FEBRUARY 2, 2006
Why the tobacco companies are leaving Formula 1
Many governments have tried to ban tobacco sponsorship over the years but Formula 1 has always cleverly dodged the legislation with deals which allowed cross-border advertising to continue. The big breakthrough in stopping this activity was the World Health Organization's Framework Convention on Tobacco Control. Faced by this and trying to win the initiative the major tobacco companies agreed their own deal to pull out of sport at the end of 2006. All but Marlboro has now made it clear that they intend to honour that deal. In the meantime the anti-tobacco forces are growing all the time. The European Union is threatening legal action against member states that try to bend the rules and the WHO treaty now has 127 countries that are party to the deal. A further 47 are signatories but have not yet ratified the treaty. These include the United States of America, Italy, Switzerland, Poland, the Czech Republic, Argentina and the Ukraine.
There are 72 non-parties to the agreement although these are mainly poor, chaotic, despotic or dependent on tobacco revenues. The only significant non-signatories are Russia, Indonesia, Bahrain, Monaco and Colombia.
While there is no doubt that tobacco money has played a significant role in the development of the sporty, there is also a sound argument that once tobacco finally departs, other firms which did not want to be linked in any way with the tobacco industry will step in. Teams say that they are unlikely to pay the same as tobacco companies - which is probably true - but this may be offset by the fact that more companies will jump on the F1 bandwagon once it loses its image as a partner of the tobacco industry. If not, budgets will come down which will mean that there will have to be cost-cutting from the teams as the only sure-fire way to redsuce costs in F1 is to reduce the money supply.
It should also be noted that there will probably be an increase in F1 sponsorships when the soccer World Cup is over this summer because companies currently involved with that competition will be planning their makreting for the next four years.
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