With McLaren finding it hard to retain sponsors amid a negative slide in performance, is it time for the Woking-based squad to change its approach towards them?
McLaren’s slump in performance has had a negative impact on its ability to retain sponsorship. While former title sponsor Vodafone exited at the end of 2013 as part of a comprehensive review of company’s marketing strategy, more recent departures have directly taken McLaren’s on-tracks results into consideration.
Luxury fashion brand Hugo Boss ended its decades-long association with McLaren in 2014 to move over to Mercedes, citing contrasting fortunes of the two squads. More recently, Tag Heuer jumped ship to Red Bull, and will be shelling out a much higher sum to gain naming rights of the Renault engine.
Johnnie Walker is expected to join the fray, with its parent company Diageo having bought a major chunk in Vijay Mallya’s liquor business. Similarly, Santander’s long-term future with McLaren has also been cast into doubt, with the Spanish banking giant having downsized its financial support to the Woking-based squad.
As a result, McLaren has been forced to run a livery mostly devoid of sponsors. More significantly, the sponsor exodus has put a big hole in the company’s accounts, which is only compounded by the expected fall in prize money for finishing ninth in the championship.
McLaren downplays sponsor exodus
McLaren insists that the group’s strong financial position, thanks to its burgeoning automotive arm, means the loss of sponsors is not a matter of concern. But diverting funds from one division to another doesn’t make sense in the long term.
The team renewed its vows with Honda with the aim of dominating Formula 1, for which it needs more cash. At present, its budget falls some way short of Mercedes and Ferrari. A further decline in the budget won’t do the team any favours.
You see, Williams entered a vicious cycle for nearly a decade. Only a comprehensive overhaul of their operations and strategy, centered around new regulations and an increased budget, allowed them to return them to return to the forefront of F1.
Time to change approach?
In light of this scenario, perhaps it makes financial sense for McLaren to reduce its rate card for a short period of time. This will help in keeping the budget budget intact, without putting pressure on group’s financial resources.
But rate card is just a small part of the wider problem blighting the team: their approach towards sponsorship.
As veteran journalist Will Buxton revealed on his blog, team chief Ron Dennis was unimpressed with Tag Heuer making their brand ambassador Cara Delevingne sit in one of the McLaren cars during the Monaco Grand Prix weekend. Dennis completely ignored the social media reach of the British model (close to 30 million), with the rift so produced culminating in loss of sponsorship money.
Surely, that’s a naive way of losing a sponsor - one that has been pouring millions into your squads for over three decades.
Times are changing and brands are constantly finding news ways to promote their products. Formula 1 teams must be ready to embrace the strategies adopted by their sponsors, after all they contribute a significant portion of a team’s budget.
While McLaren’s ability to raise sponsorship is reduced by its lack of performance, drivers Jenson Button and Fernando Alonso still hold a lot of value for sponsors.
This has only been vindicated by the incoming of champagne brand Chandon. But its entry, along with that of news channel CNN, would do little to offset the loss of the slew sponsors who’ve already left, or are planning to leave the team.
by Rachit Thukral
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