Sponsorships Hit Pit Lane As Some Fail To Start
The Age
Monday February 25, 2002
The lure of track-side networking has proved a bit too expensive for some companies at this week's formula one Grand Prix in Melbourne.
Big-ticket sporting events are now chasing fewer corporate entertainment and sponsorship dollars but the global appeal of the Grand Prix carnival means there have been a comparatively small number of corporate casualties this year.
``Certainly, we've had a few companies tighten their belts so they've cut their corporate spending - they won't be there this year but they'll be back next year," Grand Prix Corporation chief executive John Harnden said.
The belt tightening travelled high up the sponsorship ladder, with Qantas last year severing its five-year naming-rights association with the event, although it remains the official airline.
Foster's has stepped in as the naming-rights backer, one of the most expensive sponsorships in Australia.
AMP, Michelin and Panasonic are also among the 24 companies that have signed up as sponsors this year, up from 16 six years ago.
Mr Harnden said the number of sponsors had increased slightly this year despite the fact that some cash-strapped businesses had pulled out. Mattel and Santos both decided not to renew their contracts.
``We have three new sponsors and we lost two - overall, sponsorship is up on last year," he said.
About 1000 companies are splurging on elaborate corporate packages in an attempt to impress current and prospective clients. This compares with 800 companies two years ago.
They will be scattered across 230 sites, marquees and corporate platforms.
The number of corporate patrons schmoozing will be about the same as previous years, at about 20,000 people a day over the four days of the event. This means the Grand Prix Corporation can expect to make about $20million, given that the average corporate-ticket price is close to $1000. Some companies will pay as much as $3135 per head for the sought-after area above the pit lanes.
Craig Richards, managing director of consultancy Sponsorship Solutions, said companies were slashing their corporate-spending budgets and rationalising sponsorship portfolios to extract maximum value from fewer events.
``Undoubtedly it's been difficult conditions for people to find sponsorship but the blue-chip end of the sports market have not found much difficulty - it's the next level down," he said.
Mr Richards said companies assessed sponsorship-program potential on a sporting event's image and audience reach. Globally, the Grand Prix offers team sponsors more opportunity to drill their messages into audiences, whereas single-event sponsors have only four days to make an impact.
On average, about 350 million people watch each race, making the formula-one world championship the third most-watched television event across the globe.
It is estimated up to three-quarters of the $3billion spent on formula-one racing worldwide this year will be sourced from sponsorship.
Ferrari sponsor Vodafone says its multi-million-dollar sponsorship package is cost-effective because of the TV audience numbers and their broad demographic spread.
Andrew Collis, who heads Compaq's sponsorship program with the BMW Williams team, said the computer giant was more focused on this corporate partnership, rather than spreading itself across a whole range of programs.
``Our company has mirrored the overall market - we've certainly focused (on our) biggest relationship and cut smaller sponsorships that did not contribute to getting out the message we wanted to deliver," he said.
The partnership stretched well beyond logo displays, with Compaq providing the team's computing power to enhance its worldwide image as a high-tech enterprise, he said.
© 2002 The Age