As Formula 1 racing gains a significant foothold in the United States, two racing teams that previously struggled to finance are now seeing increased opportunities with American companies.
Williams’ Jost Capito and Haas’ Guenther Steiner don’t sit through each week of the F1 schedule thinking they’re in a position to win the championship. At least not in recent years and certainly not in 2022 where Williams is currently last in the Constructors’ championship points and Haas sits in 8th. Yes, they will always work towards it, and as part of the race-within-the-race, both teams have claimed points this year, something that was not always given in the past.
Racing in Formula 1 is not cheap by any standard. Even if a cap is placed on the cost, it will be $ 145 million in 2021 and will decrease to $ 140 million for this season. It will drop to $135 million for 2023.
Sponsorships fuel all types of racing, but F1 eats the most at its table. With races staged around the world, businesses gain a global footprint by signing deals.
The deals aren’t cheap given the exposure, and many ways to activate them around the world. However, the historic Williams family, they were forced to sell in 2020 to the investment company Dorilton Capital. American Gene Haas owns the Haas F1 team but Steiner and the company have clashed over major sponsor issues in the past, namely Russian sponsor Uralkali which was dropped in March over the invasion of Ukraine.
For decades, the appeal of F1 seems to be unheard of in the US And even though Netflix has done a lot.
I caught up with Jost and Steiner while they were in Vegas for the kickoff party for the 2023 race. While the smoke is still clearing from the likes of Lewis Hamilton making donuts on the Strip in front of thousands, the two team principals are more than busy making calls.
“Given where Williams is from financially, the 2022 season will be challenging,” Jost said by phone. “I believe we did well outside the track – how to develop the factory and the company, develop sponsorships – develop the commercial side of the business. Even on the track, we got points where we closed the gap between the midfield teams. So I think we’re very happy with where the season is so far.
For Steiner, the increase in popularity in the US will pay direct dividends for 2023. Texas-based digital payment company MoneyGram has signed a multi-year deal with Haas that gives them a prime which has been the car’s livery sponsor since dropping Uralkali ahead of the 2022 season. Financial terms were not available but based on other deals that are more focused on mid-pack teams, the deal could be worth $40 million per year; a huge cash infusion for Haas.
“I live in the States and I see the growing interest in F1 because five years ago, we would never have had that company in the US as a title sponsor without enough interest even if MoneyGram wanted that goes all over the world,” Steiner said. “But MoneyGram being a US company with a sponsorship deal for an American-owned team, it’s good.”
Steiner mentioned that with MoneyGram seeing the popularity of F1 growing in America, they could be one of the first companies to “jump on the bandwagon” in the US.
“I think they’re very smart because if you’re the first – or if you’re one of the first – the price is better because everything goes up in the future,” Steiner added.
Formula 1 has seen a resurgence in business since US-based Liberty Media bought the racing league. The recent Q3 financial reports show that F1 has bounced back significantly from the height of the pandemic, posting $82 million in operating income, 2% from Q32021, and that will continue as the rights in the media negotiated from the likes of ESPN kick next year.
As F1 continues to heat up in popularity, supply and demand will increase sponsorship money, even as concerns about global inflation affect ad budgets.
“Liberty has done an amazing job bringing three races to the US that really shows the growing interest in America,” Jost said. “I think every team benefits from that. Formula One, as a franchise, only consists of 10 teams. It is the biggest, or close to the biggest, global sports and entertainment series in the world. Only with of 10 teams for the whole business, this makes all teams more attractive for sponsorship deals.