Thank goodness the F1 team bosses have had the good sense to step away from doing something really stupid and have voted not to make their lives more difficult with significant technical rule changes in 2017.
Formula 1 is struggling to keep up with itself and more change would have simply added to the problem. The idea that change is a good idea to rebuild the crumbling F1 audience is one that I believe is fundamentally flawed. Change for the sake of change is plain daft. There is nothing wrong with the sport that some good promotion will not fix. Of course that would require the promoter to actually promote, and as the owners of the business do not understand the concept of investing for the future there is little chance of that happening.
If you want evidence of this you need only to look at the other “big” story of the day in F1 circles: the toppling of Ferrari by Lego as the world’s most powerful brand. Admittedly, this is pretty nebulous, designed as a way to promote Brand Finance plc, a company that values brands. Founded in 1996, the firm calculates a list of “brand strength” by determining the value that a company would be willing to pay to license its brand if it did not own it. This involves a murky methodology of future revenue estimates and calculations of imagined royalty fees.
In any case, it makes headlines for some reason and the conclusion is that Lego is a stronger brand than Ferrari, which has tumbled to eighth on the list, behind such brands as PwC, Red Bull, McKinsey, Unilever and L’Oréal. The survey even suggests Rolex is bigger than Ferrari these days. I am not quite sure what has happened to giants such as Coca-Cola, Apple and McDonalds but “strength” is not the same as value.
Explaining the result, the company points to the importance of The Lego Movie, an animated feature film which came out last year, featuring talking Lego “people” which encouraged back-to-basics creativity. The story is the usual ordinary guy versus evil tyrannical Lord Business (read David and Goliath). This may be entertainment, but it is also promotion and evidence that Ferrari and F1 should do more to encourage interest from the cinema. F1 has a habit of producing stupidly high fees whenever anyone with an cinematic idea comes along.
According to Brand Finance, Ferrari’s drop is due in part to its poor performance on the race tracks and to the plan to relax the production cap to sell more cars. Brand Finance’s communications director Robert Haigh rather impertinently says that “people don’t see it as being so exclusive anymore.”
He’s clearly not living in the real world…
I firmly believe that the F1 product is great, but that it lacks promotion and its avoidance of social media is just plain Luddite. Kids still love racing cars and only drift away from them when access to the Internet take them off into virtual galaxies where F1 is utterly invisible. If you want evidence to back that up, look at the financial bonanza that the Cars franchise has been. F1’s gaming efforts are pathetic when compared to products such as Grand Theft Auto and its engagement with future customers is worse than zero. Its focus on profit at any cost is deeply unattractive. The problems are more fundamental than bodywork and horsepower. The FIA seems to understand this but has sold its power and so has little real voice, and what it does do is poorly orchestrated from a PR perspective.
For me the most interesting story of the day was that the federation engaged McKinsey to study how F1 costs can be cut without the sport being materially affected. The conclusion was that half the cost could evaporate without any drama.
The consulting firm studied the finances of the nine F1 teams and proposed cost-cutting measures that could help the small teams to survive on TV money alone, without the need for sponsors or pay-drivers. The study reportedly shows that a 25 percentage reduction in budget is possible even with engine fees being astronomical. It also concludes that 35 percent could be saved in the design and production process, 15 percent could be cut from racing activities and 20 percent from testing.
This has only come to light thanks to a leak to a friendly news outlet, rather than being out into the public eye in a more forceful manner – by means of an FIA press release. It hardly seems worth the McKinsey fees to have so little actual coverage from such a useful exercise, but it is sadly typical of the bunker-like thinking in FIA circles.
Perhaps it would have been smart to have asked McKinsey to compare the promoter’s share of the profits to other sports and the damage that has been done by the outflow of money that the sport should be using to keep its customers happy.
The structural problems in F1 are what drives away business. Fans don’t like being fleeced to go to races, nor to watch the sport on TV. They don’t like the fact that no one seems to care about them, beyond some token gestures now and then. And they don’t like the financial structures that make F1 an unfair playing field. Fix those problems and fans will watch any shape of car, with any kind of engine.
I will be hosting an Audience with Joe for fans in Melbourne on Friday, March 13. Not a great date perhaps but in France they buy lottery tickets on Friday 13th because they consider it a lucky day, so I prefer to look at it that way as well…
