The fallout from Crashgate came very quickly and very hard – both ING and the Spanish insurance company Mutua Madrilen have cancelled their sponsorship of Renault F1 effective immediately.

James Allen reports that ING were providing $65 million annually with $5 million annually from Mutua Madrilen. Losing $70 million is a big hit – makes one wonder what sort of reserves are available to support the team in competing in the last four races of this season – will they make it all the way through?

And what are implications for next year? If the economy doesn’t improve by Jan/Feb, then Renault may be hard-pressed in securing sufficient budget for next year’s campaign.  Would fallout from this scandal, along with what’s already taken place this year and last, cause more sponsors to look at bowling or model ship building as a safer investment?

Other news today that Bernie (FOM) and Luca (Ferrari) are interested in reducing Flavio’s lifetime ban from F1. If that’s pulled off, it will further lessen the validity of the FIA penalties and make sponsors (and fans) turn their backs in disgust.

More immediately, some poor saps have to scrape ING and Mutua Madrilen logos off of race cars, equipment, clothing, signage and Web sites. TONIGHT – all as fast as possible.  I bet we’ll see either white space or a Renault decal of sorts. But changing livery is not a trivial task, especially under “crisis” like circumstances.  As of this writing, both sponsors were still on the Renault team Web site.

If the economy fails to improve in Q409, sponsors looking for an “out” will have an easier way to go. And sponsors thinking of getting in will do a bit more due diligence and likely want more oversight than was done before. It’s a shame these consequences remind me of the US financial industry as it tries to reestablish itself.  Potentially turning some things up on their heads!

This is how the Renault F1 “crashgate” ends (except for inevitable fallout of different kinds) – Renault stays involved in the sport, the guilty team managers are suspended from the sport for up to life, the guilty driver gets immunity but will likely never again step into an F1 car.

James Allen writes on the conclusion here.

It reflects horribly on the people involved and the sport in general. But kudos to Renault car company for owning up to the error that their race team committed and for staying engaged in the sport – saving hundreds if not thousands of jobs that might have been lost.

I think Renault did the best thing possible by not contesting the charges, booting the responsible managers and negotiating the penalties with the FIA. If anything, the FIA let them off too easy, compared to McLaren’s treatment a couple of years ago.

Hoping all race teams are updating their “things you should never do” list.

The scandal over Nelson Piquet Jr.’s intentional crash at Singapore last year, now resulting in the resignations of Flavio Briatore and Pat Symonds, is the latest and perhaps biggest example of how to make sponsors look at other types of sponsorship engagements.

There’s been so many scandals in F1 over the last few years that it seems the sport is bent on self-destruction. It will survive nonetheless, assuming we can keep skating around an economic meltdown, because F1 provides such a unique value proposition – global audience with many loyal fans, a level of technology like no other sport, fantastic hospitality options for building relationships with customers, and great options for consumer tie-ins. If you need a global platform, F1 delivers that and more.

But the sport needs to clean up its act – not only on the administrative/management side, but now we see there are dubious strategies being used by at least one team. Planet F1 covers the financial risk thusly:

‘RENAULT’S SPONSORS COULD WALK AWAY’

Friday 18th September 2009

Aside from the threat of expulsion or a hefty fine, Renault also face the loss of many of their sponsors in light of the FIA’s race-fixing allegations.

The Anglo/French team stands accused of ordering then driver Nelson Piquet Jr to deliberately crash in last year’s Singapore GP, thereby helping team-mate Fernando Alonso claim the victory.

The team, without recently departed team boss Flavio Briatore and director of engineering Pat Symonds, the men believed to the masterminds behind the plan, will face the FIA’s World Motor Sport Council in Paris on Monday.

Although the departure of Briatore and Symonds may save the team from being booted out of Formula One, Renault could be slapped with a hefty fine, leaving the cash-strapped ahead of next year’s Championship.

And finding sponsors to help cover the bill could be an extremely difficult task for the team while many existing sponsors could walk away.

“This is serious, it’s cheating,” Scott Garrett, a director at sponsorship agency Synergy and former head of marketing at Williams, told The Guardian.

“If you were a sponsor of Renault, would you want to continue with that sponsorship? There will be a reputational damage clause and they would be perfectly within their rights to terminate.”

