24/07/2012
NEWS STORY
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For the past few weeks rumours have been swirling around that American soft drinks giant Coca-Cola is considering sponsoring Formula One. Pitpass alluded to it on 8 June and, one month later, business editor Christian Sylt revealed that the rumours are indeed true. Another supporter has now backed up this view leaving the paddock on the edge of its seat waiting to see if Coca-Cola will decide to pour its money into F1.
Soon after the initial report was published a few lone voices suggested it was hard to imagine that Coke is even considering sponsoring F1. "You are dreaming if you think there is Coca-Cola money for F1," said one.
This wasn't a knee-jerk reaction as it was justified with the explanation that "Coca-Cola is a global brand and does not need any exposure. Thus when it does a sponsorship deal it is looking for better ways to engage with fans, or to sell more drinks. They tend to go to sports because they are engaging. F1 is simply not the right place for them to be...The only thing that might make sense is if Coca-Cola was to buy Monster, as was rumoured a few months ago (but denied by Coke). Monster would be a good fit in F1, in direct competition to Red Bull. However, even in that scenario, I don't think F1 is cool enough for Monster's idea of its own image."
It is debatable whether F1 isn't the right place for Coca-Cola but it is definitely helpful to raise the example of Monster when thinking about this subject. It is correct that Coca-Cola was reportedly considering buying Monster which indicates its interest to the soft drinks giant. However, it is most certainly not correct to say that F1 isn't cool enough for Monster as in fact it is already involved with the sport as a partner of Mercedes GP. It isn't the only one as of course Red Bull and Lucozade also have team partnerships showing F1's appeal to beverage brands.
In the wake of the initial revelation about Coca-Cola considering sponsoring F1, others have now stepped forward to dismiss talk that the brand is not looking at F1. "Is Coca Cola giving Formula 1 a serious look? From what I understand of the situation, yes it is," says Will Buxton, SPEED Channel's F1 pit reporter, on his blog. Sylt has known Buxton since 2003 when they worked for magazines owned by F1's boss Bernie Ecclestone, but the pit reporter's conclusion that Coca-Cola is considering sponsoring the sport comes from a different source.
"I'd heard the rumour from a number of paddock sources over the past two months: namely, that when Vodafone's title sponsorship of [McLaren] ends (with some sources claiming it will finish prematurely at the end of this season), Coca Cola will step in. Even a livery had apparently been mooted, a sort of homage to the old Marlboro livery we so associate with McLaren. White and red, lest we not forget, are also Coca Cola's corporate colours," says Buxton.
However, he adds that "the more I've looked into it, I'm afraid to say the less likely a link up seems. There is one pretty major hurdle that stands in the way of any such deal, and that is McLaren's link with GlaxoSmithKline." He explains that the company already has logos for its Lucozade energy drink on the McLaren cars and one of its competitors is Powerade, which is owned by Coca-Cola.
Accordingly, Buxton says "it seems fairly simple. For as long as the GSK partnership exists, a Coca Cola tie-in would be nigh on impossible." However, he adds "as I said, I'm sure Coca Cola is looking at F1." However, as Pitpass has pointed out, the McLaren partnership is with GSK itself so it could switch the Lucozade logos with those of another of its brands. If McLaren's deal was signed with Lucozade directly that would be different but it is well known that this is not the case.
Testimony to this, at the German Grand Prix, GSK switched the Lucozade logos for those of protein shake brand Maximuscle. It blows a hole in the theory that Coca-Cola could not put its logos on the McLaren because Lucozade is already on the car.
There is further precedent for a company which sponsors F1 to switch the brands it promotes on the car as Virgin did just that in 2009. Virgin Group sponsored the Brawn GP team and during the year its logos on the car changed from promoting the vanilla Virgin brand to Virgin Galactic, Virgin Active Health Clubs and Virgin Media. Again, this would not have been possible if the sponsorship had been with any of these brands directly.
Interestingly, in last week's Vodafone McLaren Mercedes phone-in, Martin Whitmarsh was asked "What's the situation with the Vodafone title sponsorship moving forward? Have they informed you about their 2014 plans yet and have you spoken to Coca-Cola?" In response, he said "As you can imagine we don't talk about commercial discussions. We have enjoyed a good and very successful partnership with Vodafone. We will be with them for some time to come and we talk together about whether that would be lengthened beyond the existing length of the contract. There are also a whole range of other conversations with existing partners and new partners. But I'm sure you can imagine that we are quite unlikely to disclose those discussions."
Whitmarsh's comments indicate that the Lucozade logos would not pose an obstacle for Coca-Cola. Why so? Well, imagine what Christian Horner would say if had been asked if he had spoken to Coca-Cola. It is safe to say that he would firmly and robustly deny it. The reason for this is that Horner's team is committed to Red Bull (it is owned by it) so he would not want there to be any talk of him speaking to another drinks company. Whilst McLaren is not owned by Lucozade, it is wholeheartedly committed to it as it is a partner of the team. However, ultimately, Whitmarsh's loyalty lies with the company the deal is signed with and Coca-Cola is not one of its direct competitors.
It is no surprise that F1 is rife with financial rumours as the business behind the sport is frightfully complex. In September last year flawed reports emerged about Toro Rosso claiming that Red Bull boss Dietrich Mateschitz "has already sold a minority shareholding of the team to the Abu Dhabi investment company Aabar, and that this company has an option to take over the majority of the shares in the team." The previous month it was claimed that "the word on the street is that Silverstone circuit has been leased for the next 100 years by the British Racing Drivers' Club." Depending on who you believe, it is also the case that "the word in the F1 paddock is that Lucozade could be stepping up to become the McLaren title sponsor if Vodafone decides to reduce its involvement." That would be the same Lucozade that dropped its logos from the McLaren at the German Grand Prix.
Readers lose out by being fed these kind of false reports and our job here at Pitpass is to tell what can be trusted and what is a con. We root it out and kick it. Coca-Cola considering sponsoring F1 has certainly withstood this test as Buxton's evidence shows. Whether the drinks company ends up investing its money in F1 remains to be seen.