F1 Sponsorship Prices: Why High Brand Equity and Shared Nationality Cost More

What is it about?

This multi-year study analyzed the actual prices paid for Formula One (F1) team sponsorships to identify factors that influence price premiums for commercial affiliation. Using a multilevel, random-effects model of 329 distinct sponsorships, the analysis found that the sponsoring company’s brand equity and shared nationality with the team were statistically significant predictors of price premiums. Companies designated as having high brand equity paid a substantial premium of $14.6 million per sponsorship. Furthermore, sponsors headquartered in the same country as the sponsored team paid over $4.1 million more for the partnership. The significant premium associated with shared nationality suggests potential agency conflicts—self-interest motives overriding rational business decision-making—in international marketing decisions. In contrast, congruence (fit), sponsor clutter, and team performance were not significant predictors of price, challenging prevalent assumptions in sponsorship theory.

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Photo by Isaac Maffeis on Unsplash

Photo by Isaac Maffeis on Unsplash