The deal dovetails with Emirates efforts to spread its reach globally and adds to its growing roster of major sports partnerships. In 2005, it signed a record $162m deal with English football club Arsenal that includes sponsorship of shirts and advertisements on the pitch. Arsenal's home ground in North London was also named Emirates Stadium as part of the deal.
The airline now spends about spends about half of its $1.03bn sales and marketing budget on sponsorship and boasts partnerships with Fifa, ATP, as well as major European football clubs such as AC Milan, Real Madrid and Paris Saint-Germain.
"For many years, Emirates has been at the forefront of sports partnerships across the world. With the addition of this global partnership with the Formula One group, we are continuing to expand our sponsorship portfolio, which I'm sure will be appreciated by sports fans," said Sheikh Ahmed bin Saeed Al-Maktoum, chairman and chief executive, Emirates Airline & Group.
Other investors in the region have followed Emirates' lead. In 2010, state-owned non-profit Qatar Foundation for Education, Science and Community Development signed a $40m a year deal with Barcelona club, one of Spain's leading football teams. The country's national carrier, Qatar Airways, is also the official airline of the Tour de France.
In 2011, Abu Dhabi's Etihad Airways signed a 10-year deal with Manchester United worth £400m that covers shirts, stadium-naming rights and the area surrounding the team's stadium, now known as Etihad Campus.
A number of high-profile sporting events are also held in the region, including the Bahrain Grand prix, Dubai Duty Free Tennis Championships, the Omega Dubai Desert Classic, Abu Dhabi HSBC Golf Championship, and DP World Tour Championship.
Looking ahead, Qatar will host the Fifa football World Cup in 2022, while Bahrain has officially made a bid to host the 2019 Asian Football Confederation Asian Cup.
Sport attracts diverse audience
"As brands in the Middle East such as Emirates have grown so successfully globally, sport has proven to be the best way to reach their hugely diverse target market," says Donal Kilalea, CEO of Dubai-based Promoseven. "Every sport attracts people who love it irrespective of nationality, age, income group, and education."
Simon Cory-Wright Director, Middle East for TSE Consulting, says sport further allows companies to connect with their customers' passions and with their heroes and role-models. "Sports offers excitement and face-paced action and it showcases skill, endeavour and success," he told AMEInfo.com.
Asked about whether these investments have generated favourable returns, Cory-Wright said success depends on what the company is setting to achieve. "It may be brand awareness, it may be customer retention, it may be gross turnover, or it may be bottom line profit. Emirates has taken a very aggressive and high-profile approach to sports sponsorship in recent years, which has certainly delivered a huge amount of brand exposure, so on that measure at least, it's been successful."
Kilalea says one of the biggest challenges for companies sponsoring sports is to ensure it captures the target market that they are trying to get. Sports such as cricket or rugby are going to vary widely in their popularity across the globe.
Sponsorship of individual athletes can also be risky, as a company ties its own reputation to that of a particular person, warns Cory-Wright. "Tiger Woods and Lance Armstrong are good examples of how it can all go wrong very suddenly, while Jumeirah's sponsorship of Rory McIlroy has clearly paid dividends way beyond expectations," he noted.
"Even sponsorship of events or sports organisations can come unstuck. When the 2001 Ryder Cup was postponed following the 9/11 attacks, the sponsors had to wait another whole year before receiving the sponsorship benefits they had signed up to. But today many of these risks can be mitigated in the sponsorship contracts, with cancellation and compensation clauses for misconduct of athletes or cancellation of events."
Looking ahead, Kialea says we can expect more investment in sports by entities in the region. "Because of the huge ethnic diversity and incredible fragmentation of the media in the region, people are looking for the best way to reach their target market, and sport offers that," he said.