14/04/2014
NEWS STORY
It may seem like all of the money in Formula One is sucked up by the circuits, the teams and the sport itself but, in fact, there are other big winners as well. One of the biggest is sponsorship agency, Just Marketing Inc (JMI) which has brokered some of the most well-known deals in F1 such as McLaren's partnership with whisky brand Johnnie Walker and Martini's title sponsorship of Williams. Indeed, it is so successful that since it was founded in 1995 it has done more than £600m ($1bn) of deals according to an article in business magazine Forbes by Christian Sylt.
Although JMI was established nearly two decades ago, its founder and chief executive Zak Brown says that the vast majority of its income has been generated over the past five years. "We have raised over a billion," he told Forbes adding that "it is really in the past five years that we have probably done the majority of that." F1 has been the driving force behind it.
Brown was born in Los Angeles and JMI's origins lie in America brokering deals with the NASCAR stock car series. One of its most high profile NASCAR deals is with Crown Royal, the whisky brand which has naming rights to the Brickyard 400. Crown Royal is owned by Diageo, the world's largest producer of spirits, and it was JMI's entry point into F1 as one of its other brands is Johnnie Walker.
In 2005 Johnnie Walker signed its partnership with McLaren which gives it branding on the top of the cars' wing mirrors as well as on the drivers' overalls and helmets. "Our first client in F1, Johnnie Walker, came out of having a successful programme with Diageo in NASCAR," says Brown. "Just as the NASCAR people look up to F1 because of its technical expertise, I think the general feeling in F1 is that NASCAR does a really good job commercially."
He adds that "our competitive advantage was knowing the tricks of the trade of NASCAR. That was appealing to companies in F1 because they felt that maybe NASCAR was one step ahead in terms of leveraging sponsorships." Things have changed since then.
Since 2005 JMI has brokered several more deals with teams including bringing consumer goods firms GSK and Unilever to McLaren and Lotus respectively. However its biggest gains have come through dealing with F1's chief executive Bernie Ecclestone and bringing global partners to the sport itself. They get trackside advertising spots and use of the F1 brand in advertising for an annual price tag which rises up to more than £17.9m ($30m).
JMI was responsible for investment bank UBS and Korean electronics firm LG becoming official F1 partners. Another could be on the horizon as it has been revealed that Subway, the US sandwich chain which is JMI's oldest client, is considering becoming an F1 sponsor.
"I would say F1 and NASCAR probably capture 90% of our income," says Brown adding that "F1 represents probably 70% of our profits and growing. The F1 business is growing faster than NASCAR for sure."
He says the reason for this is that F1 is genuinely global. Its races take place in 19 countries and, as Pitpass revealed it attracted 450m television viewers last year making it the world's most-watched annual sports series. "If you are really a global company there are not many options out there next to F1," says Brown. As brands become more global F1 becomes more attractive though Brown adds that there is still plenty of room for growth.
"In NASCAR the deals are more Business-to-Consumer whereas in F1 they are more Business-to-Business. How can that be given that there is this massive reach and enormous consumer base? We are missing the trick because there should be more consumer companies and I think there will be. I think the Unilevers and GSKs coming in is the first step because these are the big guys in the consumer marketing goods space and they are usually first in. So, if I were to label categories that I expect to see growth in, consumer facing products would be right at the top of that list."
Moving into F1 was a shrewd move as Brown says that "if we do an F1 deal, it is typically a healthy seven figures. In NASCAR it is probably now low seven figures. You can't bank on doing a 20 million title deal. We once had five or six NASCAR title deals at one point. Now we have got one."
JMI's accelerating fortunes from F1 put it on the radar of sports marketing firms culminating in it being sold for £45.4m ($76m) in October last year. JMI was bought by CSM Sport & Entertainment, the sports agency owned by marketing firm Chime Communications and run by Sebastian Coe, the former athlete and front man of the London 2012 Olympic Games. "We were Chime's biggest acquisition and we have doubled in value over the past five years," says Brown.
It made Brown a rich man as he owned 20% of the company with 60% previously held by private equity firm Spire Capital and 20% in the hands of advertising giant WPP. It also boosted the profile of Brown himself and in January he was appointed to the board of engineering firm Cosworth as a non-executive director. Time will tell whether he is able to help turbocharge its fortunes as he has done with JMI.