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Having dipped its toes and tasted immediate success in Formula One after signing as a bit-part sponsor of

Brawn GP at the 2009 Australian Grand Prix, Virgin – one of the world’s most recognised brands - upped its involvement in the sport at the start of 2010 with an US$8 million investment in Manor Grand Prix. And, having acquired the title naming rights to the fledgling British Formula One outfit, Virgin Racing was born.

While the ultimate goal for any Formula One team has to be podium finishes and championships points, targets which proved to be far beyond the reach of any of Formula One’s new entries in 2010, “your primary objective when you first come into Formula One is to survive,” confesses Jim Wright, Virgin Racing’s highly experienced marketing director.

“Obviously a lot of teams have tried to come into Formula One and failed, so the first objective is to survive,” he continues. “We’ve done that. We’ve not only survived but we’ve built ourselves a strong commercial platform to build on over the

next three or four years. We’ve done that through hard work and through a realisation of what we were able to achieve in year one in terms of on-track performance and then by making sure that we built value for our partners beyond what we would be able to achieve on-track.

“We’re up against major organisations that have been, in some cases like Ferrari, racing 60 years. My old team Williams has been at it 35-plus years, so we’re up against some big players.”

Wright, a veteran of the Formula One sponsorship industry explains that, while his job title is officially marketing director, first and foremost his role is about finding sponsorship to enable the team to meet its costs . “In terms

of my responsibility it’s about bringing in the money to enable us to race and then it’s about making sure we are delivering on all of the contractual promises that we make through our marketing department.”

And, with experience at both Williams and Toro Rosso, Wright is well placed to deliver on promises made and guide newcomers to the sport through the process of activating their sponsorship effectively. “I think you can lead by example but I think it is wrong to say ‘Because we did this at Williams with XYZ, you must also do it.’ There’s no guarantee it will work and times have changed.

“Instead, what the rights-holder can do is to provide the ideas and provide the focus and direction for a sponsor to then activate, but you can only lead the horse to water. The value of the sponsorship is not based, or it is unfair to judge it, purely on the price you’ve paid for it. If you’ve paid a fair market price for it, it’s then up to the sponsor, working with the rights-holder, to activate it. If the sponsor doesn’t activate it properly and then turns around at the end of the year and says, ‘that was crap, we didn’t get a return on

Despite the team finishing last in the 2010 Formula One constructors’ world championship, Virgin Racing’s marketing director, Jim Wright, was pleased with its commercial performance in its first year in Formula One – and believes it is well-placed to improve in all areas this season.

The driving licence

By Tom Love

“The very first hurdle we had to overcome was credibility.

We had to prove that this was a serious programme .”

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investment,’ well, the sponsor has to shoulder a lot of the blame.”

As such Wright is keen to stress the necessity of giving sponsors the freedom they need. “You give them great leeway because at the end of the day, if a sponsor is activating well and making the sponsorship work then they’re likely to stay with you, grow with you and it becomes a sustainable sponsorship programme.” Several sponsors of Virgin Racing in 2010 have been retained by the team for its second season.

“If you don’t allow them the freedom to activate I think that’s a major mistake and I think some of the traditional rights-holders in Formula One have made sort of boxes saying, ‘OK, you can operate in these confines.’ I think that will be proven to be the wrong way to go about things given the current economic climate and with the changing condition of sponsorship.” Wright acknowledges that there are boundaries to any such relationship, particularly when the team’s performance suffers as a result. And, while it is a scenario that hasn’t happened yet at Virgin Racing, he sees the potential for that to happen at some point. “However, if you’ve got an experienced senior management you can head that off at the pass and redirect those energies and channel them into positive aspects of the sponsorship. In essence it’s not a problem, if properly managed.”

That Wright is able to discuss activating long-term sponsorships is an indicator of how far the team has come. 18 months ago it was no more than an idea. After accepting the role, Wright’s biggest problem was convincing potential sponsors that Virgin Racing was a reality and the project was going to survive beyond the planning stage.

