Wow, that was a weekend and a half. No time to do anything. Just running to keep up all the time. I finished the work necessary on Sunday morning about two minutes before the cars took off on the final parade lap for the Spanish GP and then dived straight back into it when the chequered flag fell… It was rather a highly-charged weekend with the F1 teams becoming increasingly frenetic about the FIA’s trenchant position on budget caps and one gets the feeling that the whole thing is on the verge of spinning out of control. That is really not good. There must be compromises that are possible if those involved will focus on the important matters and not worry about extraneous things like team performance or ego or power. What is important is to hold everything together.
For me the most important thing of the weekend was the number of empty grandstands. This was very bad news for Formula 1 because Spain is supposed to be the boom market. The country is supposed to be wild about Fernando Alonso and yet the crowds were seriously down. Fernando remains one of the top drivers and while his Renault this year has not been very competitive, he is still very popular with the fans. This was so noticeable that I went to find out the numbers. The Catalans do a four-day head count and last year that number was 371,000. This year it had fallen to 213,000. Now I was never very good at mathematics but a few taps on the calculator revealed that this means that the overall crowd was down by a shocking 42%. The race day figure was 92,430. That is not a bad crowd at some events but last year it was 132,600 and in 2007 it was 140,700, which means that the two-year loss of bums on seats is something in region of 35%. Last year’s Renault was pretty rubbish at this time of year so one cannot blame that. The only other logical explanation is that the tickets are too expensive in the current economic climate.
The crowd figures in Australia and Malaysia were both down but the drop was in single figures. The numbers in Barcelona call into question whether any of the European promoters will still be in action at the end of the year if their fees are not reduced by the Formula One group. There are several already squealing and others who have given up but Bernie Ecclestone says that his business model is still working because he has customers in the Middle East and Asia. Perhaps he does, but is this really what is best for the sport? The smart thing to do would probably be to agree to drop the fees across the board so that no-one would feel aggrieved, but that is not in Bernie’s DNA. That is why he is a billionaire. The problem he has is that his partners at CVC Capital Partners need him to keep pumping money in their direction so they can pay their debts. I noticed some of these people in the paddock in Barcelona. They are not regular visitors, and I have no idea what they contribute to the sport, particularly when you compare it to what they take out.
Last night I wrote a column in the GP+ e-magazine and I think you might appreciate it. It is called “A tale from the farm…”
These are difficult times. Unless you live your life with your head buried deeply in the sand, you know what is happening. We are in the grip of a major economic crisis: the biggest for several generations. Companies are shutting down, people are losing their jobs. The signs are that this is going to be a prolonged recession, which will almost certainly soon be defined as a depression. There is no hiding from this one.
How is Formula 1 going to survive? I think we will know the answer to that pretty quickly. The various parties involved show signs of coming to blows and being polite is becoming less and less of an option. The important thing is to understand what is going on. And, surprisingly, it is not really to do with two-tier systems, nor even budget caps. Those are symptoms of the problem, not the problem itself. So let us forget the politics and the egos and alliances. Let us look at this in the most simple way possible.
Formula 1 is a big fat cow in a field. It has plenty of grass to eat and it plods off to the milking shed every so often and produces milk which a dairy company takes away and turns into cream, butter, cheese and so on. The farmer sold the commercial rights to the cow to some men in suits and they have sold the milk for years to come. They have kept all the money. So the old cow has to go on being milked, while the men in the suits drive around in fancy sportscars and the farmer buys Armani jeans and has a big boat.
The cow is happy enough because eating grass is what she does best, but now and then she thinks that she deserves a little more. She sometimes wonders what would happen if she jumped the fence.
The problem has now come to a head because there is a drought. The grass is drying up and the cow is hungry. The farmer and the men in suits demand the same amount of milk and the cow is protesting more and more and thinking about refusing to go to the shed. She knows that refusing to be milked will be painful but cannot think of what else to do. The hedge to the next field seems higher than ever. The farmer is no longer able to convince the cow that the men in suits deserve what they are getting…
The cow does not care whether the men in suits go out of business. All she wants is more grass, perhaps a shelter and to be left alone to do what she does best. The cow thinks she is the star of the show…
Where will it all end?
You would be hard pressed to find anyone in the F1 paddock who has any sympathy for the men in suits (CVC Capital Partners). They came in, they borrowed money to take over and restructure the business. Then they borrowed a vast sum against the future profits of the sport and took the money, leaving the sport to pay for years to come. If it cannot pay, what will happen then? Will they dip into their own pockets and help out? Of course not. They will fold up the business and run to the administrators asking for protection, blaming everyone but themselves. If that happens, the debts will disappear and the commercial rights of the sport will be up for sale to whoever pays the most.
The teams are the stars of the show. They are what people come to see. They are happy to give a promoter a fair share of the profits, but 50% is not the right number. A more normal figure would be around 15%. Let us not take it away from farmer Bernie. He has done a terrific job for F1. He has done a terrific job for himself. The sport would not be where it is if it had not been for him, but then again he has been handsomely paid for his work. He is a squillionaire. Yes, he wants to hold on to the cash cow that the sport has become, but the old cow is beginning to protest more and more…