CONENfERCLAIL C03,24UNNICATION & Ti-m 1--\=Nv-ALNLARKET '11TI I JUNE1993- SESSION I SPONSORS111P OF TVIALIORSWRTING ENE--sTsAs,kW"--jroCRoss CurupuLDIVIDES RialARD WEST I NLkRKETING DIRECTOR NViI-LwNis GRxNjD PRLx ENGINEERING LOW CD U1 asi ~7. US-x1,.1U1= co %-0 BATCo document for Legal Services : Health Canada 20 October 1999 DMODUCTTON Formula I is now admowledged as one of the World's greatest sporting spectacles. It is however, far more than that, and once the publicly perceived motor racing images are stripped away, the underlying theme is one of a competitive business world where the activity of obtaining and servicing commercial sponsorship is of paramount importance for teams to successfully compete in such a global business. Formula 1 today is controUed by two governing bodies:- The FOCA, (The Formula One Constructors Association) is controlled by Nir Bernard Ecclestone and is based in London. FOCA oversees event organisationpromotion, television issues and event hospitality. 0 The FISA (Federation Internationale Du Sport Automobile) is headed by Iqx Max Mosley and is based in Paris. FLSA overseas the sporting calendar of Formula 1 events and is responsible for the International Sporting Code andTechnical Regulations as a subordinated arm of the FLk (Federation Internationale de Lautomobile). Underneath the glamour and excitement is an industry directly employing some 20,000 people across Europe in fields as diverse as design, aerodynamics, specialist metals andcarbon composite material applications, electronics and applied computer technology to name but a few. In addition there are a number of companies specialising in the transportation of hundreds of tons of freight and the many hundreds of indivridual teams members on a bi-week-ly basis throughout the Championship season. In 1989, the SouthAustralian Government estimated for their one event alone, the Adel,aide Grand Prix brought revenues of some forty eight million.Australian dollars into the local community in one weeL This in tum has roll on effects for related business' such as the airlines, the hotel industry and individual local retailers and leads to the claim that Formula I as an overallbusiness entity generates a turnover in Excess of one billion dollars annually. Formula 1 teams are almost totally dependant on commercial sponsorship to secure their operations. The business of motor racing attracts not only the World's leading co motor manufacturers and asseciated companies (Le.; fuel., ty res, electronics) but also a %ride selection of truly global consumer brands who now utilise sponsorship as a significant part of their international marketing mix 1 4 BATCo document for Legal Services : Health Canada 20 October 1999 The rationale for utilising 'Formula I as a sponsorship and marketing tool is clear. The FL-k Formula I World Championship for Drivers and Constructors takes place in fifteen countries, with a total of sixteen Grands PriY, eleven of which are held in Europe, across a racing season starting in March in South Africa and finishing in Novembez- inAustralia in front of a live and deferred television audience of over eight billion people. Put another way, five hundred and two million people pe-- race! Formula 1 is broadcast, either live or deferred in one hundred and two Countries and in 1992 these countries received five thousand three hundred hours of television coverage - equal to seven and half months of continual coverage! In addition to live and deferred broadcasts, Formula 1 receives a further twenty one billion cumulative viewers via additional bipadcasts, special features and global news coverage adding a fuxther three thousand six hundred and seventy one hours of coverage. 0 When adding the additional coverage of news and special features broadcasts, this takes the totalnumber of countries receiving broadcasts to onehundred andtwentyone. The final 1992 FOCA fig-ure (Source; The Formula One Constructors Association) claims a cumulative global audience of twenty nine billion when including all news reportage, syndication, special programmes etc In 1993, FOC-k Television will continue to explore new markets, install additional high technology on board camera equipment and develop new techniques aimed at improving the delivery of Formula I Grand Prix racing. Currently in Formula 1, there are thirteen team with two cars per team all based in Europe competing for the titles of the World Constructors and World Drivers Championship. Seven of the thirteen team are based in England. Points are awarded on a sliding 10 - 6 - 4 - 3 - 2 - 1 basis for Constructors and Drivers alike with all races and points counting towarcLs the final Championship outcome. (A C) The majority of tea rn are privately owned. The main exception to this rule is Ferrari, now part of the Fiat empire. In recent years a number of teams have become part of larger Groups of Companies ie.; Benetton Formula, (formerly the Toleman Team) L^J which is now