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Funding Formula 1: the lucrative nature of sponsorships

Formula 1 sponsorships are worth lots of money but do you really know how they work? Find out more about the top racing F1 sponsorships for 2021

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Sports and sponsorships go together like apple pie and cream, a harmonious pairing that complements each other to perfection. Every sport enjoys sponsorship deals, but arguably the most glamorous of them all is F1.

With eye-watering speeds, the latest tech and the talent required for handling such a powerful machine, there’s nothing quite as alluring as motor-racing. And Formula 1 is the daddy of them all, attracting fans from all over the world.

Hardly surprising, therefore, that firms have been queuing up over the years to sign sponsorship deals, with every brand keen to link their name to the best on the track. But who benefits from a lucrative sponsorship deal? Here's a closer look.

Team Sponsorship

Historically, tobacco firms were significant sponsors of F1 - along with other sports - and there were some teams who were strongly associated with a particular cigarette and colour. Examples include Jordan (Benson & Hedges), McLaren and Ferrari (Marlboro) and Williams (Rothmans).

The ban on tobacco advertising in 2006 forced F1 teams to rethink their sponsorship deals radically, and in the past two decades, many have forged far healthier - and more lucrative - deals with other firms.

Over the past decade, some of the biggest sponsors in F1 have included brands such as Petronas, Santander, Shell, Mobil 1, Vodafone, and Telcel. Many of these sponsorship deals stretch back decades, such as the link between Ferrari and Shell, which began in 1924.

Alongside the firms that have been sponsoring F1 teams for many years is a brand new crop of sponsors who can offer something extra. These include PartyCasino, Oracle, Cognizant and TeamViewer. Racing teams are no longer just looking for sponsors that can fund new engines or provide engineering expertise, as they can cover the latter in-house. Instead, they're seeking out deals with pioneering companies who lead their field in areas such as digital expertise, as this will help teams to develop in a new direction.

And of course, for the companies who choose to partner with a racing team, there's the same benefits as always: the ability to reach a global audience and promote brand awareness. But increasingly, there's the opportunity to benefit from the knowledge that racing teams have; sponsorship deals have become a two-way exchange of advice and information that helps all parties.

Choosing the Right Drivers

Although the teams in F1 come with their own reputation, which attract sponsors, it's also about the drivers in the cars. A big-name team may offer benefits, but when there is a successful driver in the seat, the potential for sponsorship deals rockets.

The great Michael Schumacher still leads many of the all-time records and contributed heavily to Ferrari, holding the record number of wins. However, although he's no longer behind the wheel, there are plenty of other top-notch drivers who have proven their ability on the track and are steadily carving out their own legendary status.

Drivers such as Lewis Hamilton and Max Verstappen earn megabucks due to their success, and their race wins and records mean they're extremely attractive to sponsors. Verstappen's personal sponsorship deals include Red Bull, Ziggo, and Jumbo Supermarkets, while Lewis Hamilton is sponsored by Monster Energy, Tommy Hilfiger, Puma and Sony.

Getting your company's name on any of the top drivers won't be cheap, but the benefits are more than worth the price for the brands that achieve it.

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