There are rumblings that the Loi Evin, a ban on alcohol sponsorship in France, could be expanded across Europe. Talk about expanding the law has been going on for years, with the French – naturally – leading the calls for the Europe-wide ban.
Many news stories have been printed about how bad a ban on alcohol sponsorship will be for Formula 1. I should point out that contrary to some people’s beliefs, this is not a problem of the same scale as the ban on tobacco. Alcohol sponsorship in Formula 1 doesn’t contribute anything like what tobacco did. In fact if we’d had this discussion a couple of months ago, before Martini & Smirnoff entered the sport, it would pale into near insignificance.
Current alcohol sponsors in F1: Johnnie Walker (McLaren & FOM), Martini (Williams), Smirnoff and UB Brands (Force India), Jose Cuervo (Sauber), Veuve Clicquot (Ferrari) and G.H.Mumm (FOM). The total spend across all teams and FOM comes to around $60m, with Johnnie Walker contributing the most at around a third – but most of that goes to FOM for circuit signage.
Compare that with tobacco sponsorship at the time, that was in the region of $250m. Of course this was at a time when F1 team budgets were much lower – so in percentage terms tobacco sponsorship was a great deal more important to teams than alcohol sponsorship is for teams in 2014.
The main teams to be affected by a ban would currently be Williams, Force India and McLaren. Of course all the teams receive a share of FOM’s revenue, however given the size of the FOM agreements we’re talking about, the monetary loss is likely to be in the mid-six figure range per team. So in the scheme of things, not a great loss.
One point that should be made is that any ban on sponsorship, will likely not be a ‘sponsorship’ ban, but more likely a ‘brand’ sponsorship ban. That’s to say that sponsors will not be allowed to benefit from on-car, on-driver or circuit branding (anything visible on television), but can benefit from other rights and benefits such as hospitality experiences and promotional rights. Team’s can still generate significant revenues from brands for rights such as access to drivers.
To provide an example, Johnnie Walker’s sponsorship would likely still be successful without their on-car and on-driver branding as the majority of sponsorship activity is off track / off broadcast – parties, VIP experiences, on-pack promotions, on & off-trade point of sale activity, and new/social media communications. The branding helps them generate greater brand association.
In the case of Johnnie Walker they have been involved in F1 for a long time, so will benefit from legacy brand association for years to come, even if the brand isn’t present. E.g. many people still believe Marlboro is still on the engine cover of the Ferrari years after it was removed.
The difference comes when a new alcohol brand wants to enter the sport for the first time. They will naturally have to work harder to create that brand association. That said there is plenty they can do that doesn’t include in-broadcast branding to create this association.
Yes Formula 1 will suffer if an alcohol ban is imposed, but it is not of the scale or importance of the tobacco ban. Sports such as football will face a much greater problem in trying to replace those lost dollars.
Something everyone should be aware of though, is the habit for people to move onto the next thing. Tobacco sponsorship is banned, alcohol may be banned in the future, but what is next in the cross-hairs? Fast food? Sweets and confectionary? F1 has adapted well to change in the past, and it will continue to do so in the future. Ultimately it (and the teams) have to in order to survive.