ovvned by the Italian clothing giant, and McLaren International, one of C3 the most successful teams in recent years, is nowprimarily ownedby the TAG Group of Companies in Paris. BATCo document for Legal Services : Health Canada 20 October 1999 A"illiams Grand Prix Engineering Limited however remains in the o%-nership of its two principal share holders; Managing Director, Frank Williams and Team Technical Director, Patrick Head. Formed in 1977, Williams has now won five Constructors World Titles and four Drivers World Titles and in doing so has won 64 Grands Prix to date. TheCompany now has in excess of Mo hundred people in its employ. During this time William has relied for the majority of its significant funding requirement from commercial sponsorship. In 1993 the budget requirement of the team is in excess of twenty million pounds sterling. Despite these budget levels, William do not pay for their engine technology. This is supplied by Renault Sport, the racing division of Renault in Paris. The Renault involvement in Formula I is based on the belief from board level downwards that performance, team work~ excellence and winning are all part of the marketing mix that assist Renault to sell their products to the general public. Formula I is also used within Renault as a communications medium, providing actual evidence that two companies from separate national backgrounds canwork together successfully and effectively and bread, down cultural barriers through a common cause. Such is the strength of thisAnglo French partnership that Williams andRenault have now entered intojoint venture programmes in both research and development and actual William Renault products are now available ie.; The Williams Renault Cho limited edition road car launched earlier this year. To refer to Renault as a sponsor would be to undermine the strength of the companies efforts since 1989 when the first Renault engine was included as part of the Williams performance package. The combination of William and Renault has provided a true technical and marketing partnership for the 1990's. Un 110 (A 00 --4 N) BATCo document for Legal Services : Health Canada 20 October 1999 lVilliams current portfolio of sponsorship investment is as follows:- C-ANTOIN BUSLN7ESS IMACHLNES. Japan/Europe. C20M. CIGARLETTES (R.J.R. Nabisco). United States of America. SEGA CONTUM GAMES. Europe - UK- ELF FUEIS AND LTJBRICk\-TS. Europe - France. LABATTS PMMIM L-kGER. Canada/ n,- - Italy - Europe. HIGHLkN-'D SPRENG IMLN-EL-~L IVATER. Europe - Ul'- - NIAGNETI MARELIJ ELECTRONICS. Europe - Italy. BULL CONPU-M SYSTBiS. Europe - France. KICKER-S (T OTHING. Europe - France. It is clear from the Williams sponsorship portfolio that we are associated with motor manufacturers, brewers, comput er s ofTware andhardware manufacturers, a clothing company anda tobacco manufacturer. The lVilliarns policy is that we %ill always respect individual countries laws and voluntary codes of practice provided that they do not restrict unreasonably the rights of the company or individuals concerned. obviously, each company has a specific rationale for entering formula 1. In some cases this will be strictly a brand awareness strategy and in others where brand awareness is already established, Formula 1 provides an ideal'prestge image, press, public relations and hospitality platform. When studying a prospective sponsors corporate details, William specifically look for partnerswho's corporate profiles, potential sponsorship support spend capabilities and brand suitability match into the e:dsting portfolio of investment. In many cases William's sponsors look to assist each other in terms of joint advertising, hospitality and promotional prograrnm es to achieve greater awareness andimportantly, cost eff ectivenessviajoint marketing, advertising andPR campaigns. The William Sponsorship and Marketing Services Department offer a full creative and logistics service to our sponsors to ensure that at all times they are receiving the (-.14 ma--nTnum benefit from their association with Formula 1. C) (LA Un Despite the obvious strengths of motor racing, which other aspects do companies %~o 0 L--4 consid,--.- beneficial when becoming- involved in Formula 1? cc BATCo document for Legal Services : Health Canada 20 October 1999 Formula I provides not only a global marketing opportunity, but a very strong European bias that can easily circumna~lgate cultural and national biases. Williams represents an English team ~Nith French engines, a French and English driver combination, American tyre technology, Japanese, French and Canadian sponsorship, Italian and French electronics and an international design team. The guiding factor is that Formula I at It's MOSt successful is able to bring together all of these elements into one winning partnership With'Wl=ers'in every area of the programme. Sponsorship is no longer a philanthropic exercise. The companies involved with Williams Grand PrixEngineering