Honda F1 website

MARCH 30, 2009

Brawn and Virgin

When he launched the Virgin sponsorship of Brawn GP on Saturday in Melbourne, Ross Brawn said that the deal was "both commercial and technical" and both he and Sir Richard Branson talked about the synergies between F1 and some of the other Virgin companies, such as the airlines, the trains and Virgin Galactic, the spaceship company that aims to develop the space tourist business. No-one seemed very keen to talk about the money involved and the signage was such that the deal is obviously not huge, at least not in the short term. There have been suggestions that Virgin may buy Brawn shares, but the reality is that Branson generally takes only small shareholdings in companies, preferring to allow others to pay him for the use of the Virgin brand. Brawn GP currently has five shareholders and there is no reason for them to sell at the moment, particularly now that the teamn has shown its pace and there is an opportunity to create value from the team. The signs are that the Brawn-Mercedes will be dominant for at least a couple of months and the team may be able to maintain the advantage beyond that. Other teams may have more money and better resources, but Brawn is not a small operation.

It seems more likely that Branson might try to emulate the deal that exists between Marlboro and Ferrari. The tobacco giant buys the sponsorship space on the cars (and the naming rights to the team) and then sells the space to other sponsors. This means that the sponsorship can, in effect, cost nothing of even make a profit, particularly if the value of the sponsorship space increases as the team wins races. Branson could try to negotiate a deal that would allow him to name the cars Virgin, but this would be a lot more complicated. However the FOTA teams say that they will not make a fuss about name changes at the moment to help the newer teams to survive.