The next few days may turn out to be some of the most important in the history of Formula 1 in the last 30 years. It is increasingly clear that someone is on the verge of lodging an official complaint to the European Commission about the way the sport is operating, on the grounds that the commercial and governance structures are anti-competitive. It may not happen because people are looking for solutions to avoid this scenario, but it will take some serious compromises if this is all to be avoided.
It is clear that some of the big players in the F1 world are nervous about scrutiny from the European authorities, particularly as it will make waves at a time when there is much scrutiny on the politics and financial structures in sport, following the recent revelations regarding FIFA. This provides a climate for possible change because although motorsport is not anything like the soccer world, it is nonetheless in need of restructuring, better governance and more transparency. If one has nothing to hide, what is the problem with transparency? Thus fans can be hopeful that this will open the way for new ideas, attitudes and business models. There is, naturally, some opposition to change because this is also about money, power and ego.
The sport is worth a lot of money and so, when push comes to shove, solutions must be found or else the whole business will fall apart. Perhaps there are some who are even hoping that this might happen so that they can pick up the pieces and get more control and more money. This is all very short-sighted and the wisest voices in the sport are looking at the bigger picture.
“The biggest asset Formula 1 has is its fan base,” says Graeme Lowdon of the Manor F1 team. “It’s global and it’s massive. There are millions and millions of fans and it’s the root of this entire sport. Everything channels from that, so it’s very, very, important to understand what fans want, not just now but in the future, and how they would like to integrate and engage with the sport.”
There is a lot of tosh talked about what fans want and while surveys are to be welcomed, they are also dangerous weapons in the wrong hands. If, for example, one does online surveys, one can prove that F1 has a younger demographic than is actually the case, because the older fans don’t do much online. So the sport needs to be careful that it does not get led up blind alleys.
It is fairly clear that fans want cheaper tickets, free-to-air TV, better facilities, a good show and more engagement. They want to feel that the sport cares about them. It is harder to figure out what to do with the younger generations, because they seem to have different attitudes towards cars. But, having said that, the Disney franchise “Cars” shows that kids still like cars and it is up to F1 to figure out how to translate that interest into a new fan base.
Defining the problem is part of the route to a solution and different groups have different views, and they have been busy muddying the waters. The key point is this: How can a sport that generates $1.8 billion a year in revenues be incapable of supporting 12 two-car teams which race one another on only 20 occasions each year? The only possible answer to this question is that the business model is not a very good one for all concerned, even if for some F1 is filling their pockets, pumping up their egos and making them feel powerful. These people do not really want things to change, unless they see that they can get more money or more power. They are clever people and so their arguments sound very plausible, but in reality this is largely smoke and mirrors with everyone dressing up their own interests as things that are best for the sport.
The big teams are now in the process of trying to sell the sport on the idea of customer cars. They say that the motivation is to get full grids and to help the small teams to survive. When you stop and think about it, the customer car concept could equally be seen as a cunning way for the big teams to get a bigger share of the revenues of the sport. The Formula One group will not give them more (probably it cannot afford to) but the big teams have realized that if they sell copies of their cars to the small teams, they will gain more money, without needing to spend very much more than they currently are. Their goal, therefore, is to have four or five teams selling their cars to the other entrants. And this is not just about the sport because some of the numbers involved are useful for other reasons. Ferrari, for example, might be able to charge customer teams $60 million a year to provide everything required. If there are three Ferrari customers the deals would be worth $180 million. However, these figures can be used for other things. If the team does five-year deals with three customer teams this means that it can book $900 million in guaranteed future revenue and with an IPO coming up that will help to hike the price of the shares, which means that the parent company can raise more money from the markets to pay off its debts and to invest in new models.
The small teams that would be forced to buy cars in order to remain competitive are, inevitably, spitting razor blades about the idea, while Bernie Ecclestone, the CEO of the Formula One group, which makes the money by selling commercial rights, is sufficiently canny to have spotted that this would give the big teams much of the political power in the sport and so he is proposing a one-chassis concept which would provide all the teams with the same basic car, which would undermine their powerbase and make him money. Fans might be led to believe that this will produce better races because it would all be down to driver talent, but that is not how it works. That system exists in IndyCar, but the same three teams have won the IndyCar title for the last dozen or so years…
The problem with both of these business models is that once teams have been forced to become customers, they will need to lay-off many of their staff and will have no need for the R&D and manufacturing infrastructure that they all have and that means that they cannot easily move up and become constructors in the future, without huge sums of money. There is clear evidence of this with Scuderia Toro Rosso which, for a time, was allowed to run Red Bull chassis. This led to opposition, particularly after Sebastian Vettel won a race in a Toro Rosso, and so the loophole was closed and Toro Rosso has spent the last five years reconstructing a manufacturing base. Today it is able to compete with Red Bull Racing, without using the same chassis. The problem is that this has cost a fortune.
