On the heels of a second planned government bailout and the exit of its chief executive officer, Dutch financial services company ING announced Monday that it will end its sponsorship of the Renault Formula One team after this season. A deal...
On the heels of a second planned government bailout and the exit of its chief executive officer, Dutch financial services company ING announced Monday that it will end its sponsorship of the Renault Formula One team after this season. A deal entered as Renault celebrated a second consecutive world driving championship in 2006 will expire at the end of 2009. Reuters cited the annual report on the sport's finances, Formula Money, as estimating ING paid $86 million into the sport annually, $65 million of it to Renault.
"During the past three years, the team and ING have enjoyed a rewarding and successful relationship," team managing director Flavio Briatore said in a statement issued by Renault F1. "ING has been an enthusiastic and supportive partner for the Renault F1 team in all respects. They have been a true success story and have become a brand that is recognized worldwide thanks to an innovative and proactive sponsorship program with our team and Formula One.
"However, we have been aware for quite some time that the world's current financial climate was calling for a restructuring of our sport, and with FOTA we have moved in that direction. Drastic cost reductions have been on FOTA's agenda as one of the first priorities and, with the ongoing program of measures, we are confident we can guarantee a solid future for our team and for Formula One."
Formula One Teams Association, the managing directors of F1 teams, organized last summer to have a say in organizational and financial matters. The group agreed substantial budget cuts in December to avoid having them imposed by the sport's sanctioning body, the FIA.
A decision not to renew its agreement with the French team is only the latest by an F1-sponsoring bank. In January, Credit Suisse ended a seven-year association with the private Sauber team that became BMW Sauber in 2005.
The largest bank in the Eurozone, Santander, a corporate sponsor of McLaren Mercedes, has emerged as a sufficiently strong sponsor as to scrap F1's rules on trophies and hand out prizes shaped not like loving cups, as rules provide, but in the shape of the Spanish company's stylized logo. Proud to announce it missed being hauled down by the subprime mortgage mess that toxified so many banks' books, Santander fell victim to the Ponzi-scheming Bernard Madoff. Santander's F1-pertinent news has been to announce it will switch from McLaren to Ferrari in 2010, the inference being two-time world champion Spaniard Fernando Alonso, currently at Renault, would claim a Ferrari drive by then.
The interesting F1 sponsor-bank news is that of Royal Bank of Scotland, the outfit whose debt obligation totaled trillions by the time the British government bought up nearly 70 percent of the bank, a process that began in October, about a week before the Dutch moved on its first bailout of ING. The Scottish bank's deal with Williams has two years to run, but a bank official reportedly said last month the sponsorship is under review.
The Scotsman newspaper reported at the weekend that Member of Parliament John Mann, a member of the Treasury Select Committee, has urged sports stars including three-time world driving champion Sir Jackie Stewart to pull out of personal-appearance contracts with RBS. The bank, expected to post the largest annual loss ever by a UK corporation, reportedly budgeted nearly $300 million for sports stars -- including the equestrian granddaughter of Queen Elizabeth -- to entertain bank clients. "I think they need to consider that this is borrowers' money we are talking about," the newspaper quoted Mann as saying. Reports emerged a week ago that the bank intends to pay up to $1.5 billion in employee bonuses.
As do many businesses, banks see sports sponsorships as vital to raising brand visibility. But in these times of government -- read: taxpayer -- bailouts, money spent on sports is seen as unnecessary luxury, as misplaced as inflated bonuses for executives who have driven their companies into the ground. Bailed out by U.S. taxpayers, insurance giant AIG has ended its Davis Cup tennis sponsorship and will let its shirt sponsorship of football club Manchester United lapse. A global financial crisis affecting sports across the board doesn't stand to be finished with F1 yet. Bank on it.