Ferrari in new £300 million Marlboro deal

[gridwalker]

Correct : Phillip Morris pays for control of the livery in a lump sum, then acts as a reseller to other sponsors.

This gives them a veto over potential sponsors that don't match their desired livery.

[Tozza Mazza]

This deal stinks of ashtray. I'm a young person, and I can say that older people don't start smoking, they tend to be quitting or have quit . Smokers start young, usually under the age of purchase (18 in the UK), and due to no advertising, will buy cheap, not quality, as they cannot afford it. Philip Morris cannot be making money out of this, so what is going on. His company rukn many lifes across the world(a few years ago watched a great documentary by businessman Duncan Bannatyne in Kenya I think). But that's what happens in our MONEY obsessed world. *SIGH*

[feynman]

Correct

Given the volume of money described in reports, then it has to be safe to say you are correct to say correct.

The blank car is sold to Philip Morris, I guess this suits Ferrari as they get their sponsorship money in a lump sum and don't have to broker individual deals, and Philip Morris take the (minimal) risk that they can't sell-on sufficient livery to cover enough of the costs to bring the deal back down into reasonable territory (no matter how subliminal you get, 300mill is a big chunk of change for no logo).

What I would really like to know more, is how the contract with Santander works, if all that money goes back to Marlboro, or if the pot is split, and Ferrari get to wet their beak with something a little extra.

But that's what happens in our monet obsessed world. *SIGH*

What, you mean like this:

[andrew]

I asked someone to change some monet for me. It was a bit dark due to it being night time. I didn't realise until I got home but the rotter had ripped me off and given me a Picasso.

[Tozza Mazza]

This is why I hate touch screen phones!!!

EDIT: whilst not being particuarly arty or a fan of art, last year I went to a Monet exibition in Rome, and was very impressed by his massive works of art.

[donskar]

It is no worse than the likes of McLaren being involved with BAE a few years back (I don't think they are now). It is also no worse than drinks companies as sponsors.

Morality of sponsorship in F1 is steeped in hypocrisy. Some products, which are just as harmful as tobacco if not more, are deemed to be acceptable yet others are not. Tobacco is an easy target as it is no longer socially acceptable however getting heavily drunk, having a fight, eating a dubious product from a late night takeaway and decorating the pavement is the height of good social etiquette, thus alcohol is perfectly allowable.

I don't buy the link between tobacco sponsorship in F1 and someone deciding to have a puff. I have watched F1 pretty much my whole life and have been aware of tobacco brands from a very early age but I have never felt the need to buy a pack of Marlboro or Camel. I have never felt the need to buy a bottle of Johnny Walker because I have seen it's name going at 190mph.

Fuss over nothing, but I guess it is Ferrari, the team everyone loves to hate.

Excellent post.

[donskar]

Are you implying that Ferrari are cheating?

Of course they are! What else would you call it if they get paid $500m by Marlboro to do it?

In all honesty WB, I'm pretty sure that I'm not alone wearing rather tired of your relentless Ferrari-bashing. When you are rather alone on the forum in this crusade against pretty much everything that Ferrari stands for, I can't help wondering where it all comes from and did you hate the prancing horse just as much when MS were winning every second race?

Let my try a few educated guesses?

- You hate Ferrari because they denied MS his WDC number 8 and 9 in 2006-07, the way you see things anyway?

- You hate Ferrari because the hired Kimi to do the winning instead of MS?

- You hate Ferrari because Montezemolo went against your house-god MrM?

Perhaps I should open a new thread; "Why does WB hate Ferrari so much, or is Ferrari since 2006 the root of all evil?"

How about that Don?

