Aabar joins race to tap into F1’s allure

Daniel Bardsley

• Last Updated: November 16. 2009 9:33PM UAE / November 16. 2009 5:33PM GMT

Abu Dhabi // Formula One’s global reach and prestige had already attracted finance from the Gulf and Aabar Investments clearly was impressed by what it saw.

Its purchase yesterday of a 30 per cent share of what is now the Mercedes Grand Prix team indicates that the Abu Dhabi firm likewise hopes to gain a worldwide profile as well as a financial return, specialists said through its stake in the 2009 championship-winning team formerly known as Brawn GP.

Aabar’s deal follows the move in July 2005 by Mubadala Development – another Abu Dhabi investment company – to secure five per cent of Ferrari.

In January 2007, in the second major purchase in Formula One by a Gulf-based investment organisation, the Bahrain government’s investment arm, Mumtalakat, bought 30 per cent of the McLaren Group.

Mubadala’s purchase of a stake in Ferrari, a legendary name in motor racing and a highly successful road-car manufacturer, has allowed the UAE company to develop a high public profile in F1.

Both the company name and the words “Abu Dhabi” have appeared on the front of the cars for the past two seasons, and the team’s drivers – Kimi Raikkonen, Felipe Massa, Luca Badoer and Giancarlo Fisichella – have worn Mubadala Abu Dhabi caps at races and official events.

In addition, in March 2008 the Abu Dhabi-based airline Etihad Airways became a sponsor of the Ferrari F1 team, signing a three-year agreement.

The Etihad logo is featured on the rear wing and side of the Ferrari grand prix cars.

Hermann Behrens, the Middle East chief executive of Brand Union, which has Aabar as one of its clients, said Formula One was “very high impact” and suggested Aabar may, like Mubadala, be looking to benefit from F1’s global prestige.

“Their stake [in Ferrari] is quite low, but we have seen the benefit that Mubadala have managed to leverage,” he said.

“Through sponsorship, they’ve gained quite a lot of profile globally as well. Aabar are probably fighting for some profile as well.”

Mubadala and Aabar are not companies that sell to consumers; nonetheless, they can benefit by “building awareness” through exposure in sport such as Formula One, according to Mr Behrens.

“For high-profile decision-makers, people looking to invest as well as to secure investors, you would want them to recognise Mubadala as a brand they know through sponsorship activities,” he said.

Involvement in Formula One also offers opportunities for corporate hospitality from which the likes of Aabar and Mubadala can benefit.

However, Aabar’s main motivation for investing in the former Brawn GP, Mr Behrens said, was likely to be because of a hoped-for financial return.

“Aabar are very diverse in their investments; they invest in a wide range of activities,” he said.

“They would primarily be driven by the potential financial return as an investment company.”

The new Mercedes Grand Prix team will offer significant marketing potential for sponsors and investors, and given the success of the Brawn GP team this year, it is unlikely to be short of sponsors for 2010.

Brawn’s current fortunes stand in stark contrast to the situation at the start of 2009, when its cars were almost bare of sponsorship.

Established teams such as McLaren and Williams had multimillion-dollar agreements for the season with blue-chip sponsors such as Mobil and RBS.

By contrast, Brawn had a sponsorship deal with Virgin that was said to be worth a relatively modest US$250,000 (Dh918,000) per race.

In an interview at the recent Abu Dhabi Grand Prix, the team’s chief executive, Nick Fry, said early interest in Brawn had tended to come from entrepreneurial companies and individuals.

However, following the team’s extraordinary success in the early part of the 2009 season, with Jenson Button winning six of the first seven races, many more sponsors jumped on board.

Among them were the Brazilian energy drink TNT, the clothing brand Henri Lloyd and the Qatari telecommunications operator Qtel.

Sponsors that supported the team from the start gained a return that was probably worth at least four times what they paid, according to Mr Fry.

This was in large part due to Brawn’s heavy exposure in television coverage. According to the team’s own research, 25 per cent of global coverage throughout the season featured Brawn GP.

This peaked at 39.5 per cent at the Brazilian Grand Prix in Sao Paulo on October 18, when Button secured the 2009 championship.

Brawn also won the 2009 constructors’ championship.

Mr Fry said yesterday the team’s high profile last season would pay dividends in 2010, and added that this week’s takeover would further increase the team’s attractiveness to sponsors.

“As you can imagine, winning both championships, we have had already a lot of interest in the team, and we can only anticipate that with this investment that’s going to increase,” he said.

dbardsley@thenational.ae