Tobacco sponsors running out of road after China rules out F1 deals

Cigarette companies left with plenty of cash but nowhere to spend it, as Formula One faces up to loss of lucrative partnerships

Formula One has hit a road- block after China, home to one of the sport's newest circuits, agreed to ban all tobacco sponsorship.

The Chinese authorities ratified the World Health Organisation's Framework Convention on Tobacco Control last week. Under the terms of the swingeing treaty, to which nearly 80 countries have now signed up, China must ban all tobacco advertising, promotion and sponsorship within five years - including at its newly launched, £170m grand prix circuit.

It is a frustrating and potentially expensive blow for F1, which is controlled by the billionaire Bernie Ecclestone. Tobacco firms have been some of the biggest sponsors in motor racing, lavishing millions on backing teams and promoting their brands. But the partnership is being dealt a fatal blow as the curbs are introduced.

"For sure, it's not an ideal situation, because tobacco companies have a big available spend," said one motor sports marketing expert of the Chinese ratification. "There's going to be less money in the pot.

"I don't think [the tobacco companies] would like to pull away from F1 but they are facing a losing battle."

China already has restrictions in place on tobacco advertising, but sponsorship is broadly permitted, and Honghe, a domestic producer, recently signed a deal to back the Chinese Grand Prix. The 5.5km circuit, which was built on reclaimed swampland near Shanghai, hosted its first F1 race last year and will hold the second next month. According to F1's official website, the track was designed as "the race circuit for the new millennium".

"The Chinese Grand Prix was one of the few where tobacco branding worked," said Tim Sice, the managing director of talent management at CSS Stellar, a sports marketing agency. "Of course it's a blow. Tobacco companies have big marketing budgets and have very few places to spend that money. They had found an outlet in F1 and motor sports. They try to link their brands with sexy sports and an awful lot of money has gone into F1."

A host of tobacco companies still have links with the sport despite the growing restrictions. British American Racing (now BAR Honda) was funded by Lucky Strike owner British American Tobacco - the UK group remains a sponsor - while Gallaher backs Jordan. Philip Morris, the world's biggest tobacco company, is also involved with the sport.

But some are moving away - Imperial Tobacco no longer has any association, for example - and companies from different sectors are moving in to plug the gap. "Certain brands don't wish to be associated with tobacco and that's restricted them from coming into F1," said Mr Sice. "So [China ratifying the convention] might well introduce new brands into the sport. Whether they will come in at the same level as the tobacco companies, though, no one knows."

Mr Sice said hi-tech firms - "the Googles of this world" - were being targeted. Other brands that have recently joined the sport include caffeine drink Red Bull, Johnnie Walker whisky and, perversely, a number of nicotine-replacement drugs, such as GlaxoSmith-Kline's NiQuitin CQ, which sponsored BMW Williams.