Xcellent post, X! WB's post are becoming more and more sad. WB may well be as saintly as Mother Theresa, and more intelligent than Einstein, but his posts are simply beyond rational comprehension. But his posts are not unique. Others also display the same irrational hatred of Ferrari, often based on total ignorance. I love the posts that equate Ferrari's use of red as an advertising ploy. Does NO one remember that red is Ferrari's official RACING COLOR (England = green, Holland=orange, Germany = silver, USA = blue and white, etc.,c etc). Ah, we,, X, I guess we need to sit back and enjoy some of these posts like low humor -- like Benny Hill, Three Stooges, etc. Well, I don't smoke, so it's back to bourbon (Jim Beam Black is a bit disappointing, BTW)

[donskar]

Let's all have fun here without wasting our emotions hating each other (or anything else) -- life is too short.

A couple observations: please stop, take a deep breath, step back and think this through rationally (WB, you're excused ).

1) Do you seriously believe that Marlboro's association with Ferrari has a significant impact on the average F1 fan? (And what impact does it have on the overwhelming majority of their target market that do not attend races or even buy an auto-oriented mag?) Only hopeless F1 nerds like us are aware of all this. Does the average race attendee root for (or against) Marlboro or Ferrari?

Scene: Monday morning after a race: husband and wife at breakfast table eating, drinking, reading newspaper.
HE: Say Margaret, says here Marlboro had another bad race, got beaten by Red Bull and Johnny Walker.
SHE: That does it! I'm switching to Camels! And let's dump that Chivas and have us a Johnny Walker with a Red Bull chaser!

Stop staring at your navel and think of the real (big) world.

2) I believe an earlier poster has it correct: Marlboro pays Ferrari huge sums of money to act as Ferrari's agent. They sell space on Ferrari to select sponsors. Ferrari gets lots of money without having to deal with miriad sponsorship issues, and Marlboro/PM gets to pocket the excess.

Is that wrong? Not in the dimension I inhabit.

[hardingfv32]

1) Do FIA rules preclude tobacco sponsorship livery at races where such activity would be allowed by the host country?

2) Reviewing the PM financial statements why is it I do not find a division/profit center for advertisement brokering? IF this arrangement is true, it is just a scam that is a characteristic of how Ferrari's does business.

Brian

[CHT]

Talking about tobacco and alcohol. Did anyone watch the US TV series MAD MEN?

[Traction]

Let's all have fun here without wasting our emotions hating each other (or anything else) -- life is too short.

A couple observations: please stop, take a deep breath, step back and think this through rationally (WB, you're excused ).

1) Do you seriously believe that Marlboro's association with Ferrari has a significant impact on the average F1 fan? (And what impact does it have on the overwhelming majority of their target market that do not attend races or even buy an auto-oriented mag?) Only hopeless F1 nerds like us are aware of all this. Does the average race attendee root for (or against) Marlboro or Ferrari?

Scene: Monday morning after a race: husband and wife at breakfast table eating, drinking, reading newspaper.
HE: Say Margaret, says here Marlboro had another bad race, got beaten by Red Bull and Johnny Walker.
SHE: That does it! I'm switching to Camels! And let's dump that Chivas and have us a Johnny Walker with a Red Bull chaser!

Stop staring at your navel and think of the real (big) world.

2) I believe an earlier poster has it correct: Marlboro pays Ferrari huge sums of money to act as Ferrari's agent. They sell space on Ferrari to select sponsors. Ferrari gets lots of money without having to deal with miriad sponsorship issues, and Marlboro/PM gets to pocket the excess.

Is that wrong? Not in the dimension I inhabit.

I would like one of those regardless. Next time you find yourself in the Southern Hemisphere, Cape Town specifically consider yourself served, courtesy of your truly.

[gridwalker]

I love the posts that equate Ferrari's use of red as an advertising ploy. Does NO one remember that red is Ferrari's official RACING COLOR

Close, but no cigar : Look at Ferraris through the 80s and early 90s and you will see a much darker shade of red with predominantly black highlights, but the red grew lighter and became highlighted in white after Marlboro switched their title sponsorship deal from McLaren to Ferrari. It isn't the use of red that is in question (that will always be the case for Ferrari) but the exact shade of red has been altered subtly to match that used in the Marlboro brand identity ... after so many years, the exact colour scheme for both brand identities have converged and nobody thinks any different.

