the deal F1 wants to prove it is right

Ferrari and HP announce multimillion-dollar agreement and it is further proof that F1 wants to show that its choices are on the right path

Some time ago, I wrote a column saying that the union of F1 and the IT industry was not just about the money (the link is here). The needs of both areas show that there is a vast field of cooperation between the two. And it cannot be denied that there is a need for promotion and for teams to cover their expenses…

Just like in the 2000s, F1 has become a beautiful marketing tool. And Oracle in recent years has shown the viability of the process with Red Bull. Then came McLaren with Google and Chrome. In times of budget ceilings, these agreements bring money and technology. And they make the operation increasingly profitable for the teams: the more expenses are covered with sponsors, the less money the controllers have to pay…

The newest chapter in this story is the announcement of the “multi-year” sponsorship agreement between Ferrari and HP. From the Miami GP onwards, the North American giant will stamp its brand on Italian cars and will be the team’s main sponsor, including giving its name to the team (now Scuderia Ferrari HP). The appearance of the HP logo will not be restricted to F1: the Driver Academy and eSports programs will also carry the brand.

The weight of the announcement is not just financial. After all, Ferrari’s competition area is self-sufficient and the company has been breaking sales and profit records for consecutive years. But it marks the definitive goodbye of Phillip Morris as main sponsor (meaning Marlboro and Mission Winnow). They are still on the list of partners, but no longer as flagships.

It was alleged that PMI paid around US$70 million/year to the Italian team. Based on the fact that Oracle’s agreement with Red Bull is estimated at US$ 100 million, we can conclude that HP must be at the same level. But, regardless of anything, it means that Ferrari, with a single sponsor, can basically cover the expenses foreseen in the Budget Ceiling rules. In addition to helping pay for Lewis Hamilton’s salary…

This is the point that Liberty Media thought from the beginning for F1: that the teams could cover their basic costs with sponsors and prizes and could become autonomous entities, without depending so much on their controllers. Red Bull had already proven this, Mercedes proved it and now Ferrari has even more credit.

But we are talking about large teams, which naturally attract attention. And so the gap between the smaller teams ends up increasing…although this difference was already much greater. It just proves that F1 has once again established itself as a heavy marketing tool and that it reaches a relatively young audience in big markets (hello, USA!).

It just has to match the rest about competitiveness…