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Last Updated: Wednesday, 18 February, 2004, 08:09 GMT
Tobacco ad ban 'choking Formula One'
By Theo Leggett
BBC World Service business reporter

F1 Ferrari
Can the sport go on without money from the tobacco industry?

Back in the 1950s, in the early days of Formula One, motorsport was still a game for rich men with time to spare.

Since then it has grown into a multi-billion dollar global industry.

The core of the industry was developed in Britain, in what has become known as Motorsport Valley.

More than 4,000 hi-tech engineering businesses which owe their existence to motorsport are clustered along a corridor of countryside in southern England.

Together they contribute $8.5bn (4.4bn) to the local economy, and employ more than 38,000 people.

"Motorsport Valley as an entire business cluster is thriving and attracting the attention and support of governments from around the world," says Chris Aylett, chief executive of the UK's Motorsport Industry Association.

"Clearly the government here wants to replicate the global successes of Hollywood in the film industry, or Silicon Valley in the IT and computer world."

In the lead

The success of the British motorsports industry owes much to Formula One.

Formula One is far too expensive in every possible facet
Nicky Semengo-Turner, Touchstone Securities
Six of the 10 teams which compete at the pinnacle of the sport are based in the UK, and there is little doubt that their financial and technological wealth generates momentum for the sector as a whole.

But the good times may not last.

Early legislation

One problem is the withdrawal of tobacco sponsorship currently worth hundreds of millions of dollars every year.

BAR team chief David Richards
BAR's David Richards: Sponsorship at risk
Formula One has agreed to get rid of tobacco funding by the end of 2006, but the European Union has decided to ban it a year earlier.

And in the UK, the ban has been put into force in a way which could leave teams open to prosecution for carrying tobacco logos even if they only do so outside Europe.

"When we are participating in events in China we would not be allowed to run our advertising there despite the fact that in China, it's perfectly legitimate," said David Richards, head of the tobacco-sponsored BAR Formula One team.

"That will only affect teams that are UK based.

"The teams have all agreed with the industry to stop advertising at the end of 2006, but this would bring that forward to July next year, which obviously would have major consequences not just on our team but on the entire industry."

Eastern promise

The row over tobacco sponsorship is just one controversial issue among many.

And it has added to claims that heavy-handed regulation and high costs may help drive Formula One teams not just out of Britain, but out of Europe altogether.

The sport is promoting itself heavily in countries such as India and China were sponsors can find lucrative new markets.

At the same time, its engineering base could soon be on the move as universities in eastern Europe and Asia produce highly qualified graduates who can be employed at a fraction of the cost of their western European peers.

'Heads in sand'

"Formula One is far too expensive in every possible facet," explained Nicky Samengo-Turner at Touchstone Securities.

"The costs need to come down in order for media to get its value.

"As there's meteoric growth in engineering skills in other parts of the world, there is a danger that it could go.

"I think there's a huge reluctance for everyone in and around our motorsport business and its engineering and media sides to take their heads out of the sand and do something about it."

For the moment, Britain's Motorsports Valley remains in pole position at the head of a growing industry.

But if Formula One moves away in search of lower costs and less regulation it may one day find itself overtaken as other countries take advantage of the sport's increasing globalisation.


SEE ALSO:
BAR boss issues tobacco threat
01 Feb 04  |  Formula One
F1 makes tobacco U-turn
25 Jun 03  |  Formula One
Countdown to tobacco ad ban
14 Feb 03  |  Health
EU adopts tobacco ad ban
02 Dec 02  |  Europe


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