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F1 team a marketing vehicle for Haas brand

When Formula One rolls on Sunday to start its 2016 season at Melbourne’s Albert Park, the starting grid will feature something that hasn’t been seen in 30 years: a U.S.-led team.

And it won’t be hard to identify the two cars of the Haas F1 Team either: They’ll be featuring the marks of team owner Gene Haas’ Haas Automation machine tool brand as their primary sponsorship.

Esteban Gutierrez (left), with team owner Gene Haas, will drive one of two cars for the Haas F1 Team.
Photo by: GETTY IMAGES
“Formula One is a premium brand, and our goal is to convey that premium brand to Haas Automation,” Haas said.

It’s admittedly a long-term play. Primary sponsorships in F1 range between $42 million and $70 million annually, an industry source said, so there’s money being left on the table with the self-branding. Haas said he doesn’t expect his team to break even financially until year five, in part a nod to the financial pressures of F1.

But the Haas Automation

feature will give additional exposure to a brand with room to grow globally. The company posted $1 billion in revenue for the first time in 2014, but it still lags the likes of Germany’s Trumpf Group, which touts nearly $3 billion in annual revenue, on the global market.

“Right now, we have probably somewhere around a 1 or 2 percent market share in the world,” Haas said. “If we can just go to 3 percent, that’s worth $400 [million] to $500 million.”

CSM Sport & Entertainment has been working with the Haas F1 Team to set up its long-term commercial plans and strategy.

“The Haas Automation brand will get hundreds of millions of dollars in media exposure around the world,” said CSM Chief Executive Officer Zak Brown. “It’s the world’s largest annual televised sporting event. It’s an extremely efficient and economical way to build your brand around the world.”

F1 STORIES TO WATCH IN 2016

The status of the U.S. Grand Prix in Austin, Texas: F1’s initial schedule for 2016 labeled the late-October event as “subject to confirmation” following Texas state funding cuts late last year. It wasn’t until last week that the event’s standing on the circuit’s calendar for this year was secured.

  The direction of the series for the future: The offseason brought public discord between F1 Chief Executive Officer Bernie Ecclestone, members of the sports’s FIA organizing group and team representatives. Ecclestone’s public criticism of the sport unsurprisingly drew bristled responses.

Will U.S. viewership gains continue?: NBC Sports Group has held F1’s U.S. broadcast rights since 2013, and it’s seen consecutive years of double-digit percentage growth across NBC/CNBC/NBC Sports Network: from an average of 366,000 viewers in 2013 to 457,000 in 2014 to 521,000 last year. The international story has been different, though. Global viewership has been falling in part due to F1 moving away from free-to-air outlets and toward cable and other pay-TV distributors worldwide.

Racing comes to Azerbaijan: The country’s capital city, Baku, will host on June 19. The race brings F1 to a country that’s been accused of human-rights violations.

Haas isn’t going solo. It does have secondary sponsorships in place with Alpinestars, Richard Mille and América Móvil (Telcel/Claro). While team officials did not reveal any financial terms, one source put the annual value of each of the deals at “a couple million dollars.”

While Haas didn’t rule out an outside primary sponsor down the line, it’ll be a namesake brand that rolls at the start.
“Manufacturing is growing, and it’s growing outside [the U.S.], so we need to be there,” he said of Haas Automation. “Formula One is a great way to get that awareness.”

Operationally, the team will compete out of headquarters in Kannapolis, N.C. — the same place from which Stewart-Haas Racing runs its NASCAR Sprint Cup Series team — but it has a presence in England and Italy, as well.

Haas said the three-pronged setup is the result of what he called a “preconceived notion” the whole team could be run out of the United States. But as the team built its operation following Haas’ 2014 announcement of its intent to compete in F1, the global plans emerged.

Haas F1 early on agreed to partnerships with Ferrari and Dallara; both are based in Italy. Ferrari is providing the team with a number of technical components, including power units. Dallara is building the chassis for the Haas team’s VF-16 car, which was unveiled late last month.

And just as NASCAR teams have built many of their operations around the Kannapolis area in North Carolina, for F1 teams, there’s England’s Motorsport Valley. Eight of this year’s 11 F1 teams have operations in this area around Oxford, England — an area that includes Banbury, where Haas purchased a factory to set up a base.

All told, for its debut season, Haas F1 has 99 employees across its three hubs: 56 in the United Kingdom and six in Italy, with the remaining 37 in Kannapolis.

HJ Mai is assistant managing editor with SportsBusiness Daily Global.

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