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What are the facts?

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1. The stories have been circulating recently that after 11 years as the official timepiece of Formula 1 Rolex look set to leave the sport to be replaced by LVMH the parent company of TAG Heuer and Hublot.
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2. Rolex has invested in motorsports sponsorships for almost 100 years - with its first sponsorship beginning in the 1930s.
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3. Tag Heuer is a LVMH brand that has enjoyed a Red Bull Sponsorship since 2016 and has been involved in Formula 1 since 1969.
   1. This contract expires at the end of this season
4. The new LVMH contract is seen to be far more lucrative than the current F1 and Rolex deal with talk of it being worth in excess of $150m USD starting from next year.

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Why is Rolex pulling out of F1?

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Rolex is arguably the world's most famous watch brand and Formula 1 is still at the height of their popularity boom... So why is this happening now?

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Money

The most notable reason is money. We can all distinguish that as the value of F1 increases, so does their ability to increase sponsorship levels through higher deals. The payback to the companies is exposure on a grand scale. Just how grand is that scale? F1's audience has doubled in the past decade, reaching 1.5 billion viewers in 2023 making it the fourth most watched sport in the world.

However it would seem that Rolex when weighing up the new contract do not feel, financially, it benefits them enough. The current deal they have is reported to be around $50M USD although it was originally just $10m at the start of the partnership, far less than the proposed new amount that is being reported on offer from LVMH.

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Rolex Company Values and Image

Whilst money is a factor... there is another factor that’s not actually being reported on. That is company image and company values.

Now you might be thinking about the company image. What am I on about? Surely being associated with F1 is all about positive company image??? It surely brings in good press!!

The biggest factor of company values that does not appear to align with F1 at this present day... Sustainability.

Rolex currently supports several environmental sustainability projects. Whilst F1 is making moves to address that, CO2 emissions in 2022 were still 223,031 tonnes... This could very well be perceived as being at odds with the message that Rolex is trying to portray with their sustainability efforts. Additionally, with such a large contract being proposed, it could be a move that from a PR lens is perceived as placing sponsorship and exposure over values... Values which they of course pride themselves on and have made a massive part of Rolex's marketing.

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Why would a Formula 1 and LVMH sponsorship make sense?

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LVMH are waiting in the wings to replace Rolex. Tag Heuer- an LVMH brand- has enjoyed a long association with the sport due to a partnership with Red Bull that dates back to 2016 and an even longer association with the sport dating back to 1969.

However that contract between the two parties is rather conveniently finishing at the end of this year paving the way for a move to become a Formula 1 sponsor and enjoy the perks that go with that. This would include race title sponsorships at select events and, of course, trackside branding at all races. 

Boosted by a $94.5 billion revenue amassed with their 75 brands it would seem that the group certainly has no trouble competing with the new amounts that F1 are looking to get for the deal.

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Why now?

LVMH have been actively targeting this move seeing it as a major growth area for the brand.

When Frederic Arnault became CEO of the newly created LVMH Watches operation, just this year, he talked about moving the focus into F1 saying 

“A lot of our investment was going into sports and entertainment partnerships. We decided we would concentrate our investment into motorsport and particularly F1.”

He went on to add that the shift in the demographic market from what was seen as an old man's sport into what is now a much younger, more international audience of both men and women who are really interested in the sport as well as the dynamics of drivers has made F1 a perfect fit for the company. 

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What will happen to Rolex in F1?

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Ironically a Rolex presence may still end up in F1 next year due to its association with Red Bull. They have a deal that, while may not get the same exposure, could well be expanded to replace TAG Heuer and protect the brand.

Rolex already sponsor Visa Cashapp RB under the Tudor brand which is a sister company to Rolex. The partnership started this year for the sister Red Bull team and there is absolutely no reason why that couldn’t be expanded to the main Red Bull team if TAG Heuer do make the move with LVMH.

Therefore Rolex will be able to maintain its association with the sport - just not as high profile and potentially for a less amount of expenditure (which would go down well with the company). 

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Either way time will tell how this all plays out but it would seem that once again F1 is the winner.

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