At the point the team was born, in 2009, Formula One looked set to adopt a US$40 million budget cap, immediately making the sport more financially accessible to newcomers. A host of potential new teams expressed their interest and while most of them never got further than a name, Hispania Racing and Virgin Racing were accepted, with Lotus following once the USF1 Team project collapsed. Only then was the idea of a budget cap rejected, dramatically changing the landscape for each

of the new teams.Unsurprisingly, then, at the time of Virgin

Racing’s inception there were widespread predictions that the team was destined to fail, claims further exacerbated by the collapse of the USF1 Team. A hard sell from the start, the time constraints on the project would prove inconvenient to say the least. Starting in July 2009 – “a remarkably short time in which to put anything together” – Wright describes how, initially, Virgin Racing and his marketing team were operating without elements that established teams take for granted, including a team headquarters or even a car. Those hindrances made it much more difficult to convince potential investors that the project was genuine.

“The very first hurdle we had to overcome

was credibility. We had to prove that this was a serious programme which was going ahead and that people should come onboard and be part of it,” Wright says. Selling sponsorship in any capacity is no easy task in any sport but the difficulty of a sale is made doubly so in a sport with such high financial requirements and off the back of a team which had yet to perform. However, the lessons Wright had learned working with previous Formula One teams, coupled with the reputation of the Virgin brand, would prove to be a recipe for success. “The vast majority of brands associated with the Virgin Racing Formula One team have come onboard because of the Virgin brand, it’s as simple as that,” Wright confirms. “What you’re selling is brand. When I was

inTervieW | MOTORSPORT

2011 Virgin Racing driver Jerome D’Ambrosio, pictured during Friday practice for the 2010 Singapore Grand Prix on 24th September. Virgin’s virgin season in Formula One yielded no points, but the team managed to secure its financial future, in the short term at least

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at Williams it was very well established and was trading commercially on its heritage and its very successful pedigree in Formula One. What I learned when I went to work for Gerhard Berger and Toro Rosso was that without the strength of the brand you couldn’t sell. Red Bull was obviously involved in Toro Rosso but they weren’t actively looking to bring partners in, they weren’t going in with an ‘arms wide open’ approach. If you’ve got a strong brand and a business model that wants to bring in third parties then you’ve got a very good chance of succeeding. In the first case it was the strength of the Williams brand within Formula One and the success that it generated. In the second case Toro Rosso didn’t have that strong brand and open arms

approach and it failed; I failed.”However, when it came to Virgin Racing,

Wright recognised that the team did not possess the racing pedigree of Williams, nor the financial clout of Toro Rosso by way of Red Bull. What the team did have was the power of the brand, the reassurances of Sir Richard Branson and an ‘arms open’ approach where it was clear from the off that the team wanted to bring third parties onboard. Therefore, although Virgin was unwilling to commit a substantial sum to the project, unlike other teams such as Red Bull, it instead chose to direct its efforts in a less obvious manner. “There are 200 companies within the Virgin umbrella group and in most of those Virgin does not have the majority shareholding, it has a minority shareholding.

Our deal with Virgin was no different.” Wright puts Virgin’s willingness to license the company name as the cornerstone of its business model.

“What Virgin brings to the table is brand and the strength of that brand. What we were then able to do is use that, within pre-determined terms and conditions, to bring in third parties as a sponsors and that is just enormously helpful to us. It’s something which we would not have achieved – firstly being on the gird, secondly surviving and thirdly building to the higher platform which we have now achieved – without that Virgin brand. Going out and talking about a Virgin team and Richard Branson’s involvement in that team gave us credibility. It gave us cut-through and it gave us a very sound platform from which to operate. Without that platform, it wouldn’t have happened.”

