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Red Bull may bid for US GP naming rights

21 June 2011

The news that Red Bull is looking to pull out of NASCAR Sprint Cup operations has led to suggestions that it may be planning to consolidate its sponsorship activities into their far more successful F1 franchise, and that the money may even have a key role in securing the United States F1 Grand Prix's place on the 2012 FIA calendar.

With Sebastian Vettel looking unstoppable for a second consecutive world championship at the Red Bull Racing F1 team, concentrating their sponsorship program on F1 seems to make a lot more sense for the Austrian energy drinks giant rather than continuing to pour money into a NASCAR Cup team that at best has delivered below expectations in its five years of competition.

Red Bull is already the title sponsor for the MotoGP races at Laguna Seca and Indianapolis, and since the news of its pull-out from NASCAR it's been suggested that the company might be looking at a similar race title sponsorship deal for the United States F1 Grand Prix at the Circuit of the Americas in the Texan city of Austin, set to d├ębut on the F1 calendar on 17 June 2012.

The deal makes sense on the balance books, with the annual cost of up to $40m running a NASCAR Cup team easily covering a title sponsorship for the F1 Grand Prix should it choose to go in that direction and reinvest the money while staying in the US motor sports market.

With annual sales of over a billion units in the United States, the drinks company does not want its withdrawal from stock car racing to harm its North American retail presence. However, it's been clear to analysts for sometime that Red Bull's rivals Coca-Cola and Gatorade seem to get much more exposure for their individual race sponsorship deals in NASCAR - where the winner drinks and sprays the sponsor's product in victory lane in sight of all the TV cameras and photographers - than Red Bull gets for running a mid-league team week-in and week-out.

The F1 angle additionally builds on Red Bull's existing investment in the sport and gains an international dimension lacking from their NASCAR franchise. However, on the other hand F1 has only a fraction of the exposure of NASCAR (or even MotoGP) in the United States and the move would certainly lessen its overall profile in the country.

The suggestion that Red Bull is lining up to act as a Grand Prix title sponsor comes after the US F1 event has been suffering from some financial wrangles in recent weeks that could have seriously threatened the event's chances of going ahead in 2012.

The issue centred on a row between the Austin city council and the local organisers and promoters of the F1 event in the city, Full Throttle Productions, over the payment of a $4m annual amount to the state's Major Events Trust Fund for the ten-year hosting contract. The Austin city council had feared that city taxpayers would end up being landed with the costs, which would have been politically damaging to city officials up for re-election shortly just as the region needs to be seen to be 'tightening its belt'.

If Austin's city council had failed to sign on as "endorsing municipality" and take on the liability then the event would have lost the $25m annual state funding earmarked to pay the local organising committee's hosting fees to Formula One Group, meaning that Austin could have been knocked off the FIA F1 calendar altogether. However, Full Throttle Productions has now agreed to pay the $4m contribution for the full ten years in advance to Major Events Trust Fund, which has eased council fears about the city's own financial exposure.

"This confirms what I've been saying all along, that the city would be contributing no upfront money, and that the city would not be at risk," said Austin Mayor Lee Leffingwell. That should clear the F1 project for council approval in a meeting later this week, he said.

It's not escaped notice that $40m upfront is a large chunk of change for a sports promotion company to come by - and that by coincidence, Red Bull just happen to have that sort of cash available should they pull out of NASCAR at the end of the current 2011 season as seems highly likely. And one obvious way for Full Throttle Productions to gain access to that sort of funding would be by doing a deal for the race title rights with a company such as Red Bull.

Full Throttle Productions' hand was forced when Council Member Bill Spelman threatened to postpone the meeting scheduled to approve the city's application for the $25m annual state funding. When asked if he thought that the urgent need for this cash was behind Full Throttle's decision to agree to pay up in full in advance, Mayor Leffingwell said: "I think that's a fair assumption."

Asked if he thought this would be enough to get the council vote in support of the US Grand Prix through this week's meeting, Mayor Leffingwell said "I would hope so," adding: "I'm for it." However, further details about who will be responsible for specific city expenses related to staging the event have still to be fully resolved, emphasising once again just what an expensive honour an F1 Grand Prix is for any "lucky" venue to have.


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