race suit but his sponsor i.e., 1&1 AG (an internet service provider) was featured in smaller dimensions, than MSU, on the top-lefthand side of the German’s overalls. This ties in with Damon Hill’s agreement where dimensions of sponsor decals were discussed in detail.

Another example of the above-stated can be found on Aston Martin’s 2024 race suits for Fernando Alonso and Lance Stroll. The righthand side sleeve of the two-time world champion sports Citi Bank’s logo which is not present on Stroll’s race suit.

It would hence, not be uncommon for a driver’s agreement to at least refer to clauses of a separate sponsorship agreement between the team and a sponsor with respect to dimensions and placement of sponsor decals – if the driver’s personal sponsors are also team sponsors. In case a personal sponsor is not also a team partner, as is the case with Kevin Magnussen and Admin by Request, then the driver’s contract would itself incorporate stipulations with respect to dimensions and placement.

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