It costs hundreds of millions of dollars to compete in Formula One racing, and hundreds of millions more to be successful. Is it worth it?
Infiniti thinks so. This year, it partnered with Red Bull Racing to get its name out there.
The money is huge.
The team?s drivers, Sebastian Vettel and Mark Webber, earn around $15 million and $13 million a year, respectively. Chief engineer Adrian Newey makes well over $1 million. Six other highly-paid managers on the pit wall, 40 engineers in the garage, at least 80 crew helping out on location and more than 500 toiling at home in the factory are all part of the team striving to make the cars faster. And all are paid well to do it.
When you add the multi-million dollar cars and the travel and the research and development and marketing, it makes Formula One prohibitively expensive for all but the wealthiest companies. After spending fortunes on indifferent results, Toyota and BMW backed out.
So why did Infiniti do this? The premium brand of Nissan, it sold most of its 172,000 cars last year in the U.S., which couldn?t care less about F1.
?We have a brand and a brand position in North America; the question is, how do you expand out of North America?? says Andy Palmer, Nissan?s executive vice-president for global planning and program management. ?If you have an ambition to be the fourth member of an exclusive club, then you need to play in more than North America.?
The three other members of the exclusive club are BMW, Mercedes and Audi. Of the world?s 13 premium automakers, ?the ones we covet are the Germans,? says Palmer.
Mercedes now fields its own F1 team and powers the McLaren outfit, too. Audi and BMW are invested in Le Mans endurance racing. BMW raced with Williams and Sauber in Formula One from the late 1990s through the turn of the century, but pulled out after the 2009 season, in the middle of the worldwide financial crisis, to put its money into electric car development.
?When we had to cut costs and we may even have had to lay off people, and at the same time spend a couple of hundred million on Formula One, it didn?t really fit together,? explains Ludwig Willisch, BMW?s Head of the Americas. ?You might as well use that money that you saved and invest it in the future.?
BMW already has a global brand.
Infiniti does not.
?You can buy very traditional advertising and buy tennis and golf and sailing, because your dealers like it, but the elephant on the table was the topic of motorsports,? says Andreas Sigl, Infiniti Formula One?s global director.
Ownership of an F1 team was considered too expensive, so Infiniti went looking for an existing brand with which to partner. Sigl says Red Bull, the Thai-based maker of highly-profitable energy drinks, was the obvious choice. It had already been racing for several years, and, with Sebastian Vettel and Adrian Newey signed on, was just starting to win.
?We needed a brand that has the same chemistry and the same kind of behaviour,? says Sigl. ?We stand for performance and precision and passion, but also for provocation. If you look at who the master of provocation is, it?s Red Bull Racing.
?We want some of the Red Bull-ness to rub off on us. We are more than stickers on a car; we?re not just a sponsor. If you?re a sponsor, it?s like paying for sex. We are a partner, because we think we have to offer more than just money.
?Suddenly, as an independent team, they have access to all our engineering resources around the world that they never had before. They are, at the end of the day, a drinks manufacturer.?
Infiniti began sponsoring Red Bull Racing in 2011, the year Red Bull won both the F1 constructors? championship and Vettel the drivers? championship. They?ve been winning ever since. Infiniti Red Bull Racing leads both championships heading into this weekend?s event in Montreal.
The value of Infiniti?s brand exposure in the first year alone was estimated at $251 million, says Sigl, and both he and Palmer reckon that?s a great deal.
?The biggest automotive market in the world is China,? says Palmer. ?We entered China five years ago and we entered with a brand that was virtually unknown ? unaided brand awareness stood at something like 14 per cent. At the end of the last Formula One season, when we now have 60 dealers in China, the unaided awareness is 29 per cent.
?We?ve had phenomenal growth.?
“Infiniti?s gone big with its racing partnership. This year, it appointed its 25-year-old champion driver, Vettel, as the company?s director of performance, and named a 420hp version of its FX45 crossover that he helped develop as the Sebastian Vettel edition.”
The automaker?s entire lineup will be replaced by 2017. Smaller, more powerful and efficient engines will be the focus.
Americans might like the V6 that Infiniti is known for, but the car-maker?s sights are set on the rest of the world.
Will it pay off? The most important factor in the branding equation is Vettel?s win total.
We?ll see how it goes for him this weekend in Montreal.