Destroying the manufacturing base of the sport makes no sense at all and the customer car argument is flawed in that the idea might be presented as six manufacturers each having a factory team and a customer team, but in reality it would take very little time for this to change into six teams, each running four cars. It simply makes sense from the point of view of economies of scale and so on. After that the weakest of the teams would become vulnerable because the best it can hope for is 21st position on the grid and so the number of these constructors would thin out.
Allowing the big teams to supply more cars is a recipe for disaster. This has been shown in the United States where NASCAR allowed teams to run as many cars as they wanted to run. They added more and more cars and using race-by-race sponsorship managed to suck up all the money from the smaller lower-ranking teams by offering the sponsors fewer races but a higher profile. The result was that there was a serious contraction in the number of teams. The problem was solved by NASCAR limiting the big teams to four cars each and today the midfield is building up again, but that has taken time and money.
Part of the problem is that manufacturers and big team-owning sponsors tend to create boom and bust cycles in the sport. They come in, in order to promote their products, they spend until they win and then when they have achieved their goals they depart and they do not care what damage that might do. The spending races put pressure on the little teams because they simply cannot compete. And yet manufacturers and rich people have been a part of the sport from the beginning. Grand Prix racing only exists because the French car companies rebelled against the system which was originally based on nations competing against one another. France had a much stronger car industry than other countries and so the manufacturers pushed the Automobile Club de France to stage events open to anyone. That was more than 100 years ago and the same patterns of behaviour have been seen ever since. The most effective are championships in which the manufacturers agree to create an environment in which everyone can win and work closely with the series owners. In that case, everyone wins, but it is more show business than pure motor racing and there is no room for ambitious and innovative engineering. It is expensive show business and the competitive urges of those involved are dulled by the artificial realities.
There are some who argue that technology is not important and that the rules must be changed, but they forget that the key to success has always been to build cars that are faster than the opposition and that this is what makes F1 different and fascinating. People like to see David fighting Goliath. There is much talk of changing the rules to make the racing better but this makes no real sense. The best way to reduce spending and improve the show is to leave the rules as they are because the law of diminishing returns means that the field will get closer together as the technology spreads, so the racing will be better and the ability of the teams to spend more is rather limited. Changing the rules costs a fortune and tends to create disparity of performance as we are seeing at the moment.
The show will come back if the rules are left alone. It might help to try to control spending or getting rid of wind tunnels, but these ideas tend to undermine the high technology image of the sport, which is important to sponsors.
The desire for change comes because there is a perception that the racing is not exciting and yet those in the sport do not really complain because they have greater insight into what is going on and they see how competitive it is. The skill is to ensure that the public also understands the level of competition and that can only be done by investing in media technology and using communication. The Formula One group does not make massive investments and wants to charge for everything. This drives away fans.
The other problem is that even if a solution can be found, no-one can agree on it. And this is where the biggest problem lies. The governance is a mess. The Strategy Group came into existence because Ecclestone needed to get the big teams to support him when new commercial agreements were put together after the end of the Concorde Agreement in 2009. This gave the big teams more power and more money. Ecclestone is believed to have negotiated financial guarantees with the biggest players to stop them pulling out unexpectedly for the 10-year term of the deal, which runs until 2020. The word is that the big players all agreed to penalties running to a $1 billion over the 10-year period, but reducing by $100 million each year. Thus the cost of leaving F1 is reducing all the time, but they are still tied into the sport for another five years. Things are complicated by the fact that the FIA can no longer tell the sport how things should be. This is because the FIA, under Jean Todt, agreed a deal in the summer of 2013 that gave the federation money to give up its power as the rule-maker. This was a dreadful error by Todt, but he did it because he had a different agenda and was not interested in the sport and wanted to go after his own personal ambitions in the world of road safety, using the FIA as his springboard. Right now the FIA is failing in its duties in F1 but there seems to be no opposition within the federation to give Todt a hefty boot up the rear end and get him to fix the problems he has created. In F1 circles, the feeling is that the disappearance of Todt would not create rivers of tears.
The FIA risks getting into hot water as a previous EU investigation, which ended 12 years ago, saw the federation agreeing to act only as the sports regulator and not to get involved in commercial matters. The Formula One group agreed to deal only with commercial matters and not be involved with governance. However, the deal that created the F1 Strategy Group may be deemed to have overstepped the mark in both respects.
