Mercedes F1 investment questioned
December 24, 2009 by Negative Camber
Filed under Prime & Option, Top Story
You may recall the criticism leveled at Daimler Mercedes when they purchased Brawn GP a month ago:
“In these economically difficult times, the company should invest in better marketing of its real cars,” said Erich Klemm, head of Daimler’s works council.
Those same sentiments are being echoed with the announcement yesterday that Mercedes GP Petronas has signed veteran driver Michael Schumacher. The question at hand for the Works Council is the money spent by Daimler in light of a recession and many workers being laid off. The recent protests over the E Class manufacturing duties being moved to the US has been a catalyst for concern with Daimlers recent spate of spending in a sport that many consider less relevant when compared to the carbon sensitive crowds.
With Honda, BMW and Toyota leaving, Daimler labor leaders are wondering why the company is not following suit to spend its dollars elsewhere. The answer from Daimler Chief Executive Dieter Zetsche is that “it would be a missed opportunity” to not take advantage of the world stage of F1.
His reasoning may be best described in this article at the Wall Street Journal. The lack of major manufacturers in the series, due to the exodus of all but Mercedes, Ferrari and to a lesser extent Renault places them in a more prominent position for the world stage. This will not go unnoticed as the sport travel the globe and Mercedes is seeking emerging market sales.
The criticism of commercial rights holder Bernie Ecclestone’s desire to eschew traditional European circuits for Asian and Middle East countries may well upset fans but it also could be a lucrative market should Ferrari and Mercedes seek emerging market penetration.
Is Mercedes right to sign Schumacher to a multi-year deal for a princely sum? There is little doubt that it was not coincidence when Petronas committed to a 5-year deal for 30 million Euros a year the day before the Schumacher singing was announced. In that light, perhaps Schumacher has already paid for himself and a substantial amount of the purchase price of the former Brawn GP team. Can the criticism continue to be leveled at Daimler executives if the balance sheet is looking rather robust?
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I think its good the sport needs more investment!
I agree pal. I think he’s already paid for himself and to a large extent, the cost of buying Brawn. Not sure how much more you can argue that point but I am sure I am missing a critical issue. The sport needs the team and investment and to a large part, the excitement.
I don’t get it. Why would some Daimler people have a problem in the investment of Schumacher. The money he gets are reasonable, no where near the huge sums he had at Ferrari and he certainly is in a position to bring big money to the team because he is at the later stage of his career after having a huge success.
Economically his a good deal. So what is there problem? Having an F1 team right now is cheaper than ever was in the last decade and with a big major sponsor like Petronas along with others the bill gets even smaller while the benefits are very big. What Mercedes is doing seems very logical to me.
The only reason why they’d have a problem with the team and with Schumacher is that they know nothing about motorsport. I fully agree with Mr. Zetsche that NOT investing in F1 would be a major mistake on Mercedes behalf. Asia is a prime market for their brand, and they’ll get LOTS of exposure for a relatively cheap price. Its funny how companies will spend $10M+ on for 3-5 spots in the SuperBowl, a total time of about 2 minutes, yet balk at funding an F1 team which will be seen by millions over and over again each and every weekend during the race broadcast and throughout the weekdays in between on sports news shows, magazines, and internet sites like this one. In spite of what we see as astronomical costs, motorsports sponsorship is cheap advertising. Oh, and don’t forget the VIP hospitality opportunities sponsorship brings to the table as well. That’s another huge benefit.