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Photo by: www.kymillman.com/f1

Let me say this up front and with some level of conviction, I know better than to post a piece on anything that remotely orbits the American political scene right now given the inane levels of invective and vitriol coming from all sides of the political spectrum. This website is about racing and no one cares about your liberal or conservative views on politics or your opinions on Clinton or Trump.

I’ve literally stopped reading social media accounts and websites of motorsport journalists, pundits and satirists of motorsport due to their compelling need to engage in exhaustive tirades on recent politics. It’s boorish to be quite honest. I don’t care about their politics, I cared about their insight to motorsport but unfortunately that has taken a back seat to their need to tell humanity how to behave and decipher recent political events.

Having said all of that as a disclaimer and to set the tone for any commentary we may have, I was very intrigued by a story or two recently that involved Formula 1, money, sponsorships, support and politics.

It is in interesting issue that follows the money of sponsorship and support that are tied to concerning geopolitical issues and how they are associated with Formula 1. Let’s take a look at the first story:

Kaspersky

As you may know, Ferrari are one of the largest, well-known brands in the world and any sponsor would pay well, and do well, to attach their brand to the Prancing Horse. One such company is anti-virus software company Kaspersky but today, this story broke in the Wall Street Journal:

“The U.S. Department of Homeland Security ordered federal agencies Wednesday to identify and remove products from the Russian cybersecurity firm AO Kaspersky Lab running on government computers, citing concerns that Russian intelligence could compromise U.S. systems through Kaspersky software.”

The reason given is concerns over “broad access to files and elevated privileges on government computers that could be exploited by malicious cyber actors.” The WSJ story associates this with all the dialog about Russian collusion and the American election but the when you read the actual positioning of the DHS edict, it says:

“The risk that the Russian government, whether acting on its own or in collaboration with Kaspersky, could capitalize on access provided by Kaspersky products to compromise federal information and information systems directly implicates U.S. national security,” DHS said.

Not much in there about Kaspersky’s past involvement or alleged involvement in the election and I make that distinction to be fair to Kaspersky here if they’ve done nothing wrong. There are more concerns over Russian law that would compel them to reveal information of their clients etc and it is worth a read for sure. It reminds me of the government forcing Apple or China and Google. However, what I am more focused on is how this impacts the sponsorship with Ferrari and brand association. Kaspersky was quick to respond to the DHS mandate:

“Kaspersky Lab has never helped, nor will help, any government in the world with its cyberespionage or offensive cyber efforts, and it’s disconcerting that a private company can be considered guilty until proven innocent, due to geopolitical issues,” the firm said in a statement. “The company looks forward to working with DHS, as Kaspersky Lab ardently believes a deeper examination of the company will substantiate that these allegations are without merit.”

Now let’s go back to that initial compelling feeling you had to weigh in with your disdain of one candidate or another or the election or politics in the comment section. Don’t share that here but let that be a thought point for you in that if you have those very heightened feelings about the election or Russian interference et. al. you may now be associating a team you like with a suspect player—in your mind, of course, because the DHS hasn’t said they found any evidence of wrongdoing by Kaspersky. If there was evidence, at this point, you would think they would say that. Maybe not, who knows?

How does Ferrari approach a sponsorship situation like this? It reminds me of the old days when Williams had the Bin Laden sponsorship or more recently, Petrobras sponsorship when all the bribery scandal broke. Perhaps like Williams, regardless of the concern or even scandal, if found guilty of anything, Ferrari will move on and it won’t be a big deal. It didn’t seem to be for Williams but then Williams doesn’t have the brand equity, reach and frequency that Ferrari does—no offense, just saying.

F1 teams need sponsors and sometimes those sponsors can go south like Force India’s sponsors. Big financial issues and even geopolitical issues. Take the FIA and Syria for example.

FIA and Syria

I was reading a piece over at Forbes from Chris that “revealed that F1’s regulator the Fédération Internationale de l’Autmobile (FIA) has given grants to the Syrian Automobile Club (SAC) in each of the past three years despite war raging in the country.”

The news was broadcast on ITV in the UK and outlined the atrocities in Syria and the use of this money to buy karts and helmets for kids in an effort to show normalcy in the nation. Even Twitter user “Fake Charlie Whiting” got involved in the fray through a series of tweets and counter tweets with the author over the investment. You can read the article here.

I’ll let you draw your own conclusions on this but the FIA has, even way back in the Max Mosley era, relied on all of the local motoring clubs for their membership, support and ultimately votes during presidential elections. Recall Max Mosley’s bravado when Ari Vatennan was running against Jean Todt as Mosley’s replacement and brought this “vote” issue up. If you’ve forgotten, you can read it here.

The point is that the FIA need to support the motoring clubs that participate, pay dues and are important for its elections and procedures. This is, after all, their charter for road safety and working with motoring clubs in as many nations as they can.

So how does the FIA assuage the concerns? Recall the decision to race in Bahrain with the human right’s issues a few years ago? That didn’t go over well with many F1 fans.

