Slowed Down by Bad Sponsors? An Empirical Study of the Impact of Sponsor Perception in Formula 1

Abstract

On a global scale, Formula 1 is one of the biggest and fastest growing sports with up to 100 million people watching a single Grand Prix, and the rapidly growing audience is making Formula 1 a very attractive target for sponsorships. Additionally, the 10 teams in the sport are also experiencing the effects of the sport’s growth, with the average team now boasting a value of 1.88 billion USD, a 276% increase over the last four years. While the literature on the positive brand impact for companies sponsoring sport teams is extensive, much less has been written about the reverse process, particularly within Motorsports and Formula 1. And with the increasing team value in mind, it is becoming more important for the teams to actively and effectively manage their brand and perception in the eyes of fans and other stakeholders. This paper therefore seeks to understand how image can transfer from a sponsor to a Formula 1 team, in the eyes of fans, based on the theoretical model by Gwinner (2005) for image transfer in Global Sports Sponsorships. The paper also sets forth a number of hypotheses for which factors can impact this reverse image transfer process.
A self-administered online survey was developed to determine if and how image transfers from a fictional sponsor, OilCo, to a fan’s favorite team. Data from 259 respondents was collected and analyzed using Structural Equation Modelling, which ultimately showed that image does not transfer from sponsors to teams to a significant degree in the eyes of fans. The paper discusses the overall result along with the individual hypotheses, including both contextual and methodological reasons for why the results show no reverse image transfer taking place, thus going against the theoretical predictions of Gwinner’s model. The paper also outlines the managerial implications for how the knowledge that was produced can drive value for Formula 1 teams, potential sponsors, and the sport’s governing body, along with opportunities for future research that could shed further light on the interplay between sponsors and sponsored entities. Lastly, the paper’s conclusions and theoretical contributions are outlined.