Should F1 sponsorships have stricter regulations?

With the latest addition of a contentious company sponsoring a Formula 1 team, the age-old question rises yet again on whether there should be more regulation of money coming into the sport.

Valtteri Bottas driving for Alfa Romeo at the 2022 Mexico GP - Photo by Florent Gooden / DPPI

We know Formula 1 is a money driven sport, where in order to succeed to you need the money to devote to research, development and testing. Without it teams will struggle, and drop down the field. The best, most recent example of this is Haas. During their first few seasons since they joined the sport in 2016, they were among some of the top performing cars on the grid, with common appearances fighting for podiums and leading the midfield battle. In 2018 they finished fifth in the Constructors' Championship after a strong race season, almost doubling their points in the previous year. It seemed like the team was on the up and there was no stopping them, that was until the infamous drinks company Rich Energy entered the picture.

2019 was meant to be an even better year for Haas, with what seemed like at the time a brilliant new title sponsor, bringing even more money for the team to build on their successes and improve their performance. But unfortunately that never ended up being the case. Rich Energy faced many legal issues during the year, from their logo being plagiarized to the company's CEO William Storey being ousted from the company. All this bad PR saw a bad reputation being laid unfairly onto the team, and by September of the same year the deal was over prematurely and Rich Energy left Haas and the sport indefinitely.

This left Haas in a difficult position as they lacked an essential title sponsor, and were now missing a significant chunk of change to put into their future cars. Both the 2020 and 2021 seasons were essentially a write off from Gunther Steiner, the team principal, with the team only managing to score 3 points across the two seasons.

Kevin Magnussen driving the Rich Energy branded Haas at the 2019 Canadian GP

Haas aren't the only ones to have had a big sponsor fall through on their promises. Just in the past year we've seen a massive growth of crypto currency companies sponsoring many of the teams, from Binance sponsoring Alpine, Bybit sponsoring Red Bull, and FTX with Mercedes. All but 2 teams (Haas and Williams) had a crypto currency sponsor of some kind in the 2022 season.

However, as with the volatility of the crypto world, comes unsettledness with their funding too. Late in 2022 there was big news coming from FTX as the company which was one of Mercedes' biggest sponsors, with a deal in the 8-figure range, filed for bankruptcy. The then-CEO of the company, Sam Bankman-Fried has since been arrested and charged with alleged fraud, money laundering and conspiracy. All-in-all not a great scenario for any company to be associated with, let alone one of the top teams of Formula 1.

FTX Special livery on Mercedes at the 2022 Miami GP

These two examples are just in recent years; throughout Formula 1's history there has been plenty feeble companies sponsoring teams and the sport in some way. There are some regulations in place for the benefits of consumers, and improving the public image that F1 is trying hard to maintain, such as the banning of tobacco adversitements, drugs, weapons, adult or politial content. There are still some questions relating to the ethicality of gambling sponsors, but as it stands it's up to the teams to decide whether they want to promote those companies.

Despite the recent crashing of crypto sponsors, Alfa Romeo has just recently announced a three year, $100m deal with the crypto casino & sports betting platform, Stake, as their title sponsor. This new deal, while bringing in a significant amount of money for the team to help develop their cars, has alas brought controversy and questions over the longevity and security of the company. The Sydney Morning Herald reported that Stake are currently being sued for $400m in punitive damages from one of the original founders who claims they were misled into not participating in the formation of Stake.com. The company itself is actually registered in Curacao, a Dutch Caribbean island, to avoid Australia's money laundering laws.

It appears this deal between Stake and Alfa Romeo is just to fill the gap until Audi take over the team in 2026, but as we've seen with the relationship between Rich Energy and Haas, it doesn't even have to take a full season before things can fall apart and leave a team essentially stranded. Hopefully that isn't the case this time, and the Sauber team can survive and maintain their growth through until 2026. But the question still stands on whether there should be a stronger, more regulated vetting process from Formula 1 or the FIA themselves surrounding companies and sponsors entering the sport in various ways. After all, any damage a company could cause for a team only hurts the public image of the sport as a whole. Let alone the jobs that could be put at risk should a deal turn really sour.