The Renault Formula One team is in a very precarious position at the moment. Despite taking a couple of unexpected wins in 2008, last season was not a good one for the French concern, which has targeted 2009 as the year in which in needs to re-establish itself as a consistent front-runner if it is to survive.
Unfortunately, that position has become even more precarious with the news that the team’s title sponsor, Dutch banking group ING, is to pull out of Formula One at the end of this year.
On 15 February, the company issued the following statement: “In light of the recently announced cost reduction programme, ING confirmed today not to renew the three year sponsorship (2007-2009) contract with Renault F1 and to end its presence in F1 beyond the 2009 season.
“ING’s participation in Formula One was the company’s first global sponsorship project aimed at delivering revenue and raising the global brand awareness, particularly in ING’s key growth markets. Over the past two years, ING has successfully achieved its objectives for the F1 sponsorship, raising its overall global brand awareness by 16% (March 07 vs November 08).
“F1 remains a powerful business driver even in a difficult economic climate. Whilst ING has cut the F1 sponsorship costs by 40% in the final year, revenue generating opportunities will be a continuing focus through 2009. ING has enjoyed the relationship with Renault F1 and will continue to work closely with the team during the final year of the partnership.”
ING have to pull out so they can clean all those windows
Renault’s participation in Formula One is already under close scrutiny from its management board and this latest news is an added blow. It means that Renault not only has to perform in order to persuade its board members to allow it to continue, it also has to make itself an attractive proposition to another title sponsor, and all at a time when marketing budgets are being slashed worldwide. The problem is compounded by the fact its new car, the R29, hasn’t exactly set the world alight in pre-season testing at the hands of Fernando Alonso and Nelson Piquet. If things don’t pick up, this could be the French manufacturer’s last season in F1.
Smells like a lack of team spirit
ING isn’t the only major F1 backer which is looking for a way out. Beleaguered bank RBS, which supports the Williams team, has filed the biggest loss in UK corporate history and is under pressure to reduce its sporting
portfolio, which also includes the Six Nations rugby championship.
Renault are not the only ones affected
There are many, particularly the activist group the TaxPayers’ Alliance, who object to the bank spending millions wining and dining its corporate guests in the exclusive Formula One Paddock Club at each Grand Prix, courtesy of the British tax payer. Matthew Elliot, chief executive of the Alliance, was quoted in the Daily Express newspaper as saying: “It’s ridiculous that taxpayer-funded banks are using taxpayer’s money to sponsor sporting events, especially the rich-man’s sport of Formula One. RBS needs to realise that it’s now effectively part of the public sector and taxpayers do not want their money to be used to fund elite sports, especially during these tough economic times.”
These people don't like banks sponsoring F1 teams
RBS still has another two years to run on its sponsorship deal with Williams and it would cost it a lot of money in penalty clauses to pull out early. The bank has said though that it recognises the need to ensure that its sponsorship activities “reflect the process of restructuring that the bank has underway”.
“We are trying our best to strike the appropriate balance within the constraints of both contractual obligations and of course maintaining the benefit of some key activities to our customer businesses,” it added.
These are tough times for Formula One teams but at least Williams has the advantage of not being tied in with a major manufacturer, apart from its engine deal with Toyota. F1 is its core business, unlike the Renault team, which is at the mercy of its chief executive officer Carlos Ghosn, who was appointed in 2005. Ghosn was not a fan of F1 but has said that he supported the team’s involvement as an advertising vehicle and technology investment. “We are not in Formula One out of habit or tradition, he said. “We’re here to show our talent and that we can do it properly… Formula One is a cost if you don’t get the results. Formula One is an investment if you do have them and know how to exploit them.”
Renault's F1 team is in the hands of this man
Despite stating last year that Renault would remain in F1 for ‘many years’, if success is not forthcoming this season, then faced with the withdrawal of a title sponsor, Ghosn may well reconsider the value of staying in the sport.