The ironic thing is that the person who now stands to gain the most from the dismantling of the Strategy Group is Ecclestone himself. If the European Commission does demand a new structure, Ecclestone could justifiably tell the big teams and the FIA that he is not able to honour the agreements made because they are against the law and it could end up with the Formula One group getting more money for itself. The downside is that if the deals are cancelled, Ecclestone will struggle to get the financial guarantees that currently exist that lock the team owners into the sport for the term of the contract.
On paper, Ecclestone works for CVC Capital Partners, the private equity company that owns the commercial rights business. This company seems weak and terrified to do anything other than support Ecclestone, but if he gets into trouble they would likely jump to support the strongest group, which would be the big teams and manufacturers. CVC seems to know very little about the sport, highlighted by the daft idea discussed recently of bringing back refuelling, which appears to have been a CVC idea. The bad news is that CVC does not care about the sport. They want to take as much money as possible and so do not want to make sensible investments for the long-term. They don’t want to improve the business because if there is no margin for improvement, the price of the business goes down. Almost everyone in F1 agrees that the sport can do a great deal better financially than it does, but that it needs to change strategy so as not to squeeze so much money out of TV companies and race promoters that they give up. This is what is driving the fans away because ultimately the costs are passed on to the fans.
Into this mess has walked former FIA President Max Mosley, too old to make a comeback, but happy to tell the world what is wrong.
Mosley’s solution to the problem is the most intelligent.
“Income should be distributed equally,” he says. “Bernie says that is communism and the big teams would be against it but it is a sport and sport demands a level playing field. If you’re giving one team five times as much as another team that is not a level playing field. I would bring in a second set of rules – run under current rules or a second set on condition you operate under a cost cap. Because you have more freedom your car would be as quick as the expensive teams. Then you’d get very competitive racing and the smaller teams wouldn’t be in as much financial trouble.”
The big teams argue that this does not matter because the small teams are now so weak that they will probably fail anyhow and say that there is no point in giving the small teams more money because they have already proven that they will compete beyond their means and build up debt.
About the only thing everyone agrees about at the moment is the fact that F1 costs too much money and there need to be cuts. The problem is that the big teams are not really interested in actually making cuts because they fear that their competitiveness on the race track will be affected. Thus they may say that costs need to be cut, but they make sure that they are not.
The interesting thing is to see whether and how someone will make an official complaint to the European Commission and trigger the process that will perhaps fix the problems. The small teams will do it if necessary, but some feel that it might be better for someone else to do it. There has been talk of Colin Kolles. He is close to Bernie Ecclestone and was in charge of a small team (Caterham) that went out of business because of the way the sport now is. He has nothing to lose because he’s not involved in F1 at the moment. And perhaps if he plays a role in fixing it, he can get into it again in the future.
The EU will probably jump at the chance in order to be seen to be doing things after the Americans started the action at FIFA.
In times of crisis what is required is leadership. The EU may break up the current structures, but what it really needs is a leader to build new ones.
joeblogsf1 
I read (FT?) that the EU commission was skeptical of the complaint, specifically suggesting that the complainants need to demonstrate broad harm to individuals, i.e. fans, rather than to just a handful of teams. The complaint seemed to focus on how revenues are split, benefiting Ferrari, Mercedes, etc., at the expense of the small teams.
The case can be made that the current structure hurts fans, but it involves a lot more hand-waiving and subjective opinion, versus the cold, hard black and white on contracts that define revenue sharing.
It will be interesting to watch; certainly more than was the Canadian GP
The other thing about customer cars and a level playing field through ‘balance of performance’ regulations (rather than through sensible rules allowing those behind to catch up) is that the four big spending teams, once competition had been neutered, would all scale back their activities too, so it wouldn’t just be the smaller teams who lost all their engineering talent, it would be the big ones too. Finally you’d have a garage full of people whose input was limited to deciding how much front wing to put on the cars…
Sorry Gary didn’t mean to put this as a reply to your point!!
Ted Kravitz was dismissive towards Saward and this idea at Monaco. I was surprised at how hostile Ted seemed to this idea. I think it is loooong overdue.
Ted is now on the Bernie gravy train. Did you see that puff piece he did for Sky? Then he appears on the podium doing global interviews. Bernie is kind to those who are kind to him.
