Why are people/companies interested in buying F1 backrunner teams?

Starting a team from scratch is ridiculously expensive in part because you have to pay a "buy in". You can purchase an existing team that has already paid, and you don't have to ante up the entry fee. Lots of companies want to become "respectable" or announce that they've "arrived" (or a country is arriving or now has the wealth to compete at this level). F1 has worldwide audiences, is glamourous as all get out, and if you're on the grid, you have a chance at a win (in theory, at least). So, if they want to get in, buying an existing team is the best way to do it. There may be other reasons such as the big automotive companies who want to compete with their products, prove themselves and get in it in a big way to showcase their technologies. It's also true that an existing team will have the necessary facilities, equipment, personnel and relationships with vendors in order to get a race team to the track. What Toyota did was exceptional in today's environment. 25 years ago, you had independent small-ish, playboy owners who could operate on a shoestring budget. But, regrettably, not any longer.

And, while it's obvious why a consumer-based product company would sponsor an F1 team (Marlboro, Lenovo, Vodafone), why companies that don't manufacture and sell consumer products sponsor F1 is more complicated. They might be the necessary technical partners or merchandising partners. They might just have a CEO who likes it. Lots of reasons. However, sponsorship is almost always a money losing proposition. One of the biggest problems is that you simply can't connect the sponsorship to the purchase of goods and services. Are you any more likely to purchase Lenovo laptops because they sponsor an F1 team? And, if on the off chance that you were, how would Lenovo even know that that's why you purchased it unless you tell them as much. Nope, it's usually just someone who really thinks racing is cool and F1 is the coolest, global racing. So, let's plunk down $50MM for a multi-year sponsorship deal.

Anyway, you're correct when you point out the financial advantages of winning. It's more than just financial, though. It's better treatment all-around. Better parking in the paddock. Better location in the Pits. More influence with Bernie and Max, even? And, by buying in, you "inherit" the position of the outgoing owners.

CW

 

If the team can get off the ground running, do well, and make it to the middle of the pack then you can begin to pick up bigger sponsors and more money. However with most of the teams run my major car manufacturers (BMW, Mercedes, Ferrari, Renault, Toyota, Honda) and having gigantic sponsors, the chance that a backrunner moving up is near impossible.

 

+1 Only reason IMO is brand awareness to consumers. F1 is still one of the most watched sports, so it becomes a $50mm worldwide ad campaign. And I'm sure nice box seats for the sponsors' CEO.

 

Whats a Force India ?
Not the team, I know that.

 

The other thing is that if (and it's a big IF) the performance of the team can be improved so they are in the upper half of the grid (think Sauber this year, or Williams a few years back), then you can command more sponsor money and you also get more TV money from Bernie, and that means you could actually turn a profit.

Wasn't Eddie Jordan the highest paid team owner? Although some folks mentioned there were reports of some impropriety around his finances at the team, but as I recall he was turning a pretty healthy profit per year.

 

This should be in the racing section.

 

Alex Schnaider made a tidy profit on his Midland deal.

 

if i was a billionaire i'd probably buy one just to say i own my own f1 team. the challenge of trying to turn the team around would be fun.

 

Puffy/P.Diddy/Diddy/Sean Combs said that he would be very interested in running an F1 team.

 

Everyone is in F1 to make money. If the F1 team makes no profit, but sales of your cars or energy drink etc go up it can still make you money. The Red Bull brand now has global advertising every other weekend and that would cost a hell of a lot done any other way. On Saturday I went for an Indian meal with my family. I had a choice of Cobra, Kingfisher, or Carling beer. I went for Kingfisher as I like the Force India team! I've never seen an advert on tv for Kingfisher beer.
I was involved in a deal to sell the advertising space on the bottom of Rubens Barrichello's visor when he was at Ferrari. This is an area about 2 inches square. A software company paid £50K to have their logo on the visor for the last 9 races of the 2002 season. The CEO was very happy as he could go to races and be treated very well and he could take potential customers if he wanted. The first race with the logo on was the European GP at Nurburg and he won it! I spoke to the CEO at the end of the seson and he thought the whole experience had been great and it helped to get some deals that they may have lost without the F1 link. He thought it was money well spent.
If I own a company and I sponsor the Super Aguri team I get the same access to the paddock and the glamour of F1 as the guy who sponsors Ferrari, but I get it for much less money. Sure, my guy won't win the race, but my customers get to chat with the drivers and possibly share a hotel bar or dining room with Alonso/Hamilton/Raikonnen etc. My customer will have some stories to tell his golf buddies and they will hopefully think of me when it comes round to contract renewal time. For a lot of the sponsors the benefit is more about the access to F1 rather than advertising. If I run a company that sells forklift trucks I doubt if many people sat at home watching the race will suddenly decide they need a forklift to help with the gardening! However if I run a warehousing company and we need some new forklifts I'd be happy to let the CEO of Acme Forklifts take me to a GP and talk to me about the deal over champagne during the race.

 

Sponsoring an F1 team, car or driver is just an 'in' thing, unless you are taking direct aim at a market ala Honda, Toyota, Mercedes, BMW - where would Ferrari be today if they did NOT race - ever ?

Race fans generally remember - in the early 80's, I bought my first real set of luggage - I had a choice between Samsonite, and American Tourister.
I chose Samsonite because they sponsored Vel's Parnelli Jones USAC Indy Cars in 1971-2-3 (or so) - driven by Mario Andretti and Joe Leonard - 12 years prior.

Do we go out and specifically LOOK for something that is or was sponsored by a company involved in motorsports ?
Probably not, but if we are in a position to make a choice between two products, one has motorsports ties, one does not, I like to think
we opt for the one with motorsports ties.

Bad example - most nascar fans I saw smoke Winston, most F1 and Indy fans smoke Marlboro.
Rothmanns, Players, Gitanes..... dunno.

Why sponsor an F1 team ? Or any motorsports team ?
Just look around at all the new 'hospitality suites' - not just at ALL racetracks, but at ALL sporting events; football, basketball, baseball, hockey.....
You get financially involved, and you are 'in', maybe it's a bit ego, too.

 

Bernie and co. make reams of $ off of F1.
They pay out $ according to the points system.
Backmark teams without factory backing cannot contemplate ever winning.
I believe Bernie subsidises these teams discretely to fill out the grid as they do not earn any point money to speak of. Just enough to keep going.
F1's big show will always be the top manufacturers, Ferrari in particular, but they do need to fill the grid.