F1 under attack for merchandising greed

Grand Prix Legends, a leading vendor of Formula 1 merchandise, has just produced a market report on F1 in 2003-2004 and it has some cutting observations about the way in which Formula 1 merchandising operates. The report reveals that last year the number of merchandising companies involved in the sport dropped because of a shift in interest, notably to the MotoGP series, despite the fact that F1 TV audiences grew in most of the European markets. Grand Prix Legends itself reported that in the last five years F1 has dropped from being 80% of its sales to last year's figure of 46%.

Formula 1's response to falling sales has been to raise prices and thus sales are dropping further as F1 fans are driven away by the costs. The report drew some telling comparisons between soccer and Formula 1, pointing out that in soccer a 100% cotton T-shirt will sell for $20 and cap will cost between $10 and $17. Ferrari caps retail at $34 and T-shirts from BMW cost $42.50, while a ceramic mug with a logo sells for $8.50 in soccer and $29 in F1.

"Is it any wonder that the F1 fan base is diminishing," the report concludes.

The report says that teams "often fail to recognise that designing effective fan wear has little to do with adhering to corporate manuals and guidelines. Motorsport fans are not style gurus. They do not frequent trendy clubs or sophisticated bars. They do not turn left when boarding a plane. They don't drive new Ferraris, Jags, BMWs or Mercs."

The report highlights the fact that "the domination of Ferrari and Michael Schumacher is quite disturbing". Ferrari sells 55% of all F1 merchandise and Schumacher has 20%. The BMW Williams team gets only six percent but that is twice as much as the next biggest sellers: Juan Pablo Montoya, BAR, David Coulthard and Ayrton Senna which each account for just three percent of the business. Jaguar Racing has two percent but no-one else has sales of more than one percent.

The telling point is that 85% of all merchandise sold is priced at less than $170 and the company concludes that producing garments which cost more makes little sense and yet some of the F1 teams are churning out items priced at $340.

Individual teams come in for criticism as well. The BMW Williams range, which features a polo short costing $102, compared to Ferrari's $68, is written off as being "dull" and "simply too expensive for the average racing fan". The report concludes that Montoya would sell more if his prices were lower but says that this is controlled by BMW. It also reveals that BAR, Jaguar and Minardi all sell three times as much merchandise as McLaren because McLaren insists that fans pay $102 to join a club before being allowed to buy any merchandise.

The report commends Jaguar Racing for well-priced products and notes good sales from BAR but is highly dismissive of Jordan, saying that there is "a glut of merchandise from previous disastrous licensing agreements as a result of which there is enough yellow and black team wear in the market to last until the end of the decade". The report contends that this has hit sales and damaged the Jordan brand.

Renault's figure are disappointing given that the team is more popular than sales suggest and Grand Prix Legends blames high prices although Toyota comes in for heavy for selling teeshirts at $100 apiece. Sauber does surprisingly well because of "the sheer quality of the polo shirts and T-shirts which have 13 separate embroideries all of them top quality". These are still cheaper than BMW Williams products and as a result the report says that they sell 10 times as many Sauber shirts than they do BMW ones.

The report attacks the drivers for their attitudes towards the fans saying that "with a few exceptions they are totally disrespectful of the fans who support the edifice which pays then so handsomely" and concludes that "many of them behave like spoilt brattish adolescents".

The company says that having studied the market it reckons that a printed T-shirt should be selling for between $25 and $34, a basic polo short between $50 and $60 although more elaborate designs with multiple logos will sell for up to $85. The casual passer-by will baulk at paying more than $25 for a baseball cap but the company says that if the dedicated fan is the target the price could be $30.

"We are often surprised at how well season-old caps sell when the price is lowered to $17," the report said. "Considering that the cost price of most caps is still less than $1.70 that should be achievable. We are convinced that a $17-20 cap would simply fly."

These findings underline that the fact that NASCAR has understood for many years: low-end goods sell much better than expensive high-end merchandise.

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