Formula 1 is a multi-million-dollar sport with plenty of cash to be made. F1 teams need to pay extraordinary amounts of money just to enter a season, never mind building a competitive car, paying hundreds of staff members, and employing drivers. This is where the cost of F1 sponsorship comes in.
It can cost anywhere from hundreds of thousands to hundreds of millions to sponsor an F1 team. F1 sponsorship varies massively across the grid. F1 sponsorship costs vary depending on a number of factors, including which team is involved, and even where on the car the sponsor’s logo appears.
Sponsorship is a complex system in Formula 1, but it’s one the sport thrives on. Without the consumerism of fans and the economic interests of businesses, there would be no money in the sport. Below, we’ll discuss F1 sponsorships and everything that goes with them in more detail.
How Much Do F1 Sponsorships Cost?
F1 sponsorships cost varying amounts as each sponsor will perceive the value they get back for what they are paying differently. This means some sponsors might see their deal with an F1 team as being worth $500,000, whereas others might see it worth over one million. Sponsorship is an investment, and companies pay what they think is in line with their future expected returns.
When it comes to sponsoring an F1 team there is no “cheap” option. However, it must be said that all sponsorships in Formula 1 vary massively. It all comes down to the agreement that is made between the sponsors and the team, but the typical F1 sponsorship will cost several million dollars per year.
Sponsorships are taken seriously in F1, and teams always need to provide the sponsor with enough value to justify the amount of money that they pay. There are different levels to Formula 1 sponsorships. The biggest sponsor (title sponsor) pays the most and in return receives the most benefits and the biggest branding space on the car.
Title sponsors are the main sponsor, and an example is Mercedes’ deal with Petronas, which features in the team’s full name of Mercedes AMG Petronas F1 Team.
Do F1 Drivers Have Their Own Sponsors?
F1 drivers usually do have their own sponsors. Examples of F1 driver sponsors include CarNext, who sponsor Max Verstappen, and Estrella Galicia, who sponsor Carlos Sainz. Some drivers may have smaller sponsorship deals that bring them personal perks, while others may appear on their car.
How Much Does It Cost To Sponsor Each Part Of An F1 Car?
It costs varying amounts to sponsor each part of an F1 car. This is because some parts are larger or more visible than others, making them better for branding and advertising purposes. The most expensive parts to sponsor on an F1 car are the large sidepod areas and the rear wing.
The title sponsors tend to go on the sidepods, the engine cover, or the rear wing, as this is where they are most visible. Red Bull, for example, tend to put their title sponsor on the rear wing and on the sidepod. From Infiniti to Oracle, the highest paying sponsor has always been the most visible. Sponsoring these parts of the car can cost hundreds of millions of dollars over several years.
Even the smaller, less visible sponsors, such as the ones on the Halo and the driver’s head rest, can cost close to, and in some cases more than, a million dollars. Despite being less visible, the sponsors still get a lot of benefits and value out of this sponsorship position. Plus, the onboard cameras often ensure these spots get plenty of airtime as well.
Who Are F1s Biggest Sponsors?
F1’s current biggest sponsor is Saudi Aramco. Rolex is another big sponsor of F1, as they have branding on each circuit and on the live broadcast on the countdown to the race start. Heineken is another big sponsor in Formula 1, with multiple branding spots on circuits and live TV.
There are also some major sponsors for the teams. INEOS is one of Mercedes’ biggest sponsors with prominent branding on their car. In terms of the rest of the grid, Cognizant and Aramco have been two giant sponsors for Aston Martin. They not only have good branding spots, but have also been included in the team name, which suggests they are paying a lot of money across multiple seasons.
McLaren has also secured a big sponsorship deal with Google, which uses the wheel covers to do their marketing in a unique way. But there is one sponsorship that seems to be bigger than the rest, and it belongs to Red Bull.
Who Is The Biggest Sponsor In F1?
The biggest sponsor in F1 is Orcale, sponsoring Red Bull. The biggest sponsorship deal in the history of the sport was announced at the beginning of 2022, as Red Bull agreed a rumored $500 million sponsorship deal over five years with tech giant Oracle.
If the figure is accurate, this sponsorship deal alone puts Red Bull close to the annual $140 million budget cap, which means they only need $40 million from their other sponsors before they start making a profit (excluding driver salaries and other costs). Red Bull already generates more than that each season through their other sponsors, but this new deal is a massive boost to their budget.
The Oracle deal gives Red Bull a lot of security in terms of their budget for each season, and it will likely help them to remain close to the front of the grid for the foreseeable future.