And so, in December 2009, just five short months after the project’s inception, while officially announcing Virgin’s title sponsorship of Manor GP – a deal that in reality had been inked several months earlier – the team also confirmed the existence of ten new partners, including a US$16.25 million investment from Lloyds TSB Development Capital reportedly in return for a 20 per cent share in the team.

Further tie-ups with investments broker Oxigen; Russian luxury car manufacturer Marussia; Swiss watch manufacturer Armin Strom; and perhaps most significantly, former BMW Sauber sponsor FxPro did much to highlight the commercial pulling power of Virgin’s title sponsorship.

Operating on a budget of less than UK£40 million (US$65 million), roughly half that of closest rival Lotus, Virgin Racing set out with the year one goal of being the best of the new teams. “We failed in that, we were beaten by Lotus,” Wright says bluntly. However, not one for excuses, he goes on to state that there are “no prizes for performing well with the smallest cost base. It doesn’t matter that they [Lotus] spent over twice as much in achieving that. All that matters is that we beat Lotus and Toro Rosso and Sauber and Williams and whoever else this year. We’ve got to raise our game technically, operationally and commercially because if we don’t then we’ll be at the back and then commercially

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things become a whole lot harder.”Asked about the team’s targets for the 2011

season, the straight-talking marketing director is typically frank in his response. “We’ve got to take a big leap forwards. The bottom line is that we were either at the back or towards the back in 2010. We can probably get away with that in year one, we survived and we’re still here. But now, in year two, we’re no longer a new team and we have to raise our game and take on, shoulder-to-shoulder and head-to-head, teams that have been doing this for years and years and years.”

Certainly things are already looking up in year two. The team has already secured the support of supercar manufacturer Marussia, a sponsor in 2010. The Russian company, owned by the colourful Nikolai Fomenko, will now deepen its involvement in the team as a co-title sponsor and significant shareholder in Virgin Racing, a perfect example of Virgin’s business brand in action.

Wright is adamant that the partnership will take the team to the next level. “We’ve always had the vision that there should be other major partners involved and fortunately we found a partner in Marussia

that shares our vision and shares a belief in our business model and wants to take us forward. For every new Formula One team coming into the sport you dream of having an exclusive partnership with an automotive company and we’ve found that in our first year of Formula One.

“They’re going to give us stability in

terms of our finances going forwards with strong investment into the team. Secondly they’re going to give us links to the automotive world which we believe will take us forward technically. “

Entering the 2011 season with what is likely to be an increased budget, though still the smallest in the sport by some way, Wright and the team, now officially known as Marussia Virgin Racing, look both financially well placed and confident in their ability to build upon the foundations laid in their inaugural year. “We’ve got to make a better fist of it next year,” he says. “Our year two goal has always been to mix it with the established teams. That means raising our game substantially so that we can get out of qualifying one and into qualifying two. If we start getting into Q2 then we can think about having a sniff of a points scoring position. If we do that, then we’ll be making progress.”

“Sponsorship isn’t drying up but I think the days of a big-ticket sponsor like ING walking into the paddock in 2006 saying, ‘right, we want a team. We want advertising boarding around a lot of the circuits. We’re going to sponsor races. We’re going to do this, do that,’ and spending enormous amount of money over that three-year period, are gone. I think what we’re going

to see in the future are far more strategic, far more targeted and far more intricate sponsorship deals, many of which will be linked to a business-to-business deal, which has become, if you like, the reason why the sponsorship is undertaken. What I think we’re looking at is a different sponsorship marketplace and we’ve got to react to that and to model our sponsorship

to conform to a very different world and set of economic values that everyone has at the moment. But sponsorship is alive and well in Formula One, I think we’re proving that and other teams, Renault and others, are bringing in some new sponsorship as well. But the days of the big-ticket sponsors are, perhaps, numbered for the time being.”

Jim Wright: The changing face of Formula One sponsorship

inTervieW | MOTORSPORT

“Toro rosso didn’t have that strong brand and

open arms approach and it failed; i failed.”

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