Williams beat Ferrari to $50m beer sponsorship deal

Williams, one of the few major teams in Formula One to be bringing new sponsors into the sport despite the global recession, are expected to announce a major new deal with Budweiser today.

But while August Busch IV, head of Budweiser's parent company Anheuser-Busch, will be in a position to paraphrase one of his company's best known advertisements and say to Sir Frank Williams: "This Bud's for you," he nearly offered it to Ferrari instead. According to insiders a deal had been agreed with the Italian company until one leading Ferrari team member asked the simple question: "So, what does beer taste like?"

The union of drinking and driving has been seen before in Formula One. In the 1970's German beer brand Jägermeister backed March via driver Hans Stuck. Warsteiner has also been involved with Arrows and McLaren, while Courage once appeared on the Lotuses at the British Grand Prix in place of John Player tobacco advertising. Williams themselves have had relationships with Labatts and Veltins, and Jaguar has been backed by Becks.

Budweiser looked at the sport over 20 years ago, when a deal to back the Tyrrell team at the US Grand Prix at Long Beach fell apart at the last moment. Since then they have established themselves as a major player in their native America, sponsoring cars in NASCAR, drag racing and IndyCars.

Recently, Budweiser have sought to increase their global profile, and the St Louis company's entry into Formula One is a significant step. Not only does it mark the acquisition of another major global corporation by Williams's hyperactive marketing team, and show the willingness, post-11 September, of such a business to make a significant investment of $10m-per-year (£6.25m) over the next five years. It also reconfirms the importance of Formula One as a marketing medium.

Last year the sport came close to disaster as Ferrari raced ahead and left all of their rivals gasping, but the closeness of the 2003 title fight has regenerated interest and put the sport back on the map.

Moreover, at the end of 2006 all tobacco sponsorship will be banned in Europe. This has been on Formula One's horizon for long enough for all of the teams to be seeking alternative sources of funding in place of the tobacco companies' huge marketing budgets.

Jackie Stewart's eponymous team, which entered Formula One in 1997 and later formed the basis for the current Jaguar team, was specifically set up without tobacco funding. "We knew, even then, that we needed to be innovative and to look elsewhere for our budget," the former triple world champion said.

Now only Ferrari, McLaren, Renault and BAR rely heavily on tobacco money, and all of them are looking for their next big backer. Mobile telephone companies, such as Vodafone at Ferrari, are becoming increasingly aware of the market potential of Formula One, though Orange has switched its advertising from the defunct Arrows team to trackside advertising. "We believe that it allows us to put our message across just as effectively," a spokesman said.

Perhaps the most significant aspect of the Budweiser/Williams deal is that the company have been prepared to forego their distinctive red colour scheme. Since a change from red, gold and white in the mid-1990s, Budweiser's red-and-white colours have sent an instantly recognisable message to consumers. However, under their partnership with motor manufacturer BMW (which was recently renewed until the 2009 season), Williams may only use white, metallic dark blue and silver. Other sponsors, such as Castrol, have agreed to forsake their corporate colours to fit in with this dictate and it says a lot about the promotional power of Formula One that Budweiser are prepared to follow suit.

"I think more companies are coming round to understanding the platform that the sport provides for them, and as a result they are more prepared to surrender that most exclusive of trademarks, their corporate colours," a Williams insider said. "But they have to believe that they will still get a good return on the deal."

The deal will help BMW Williams in their title fight against Ferrari and McLaren. Drivers Ralf Schumacher and Juan Pablo Montoya are closing fast on Michael Schumacher and Kimi Raikkonen after a recent run of success. It will also inevitably stimulate the search for an American driver and generate an approach to Miller Brewing, the major rivals of Anheuser-Busch, as other teams catch on. Other European brewers may be less inclined to join in, however. Their self-regulatory body, the Portman Group, may discourage similar deals among its signatories. Budweiser are not one of them.