29/03/2012
NEWS STORY
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Saying that the Bahrain Grand Prix has had a troubled time over the past year would be something of an understatement. The political situation in the region led to the plug being pulled on the race twice and the date for this year's GP has already been switched once. There are still calls to cancel the race but in reality it is too late for that. Even most sports journalists who vehemently attacked the race have had to admit that they will attend and wrote public justifications to explain to readers why they aren't sticking to their principles and boycotting the event. While the thought of missing a race was probably just too much for some of them, convincing the teams is not so easy.
Last year the teams took the decision into their own hands and their reticence was one of the factors which led to the cancellation of the race. To show them that there is nothing to worry about now, Bahrain International Circuit chairman Zayed Alzayani yesterday met F1's boss Bernie Ecclestone, McLaren team principal Martin Whitmarsh, Williams co-founder and team principal Frank Williams, Red Bull team principal Christian Horner and Mercedes GP chief executive Nick Fry.
The get together was a lunch for "friends and colleagues" at London's RAC Club and a number of sports journalists were also present. In his speech at the event Alzayani told the attendees about the results of a report produced by F1's industry monitor Formula Money and the data has been picked up today in newspapers such as the Times. Formula Money is run by Pitpass' business editor Christian Sylt, the only journalist worldwide who regularly covers the business of F1 for national media, so it is no surprise that the report is business focussed. It shows just what the teams missed out on by not racing in Bahrain last year and the results are eye-opening to say the least.
According to the report, the 2010 Bahrain GP generated exposure worth £56.9m ($90.4m) for the 103 brands which got coverage at the race. This was well above the race average for the year of £49.1m ($78m) worth of exposure and represented 6.1% of the £900m ($1.5bn) value of F1's total brand exposure in 2010. Interestingly, the race generated a higher value of exposure for F1's teams and trackside advertisers than the five oldest races in the sport, the Monaco, British, German, Belgian and Italian GPs.
The valuation of sponsors' exposure in F1 is based on how much it would cost to get a similar length of time on screen through typical advertising. This is why it is known as Advertising Value Equivalent (AVE) and the advertising price used to calculate the end figure is discounted to compensate for the number of other brands on-screen at the same time in F1.
The leading brand at the 2010 Bahrain GP was Red Bull, which gained AVE worth £14.1m ($22.4m) from its logos on the Red Bull Racing and Toro Rosso cars. This was followed by race title sponsor Gulf Air on £7.7m ($12.3m) and Ferrari sponsor Santander on £5.9m ($9.4m).
According to Formula Money's data, over the next five years the Bahrain GP is expected to generate £352.4m ($560.2m) worth of AVE for brands in F1. This is made up of £275.4m ($437.8m) of exposure for brands with on-car coverage, including team owners, sponsors and engine manufacturers, and a further £77m ($122.4m) of exposure for the sport's trackside advertisers.
Formula Money also found that the 2012 Bahrain GP is expected to bring teams £28.1m ($44.7m) of prize money giving them another reason to compete there. Projected prize money totals for 2012 show that over the 20-race season, F1's top ten teams will share in an £562.6m ($894.5m) prize fund, with the constructors' champion taking home £79.3m ($126m). However, without the Bahrain GP this total falls to £534.5m ($849.8m). The constructors' champion would lose £4m ($6.3m) in prize money while the 10th placed team would see its prize money reduced by £1.6m ($2.6m).
It isn't just teams and sponsors who would lose out financially if the race was cancelled, but also the local area. The Bahrain GP has the highest local economic impact of any F1 race at £138.4m ($220m). This is more than double the average local economic impact of £63.7m ($101.3m) and represents a significant 11.4% of F1's total annual local economic impact of £1.2m ($1.9bn). The commercial benefits aren't the justification for the teams racing in Bahrain but it sure means that they won't lose out as a result.