Was that puff piece the one where he actually said at the end of the interview “is there anything else you’d like to tell the people Bernie”? I almost spat out my beer. It was reminiscent of how the sycophantic interviews that BBC correspondents used to do with the Royals in the 1950’s, 60’s and maybe early 70’s used to end – “Is there anything else you’d like to tell the nation, your Majesty?”. It was cringeworthy. A shame as I’ve always liked Ted Kravitz but he bombed hard in my estimation with that one…
Let’s face it Ted is enamoured with the technical aspects of the cars and seems bored and dismissive of any talk of politics. To be fair to him he hasn’t really changed in that approach for years. You can see his eyes glaze over when anybody talks about off track politics unless it’s about secret tests or illegal parts – then he nearly wets himself.
I agree. He has a bit of a cult standing in our house!
I expect he’s getting a decent salary from Sky, so it’s no wonder.
Enamored with being a Performer and not worth risking a thought outside the party line.
One can easily demonstrate that the races are moving aways from the fan base because the race promoters in Europe don’t have money to keep up. This is a clear evidence of how the sport structure today harms fans. On top of that, the number of free-to-air TV channels showcasing F1 is reducing, restricting the sport from a broader audience. Yet another evidence. I believe that a small team with an intelligent principal and a decend lawyer could create a case in minutes. They just didn’t do it because they’re probably still trying to get their cut in the cake as well. F1 is based on self-interest, I don’t expect this to be any different.
I’m not against customer cars. I know it’s a different time now from 40 years ago but customer cars is what got Williams started. I would make the top 3 team have to offer a customer car deal, for a set price, to one of the newest 3 teams. It would include the PU but nothing else, no bodywork or aero or suspension etc etc and they can only run it for 2 seasons maximum. Season 3 they would have to build their own car but could continue as an engine customer. If there are no new teams then no customer cars needed.
OK – sanity check time. Customer cars and status quo or a split series a la Max Mosley’s suggestion with a bunch of Manors on super-wide slicks with ground effect boosted grip mixing it up with the regulations-hobbled Mercs and Ferrari’s on a fifth of their budget.
In my opinion, the only thing F1 needs in order to justify itself and continue to attract legions of loyal fans forever more is to be by far and away the fastest series in the world racing on any given track.
A cut of regulation could make the whole ‘big-team-big-spender’ thing look ridiculously archaic.
Bring that on I say. It would be amazing to watch.
ps. I’m not against new tech in F1 and I am an advocate of the advanced new engine formula – but I think spending is something to be controlled by direct caps rather than crippling regulation. My point to the rule-makers is that the major engine manufacturers have mainstream motivations to pursue new engine tech which is entirely different to that of pure racing teams – so why shouldn’t they be allowed to test the engine all year long if they are f**king well prepared to pay for it!!?
“I think spending is something to be controlled by direct caps rather than crippling regulation.”
Cheers.
“You may spend no more than ‘X’ amount per year. Good luck everyone”
Force innovation. Naturally, if the performance gains push higher but the cost cap stays the same, you gain more performance through innovation and efficiency.
Your insights into the hidden consequences of “customer cars” are brilliant. Constructing your own car is central to the F1 concept.
for what it’s worth, after the damon hill championship year I stayed with F1 because of the money-no-object extravagant engineering, fresh engine for every session, qualifying specials, etc.
the beryllium engines were particularly exciting.
aside from hakkinen retiring, the top of the slippery slope from all that was when they started fiddling with qualifying, Q1, Q2, etc. have never got my head around it and my interest has lessened each year.
it’s counter-intuitive but it seems the more cost conscious the sport gets the fewer teams there are.
It is linked to the increase in regulation I think – the price goes up whilst each incremental gain is reduced…
All good points. Those were great days, unsustainable but great. I totally agree re the qualifying though. Give them a qualifying engine, qualifying tyres and an hour to prove themselves.
To do that, even just for qualifying, there needs to be a total restructure of costs.
That was before my time but I think a lot of people have pointed out that it resulted in a lot of dull Saturday’s and then a flurry of laps from the big teams as long as the weather held and the track was rubbered in.
That’s my recollection of quite a few Quali days from the early ’90s. Hence the experiments with making everyone do a single run and multiple sessions and eventually the current Q1, Q2, Q3 system – which makes for decent enough TV although I wish they’d add a nominal out-lap time to the clock whenever they red flag a session.
In the GPDA fan survey, this wasn’t even an option (faster car after x period of time). I was very disappointed that we can’t consider going back to the original format of qualifying sessions.
Thank you for taking the time and trouble to post this.
i always found it amazing that Colin Kolles keeps finding his way back into F1. Also, I seem to remember that he’s a dentist and even worked on one of his drivers’ teeth.
