The pay driver concept is here to stay

As India prepare for the second edition of Indian GP, here I am reminiscing how my love for this sport blossomed over the years! I have loved this sport since I was a child and up to the point of meeting the legendary Bernie Ecclestone in 2010. The F1 phenomenon has evolved over the decades.

With an estimated turnover of  $4 billion, this is probably one of the world’s most viewed sports. Revenues flow from all directions — TV commercial rights, race sanction/hosting fees (except in Monaco), track side advertising across all venues and team owners (except Ferrari). The F1 net-worth has grown exponentially.

One of the most-discussed topics during the off season and at various networking opportunities with potential brands is the concept of a ‘pay driver in F1’.

A pay driver is basically a professional motorsport driver who instead of being paid by the team brings in funding for the teams’ operations through sponsorships. This is not something new as some of the past F1 champions started their careers pretty much as pay drivers. However, most of them were highly talented rookies when they began their careers and were supported by manufacturers or brands looking to leverage an association rather than those bringing in family funding or brands with no direct interest.

I present to you a few famous instances of how some of the well known drivers have made this ‘pay driver’ model a success by partnering with companies and bringing funds to their respective teams:

1. Pastor Maldonado tops the pay drivers list with an estimated sponsorship of close to $40 million to his team Williams through a strong backing from Venzuela’s national oil company, PDVSA and Tourism Venezuela.

2. Fernando Alonso, the Spanish driving sensation, has been supported by Santander right from the beginning of his career in F1. The relationship was so strong that the Bank, in 2010, decided to ditch McLaren for Ferrari, just to support their driver! Today, Alonso is regarded as the highest paid driver!

3. It is also a well-known fact that Michael Schumacher made his debut as a pay driver with sponsorship support from Mercedes and also Dekra (European leader in inspection of vehicles and technical systems) for the Jordan-Ford team and then worked his way up.

4. Sergio Perez, Sauber driver and soon-to-be McLaren driver, had the backing of one of the world’s richest men, Carlos Slim, through Telmex, and also justified the investments securing his first points last year and a podium finish this year. Who knows, he could well be on track to be an F1 superstar!

5. Back home, Narain Karthikeyan is backed by Tata Motors right through his career and is still regarded as the fastest Indian. This year, he is the only Indian in the F1.

Usually the quantum of sponsorship would be commensurate to the branding and real estate space on the car; driver overalls and etc, and also most importantly is to leverage the association in media.

However, it is also imperative to note that most of the funds usually go towards making the car as competitive and reliable as possible.

Some of these brands have benefited from their associations with drivers, teams and the event itself. In a study conducted by Formula Money, they had the following findings:
1. Red Bull’s brand exposure during the Australian GP was the best for 2011 with coverage worth $14.1 million.
2. In the same event, Vodafone, the sponsor of the McLaren team, was the best-exposed sponsor of the race with a media exposure pegged at $5.9 million.
3. Similarly, the event sponsor Qantas had a media exposure worth $5.3 million.
Some of the brands that sustain their presence across races include UBS, DHL, Allianz, LG, Santander, Shell, etc with annual spends probably in excess of $20 million.

This study only goes on to showcase the fact that brands indeed get more than fair share of RoI in partnering with the F1.

These and many more only go on to support the fact that ‘pay driver’ model is here to stay and will become a lot more prominent in F1 in the years to come and also definitely in times of an economic downturn. India today is moving away from being a single sport destination. We have put one of the best infrastructures at Noida. Last year’s debut season attracted over 100,000 people to witness the Indian F1 Grand Prix live at the Buddh International Circuit. Indian viewership is estimated at over 60 million and the worldwide viewership is growing well over 600 million, making F1 one of the most -watched sports in the world.

(The writer is the CEO of Advent
Sports Management Pvt. Ltd. He works
closely with Narain Karthikeyan & the
Hispania Racing Team. He can be
reached at navneet.g@advent.net.in)