Cancellation Due COVID-19 Might Cost Formula 1 More than $602 Million

Published April 12th, 2020 - 09:00 GMT
Cancellation Due COVID-19 Might Cost Formula 1 More than $602 Million
The same report estimated the Formula 1 group could face a 45% market value loss. (Shutterstock)
Highlights
Alcohol, tobacco companies expected to suffer financial pain as new season cannot start because of coronavirus.

The new coronavirus pandemic has jolted the sports world with cancelations or suspensions of events since March.

But a lot of sponsors that are restricted from advertising are worried about financial challenges.

Formula 1 has a unique platform where alcoholic beverage and tobacco companies are able to advertise products at events.

"We see these types of sponsors in car racing events. It's a marketing strategy of the Formula 1," Turkish academic Sebahattin Devecioglu told Anadolu Agency.

"So I think the Formula 1 and MotoGP's partners will be affected. Where would they advertise?" the professor at the Faculty of Sport Sciences in Firat University said of alcohol and tobacco sponsors.

Companies who encourage smoking and alcohol are generally prevented from advertising in almost all sports events because of their message clash with the spirit of sports.

Devecioglu said those firms have been flouting the ban in motorsports.

"So the motorsports events are important for restricted companies," he remarked and said none of the sponsors wants to cancel deals with organizers.

Restricted partners back Formula 1, teams 

Famed Dutch brewer Heineken is a global partner of Formula 1, organizers contend on its website.

French champagne maker Carbon sponsors F1 as an official supplier.

A leading tobacco company, Philip Morris International (PMI) is the title partner of the Scuderia Ferrari, however the Italian Formula 1 team prefers to highlight a PMI subsidiary, Mission Winnow.

Ferrari SF1000 Formula 1 vehicle does not explicitly feature the Philip Morris' logos but has Mission Winnow emblems on the rear wing, engine cover and nose of the Ferrari cars.

"Mission Winnow is a PMI-driven initiative inspired by the drive and dedication of our partner Scuderia Ferrari," the firm said on its website.

Mission Winnow added that they have erased tobacco advertisements on cars and bikes since 2007 as it doesn't endorse any PMI products.

Another nicotine firm, British American Tobacco (BAT), is the global partner of U.K.-based McLaren Racing team.

Similar to Ferrari, McLaren's car, the MCL35 has a "A Better Tomorrow" brand on its sidepod.

"A Better Tomorrow" is the slogan of BAT as the London-based firm's new logo, unveiled in March 2020, features the motto.

Formula 1's loss might be more than $602M

Business data platform Statista said in a report on March 18 that F1 could face an at least $602 million loss because of race postponements caused by the coronavirus and the event's market value could drop by $5 billion.

The same report estimated the Formula 1 group could face a 45% market value loss.

COVID-19 disrupts sports

The pandemic hit the sports world and Formula 1 could not open its new season as nine races in 2020 did not take place because of the virus.

The Canadian Grand Prix in June was among the postponed races in response to COVID-19.

"The organisers of the 2020 Canadian Grand Prix – scheduled for June 12-14 – have announced the postponement of the race amid the ongoing global coronavirus outbreak," Formula 1 said Tuesday.

Australia, Bahrain, Vietnam, China, Spain, the Netherlands and Azerbaijan Grands Prix were delayed earlier.

Meanwhile, the Monaco GP was canceled due to the virus.

French Grand Prix's fate uncertain

This season's tenth race is scheduled for June 28 in France.

But the upcoming GP in the French commune of Le Castellet is likely to be suspended or canceled because of the cancelation of the Monaco Grand Prix.

Both Le Castellet and Monaco are located in southern France.

France reported Friday the total number of fatalities in the country surged past 13,000.

Since originating in Wuhan, China last December, the novel coronavirus has so far spread to at least 185 countries and regions.

Data compiled by the U.S.-based Johns Hopkins University shows worldwide infections surpassed 1.7 million, with the death toll nearing 103,000, while more than 377,000 patients have recovered.


© Copyright Andolu Ajansi

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