The perfect man so to rescue F1.
Wonderful article.
Bring on the investigation…
Hats off to your typing skills Joe this is the longest one of yours I’ve ever seen!
It would be great if all of this comes to something rather than gets quietly swept under the carpet
I think two of your most pithy points to quote are:
‘It is fairly clear that fans want cheaper tickets, free-to-air TV, better facilities, a good show and more engagement. They want to feel that the sport cares about them.’ and:
‘The key point is this: How can a sport that generates $1.8 billion a year in revenues be incapable of supporting 12 two-car teams which race one another on only 20 occasions each year? The only possible answer to this question is that the business model is not a very good one for all concerned, even if for some F1 is filling their pockets, pumping up their egos and making them feel powerful.’
Couldn’t agree more
Point #1: ‘It is fairly clear that fans want cheaper tickets, free-to-air TV, better facilities, a good show and more engagement. They want to feel that the sport cares about them.’
That should make us think about F1 sponsorship. If F1 teams can survive on deals with niche sponsors (sellers of £5,000 watches, enterprise products), the typical fan does not matter. Teams and organisers will target the niche. In the “good old days”, teams relied on sponsorship from sellers of consumer products — fags, booze, soft drinks, white good electricals, electronics, personal banking etc. We’ll know that F1 is healthy again when teams are backed by companies with which we do business.
Ban manufacturers from wholly owning teams. Only allow privateers in, create a panel of engines at a fair price, and allow the privateers to purchase an engine and to develop their own cars.
We must be decisive. Cut the head off the manufacturing monster (good riddance to the jolly come late-lies who don’t achieve and leave when the executive board lose their patience!!)
What of Ferrari and co? If you are a Manufacture and are in F1 now, you can stay, but if you leave, you may never return. Heck, neither let sponsors wholly own teams whilst we are at it. Goodbye red bull.
Bring back the Frank Williams, Colin Chapmans, Enzo Ferrari’ and Eddie Jordan’s of this work! May we start a privateer revival.
Agree on the privateers / engines idea. However, you can’t prevent teams from coming and going. Let’s say Ferrari leaves and, in 10 years, wants to come back. If there’s space for new teams, the rules must be a set of requirements to be approved in the selection. If you create a rule which says Ferrari can’t come back because they left, it’s not fair and they could easily challenge that. The whole concept must revolve around the idea of being such a great sport that no one wants to leave and who’s not in it wants to be in it.
I believe that the F1 product is broken in most markets. In the US the race is carried with commercials. Most other sports here have mechanisms in place to stop the game and run commercials. There are TV time outs in all levels of football, basketball and hockey. NASCAR tends to have enough cautions but they are hurt by this too. Soccer only started to gain ground when the games started to be shown uninterrupted. Maybe part of the problem it is hard to care and follow a race if every eight minutes there is a three minute break that entices you to do something else. Especially if the race is entering a lull.
The product right now is televised entertainment. The racing is meat. But the product is sausage. Just focusing on ingredients does not a delicious sausage make.
Yes, there are commercials here in the US on NBCSN. However, most of those commercials are run split screen, with the picture of the race continuing to be shown. So if anything of import happens you still see it live. And if not, there is quickly a replay when the commercial ends of anything of import that happened without commentary.
Anything that comes thru to my part of the world is HEAVILY punctuated with loong spells of no communication whatsoever, while view is the sight and sound of cars going round, and round, and round….
Now, that’s not a bad thing, but when something occurs on track during those quiet periods, when commentary returns the talking heads are completely unaware and carry on in inane prattle mode…….Heck, in the last race they went to full course yellow and never a reason was mentioned…
The F1 races also happen at times where most of those watching in the US are watching a recorded race and can skip past any of the commercials.
Who can make a complaint to the EU regarding this? Does it have to be an interested party or can anyone do it? Why not get your hands dirty Joe?
The argument from the teams that the smaller outfits will overspend and die anyway is the weakest argument I’ve ever heard! I’m sure if they were a weak team they would be screaming from the rooftops. I don’t know why but I imagine Ferrari would be the loudest if they felt there was inequality that didn’t benefit them.
One of the main problems is the tight rules. If the rules were opened up – a huge amount, the budgets would police themselves and there would not be so much money spent on chasing thousandths.
The big teams / manufacturers do not want open rules, because it can make them look bad. We saw a little of this with Brawn and the blown diffuser. They immediately outlaw something that makes them look bad. And F1 has had a long history of this. Think Bernie’s & Murray’s fan car for example.
