OPINION: The billion dollar gamble

I’ve not done the sums, and I’ve not asked ChatGPT either, but I wouldn’t be at all surprised if the second most quoted figure in luxury media – and watch media in particular – over the past 12 months has been the $1 billion LVMH is thought to have paid Liberty Media to apply a thick coat of its brand paint to Formula 1. The first? Oh, that’ll be 39 per cent.

Certainly, I’ve turned frequently to LVMH’s zeroes, knowing not just their power to grab a reader’s attention (who doesn’t love a big number?), but also the deal’s significance to the watch industry, and specifically TAG Heuer. 

According to the top brass of F1’s official timekeeper, it’s already prompted a sustained spike in web traffic, social engagement, boutique footfall, and so on. And sales? On that they’re a little more circumspect – market share gained, is the refrain. Awareness translates into sales only so long as people are feeling flush, and, as we know, right now they aren’t. And besides, there’s that 39 per cent. The US is by far TAG Heuer’s largest market, and the watchmaker has been hurt like most others by Trump’s finger-in-the-air, bully-boy economic policies. 

But LVMH’s contract is over 10 years and this is a long-term project. Consensus among analysts is that in time, it will prove a smart move, leaving TAG Heuer higher up the grid than before. How could it not? Around 1.5 billion people tune in to Formula 1 at some point during a season. And it helps that a lot of those viewers are female – more than 40 per cent, according to audience measurement experts Nielsen – or Gen Z-ish.

The downside? Assuming – and it is a big assumption – the value of sales generated by the partnership at least covers the costs behind it (and let’s not forget activating the thing – race furniture, hospitality, marketing and so on could mean TAG Heuer is in for $100 million annually), there may not be one. 

But this isn’t about TAG Heuer. Or even F1, which sucks a huge proportion of annual global luxury brand sports marketing spend. It’s about how more than ever, luxury watch brands have come to lean on sport as an accelerant.

The story could just as well be about golf. Or cricket. Or rugby. Or tennis. As the founder of the sports marketing agency ThirtyThree18 Merrick Hayden said to me earlier this year, “tennis is the runway of modern luxury branding,” a comment fuelled by on-court deals with players and tournaments that put Rolex, Ralph Lauren, Audemars Piguet, MiuMiu, Gucci, and Louis Vuitton centre stage. 

In watchmaking, the deals are piling up. Breitling’s NFL deal, announced in August, is estimated to be worth around $30 million a year. Rolex continues to pour money into golf and tennis, with its three-edition Ryder Cup deal that culminated in September thought to have cost $21 million alone. In fact, look at Swiss watchmaking’s top 10, and the only brands not pinning their hopes on sport are Cartier, Patek Philippe and Vacheron Constantin. Does this make sport a guarantor of success?

Norqain clearly believes so. In November, the seven-year-old independent that counts Breitling’s former owners and industry veteran Jean-Claude Biver among its backers, announced a deal with the NHL. Ice hockey doesn’t hold much sway in the UK, but according to the stats, the NHL’s $6 billion annual revenues make it the world’s fifth most valuable sports league. Norqain is a pinprick on the watchmaking map at the moment, but will a presence across a 1,400-fixture league season propel it up the rankings? 

It might. But then again, it might not. Some watchmakers have decided that as sports leagues, teams and tournaments ratchet up the cost of involvement, enough is enough. Hublot recently dropped the FIFA World Cup, so that next summer’s 48-team, three-country football kickathon will be the first of its kind without the company as its timekeeper in two decades. Hublot has also dropped the Premier League.

Why? Cost must be up there, although as valid a suggestion is that as it looks to realign itself as a home for artists, musicians and creatives, Hublot’s top execs have determined there is such a thing as too much football, and too much sport. Their decision leaves some serious real estate untenanted.

Hublot isn’t alone in reining in its sports marketing strategy. We could point to Longines, although it’s extremely unlikely it surrendered its top-level tennis partnerships willingly, and far more probable that it was steamrollered out of Paris by Rolex, which has been claiming all eight golf and tennis majors as its own for some years now. 

That tells its own story. Competition is so fierce that unless a sport offers virgin territory for watchmakers, as the NHL does for Norqain, why bother? Competing with Rolex for market share, the odds are stacked against you, surely?

That might help explain why Audemars Piguet has backed out of golf, a sport where it once attempted to compete with the green and gold by working with a host of the world’s best players. Given the company has had a new broom over the past couple of years, that may be a simple case of out with the old. But then again, it exposes the bald truth that going toe-to-toe with Rolex inside the ropes, even when you’re AP, is a dope’s game. AP remains in tennis, but only just, signing women’s world number one Aryna Sabalenka and maintaining a legacy deal with Serena Williams. 

We could, of course, go on, but this isn’t intended to serve as a comprehensive list of watch brands using sports marketing to prevail. We haven’t mentioned Richard Mille for example, which has leveraged elite-level sport over the past 25 years to become one of the most valuable brands in watchmaking, with the company talking about annual revenues now in excess of 1.6 billion Swiss francs, more than TAG Heuer, Hublot and Tudor combined. As Lando Norris held the F1 World Championship trophy over his head in December, the world caught glimpse after glimpse of his Richard Mille watch. An expensive strategy? Undoubtedly. Effective? It appears that way.

What is intended, is to ask whether there’s a path to growth – tangible, rapid growth – that is more powerful than sports marketing. For watchmakers with product to match, is sport the one-size solution to all its problems? The antidote to the toxins of inflation, currency woes, soaring gold prices, those pesky US tariffs and long-term consumer fatigue? For now, at least, and even while the stakes are high, if you want a place on the podium, it seems you’ve got to be ready to play the game.