It’s good to see Proctor & Gamble’s decision to sponsor the U.S. Olympic Team. At a time when every marketing decision is being carefully considered, this decision must have cleared a high hurdle, particularly for a company in an industry that is so driven by metrics. This comes at a good time for the USOC, which has had a number of sponsors let their contracts conclude without renewal.

Hopefully this will be a good match for P&G – from a demographic point of view there is good overlap. Will be interesting to see how the activation programs take shape (hard to believe the Vancouver Winter Games are just a few months away).

P&G support for the USOC rather than the International Olympic Committee is appropriate from a strategic view, given P&G’s target markets are more U.S.-centric rather than global. The USOC/IOC difference also avoids a much higher investment level – $15-$25 million for a USOC relationship rather than $75-$100 million for an IOC relationship.

I’m thrilled that P&G are engaging with the Olympics and wish them lots of success. Hopefully the spirit of the Olympics will help lift everyone’s spirits if we still need a boost this winter – call me old school, but I still believe in the Olympic spirit despite the abuses by a number of parties in recent years. Looking forward to great competition from some of the world’s best athletes.

The New York Times covers the announcement here.

USF1, or USGPE, have announced a partnership with YouTube co-founder and CEO Chad Hurley – AUTOSPORT covers the story here and provides an interview with Mr. Hurley here.

Some questions/possibilities come to mind.

It appears this is Chad Hurley, entrepreneur, aligning with the team. Not Chad Hurley, CEO of YouTube, doing so. So it seems his position is behind-the-scenes investor, and advisor, but not a sponsor in the sense of having your name on the car.

However, will we end up seeing the YouTube brand, or even the Google brand, on the car? Keep in mind that Google bought YouTube in 2006 for $1.65 billion.

The advisor role, and Mr. Hurley’s position in Google, will be quite valuable as the Web evolves further to a community platform. Here’s why…

To this point, Google have not done much, if any, advertising and promoting of itself. That may need to change as Google introduces Google Wave and Facebook evolves – see The Future of Facebook by Forrester Research analyst Jeremiah Owyang. As both Google and Facebook migrate to more of a communications platform, the two megaliths of the Web may end up competing against one another. Which suggests Google may be more interested in self-promotion.

The past has seen a less-than-friendly relationship between Bernie Ecclestone/Formula One Management and the YouTube platform (guess who felt more threatened by potential loss of control). In the AUTOSPORT interview, Mr. Hurley states he has talked with Mr. Ecclestone and suggests some differences have been ironed out. Seems the path is cleared for USF1 to leverage YouTube, but will that also be available to other F1 teams? And at what cost?

Indeed, USF1′s relationship with Mr. Hurley will be very valuable in the not-far-off future. If anything moves as fast as F1, its Web-based services and technology.

The F1 slow burn has not died out, indeed, it’s flared right back up and stands ready to scorch the cheek of anyone who gets too close.

Yes, Max Mosley seems to have backed off his promise to not run for re-election in the fall. Seems those “naughty” teams went a bit too far in wishing Herr Mosley auf Wiedersehen in such a, shall we say, conclusive way.  Herr Mosley, nose now fully ajar, was led to back off his promise to not stand for re-election.

Which got the lads at CVC Capital Partners all twisted up and convinced they needed Bernie to lean on Max in order to facilitate the most hoped-for exit from sport adminstration.  Meeting tomorrow will hopefully result in the final final answer to this ongoing drama.  Bernie gave himself 48 hours after the German GP to sort out the sport’s future, evidently including a new Concorde Agreement that the FIA will have to live with, like it or not.

Reminds one of the petulance of youth – guess who!

Thierry Weil, FIFA marketing director, is reported in Sports City as stating that he expects the recession will affect the 2010 World Cup in South Africa only indirectly, with biggest impact being on the number of children that are flown in from host countries to promote sponsors’ products. Which frankly seems like a good thing to me – want your child flying off somewhere to flog shoes and shorts?

Mr. Weil states that the use of “local” children, rather than those that might have been flown in, is a nice thing for the host country.  And this will be the biggest impact that the recession will have on the event.  I hope he’s right!