Teams will not spen hundreds of millions of dollars if somebody comes along and blows them away with a 25 million dollar budget. But if they make the rules so tight that you can’t do something with 25 million, well they’ll spend a lot more and make the little guys look bad.
CART – Indy Car use to be a lot more open, as recently as the early 90s. And it was in its hey days. Big teams still tend to win, but look at Roger Penski – one year he brings in Mercedes and blows away the field with his innovative engine and his car he had made in England; the next year he couldn’t even qualify for the”500″. Before long – spec cars – and boredom.
Actually all that happens is that the $100M team sees the idea, adapts it, outspends the original innovators and unveils a faster car. But they’re trumped by the next team along, who took out a $75M loan to get their budget up to $150M to design an even faster car again. Who’re then outspent by one of the big manufacturer teams whose board approve a $200M budget – but will withdraw their funding completely in a few years when their corporate priorities change.
Regardless of the technical rules, F1 teams will gamble on their own success. Opening the technical regs will not lead to some privateer nirvana of garage outfits consistently beating the big boys.
“Regardless of the technical rules, F1 teams will gamble on their own success. Opening the technical regs will not lead to some privateer nirvana of garage outfits consistently beating the big boys.”
This true. What must happen is opening the tech regs while at the same time setting a hard cost cap. This will force both innovation and efficiency. You will have to try harder/think smarter to earn performance (as opposed to buying it), and do it in the cheapest way possible.
“Communism” works perfectly in professional sports. North american sports such as baseball or hockey are run for the most part by hardcore capitalists that have created a socialist system within which they operate to ensure the viability of their sport AND make money. For example, national tv rights are split equally among all teams. Even the richest teams that have their own sports tv network must share part of the profits with the other teams. In hockey, there is both a team salary cap and salary floor to ensure cost control while keeping the players’ union happy. I could go on and on…The end result is that teams in smaller markets can be very competitive if they are run by competent management.
+1
Example: Tampa Bay vs. Chicago in the Stanley Cup Final
This, a million times. Well said.
Joe,
Would a switch to customer cars or a common chassis adversely affect the local F1 cottage industry?
Bit would destroy it
much of it is a bloated cottage industry. The mobile comms, coffee, tea, and confectionary-machine suppliers have never had it so good
I sincerely hope that a complaint is made and that the EU investigates Bernie’s little empire. The financial structures engineered by Ecclestone are strangling Formula One, and he looks stupid when he denies it. We are fans and we are not idiots. I look forward to the day when Donald Mackenzie waddles off into the golden sunset too, pockets brimming over, good bye and good riddance.
The appalling lack of governance by the EU over FIFA may finally kick start some reforms. Sooner the better.
Careful with what you wish for. The current owner let’s someone who knows the business take care of it. Wether you like it or not, the next owner could bring tons of stupid ideas that would kill the sport forever.
After reading your latest blog Joe I cannot help but be even more depressed with the state of F1.
My feeling is even if the EU acts, it will take them a long time, to do very little but I do hope I am wrong on that.
I long for more teams, equal playing fields and close racing.
Well, let see what happens…..
Would much prefer the FBI investigators than European Commission , good article.
One of the problems with ‘customer cars’ would be – which one would you buy (or be able to buy)?
Given a free(!) choice no-one in their right mind would choose anything other than a Mercedes right now, then maybe a Ferrari, then maybe a Williams (if it came with a Merceded engine!). We’ve seen in lower formulas (F3, FF,etc.) over the years that at some point ‘the chassis to have’ is the Dallara so all the field has one, then Reynard brings out a better one and everyone who can afford it goes Reynard (and those who can’t potter round at the back in their Dallara) after a season or two, Migale bring out their Reynard beating chassis and again, all those who can afford it upgrade, etc., etc.
Surely the more well-heeled customer teams would outbid the less well funded for the ‘better’ car packages – i.e. money would still drive the field – with those with the least budget circulating 10 seconds per lap off the pace in their Manor/Renault (the only combination they could afford).
Joe,
This is a great post full of insight and passion for the sport. A sport that despite protestations from many is close to being broken. We can only hope now that an EU investigation brings about a complete reset.
Re: Fan Questionaires. I am an older fan who started to do the qs. Then I hit a question with no answers I agreed with and was not allowed to not answer, so I quit.
Most questionnaires are built in with – sometimes intentional – conformational bias and statistical ineptitude. I feel that F1 powers know exactly what the fans want but it does not fit with their agendas so we’re left feeling isolated and helpless. Divide and conquer really is effective.
