INSIGHT: Unpacking the Alfa Romeo/Sauber deal

INSIGHT: Unpacking the Alfa Romeo/Sauber deal

Formula 1

INSIGHT: Unpacking the Alfa Romeo/Sauber deal

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Influence is a big word in all walks of life, and Formula 1 is no different.

When the framework for the 2021 power unit regulations was announced at the end of October, Sergio Marchionne started making some noise. On a conference call with analysts, the FIAT Chrysler Automobiles (FCA) chief executive claimed Ferrari would quit F1 after 2020 if it didn’t like the future direction of the new regulations.

If I’m honest, I imagine the reaction was not at the level Marchionne would have hoped. This was something that we have heard before from Ferrari, and something we will hear again. An age-old tactic to remind F1’s owners of the Prancing Horse’s importance to this sport.

And yet just weeks later, FCA has just committed further to F1 with the multi-year title sponsorship (and technical partnership) with Sauber that will see a Ferrari racing against an Alfa Romeo Sauber in 2018.

How did that happen?

Part of it comes down to influence. In a sport with just ten teams, Red Bull already owns two of them. Twenty percent of the grid is guaranteed to share Red Bull’s opinion even if nobody else does. Renault has now become more closely aligned with another major team in McLaren, and Mercedes enjoys strong ties with both Williams and Force India.

So Ferrari upped the amount of skin it has in the game, buying another 50 percent of chips by ensuring Sauber is almost a Toro Rosso-esque satellite outfit. The car will carry Alfa Romeo branding, Ferrari power units and though not yet confirmed Ferrari rising star Charles Leclerc.

For Sauber, the option to become a works team with Honda was eventually seen as too big a risk to take after Monisha Kaltenborn’s departure, but a strengthened partnership with a major manufacturer remained desirable. The relatively new owners at Hinwi, who took over in the summer of 2016, have just given the team a massive profile boost and made it a far more attractive proposition for partners.

Plus, when you’re rooted to the bottom of a constructors’ championship that features five ‘big’ teams Mercedes, Ferrari, Red Bull, Renault and McLaren as well as such a strong midfield contingent, something needed to be done to try and climb the ladder.

There are of course some major commercial considerations here, with Alfa Romeo receiving the exposure of a return to F1 when the sport is seeing an increase in reach under new owners Liberty Media. But it also means there is added weight to any Ferrari threat, with its already strong influence now extending across nearly a third of the grid.

And if you’re negotiating a significant title sponsorship deal, a good bargaining tool to keep the rate down would be to suggest you’re not sure you want to be in F1 at all in future.

Marchionne now has more cards at his disposal as F1’s future is shaped by Liberty. Like where it’s going, and two FCA brands will reap the benefits. Don’t, and there’s a stronger hand to be played.

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