Zak Brown, founder and CEO of Just Marketing International (JMI), the world’s largest motorsport marketing agency which was founded in 1995 and acquired by CSM Sport & Entertainment, a division of Chime Communications plc, in 2013, has warned that F1 must rein-in its spending.

The American former professional racing driver, is widely recognised for his accomplishments as a sports marketer having been named numerous times in the INC 500 Fastest Growing Private Companies of the Year and recognised as Marketer of the Year by PROMO magazine.

Speaking to Reuters, Brown has become the latest to warn that the sport cannot continue on its current path of spend, spend, spend.

"From our standpoint, interest is as strong as ever," he said. "But if you separate how we are doing and look at the sport as a whole, other people aren't announcing deals, the McLaren car is pretty blank.

"The overall sponsorship economy, while we are bucking the trend, is very down in Formula One. That's a fact, just look at the cars," he added, almost certainly a reference to the McLaren.

"The potential for the sport is untapped," he continued. "I think it needs, as an industry, to be much better marketed. It's not where it needs to be.

"The budgets are out of control. And that then forces the whole eco-system of the sport to be financially strained, the expense of the sport is out of balance with the commercial value of the sport. Budgets now are $200 - 300 - 400 million. It's nuts!

"We don't need $400 million budgets. And if we don't need $400 million budgets, we don't need the same size of sanctioning fees which are putting tracks out of business, which then means we don't need to charge the consumers as much.

"Losing Germany, I haven't had anything other than disappointment from sponsors on that," he admitted. "With Italy there will be the same reaction.

"Some of the new markets, Mexico, are fantastic. Some of the other markets that are new, less so. We are adding some good ones... but then there is speculation of a third race in the Middle East. How can you have three races there and none in Germany? I think the two they have are outstanding and contribute a lot to the sport but a third? I don't think the market can support that.

"What I'm seeing is attendance is down, TV ratings are down, car count is struggling," he concluded. "So your key performance indicators are all on a downward trajectory right now.

"Every single client we had that was up for renewal has renewed. Every client we have that is in Formula One, is happy they are in Formula One. But even though the sport is massive, marketers do like things that are hot and buzzy. And right now Formula One doesn't have the buzz it's historically had. I think it can come back but they need to work on the product."

Interesting thoughts from a man who knows his business.

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READERS COMMENTS

1. Posted by KoosOos, 04/05/2015 5:41

"I do think he over simplified it. Funny the only ppl complaining about how much money Mr E takes is the fans.
Every time some one ask a team about should MR. E leave the sport they say no. I have not hear one team say they are Mr. E takes to much money out of the sport. Even if Mr E gives all the profit to the teams it will make now difference. It will mean a midfield team will get around 30 milj pounds more allowing them a budget around 180 milj to 200 milj a year. compare it to the top teams and you will see it didn't even make a dent."

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2. Posted by PeterMann, 03/05/2015 20:45 (moderated by an Adminstrator, 03/05/2015 20:56)

"This comment was removed by an administrator as it was judged to have broken the site's posting rules and etiquette."

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3. Posted by Joop deBruin, 03/05/2015 18:18

"Ask the talk is about cost cutting. Why aren't they all talking about why the number of eyeballs on races and all things F1 are down, therefore cutting revenue potential from advertising and sponsors?"

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4. Posted by gturner38, 03/05/2015 5:52

"Blaming the team budgets for the sanctioning fees is a sham. If FOM didn't take around 40% of the profits, they could cut the fees without cutting the funding to the teams. In either case, cutting sanctioning fees doesn't result in tracks cutting ticket prices. The tracks are still going to charge the price that they feel earns them the most money, and right now it seems a lot of tracks consider a small crowd paying higher prices makes them more money than a large crowd paying small prices. The one thing that could drive prices down would be shifting the revenue from concessions and merchandise to the track instead of FOM so that volume of sales at the track would be factored in.

Be that as it may, I do agree that we don't need $400 million budgets, but that's a completely different issue to sanctioning fees."

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5. Posted by scf1fan, 02/05/2015 23:43 (moderated by an Adminstrator, 03/05/2015 20:56)

"Errr . . . And since when do the team "budgets" have anything to do with the "sanctioning fees" for the races? If this guy is "widely 'recognized' for his accomplishments as a sports marketer" I'm glad I gave up my subscription to the hyped up "Inc." magazine years ago!"

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6. Posted by hussainahm, 02/05/2015 20:55 (moderated by an Adminstrator, 03/05/2015 20:56)

""Who cares" said Mr E."

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7. Posted by ape, 02/05/2015 19:11 (moderated by an Adminstrator, 03/05/2015 20:56)

"
who cares..."

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F1 budgets out of control, warns marketing guru

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