News Analysis: Nicotine replacement

The cars lining up on the first grid of the F1 season will bear the liveries of a broad spectrum of sponsors.

This Sunday the Formula One season opens in Bahrain, in the process drawing to a close its annual off-season sponsorship merry-go-round.

When the EU Tobacco Advertising Directive came into force last summer, forcing a blanket ban on tobacco sponsorship in Formula One, it was assumed that the sport's sponsorship heyday was over. The tobacco industry had not only shown great commitment to Formula One over many years, brands had also been involved as the teams' principle partners. As such, they invested vast sums of money and offered the sport a level of financial stability.

It was feared there would be an immediate exodus of tobacco sponsors, yet the transition to new backers appears to have been fairly smooth.

As the tobacco brands pull out, they will no doubt be missed, but so far just two of the five teams with tobacco sponsors have lost their title sponsors. Gallaher's Benson & Hedges disappeared from the Midland F1 Team, while Imperial Tobacco withdrew its West brand's sponsorship of McLaren Mercedes midway through last season.

Fresh entrants

Andy Philpott, managing director of sports marketing specialist Prism, believes Formula One is at the dawn of a sponsorship era that should be embraced by new and existing backers.

'Vodafone probably could never have been Ferrari's title sponsor, as Marlboro has filled that slot (on a deal lasting until 2011). However, it has been able to move to McLaren (from 2007) to fill the title position vacated by Imperial Tobacco. When the Premier League stopped cigarette companies sponsoring football clubs, the sport didn't suffer. It was an opportunity for new brands to come in.'

The blow McLaren suffered from losing Imperial Tobacco has certainly been cushioned by an increased investment from the Johnnie Walker whisky brand, while Vodafone's defection from Ferrari will provide a further boost; the cars will be renamed Vodafone McLaren Mercedes next year.

Mark Gallagher, managing director of Eden Rock Sports, points out that tobacco will remain present in F1, despite the changes. 'Tobacco will still be with us for some time, notably at Ferrari, and there may be some raised eyebrows, with tobacco branding still appearing at nine non-EU races plus, potentially, two EU races in countries that have questioned the Tobacco Advertising Directive'.

By the start of the 2007 season, only Ferrari will have a tobacco brand as its principal sponsor, but Mild Seven continues to appear on Renault's cars for the 2006 season as the tobacco ban permits existing contracts to be honoured. British American Tobacco's Lucky Strike will also see out the remainder of its deal with the Honda F1 team. This means Renault and Honda have another year to consider their sponsor options.

This season will also be defined by the increased involvement of less visible brand partners. One of the biggest investors has been Intel, which has stepped up its involvement by agreeing a £30m deal with McLaren. Intel had previously been a second-tier sponsor of Toyota F1.

Consumer brands

Although the commitment of technology brands is crucial to the future of F1, most experts say consumer brands are most important. This season Martini returns to the motorsport arena after an absence of more than 25 years, with a £50m investment in the Ferrari team.

Adam Wylie, managing director of 23red, who helped orchestrate the deal and will leverage the brand's sponsorship, says: 'It is incredibly important that consumer brands such as Martini are involved in Formula One. The perceptions of the sport of people at Intel, Alliance and FedEx were probably built by glamour brands of yesteryear. The residual value of those glamorous brands is very important.'

As part of its activation of the deal, Martini is launching a lifestyle TV programme called Martini World Circuit and is planning a major pan-European anti-drink-drive campaign.

Team ownership

Some sponsorship movement at new F1 teams, such as Red Bull's Scuderia Toro Rosso, is also a possibility. 'The disappearance of privately owned teams such as Sauber, Jordan and Minardi and takeovers by car manufacturers and corporates means F1 has entered a new era,' says Gallagher. 'Red Bull's purchase of Jaguar Racing in December 2004 and the more recent takeover of Minardi is an unprecedented investment for a privately owned consumer brand.'

Philpott is equally enthusiastic. 'This could be the start of a trend,' he says. 'As the owner of a team, a brand such as Red Bull can control which new partners come on board - brands that share its philosophy.'

There are just a few days until the start of the 2006 season, yet by Sunday more deals could well be in place. Williams F1 in particular is still seeking a title sponsor following the departure of Hewlett-Packard, although the financial strain has been eased to a degree by increased revenue from existing sponsor Royal Bank of Scotland. Watch this space.

MAIN SPONSORS 2006 BMW Sauber None Ferrari Marlboro Honda Lucky Strike McLaren Johnnie Walker Midland F1 None Red Bull Red Bull Renault Mild Seven Scuderia Toro Rosso Red Bull Super Aguri None Toyota Panasonic Williams RBS

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