Judge orders Etihad to pay for terminated Force India deal

5th November 2009

Etihad, the title sponsor of the team, switched its sponsorship to the Ferrari team for the 2008 season citing conflict with Kingfisher, the airline owned by Force India shareholder Vijay Mallya.

The original three-year deal was signed between the team and Etihad on 16th April 2007 and agreed at US$5 million for 2007, US$6 million for 2008 and US$9 million for 2009. The deal was brokered by Jamie Cunningham, now one of the Middle East's leading sponsorship agents. Bonus clauses were also  incorporated in the deal which meant the team could earn US$100,000 for each championship point it scored and US$500,000 for each place in the overall championship. The cost of the sponsorship was split 60 per cent for Etihad and 40 per cent for Aldar, builder of the Yas Marina circuit in Abu Dhabi.

At the time the team was called Spyker and there was no conflict. That occurred when Mallya bought a shareholding in the team the following year. Mallya was prepared to continue the agreement and not promote his airline on the cars. However on 27th January 2008 James Hogan, chief executive of Etihad, ordered the deal to be terminated and the airline signed with Ferrari in a deal believed to be worth US$10 million a year.

Judge Gray awarded US$2.483 million for the wrongful termination of the agreement after only one year. He awarded US$500,000 for termination of the bonus for points agreement and US$1.3 million for termination of the championship performance bonus agreement.

Judge Gray said the damages would have been much higher if the team had not mitigated its loss by finding replacement sponsors.

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