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After extensive
discussion regarding the future of the Royal Bank of Scotland's (RBS)
sponsorship in Formula One it has finally being announced that it is to pull
out of Formula One, but only after completing its current contract with the
Williams F1 which finishes at the end of the 2010 season.
 RBS
has, like many other finance institutions, suffered under the credit crunch.
This has seen RBS receive government funding and as a result a decision has
been made to end its involvement with Formula One as part of a wider
strategic review of its sponsorship arrangements. It came under criticism
over using this government funding to pay for sponsorship. RBS has joined
companies like ING in withdrawing their sponsorship of Formula One.
RBS has confirmed that it will
stick to its commitment to be a team sponsor until the end of 2010. Despite
this RBS is still looking at reducing costs by reducing some of the costs of
their sponsorship marketing. The bank intends to cut its spending on
hospitality by 90% this year and have cancelled trackside advertising for
2010.
RBS has another two years in a three year agreement that was signed with the
Williams team in 2007. Williams team head Frank Williams said: "RBS has been
a great partner for this team and we are pleased to have made our
contribution over the past four years to developing the RBS brand
internationally. Thanks to the support of RBS and our many other loyal
partners, we are in a strong position to ride out the inevitable challenges
of the next two years.
"RBS is showing great responsibility to the role that we play in the British
economy, supporting over 500 highly skilled technology jobs in a sector in
which Britain leads the world. In the last three years, Williams has spent
over £100 million with 2700 UK suppliers and it is of course important that
this business endures."
Andrew McLaughlin, RBS group director, Communications, added: "We recognise
that we are now operating in a very different economic environment and have
been reviewing all of our activities since October. It is imperative that we
respond to the reality of the situation we face and that we do so in an
orderly way that respects the commercial agreements we have in place and the
implications for our partners and the jobs they support.
"Throughout our relationship, Williams have shown great understanding and
innovation in driving the programme forwards. They have been very supportive
in finding ways to reduce costs over the remainder of our contract. This
early announcement allows Sir Frank Williams and his team to plan ahead
financially."
Despite the withdrawal of this funding Williams F1 CEO Adam Parr still feels
that the team has a 'positive' future for his team. The loss of such a major
team is not ideal but with Formula One making major efforts to reduce costs
and the team having a strong portfolio of sponsors the situation is not the
end of the world.
 As
for whether Williams future was bright with the cost cutting measures and
the rule changes even with the loss of RBS Parr, when asked by
autosport.com, said: "I do, although I know it is very difficult to paint a
positive picture at the moment.
"What you have to think about is this - when I came into the sport a few
years ago, I was sitting across from people (in team principals' meetings)
who said money does not matter to us. Now, we don't have discussions like
that any more.
"In order for Williams to be competitive and be in the frame for the past
two or three years, we have had to spend beyond our means. For the next two
years we will not do that, and we will be paying off a significant chunk of
debt. We are (now) seeing a scenario where our means are not dissimilar to
the rest of F1."
For Parr it did not come as a total surprise that RBS would withdraw their
sponsorship given the bank's financial problems.
Parr added: "Obviously it isn't good news for the sport that someone like
RBS is withdrawing. From our point of view we have suspected for some time
there was only a slim chance of them continuing beyond their current
sponsorship term, and that is the end of 2010.
"The important thing for us is that the board confirmed to us yesterday and
confirmed publicly today that they will honour the contract until 2010."
Even with the loss of several team sponsors Parr is comforted by the fact
that several others have extended and even increased their level of
sponsorship.
"We had 10 of our partners renew with us," said Parr. "Four of those
partners that renewed or extended with us were major upgrades, and they at
least doubled their investment 2009 compared to 2008.
"So, from a sponsorship revenue side, we came out pretty well year-on-year.
The FOM revenues (television rights money) are stronger this year compared
to last year, and we have significant cost savings coming through as a
result of limited testing and a reduction in engine costs. As an example we
are planning on using 20 engines compared to 55 last year.
"Overall we've got a very solid budget for this year. I don't want to claim
to you it is everything we would like, but we are in advanced negotiations
to bring new partners to the team for this season."
As for the future Parr was confident that there were other companies who had
the potential to become major sponsors of Williams in the future.
"We have a budget for this season and it is reasonable budget. For 2010 the
position is similar and 90 percent of the budget for this year is contracted
for that year. And there will be further cost savings...I am confident that
in time for 2011 we will have a very strong portfolio of sponsors in place.
We have a broad range of partners and no individual partner is make or break
for this team." |
