JANUARY 21, 2004
Formula 1, Britain and tobacco
The Formula 1 circus has in recent years been at the forefront of attempts to stop the gradual spread of tobacco advertising bans.
Tobacco sponsorship was the very first commercial sponsorship in Grand Prix racing, arriving at the Monaco Grand Prix of 1968, when Team Lotus drivers Graham Hill and F1 debutant Jackie Oliver ran in Gold Leaf-sponsored cars. In 1972 Philip Morris joined the fray with its Marlboro brand and in the years that followed Gitanes (SEITA), Camel, Rothmans, Mild Seven, Benson & Hedges, West and Lucky Strike all became major players. Formula 1 is one area where the tobacco companies have been able to gain huge exposure and as a result they have been willing to pay a lot more than other sponsors for space on Formula 1 cars.
But the anti-tobacco lobby around the world has become increasingly belligerent. In 1990 the European Union proposed an EU-wide ban on tobacco sponsorship.
Tobacco companies fought back, arguing that they invest in motor racing not to start people smoking but rather to convince them to switch brands.
In June 1996 the World Health Organisation condemned F1, claiming that Grand Prix racing was a "non-stop commercial" for cigarettes and that races were "venues for the recruitment of new smokers". The WHO called for a worldwide ban on "broadcasts of tobacco advertising masquerading as sports sponsorship".
The British Medical Journal joined the battle by calling for a ban on tobacco sponsorship in sport, saying that studies by academics at Manchester University had revealed that it encourages teenagers to smoke.
In Europe the attitude towards tobacco is bizarre.
The European Community recently renewed its policy of giving farmers subsidies for growing tobacco. There are an estimated 79,500 tobacco farms in Europe, the majority of them in the poorer regions of southern Europe. Greece has an astonishing 64% of all EU tobacco farms. The numbers are declining each year but the EU still pays out around $1.2bn in subsidies to support the farmers. These average out at around $9,600 per hectare per year.
The EU's long-term aim is to phase out the funding and get farmers to shift to other crops which are less attractive at the moment. The payment to farmers is justified by the fact that tobacco generates an estimated $75bn a year in tax revenues for the EU governments.
There have been suggestions that the system has been milked in massive frauds, a view strengthened in 1993 when a former head of the tobacco division of the European Commission's agricultural directorate mysteriously fell out of a sixth floor window in Brussels - just days before he was to be questioned by investigators.
The EU has, however, been campaigning against tobacco since the mid 1980s when the European Council of Ministers approved a programme called "Europe Against Cancer" but it was not until July 1998 that the European Council adopted the "Tobacco Advertising Directive", aiming to abolish all tobacco advertising, sponsorship and promotion in the European Community by the year 2006. This directive was then cancelled by the European Court of Justice in October 2000. The Europeans started the process again but modified the bill so that a ban would be introduced at the end of July in 2005.
While this was going on, the British government decided to go its own way and in December 2000 introduced its own Tobacco Advertising and Promotion Bill, which was in the process of going through the necessary legal steps when Tony Blair called the 2001 General Election. As a result the legislation was lost.
The new Labour government did not include a tobacco bill in its plans but in July 2001 Lord Clement-Jones introduced a private member's bill which was based on the text of the previous legislation. Under pressure from the back bench members of parliament, the government adopted the bill and in April 2002 this came into force. This allows Formula 1 to continue with tobacco advertising until the end of 2006.
At the same time the three biggest tobacco companies (Philip Morris, BAT and Japan Tobacco) agreed in September 2001 to a new set of global marketing standards which would stop all sponsorship in sport after December 2006 if success in that sport required "above-average physical fitness for someone of the age group of those taking part."
There is little doubt that this would include motor racing.
The FIA's policy on tobacco sponsorship in international motor sport was fixed in October 2000 when the World Motor Sport Council adopted a resolution, stating that on the entry into force of the World Health Organisation's proposed Framework Convention on Tobacco Control, the FIA would introduce a world-wide ban on tobacco advertising and sponsorship in international motor sport from the end of the 2006 season.
That was later revised to be a recommendation when it became clear that the FIA could face a legal challenge because it is not allowed to be involved in commercial issues in the sport.
Everything was moving towards a global ban on tobacco advertising at the end of 2006.
The decision by the European Union to change the date of the European ban to the end of July 2005 has thrown all these plans into the air.
Sponsorship by the tobacco industry in motor sport remains an important source of revenue for half the teams competing in the Formula 1 World Championship. The precise value of this sponsorship is difficult to estimate but is probably in the region of $300m a year.
The WHO anti-tobacco treaty is making progress but in order for it to be effective each national government has to have its own legislation. This is going to take time and so if the tobacco companies do not police themselves as they are committed to do, it could take until 2015 or even 2020 for a global ban to be truly effective. Much of the legislation still allows for races held outside a country to be broadcast into the country with the tobacco logos in place. There are one or two countries where cars are not allowed to run tobacco logos on the cars but the moves against tobacco sponsorship in Europe have hardened attitudes and the Formula One group is now moving of races out of the EU or forcing the governments involved to allow the sport to operate above the law. If a country does not want to change its tobacco laws, it must pay more for a race. This was seen recently in the deal that was struck with Canada.
There is a big new problem looming. The new British law covers anyone "carrying on business" in the UK and states that "a person who is party to a sponsorship agreement is guilty of an offence if the purpose or effect of anything done as a result of the agreement is to promote a tobacco product in the United Kingdom". This includes the broadcasting of events from other places around the world.
In other words anyone based in Britain who is racing anywhere in the world in the knowledge that tobacco logos will be seen on TV in Britain will have committed an offence. The penalties for this can be as high as two years in prison.
Four teams are going to be affected by the new British legislation: BAR, Jordan, McLaren and Renault. They are all based in the UK and all funded by tobacco companies. The fifth tobacco-funded team is Ferrari in Italy. It would not be affected and in any case it is believed that Ferrari has already taken care of the problem as Vodafone has an option to take over Marlboro's space when the time comes for tobacco sponsorship to end.
Jaguar, Minardi, Sauber, Toyota and Williams are not funded at all by the tobacco industry and so are not affected.
If the law stands as it now is, the team principals could end up in jail if they run tobacco logos on their cars after 2006.
The only way around this would be to relocate the teams outside the UK. If that were to happen it could be a disaster for the British motor sport industry.
The fact that the teams are split will probably mean that there will not be any concerted action in F1. The non-tobacco teams argue that they can survive without tobacco and that the others could as well. In fact the sport would almost certainly attract more money because some sponsors are scared away from F1 because of its overt associations with the tobacco industry.
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