The change of shading from traditional Scarlet to Marlboro-Red coincided with the start of the deal with Phillip Morris, which granted them control of the livery. Since then, Phillip Morris has been acting as a reseller for the livery space, ensuring that they maximize the brand recognition that they achieve through sponsor placement and livery shading. This was an extension of the strategy that they had previously exploited with McLaren, where the whole car's paintwork was orientated around the Marlboro brand.

This type of deal will always have a retainer clause, giving the incumbent title sponsor first refusal of whether to extend their current financial arrangement; if Phillip Morris can make a profit on such a deal without placing their logos on the cars then why shouldn't they retain their current arrangements? Ferrari get a regular income and Phillip Morris retain management control of an iconic brand identity.

This is a longstanding deal that clearly works for all parties involved; If no laws are broken, I don't have a problem with it ...

[Muulka]

I think it barely has to do with sponsorship.

Yung guys like 13-14 year old see other people smoke, older guys from the same school or whereever, they think that they are cool because they smoke. This group that you talk about barely have ever seen a formula 1 car at all. The fact that smokes lay there in stores as if you could grab them and just walk away is much worse then a simple advertisement. I see packs of sigarettes daily as i walk in stores, my parents some and my little brothers smoke, also I see these Ferrari's almost daily on the forums, yet I do not feel the need to smoke and I dont even want to. It is all driven by choice and if advertising is an influence it will still be driven by choice.

I think that you underestimate the intelligence of the average 13 year old...
Impressionable, yes, but not really irrational...

[ecapox]

1) Do FIA rules preclude tobacco sponsorship livery at races where such activity would be allowed by the host country?

2) Reviewing the PM financial statements why is it I do not find a division/profit center for advertisement brokering? IF this arrangement is true, it is just a scam that is a characteristic of how Ferrari's does business.

Brian

Just because it isnt spelled out as "division/profit center for advertisement brokering" doesnt mean that it doesnt exist. There is always that loved by companies and hated by investors "Other" category. Not only that but you probably arent going to see an exact $300m number either.

The lowest detail would probably be in the Statement of Cash Flows and even that would be vague and just say something like "Advertising".

Guys, listen. Phillip Morris is paying Ferrari for the ability to use Ferrari F1 images, wording, videos for advertising in areas of the world that it is legal to do so. Phillip Morris is NOT paying ferrari to advertise cigarettes.

It is more important for Phillip Morris to use Ferrari F1 branding than it is for Ferrari to use Marlboro branding.

So what we really have here is a Cigarette (read Devil company) company paying a car company for the rights to use their F1 images/videos/sounds/drivers/faces/etc.

Nothing illegal about that.

[ESPImperium]

Personally i dont care if Ferrari get money from Philip Morris, all i care about is if there is any tobacco branding on the car, if there is no branding, im fine. The barcode was a little too far for me, however the thing they have on the car now is making the car ugly for me in terms of branding.

If they get the money, fine, just as long as they dont advertise Marlbro cigerettes makes me happy. One of the reasons that the barcode was taken off was subliminal advertising, whitch in some juristictions is Illegal, and could have seen F1 taken off TV due to ot.

If i were Ferrari, and if it is true that Phlip Morris is acting as Ferraris agent, id be looking for a sponsor that coould give the team say $20m to $40m a season for the engine cover area, that way they are selling the space twice, and branding it once, whitch that extra $20m would come in handy somewhere.

However, i find the fact that they have extended the contract to 2015 as confirmation that Ferrari and Philip Morris will be forced to part ways from then as EU Law from 2016 states that no sports entity that takes part in or advertises in or is broadcast in (via traditional means) can take money frpm cigerette manufacturers or any one affiliated to tobacco manufacturing.

Ducatti are the same in MotoGP, however their deal expires in 2013, and from 2014, it is rumored that AMG want control over the Ducatti sponsorship and livery as they feel that Ducatti is getting swindled out of money they could use.