From Sports Marketing reporting on Real Madrid’s request of adidas – it seems the self-described best football/soccer club in the world are trying to get the most out of that perception while they can – Real Madrid are “encouraging” adidas to double their 60 million Euro sponsorship, or risk seeing the club turn to Nike.

Four other sponsors combined account for a bit more (130 million Euros) than what Madrid are seeking from adidas.  Seems like a disproportionate ask.  Time will tell if the club expenses have gotten ahead of the income.

Madrid Call for Adidas to Double Sponsorship

Real Madrid have asked sponsor adidas to double to 60 million euros the amount it pays the club annually, in view of their signing of a host of new stars, a Spanish newspaper said Friday.

Real’s new president Florentino Perez is seeking the renegotiation of its contract with the German sporting goods manufacturer, which runs until 2012, El Pais said, quoting sources close to the club and to the sponsor.

It said a refusal by adidas, which produces and sells the club’s shirts, could push Real to take its business to the company’s US rival Nike.

Besides adidas, Real has several other sponsors, including Coca-Cola, Audi, Bwin and Telefonica, which altogether pay them some 130 millions euros a year, around one third of the club’s revenues of 400 million.

In the past month, Real has shelled out more than 200 million euros for top stars Cristiano Ronaldo, Kaka, Raul Albiol and Karim Benzema.

Perez wants to up the club’s turnover to 500 million, partly so he can cover the huge salaries of 10 million a year promised to Ronaldo and Kaka and to pay for more signings, El Pais said.

“We are the best club in the world,” Perez told adidas CEO Herbert Hainer in a telephone conversation seeking a renegotiation of their contract, according to El Pais.

Bernie Ecclestone expressed an admiration for strong, decisive leaders

Wow.  Even for someone with a track record of gross mis-statements, this one goes too far.  Bernie Ecclestone, chief of Formula One Management and Formula One Administration, in an interview with The Times goes WAY over the top and basically says that Hitler wasn’t such a bad guy.  And that Bernie liked Hitler because he was a strong leader.

No doubt about the strong leader bit.  But suggesting that Hitler was mis-guided by others, when he was the man in charge, defies imagination.  Perhaps he’s just showing his age (78), but comments like this from the leader of the business side of F1 are only going to harm the sport.  Last thing it needs at this time.

If you’re  a F1 fan, no doubt you’ve been following the management battle between the FIA and Formula One Teams Association (FOTA). This blog launched in what now seems to have been the final week of that disagreement, thanks to the news yesterday that a resolution has been reached.

Huge relief – the last thing that F1 needed in these economic times is a split series, both fighting for sponsors, fans, TV time, track dates, and the general resources that go into a global racing series. The prospect of a repeat of the IndyCar/ChampCar split was not a pretty one.

The FIA issued its usual terse announcement yesterday, stating that all current F1 teams have committed to the FIA F1 World Championship and that there will not be an alternative series. There’s a few other agreements noted, plus the team list for next year – it includes the current teams plus Campos, Manor and US F1 (did Bernie back down on their use of the F1 acronym without modification?).

The linchpin seems to be the final statement related to F1 – that Max Mosley will not stand for re-election as head of FIA at the October election. I suspect that was a key concession to get the teams to re-commit to the series.

The official F1 site is fairly muted on the announcement – they have an abbreviated version of the full press release on their News page, and no reference to it on their home page. Seems like they are begrudgingly sharing the news, significant as it is.

FOTA have yet to make an announcement on their own site, although some of the teams are making their own statements. The F1 media have provided lots of coverage and views – see this story on PitPass.com for a good example.

I had thought a break-away series would be very damaging to the sport, no matter if the reasons for it were valid. Great news that seems to have been averted.

So from a sponsorship point of view – F1 sponsorship contracts usually have a clause that a sponsor can nullify the contract if the team no longer is participating in the FIA World Championship. Were the FOTA teams willing to go through the machinations of re-negotiating all their sponsorship contracts as part of setting up their break-away series? The effort in that alone is immense, with very uncertain outcomes. Sponsors don’t want to see the rug pulled out from under them because teams and organizers can’t play well with one another….will be interesting to watch for long-term effects on sponsor and team relationships.