Joe – a splendid mini thesis.
Your opinion is, from what I can tell, quite accurate. Nevertheless, however well informed you are, it’s just an opinion. FWIW, here’s mine.
Any sport which, every season, drags out more dirty laundry to wash in public is very likely to lose the support and interest of its faithful followers, and also damage the very brands currently calling the shots. I mean, really, would you buy a Mercedes, drink a can or two of Red Bull or choose a Honda scooter next week based on the actions of those currently promoting those brands in F1?
And any system of regulation which – either by accident or design – prevents real racing as opposed to the ‘coast to save fuel’, ‘save the engine’, ‘only five pu’s per season’ nonsense stands in the way of what F1 is meant to be about.
Joe Public (as opposed to Joe-too-close-to-the-woods) watches F1 to see the best cars in the world, driven by the best drivers in the world, RACE on the most demanding tracks in the world. They don’t give a flying f*** about technical developments, other than to admire the ingenuity or lateral thinking of some exceptional designers.
F1 isn’t meant to be a home for software developers, a money pit for car companies with more spare euros than sense or a place where manufacturers can develop potential road-going technology. WEC plays that game, and it plays it very well. It’s meant to be about the best showing they’re the best at racing the fastest cars, pure and simple. Or at least it was, back in the day. Can you honestly tell me this is what I’m currently seeing?
F1 has been on the path to implosion for some time – for all the usual human reasons of greed, self interest, power, general stupidity, etc. – and nothing you or I can do will change things. I only wish it would go out RACING, rather than trundling around in a real-world version of a computer game. It’s now a ‘sport’ where an anonymous computer tech guy somewhere decides how hard to push, when to come in for tyres, even where to brake. It makes a mockery of its past and paints a bleak picture of its future.
It’s over, Joe. Go report on FE. At least it’s honest about what it is, what it’s doing and where it’s going.
Each to his own
@RH a long post about what F1 should be in your opinion (I don’t agree) that is very short on how it would get there.
I am not sure whether you fully understand how journalism works. We are not decision-makers, we are observer. That is what the media does. If I was able to solve the problems (or thought that I could) then I would probably be doing it – and earning a pile more money than I am writing blogs for people who don’t necessarily appreciate them
We do appreciate. But you can’t please everybody everytime.
Read it again. Was I suggesting YOU solve F1’s problems? I think not. You stated your opinion, I used the space you kindly offer to state mine. Thank you for that opportunity 🙂
No, it was a post about what F1 used to be. It’s not going back, which is why its audience will eventually move on to other sports or formula. The personalities of those in a position to actually change things are too old / inflexible / indifferent to bring about successful change.
+1 RH. And although drivers are generally kept boringly ” on message ” by their teams, it was very interesting to hear Alonso quoted as saying that an F1 car now is akin to an airliner, and the driver like a Pilot, just managing systems on an automated flight. He also said that he’d been thinking and only just worked out that it’s been about 8 years or so since he last felt mentally and physically drained after a race. Strangely, it was LH who let out that Canada was in no way a challenge for him as a driver and was just easy. Others like JB have said that there’s no real challenge in driving an F1 car now, and this is most probably why it seems so very easy now for any young driver with pretty much no testing, to jump in an F1 car and be highly successful and immediately competitive.
Back in the day, when the likes of say Bellof or Senna got into an F1 car, one knew that someone special had arrived, and I have to wonder if say Verstappen is really likely to be very good, or is the TR just an easy machine to drive?
RH, I don’t agree that the public doesn’t care about technology as long as the show is good. Although I do prefer a good race and don’t care about where the energy comes from (a Boeing 777 spills out more carbon dioxide in one single flight than F1 would in a whole season with 20 races), I feel a big portion of the audience comes from people who wants to see the most advanced cars.
Great read, Joe!
Very well written, enjoyed the read.
Ye gods, what a treatise. I’ll pick one issue for comment: customer cars. The last highly impressive customer car effort that I remember was Hesketh racing using a contemporary March in 1973. With an in-house engineer to upgrade the car, a rookie driver and irregular appearances, they got points and a podium in their first year. I appreciate that the game is profoundly more complex now, but it still seems to me worthwhile to try to create opportunity for similar success stories. Isn’t the Haas car going to actually be pretty close to a Ferrari customer car anyway? There might be other corporate enthusiasts out there who’d like to semi-emulate Dietrich Mateschitz, if only entry could be made simpler and cheaper with a customer car.
Yes Anthony, and didn’t we all get behind the Lord and Master James! Talk about excitement and controversy!
