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Formula 1

How crypto has become F1's latest sponsorship addiction

With more and more cryptocurrency deals being struck in the F1 paddock, RacingNews365.com looks at how the sport has reached this point, going all the way back to the 1960s...

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To news overview © RN365/Michael Potts

The 1968 South African Grand Prix was remarkable for two reasons: it was the last World Championship race contested (and won) by the legendary Jim Clark and the first event to feature full commercial sponsorship – Gunston, a local tobacco brand, backed the privateer Brabhams of local drivers John Love and Sam Tingle. That initiative changed, literally, the face of F1 as big money flowed inwards for the first time...

F1's tobacco revolution

True, there had been previous attempts at sourcing non-trade support - notably via a little-known deal cut by finance house Yeoman Credit in the early 1960s - but tobacco sponsorship upped the game substantially, with the next Grand Prix featuring Gold Leaf support for Lotus, racing without Clark after the legendary Scot's death in an F2 race. Thereafter, tobacco brands fell over each in their haste to fund a team(s).

Cigars and cigarillos, roll-your-own papers, pipe and chewing tobaccos, snuff brands – if they were remotely linked to tobacco leaves, they sought wings and sidepods upon which to apply logo stickers, with even (anti) nicotine patches and other 'stop-smoking' aids following suit.

The industry's largesse soon extended to Grands Prix, with tobacco brands such as Marlboro and JPS title-sponsoring events, while British American Tobacco went one further and bought the entire Tyrrell Racing Organisation lock, stock and (empty) barrels, moved the outfit to Brackley where it had invested gazillions in a space-age factory, and renamed the team BAR – subsequently sold and renamed Brawn GP, then Mercedes F1.

Peak tobacco was reached in the mid-2000s, ironically as a final fling in the face of impending EU bans on any form of tobacco marketing. These became effective in 2006, yet the last to 'drop' was Ferrari - curiously also the last major team to fully embrace tobacco - which enjoyed corporate support from Marlboro's parent Philip Morris International through to last year, despite not displaying direct tobacco logos since 2010.

Crypto is F1's latest addiction

As tobacco advertising was banned so other fad categories joined the fray: computer and software start-ups, beer and liquor labels, financial institutions – when one or other brand associated with these groups popped up on some cars, others followed, lemming-like. It was predictable: when beer label Bitburger sponsored Benetton, its market competitors Veltins and Warsteiner appeared on the sides of Williams and McLarens respectively.

Ditto HSBC, RBS, Credit Suisse and Santander or Dell/HP/Lenovo. Thus, it is no surprise that F1's latest craze is linked to blockchains, cryptocurrencies and non-fungible tokens, with a raft of teams now boasting backing from at least one such platform. Again, the last of the majors to go down that route is Ferrari with Velas support, with the platform's logos appearing in place of PMI's 'space'.

Not to be outdone, Red Bull this year added Bybit - a deal said to be worth $150 million dollars over the next three seasons - to complement existing NFT sponsor Tezos, the latter partner shared with McLaren. Mercedes is partnered by the FTX App, while a deal that mirrors Marlboro's dual F1 and team partnerships sees Aston Martin enjoy support from Crypto.com – an F1 corporate sponsor and naming rights holder to F1's Sprint races.

"We've signed significant deals over the winter," said Red Bull team boss Christian Horner during Barcelona testing. "The world is evolving, the world is changing [and] the whole crypto sector is a fascinating one, you're seeing it more throughout all sports."

Almost all F1 teams have joined the party

An increasing number of Premier League (or similar) football teams sport are associated with the sector, and, crucially for F1, eight of the 10 current teams enjoy support from one or other of the categories, with Fantom backing AlphaTauri. Sauber (racing as Alfa Romeo) already enjoy Socios.com support and announced the addition of bitcoin meme Floki during the Barcelona pre-tests, while Alpine is partnered by Binance.

"Crypto and decentralised finance are some of the latest markets that have garnered attention in recent years, and they represent a huge potential area to grow business," said Sauber Team Principal Fred Vasseur in Spain.

Although Williams and Haas have no such support (yet?), any sponsor agents worthy of the title will surely plug the gaps sooner or later! Indeed, the former team is said to be investigating adding a crypto sponsor, subject to the brand meeting the team's various requirements.

As with tobacco, there are increasing legislative, regulatory and sustainability concerns, but given that the combined value of these sponsorships is estimated at $500m, F1 is unlikely to voluntarily turn down what could soon total a billion bucks in backing as a) more such crypto brands emerge, b) they 'grow' and up the sponsorship ante, and c) legislative meddling shuts down alternative marketing channels.

			© Getty Images/Red Bull Contentpool
	© Getty Images/Red Bull Contentpool

What about F1's push for sustainability?

With F1 committed to net zero carbon by 2030 and the mining of cryptocurrencies consuming huge amounts of energy - so much so that the 'mining' of a single Bitcoin consumes more electricity than does the average household in three months - are such sponsorship deals not in conflict with F1's overall sustainability mission?

"The sustainability argument is extremely important," agrees Mercedes F1 CEO Toto Wolff, "but it is not only about mining and the energy that it consumes, but also where the energy comes from. But you can't shut yourself down to modern technology. It's definitely an area that will grow.

"It was fascinating to understand crypto exchanges. FTX is a crypto exchange, handling billions of transactions every day, so that is something that you cannot stop. You have to do it [the right way] and we are certainly a good sparring partner for them in terms of sustainability targets."

Ultimately, crypto sponsors seek global platforms that deliver instant exposure, a youthful, vibrant and affluent demographic, entrepreneurial spirit, high speed, glamour, cutting-edge technologies, regular B2B opportunities in sophisticated surroundings and a touch of 'edginess' combined with controversy, so where better to turn than F1, particularly given the traction delivered by Netflix series, now in its fourth iteration?

Andreas Seidl, Team Principal of McLaren, said: "These brands want to use the platform of sport, the global platform of Formula 1 to promote their brands, and therefore we're absolutely open for it as well, if it's done in the right way."

That is the crux of the matter, and, after all, crypto products may be many things but they certainly don't cause health issues…

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