all operate Total Quality Management programmes and by their own insistence will only operate in partnership with comp6.nies that share a similar approach. Whether pictorially orverbally, Williams Grand Prix Engineering, it's driversandstaff and the way it conducts it's business affairs are involved in promoting a range of products and services that are,,Iewed and followed by a true European and multi- national audience. Through television, the written media, radio and pictorial coverage of Grand Prix racing a company's products and sen?ices are depicted as part of a high technology, performance led programme which demands the highest levels of attention to detail. Formula 1 sponsorshipis about associating with these images to promote the highest levels of professionalism possible. in addition to the television figures mentioned earlier, there are further media statistics that support the case for Formula I on a global basis. During 1993 FOCA will accredit the following, Television/Radio; Annual pass holders-, 220 individuals. Race by Race; 400 - 500 pass holders including the host broadcast C) company staff. (A LNG Camera Passes; 40 - 30 passes per race. Qn %10 Fixed Camera Passes; 20 - 25 passes including helicopters. (_._J co Press/Photographe--s; Annual pass holders; 2-10 individuals. Race by Race; 150 pass holders. National host journalists; 100 - 200 pass holders per race. BATCo document for Legal Services : Health Canada 20 October 1999 Whilst there are elements that would like to see sport in general and Grand Prix racing in particular rever-t to non commercialprinciples, motor sport as we know it today could simply not survive without the involvement of television, radio and the written media, which in turn provides the catalyst for the financial input of the sponsors. The sport of GrandPrixracing self regulates itself on anationalbasis. InFrance where tobacco advertising is totally restricted, Camelfollow the guidelines set out for them bythe Government andremove anyform. of branding on the teamfor the Frenchrace. The team's other sponsors in any advertising andpromotions alsohaveto foEowsuit and remove selected logos and brand representations where national laws dictate. Any sponsorship contract with Williarn contains specific clauses which state that 'logos must remain unaltered except in countries where legal requirern ents state to the contrary and therefore we as Williams are as proactive as our sponsors in ensuring that we.adhere to national laws where applicable. M-timately, this final statement leads me to the point of today's presentation to you. There are questions regarding the 'editorial controls' or supposed lack of them via the medium of sponsorship. All of us here today surely accept that sponsorship is now recognised as an integral part of an integrated marketing programme. It is now measurable and quantifiable. Whether it be sponsorship of Formula I or sponsorship of The Royal Shakespeare Company, the latter incidentally having been recently Sponsored by Unilever, large corporations haverecognised thevalue of sponsorship andare nowusing sophisticated measurement techniques to evaluate the cost verses the benefits enjoyed, just as they have done for many years across other marketing disciplines. Formula I is in itself a media event. It is no different to other sports in this respect. just as paid television or press advertising conveys a particular companies message or brand values, so does an association with Formula 1 which is recognised as high performance, glamorous, exciting and aspirational. L-J C) U4 I hope the content of my speech today has outlined the size and scale of Formula I cn and the huge infrastructure of investment, employment, and technology that exists N10 U4 i,vithin it, parricularly in Europe. co --1; Lrl BATCo document for Legal Services : Health Canada 20 October 1999 To suggest that sponsorship operates outside of the bounds of editorial control is folly. It is an accepted practice throughout the free world that television, newspapers and maga-zines operate on the principles of paid advertising. Without this practice they would not survive and neither would Formula I survive without sponsorship. National guidelines already exist to ensurethat specific product rules are not broken and as I hope I have illustrated Formula 1 and the Williams team operate within these guidelines. Formula I is the ultimate expression of a free market policy and to enforce editorial controls onto an already well controlled sport would lead to immense damage to Formula 1, general sport and the commercial world of sponsorship as a whole. For two hours on a Sunday on alternate weekends from March until November Formula I represents the ultimate sporting challenge. Underneath it lies the ultimate business challenge supported by commercial sponsorship - long may it continue to prosper. 0 ENDS (J-4 CD \.O L-4 G\ , BATCo document for Legal Services : Health Canada 20 October 1999