F1 is a global sport and as such, it’s no wonder that it gets ensnared in geopolitical issues whether at the regulatory body level or team sponsorships. How these organizations choose to handle these sensitive situations is worth watching and it does make you wonder if the need for resources, cash or support comes first and the PR issues can be dealt with if they arise.

To be fair to F1, the folks at Liberty aren’t mentioned in either of these situations and it wouldn’t be fair to suggest as much. They do, however, have their own relationships with multi-nationals such as Tata and other companies like Heineken etc. They aren’t impervious to anything untoward if one of their sponsors or key partners should run afoul of something.

In the end, this is a risk all the teams, the FIA and even F1 take when agreeing to deals. You can’t control what Kaspersky does or doesn’t do and for Ferrari, if the Russian company is found to be doing something untoward, then certainly Ferrari would part ways. That isn’t the reputation the Italian car maker wants.

Still, don’t think for a minute that a guy like Stefano Lai (Ferrari’s communications director) is not paying attention, discussing it in meetings and very sensitive to his brand’s association. Don’t think that Williams F1’s head of marketing wasn’t following the Petrobras situation and considering all options. F1 teams and F1 itself take their brand associations very seriously indeed.

Hat Tip: Wall Street Journal and Forbes and Guardian

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An F1 fan since 1972, NC has spent over 25 years in the technology industry focusing on technology integration, AV systems integration, digital media strategies, technology planning, consulting, speaking, presenting, sales, content strategy, marketing and brand building.
  • Michael

    Don’t know about DHS, but other gov organizations would certainly be doing in-depth analysis of any security program installed on gov computers. How does Ferrari approach it? Easy, take their money, keep their mouth shut and drive on until/if something concrete comes out (which I doubt will happen).

    “it does make you wonder if the need for resources, cash or support comes
    first and the PR issues can be dealt with if they arise.” Doesn’t make me wonder at all, I think that is exactly the way it is. I’ll also bet that the contracts written for races in certain countries contain language that forbids F1 and drivers from taking any kind of public political stance. So, unlike the NFL, we won’t see drivers protesting on the podium.

    I don’t have a problem with Formula One teams and organizations spreading the love and reacting to overwhelming public opinion.

    • Michael

      I didn’t read the Forbes article until now, but here is the FIA statement on Syria:

      “The current sanctions in place against Syria have been closely
      examined and the FIA does not believe that in paying these grants to the
      Syrian Automobile Club, any sanctions have been broken. They covered
      for example the cost of buying an intensive care unit ambulance and
      safety equipment for rally drivers. The FIA is committed to deal with
      its members in a non-discriminatory, non-political manner, as laid down
      in its statutes.

      “The FIA is provided with interim and completion reports to ensure
      that its grants are spent in accordance with their original purposes.
      These include invoices related to the project which are sent to the FIA
      for assessment. All proper reports have been provided and invoices for
      equipment acquired.

      The spokesperson added that: “All FIA grants are in keeping with the
      role of International Sports Federations to promote peace through sport
      and follows the advice from the UN Office on Sport for Development and
      Peace.

      “The FIA aims to promote values such as teamwork, fairness,
      discipline and respect for the opponent which can be harnessed in the
      advancement of social cohesion and peaceful coexistence.”

      Those statements say a lot. I don’t know what proof the FIA has that Syria spent the possibly 180k as they said they would, but if that has happened, who is the Forbes author to deny people in a war-torn country some bit of happiness? It’s amazing to me that the folks in these countries can carry on in a semi-normal way with bombs and rockets exploding somewhere. But they do.

      It’s a very slippery slope when making judgements on who and who not to support. Having said that, the lesson learned here is that an FIA lawyer needs to run potentially volatile issues by whatever authority needs to be consulted as a CYA. Other than that, FIA is doing the right thing.

      I’m sure there are human rights violations and other violations going on in a few of the countries on the Formula 1 calendar. As I said in my OP, I’m all for Formula 1/FIA spreading the motorsports love. Leave the (World) politics out of it.

  • Meine Postma

    Bit of a strange news message without there seeming to be any evidence.

    Maybe Ferrari can get McAfee to sponsor them ;-)

    https://www.theverge.com/2016/9/14/12904402/john-mcafee-rape-murder-accusations-gringo-documentary-tiff-interview

  • Achim

    I am sure Ferrari will look very closely at how the situation for Kaspersky develops in the US. America is Ferraris biggest and most important market. Unfortunately these things are not about evidence, it is about the level of outrage. Will it become a huge thing, or will it be lost quickly in the next news cycle? In the end Ferrari will protect its own brand which is more worth than sponsor money.

    • Peter Riva

      Achim has this right I think. Already there are rumors in New Jersey at Maserati…

  • cyclist0

    It’s too late, for the US government agencies and for Ferrari, Kaspersky has without a doubt installed back doors everywhere it’s used.

  • Guy Fawkes

    NOTE: Sarcasm Ahead

    Merc has been making side payments to Kaspersky for information. Explains a lot.