Financial Crisis Beginning to Bite in World of Sport | Business| Economy and finance news from a German perspective | DW | 07.12.2008
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Financial Crisis Beginning to Bite in World of Sport

Honda's withdrawal from Formula One racing came as a shock this week, but there were several signs over the past days that the auto industry's crisis would spill over into world sport.

Britain's Formula 1 Honda driver Jenson Button steers his car during a testing session at the Paul Ricard circuit, in Le Castellet, near Marseille, southern France, Thursday, May 15, 2008.

Honda's participation in Formula One is coming to an end due to the financial crisis

Less than a fortnight ago General Motors announced the premature end of their endorsement of golf star Tiger Woods, saving them an estimated $7 million (5.5 million euros) a year.

On Thursday, the hopes of a future German America's Cup effectively ended when Audi announced that they won't be sponsoring a team. Audi followed up on Friday with the confirmation that it will stop auto racing after nine years in the American Le Mans series.

Apart from banks and other financial companies, the world's car industry is currently bearing the brunt of the global recession and scrambling for state loans to stay alive.

Losses have skyrocketed as sales slumped to levels of the early 1980s.

Not only the big US three of General Motors, Chrysler and Ford have cut marketing and other costs dramatically as they seek a 34- billion dollar bailout from the government.

Honda Motor Co. President and CEO Takeo Fukui

Honda's Fukui moves to protect his firm's core businesses

Honda president Takeo Fukui made it clear on Friday that rather than continuing a mainly unsuccessful stint in F1 racing, the company "must protect its core business activities and secure the long term as widespread uncertainties in the economics around the globe continue to mount."

The examples of Woods and the sailing team show that these uncertainties concern the full range of sport sponsoring.

There are growing question marks over GM's long-standing engagement in golf in general through its brand Buick.

Doubts have been raised whether the International Olympic Committee will be successful in making a car manufacturer part of its elite sponsorship program.

Avoiding annual endorsement costs of more than 50 million dollars weigh heavier in current times than exclusive rights to Olympic symbols such as the five rings.

Carmakers already became more cautious before the crisis fully hit this year.

Auto industry's sponsorship of sport in danger

AC Milan's Brazilian player Kaka

Kaka can't believe Bwin replaced Opel as Milan's sponsor

Long gone are the days when GM's German division Opel used to be the shirt sponsors of soccer teams such as Bayern Munich and AC Milan, and endorsed athletes like German tennis heroine Steffi Graf.

Spanish top club Valencia had Toyota's name on their jersey when they won the 2004 league title and the Australian Open tennis Grand Slam was once sponsored by Ford.

Audi have trimmed their winter sport engagement down to being the main alpine skiing World Cup sponsor.

German yachtsman Jochen Schuemann had hoped that Audi would help fund an America's Cup team but the timing was bad as the company is determined to save some 100 million euros.

"Audi is not allowed to sign new contracts," Schuemann said on Thursday, with Audi spokeswomen Petra Klaehn confirming that "the decision was made based on the current economic conditions."

Audi cutting back in its involvement

Audi is also saving in motorsport with the withdrawal from the American Le-Mans racing series. But it will continue in the German DTM series and the 24-hour race in Le Mans.

"In view of the international economic and financial crisis, it is clear that motorsport must also make a contribution to reduce costs further," Audi motorsport boss Wolfgang Ullrich said last week.

Audi R10 No. 7, team-driven by Rinaldo Capello, Tom Kristensen and Allan McNish, races during the night of the 74th edition of the 24-hour endurance auto race at Le Mans in 2006

Audi will continue in the Le Mans 24-Hour race

But the company's technical development chief Michael Dick also said: "We know just how important motorsport is for the success of the brand. Therefore it goes without saying that Audi must also be present on the race track in economically hard times."

Dieck said that a positive cost-benefit calculation is a must in these days, a fact also applies to events in the US and the world's showcase racing sport of Formula One.

NASCAR series team bosses are looking into how they can help the ailing US companies. One measure currently discussed is limiting testing to race weekends and not at other times on other tracks.

"When you figure in travel, accommodations, parts, tires, track rental you could save the (NASCAR) garage area $30 million a year," the Detroit Free Press quoted team owner Rick Hendrick as saying.

Formula One is also engaged in massive cost-cutting by planning for instance a standard engine, measures which prove even more necessary after Honda's pullout.

Motorsport supremo Max Mosley named F1 "unsustainable" two months ago and was quoted on Friday as saying that other teams may follow Honda.

Former racer Gerhard Berger, who only 10 days ago sold his 50 per cent share in the Toro Rosso team, told Austria's APA news agency said that Honda's withdrawal "is only the beginning" and that Formula One could be in big danger.

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