Main Sponsors Of Each F1 Team
1. Red Bull Racing
Title Sponsor: Oracle ($500 million over 5 years)
2. Mercedes
Title Sponsors: Petronas ($42 million per year) INEOS ($26 million per year)
3. Ferrari
Title Sponsor: N/A
4. McLaren
Title Sponsor: N/A
5. Aston Martin
Title Sponsors: Cognizant ($40 million per year) Aramco (value not reported)
6. Alpine
Title Sponsor: BWT (value not reported)
7. Alpha Tauri
Title Sponsor: Alpha Tauri
8. Alfa Romeo
Title Sponsor: PKN Orlen (value not reported)
9. Williams
Title Sponsor: N/A
10. Haas
Title Sponsor N/A (Uralkali terminated early 2022)
Note that all figures above are estimates.
How Does F1 Sponsorship Change As You Go Down The Grid?
It’s more difficult for the teams at the back of the grid to secure sponsorship, which is why many of them need drivers who can effectively – or literally – pay the team for a seat. This allows the team to bring in extra income to further develop the cars, pay their staff and, most importantly, continue to race in Formula 1.
Sponsorship is difficult to find in any form of motorsport, whether it’s in karting or Formula 1. Even some of the biggest Formula 1 teams, such as McLaren, have had their struggles with sponsorships in the past, and in most cases, it’s not good news for the team.
The reason the backmarker teams tend to struggle to find sponsors is because the world feed broadcast usually focuses on the front runners and the midfield cars. The backmarkers don’t get much screen time, which means their sponsors aren’t always on display for the world to see.
Why Do F1 Sponsors Invest Different Amounts?
F1 sponsors invest different amounts of money because each sponsorship deal is unique, and all sponsors will receive something different in return from the team for their investment. Getting logos on different parts of the car is also worth varying amounts of money.
Some teams, for example, might be offered a lot of branding space on the car, including the incorporation of their brand into the team’s name. However, the team will offer much more behind the scenes. The brand might be able to use the car for promotional events and they might also get VIP tickets they can give away to their clients.
Other sponsors might not be willing to invest in multi-million-dollar contracts and therefore receive less value in return. It’s all based on the needs of the business in terms of their goals, the audience they would like to reach, and how they would like to reach them.
Why Has F1 Sponsorship Decreased Recently?
The main reason F1 sponsorship has been declining in recent years is likely that TV viewership worldwide has been in decline ever since 2008. This ultimately reduces the value for sponsors in Formula 1 as there will be fewer spectators who can see their branding on the cars.
Will F1 Sponsorship Increase Again?
There has been a recent resurgence in interest in Formula 1 around the world, especially in the United States. The 2021 US Grand Prix weekend saw a record attendance of 400,000 spectators, the most of any US Grand Prix in history.
This is also partly due to the popularity of Drive to Survive, which has been incredibly successful on Netflix. The show has created a huge influx of new Formula 1 fans, who bring extra value to the sport for sponsors.
With this resurgence of interest in Formula 1, there is a good chance we could see an increase in sponsorship in the future once again.
Do F1 Sponsors Make Money?
F1 sponsors do make money. They are advertising on the biggest motorsport platform in the world, which allows them to be seen and recognized by many fans worldwide. This helps to grow the sponsor’s brand worldwide, which results in more sales.
Formula 1 teams often also allows sponsors to use their cars to bring more attention to their brand. When someone sees a business that sponsors a Formula 1 car, they will automatically assume that it’s a successful business that they should consider investing in or buying from.
There is another element to Formula 1 sponsorship that goes somewhat under the radar. Business-to-business, or B2B, sponsorship is very important. Formula 1 gives businesses the platform to market to, and potentially find new business to part with. This is one of the biggest driving forces behind sponsoring a Formula 1 car.
How Do F1 Sponsors Get Value For Money?
At the end of the day, sponsoring a Formula 1 team is not worth it if the business does not get more value back, whether the value is monetary or in other forms. Formula 1 teams will do everything they can to provide their sponsors with as much value as they can.
This does not always mean bringing new customers to the business. It could also mean that the business becomes more reputable and well known, allowing them to work with other businesses around the world.
What Happens To An F1 Team When They Don’t Have Sponsors?
When a Formula 1 team does not have any sponsors, they usually can’t race. It costs a lot of money just for Formula 1 teams to participate in a season. From entry fees to salaries, fuel and even tire costs, the teams have a lot that they need to cover.
With no other income, F1 teams must rely on sponsors if they want to continue to race in Formula 1. If a team struggles to find sponsorship, they are likely to struggle with their performance as well, making them even less attractive for future potential sponsors. Even teams like Red Bull and Mercedes that make lots of money outside F1 would struggle without sponsors.
This is the vicious cycle McLaren were almost caught in during the mid-2010s. Formula 1 nearly lost one of its oldest teams simply because they did not have any sponsors. If a team ends up with no sponsors, they will eventually have to sell their team to another owner who can fund them.
Final Thoughts
The cost of sponsoring a Formula 1 team varies, depending on the agreement companies make with the team in question. F1 sponsorship costs also vary depending on where on the car the brand’s logo appears, and how successful that team is.
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