What I learnt… about Formula One sponsorship

That’s very often a shortcoming from sponsorship salesmen who will just sell, sell, sell, sell, sell, and try to get cash in, but forget to really make sure that the partner gets the return on investment in the way that he needs.

So you really need to understand their needs. It’s super important in order to have a long term partnership. You can always make a one-year deal by just selling well, but if you then don’t back it up with really adding value, then it’s going to be a very short partnership.

I think that’s something that we do well. For example, we’ll do Extreme E [video] calls with the employees of [our sponsor] IG Prime [an investor trading platform]. Two hundred employees join and while Extreme E is great when there’s a recent race, it won’t interest the 200 people, because Extreme E is still a niche thing. So what I then say is, ‘Hey, there was a Formula One race as well on the weekend. Why don’t we combine it and make it an Extreme E and Formula One talk so that I also do half of the call talking about F1? Anything you want to hear: what I think about Lewis [Hamilton], what I think about Max [Verstappen].’ This is just trying to be creative thinking about what would add value best to them.

Rosberg, right, with his Rosberg X Racing drivers, Mikaela Ahlin-Kottulinsky and Johan Kristoffersson

What role does sponsorship play in motorsports?

As a driver, sponsorship straight away hits you as being a huge matter because you have 30 to 50 contractual days that you have to do as a driver. So 50 days of travelling to sponsor events per year. It’s a ginormous amount of time that you as a driver are required to invest into entertaining and supporting the partnerships. So it’s a big, big thing. The driver time is one of the biggest parts of each sponsorship contract of a Formula One team. That’s what sponsors value the most. It’s the drivers attending their Christmas parties.

Could Formula One sponsorship be improved?

There were times where I thought, ‘This can be done better.’ But in general, Formula One caters to sponsors very, very well. You get the return on investment numbers as well in terms of visibility that’s been generated and a value attributed to that. If you look at Petronas [an energy group that is the headline sponsor of the Mercedes AMG team], if I had to guess it would be close to a billion dollars in terms of value, and they don’t pay anywhere close to that.

Then of course, driver time. When I won the world championship, I went to the Petronas headquarters and celebrated with their 3,000 employees. That’s incredibly motivating for the employees of Petronas to be associated with our team, with excellence, with winning the world championship. We would also do commercials with Petronas, sometimes viral commercials, fun stuff, which again is incredibly valuable for them to acquire talent in the future. Talent will associate Petronas with the Formula One team, with winning, and will be more inclined to join them.

They’ll also do track days. I’ll be out on a track day with all their customers, for example, down in the south of England. I would drive AMG high-performance cars, where I’m taxi driving someone. That’s an experience of a lifetime.

Then many partners have big programmes on coming to races, sitting in the garage with the headphones on watching us qualify.That’s like three metres away from the car. It’s these money-can’t-buy experiences.

What was the difference raising sponsorship for your own racing team?

I had my personal sponsors when I was driving so I learnt the ropes there but now raising the funding for an entire racing team in Extreme E is a whole new challenge. The daunting thing was the amount of revenue we need to generate. It’s a sizable budget, millions. You have running costs and travel, drivers salaries, insurance, all the PR and social media. It’s all cost.

And when you have a championship that’s never been there before, you’re selling from a PDF. You have to convince a partner to take the leap of faith and come on board into something they’ve never seen before.

We adapted [our pitch] with respect to what we were hearing from the partners and where the importance was lying. For example, very quickly we realised that for partners it was our world-class female driver who was highly relevant to them, because that was a new angle in motorsports which they had not yet experienced. Having the best female driver in the world driving for our team — the Swedish Mikaela Ahlin-Kottulinsky — partners appreciate. Take IG Prime, one of their core goals is to have a diverse team. It is why IG Prime is a partner, because they love how we stand for diversity as a team.

They won the inaugural Extreme E racing series in 2021, but narrowly lost to Team Hamilton the following year

How do you get pricing right?

You have to be careful as below a certain price, you’re not actually making any money. You have costs to deliver the contract with the partner: PR work, social media. I need to pay for VIP tickets at racetracks.

Is there a maximum number of sponsors? Around seven would probably be the ideal figure. There’s also opportunities to do barter deals as well. In the case of [the insurance group] Allianz, we have a hefty insurance bill that we need to pay. So there are opportunities to do barter deals, which are win-win for both sides. There are so many products and machine tools that we need as a racing team. So if you have a sponsor that will cover that then perfect.

What happens if a sponsor fails to pay?

We had a title sponsor recently who didn’t pay up and that’s a big disaster. You have non-disclosure agreements that you can’t speak about it. I cannot mention which brand it is, because I’ll get sued.

You have to be careful. The title sponsor not paying was incredibly painful, because you can’t sell on the [sponsorship] rights. You have to terminate to be able to sell the rest of the car again. And now you’re running late.

And how did it feel not winning this year’s championship?

Team Hamilton beat us even though we were leading the whole season, and they beat us by two points. It was an extremely painful experience.

Season 3 starts in February, with a kick-off in Neom, which is a sustainability city of the future in Saudi Arabia. We still have one vacancy in terms of sponsors, which we’re working on. If anybody reading this is interested, then you’ll be very welcome. Sponsorship fees range from $100,000 to $1.5 million.

Nico Rosberg was talking to Richard Tyler, editor of the Times Enterprise Network