The Dark Side of F1 & Motorsports Sponsorships

f1 haas vf21 uralkali-001

One of the most popular sports in the world, Formula 1 attracts thousands of fans to witness the ultimate battle between the best of the best.

With the advent of Netflix’s hugely popular Drive to Survive series, this is only growing in popularity as more fans and businesses show interest.

The Monaco Grand Prix circuit attracts millions of spectators and spectators every year. The events are filled with so much pomp, celebration and a prominent display of wealth that many of us are left wondering just how lucrative the Formula One World Championship is.

The pressure is always on the F1 drivers

F1 drivers prepare for a season months in advance and hone their skills over years in junior categories hoping to emerge as the best. The mental pressure before and during the race is exhausting and it is a well-known fact that few drivers seek help.

It is well known that traveling from one country to another causes burnout and exhaustion for the entire team. Accidents on the track are common and cruel. Not to mention the physical impact drivers endure while driving.

Despite all the challenges and hardships, many of these drivers would not give up anything. The sport offers competitive salaries and brand partnerships that bring in large sums of money to drivers.

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F1 sponsorship and advertising

F1 sponsorship

Due to the large number of viewers attracted to these races, many companies choose to advertise through F1. These companies often have their logos or names printed on the cars.

While cars often drive too fast to see the logos, companies keep advertising. These advertisements often include alcoholic beverages, online casinos or bookmakers, couriers, bands, and even popular brands like Coca-Cola.

F1 sponsors contribute as little as $500,000 to over a million dollars annually. The level of sponsorship depends on the team’s pedigree. For example, a more successful team can receive millions a year in sponsorships.

Advertising through F1 has proven to be beneficial for businesses in many ways. They associate with established brands and reach millions of people around the world.

When sponsorships go murky

Mazepin-Nikita-Haas F1 Team 2022 did not fire a drive

Sponsorship is a lucrative avenue for any team. However, the teams can also get lousy publicity from their partner companies.

Many teams do not conduct background checks or verify the credibility of the companies they work with. This often results in MLMs and rogue businesses gaining credibility through the affiliate team.

Although the International Automobile Federation sets some rules and restrictions, there are many loopholes that can be exploited.

Haas, an American Formula One team, recently severed ties with its Russian sponsors following the Russian invasion of Ukraine.

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One of the team’s sponsors, Uralkali, is a Russian oil company. Although the sponsorship brings in a tidy sum for Haas, the partnership would have resulted in negative publicity and a tarnished reputation for the team.

Likewise, drivers should live up to higher professional standards. Nikita Mazepin, an F1 rookie driver and son of Dmitri, a Russian oligarch, was recently sanctioned by the US. He was also ousted from his team because of his ties to Putin.

A series of questionable decisions

Daniel Uckermann

Aside from Russian oligarchs, F1 teams also get sponsorship deals from companies with even worse environmental sustainability records. Other companies that have shown interest in F1 sponsorship are tobacco and cigarette companies.

Other illegal activities have been linked to motorsport sponsorships beyond Formula One. These include Ponzi schemes, gambling, embezzlement, drug smuggling and extortion.

Drivers like schemer Daniel Uckermann (pictured above) and Scott Tucker have been involved in multiple embezzlement schemes aimed at defrauding their fans, creditors and other sponsors.

Sponsorships were used as a cover for money laundering and tax evasion. Money laundering is the process by which criminals and illegal institutions convert money earned from illegal activities into “legal” cash.

Criminals like drug lords often have a lot of money that needs to be hidden, and avenues like sponsorships provide the perfect opportunity to do so.

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F1 teams are seen as the perfect way to launder money. The extravagance of F1 teams is rarely questioned and provides a perfect cover for criminal enterprises. Massive and frequent cash transfers can be made to F1 teams under the guise of sponsorship.

Money can and has been moved out of tax havens for the same reason. Other payments, such as inflated brokerage fees and betting networks, can help criminals make their illicit winnings appear legit.

It needs more regulation

Hammerhammer Horner fia

A team with such sponsors would find it difficult to come forward for fear of the information being made public and the loss of further sponsors. Little can then be done to bring such criminals to justice.

Fraudulent companies have been known to evade taxes by using sports sponsorship as a cover. Often these companies increase the amounts given in sponsorships in order to obtain tax breaks. While such behavior is frowned upon, many conglomerates have gotten away with it.

There are many ways to exploit Formula 1 teams, which poses a problem for the future of the sport. Regulators need to find a way to enforce stricter rules rather than just restricting control to drivers. All members of these teams must be held accountable if the sport is to be cleaned.

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