Alonso & McLaren: making financial sense

At a rumoured $35m – $45m per season salary, the prospect of Fernando Alonso’s return to McLaren being financially beneficial to the team seems far-fetched. Such a staggering salary implies this is nothing more than a sporting decision surely? Win at all costs? Perhaps not.

Missing decals

Aside from McLaren’s decline in form, most noticeable in recent years has been their increasingly blank cars. After Santander departed fully for Ferrari, nothing significant has filled the vacuum. Aside from sporadic appearances from Gulf Air and SAP this season, they have been bereft of a title sponsor.

To attract a partner with budget to burn on a title sponsorship and a brand transferable between F1’s international markets, McLaren need one of two things: success or the promise of it. Signing Alonso is critical to convincing prospective sponsors that the latter is near at hand. In current F1, only four drivers could deliver that promise, cache and global appeal: Alonso, Vettel, Hamilton and Raikkonen. A Rosberg, Ricciardo or Magnussen do not not have that pull – yet. Thus expect Alonso’s confirmation at McLaren to be followed fairly quickly by the announcement of a new title sponsor (perhaps a Repsol or Movistar?).

Team kit

Those four are also the bona-fide stars of Formula 1 who drive the sport’s merchandise sales. The seas of red that followed Alonso’s move to Ferrari and the current swathes of silver and black that back Hamilton are proof. Combine the return of the McLaren-Honda brand with Alonso and we can expect caps, tees, jackets, models and the like to fly off virtual shelves. Additional revenue for the team plus enhanced exposure for their sponsors and partners – which feeds back in to further enhancing the market rate for backing the team – pours additional funds in to the coffers. Which is important because McLaren still have a lot of work to do.

Investing for the top

In 2014 they have had access to F1’s best power unit. That however has not always translated in to results. Compared to Williams – similarly powered by Mercedes – McLaren have not taken advantage because their car has been again found wanting. Investment in developing their car, and quickly, is going to be essential to make the jump to match the works Mercedes.

Honda may well produce a power unit on par, or better, than the benchmark Mercedes. That is only half the battle however as the BMW-Williams partnership of the early 2000’s demonstrated. Without an equally dominant chassis, the best power unit on the grid is not enough. Thus the revenue that will come from Alonso’s signing will be essential to getting McLaren back to the top.

Time will tell whether McLaren’s financial gamble proves to be a wise-one. For a team with such pedigree in the modern-era of F1, there is much to suggest it will.

Time will tell whether McLaren’s financial gamble proves to be a wise-one. For a team with such pedigree in the modern-era of F1, there is much to suggest it will.

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