But another way to tackle the problems now, might just be to reduce the complexity and the rulebook and go back in time a bit, even today I don’t think LH creates as much headline news as James Hunt did.
And if you were there, nothing about F1 today, in any way shape or form, compares to Mad Ronald, Lotus-Cosworth 72D and old Woodcote, Silverstone! You can make an F1 car that rivals the Starship USS Enterprise for High Tech, but if it can’t RACE….then it’s just a waste of space imho!
The biggest problem with the corrupt FIFA was that it was both commercial rights holder (for the World Cup) as well as the regulator.. It is always the CRHs that do the dirty deals. Sure there were bribes, but much of the income that FIFA received actually trickled down to the lower levels of the sport, throughout the world.
The opposite is true in F1, the CRH Hoovers up all the motor racing cash from the big deals, gives half to the teams and trousers the rest. Bernie sees it as Big boy’s games; Big boy’s rules.
But having drained TV Cos of cash, circuits of revenues, nothing at all trickles down to other levels of the sport. In fact at venues like Silverstone it flows the other way, every successful Historic race and trackday only help to fund the ludicrous fees demanded by FOM.
Wise words. Thank you.
Funny you mentioned the first Grand Prix race, which I have researched extensively for being a Hungarian.
True that, French car manufacturers rebelled against the system of the Gordon-Bennett Cup, which enabled two cars per country, while France was producing two-third of all the cars in the world (!) at the time. Mercedes had a plant in Austria, which enabled them to enter four cars in the race if they so wished, whereas Austria didn’t really have any relevant heavy industry to speak of.
Joe: “If one has nothing to hide, what is the problem with transparency?”
There are always arguments for commercial sensitivity. If an organisation is efficient in what it does, it can reasonably argue that it does not wish to share trade secrets with competitors. It’s part of the reason why F1 generates few patents; whilst the patent is processed, anyone can borrow the idea… It also provides a good argument that F1 teams should publish their designs at the end of each season.
However commercial sensitivity cannot be justified for most F1 activities. Broadcasters tell their share holders how much they pay for F1 rights. Private clubs which organise GPs have to share information. But governments, spending citizens’ money for an F1 franchise, rarely have anything to say. So F1 has a data inequality; European race organisers publish their costs and income, so anyone wishing to resurrect the French GP, for example, knows what the business is about; nobody can confidently say how much the Abu Dhabi GP costs.
—
If F1 moves to a customer/provider model, jobs will be lost.
If F1 moves to a fixed cost model, jobs will be lost.
Whatever decision is made, jobs will be lost. F1 racing is not an employment programme for skilled engineers, but people have to understand that any change has a human impact. In recent years, it’s not just F1 that has lost the plot. The other tiers of single seater motor sport have become spec series. No team needs designers to build their GP2 car. There aren’t many job vacancies.
If F1 moves to a customer/provider model, jobs will be lost. -> New teams/same cars -> + mechanics/ – engineers -> less innovation -> less attractive for both fans/sponsors
If F1 moves to a fixed cost model, jobs will be lost.-> dismissed engineers go to new teams who are now able to get into the sport/ + mechanics / + innovation / + attractive to everyone
Perhaps I am too much of an idealist here…don’t know and only time will tell.
This relationship between BE and CVC……. Rather cleverly BE makes himself indispensable after extracting mountains of cash from the sale, investing it all off-shore (or in hollywood houses), then rendering his services back to CVC as a consultant for a decent fee without most of the risk (I’d love to see the terms). I’m looking forward to a post-BE era when we’ll all find out where the bodies are hidden – so to speak. Now Mosley deflects attention from BE with well organised interviews, the double act working true to form. We need to keep both these characters well away from F1 Joe and anyone associated with them – it would be a start anyway.
The problem with commission-based solutions is that they often take years, and conclude in something only resembling true justice. Consider Mario Monti and Microsoft, a case that took five years from complaint to decision. Did the market change dramatically because of the Commission’s decision, or because the market itself changed?
Another great assessment.
I would argue that the rules should be stabilized with ‘lower tech-higher performance.’ Bernie hit the nail in the head with his quip about Formula E saving the world. Get rid of MGU-A, B, C and D’s and lets get back to raw horsepower. Most hardcore F1 fans, the ones who will and would spend money on it want high performance, not relevance to road cars.
At the same time lets get rid of the artificial limits on the engines and gearboxes, etc. That is one of the big things killing the show. Fans don’t want to hear drivers saying they had to conserve or park the car to save it for next race.
Bernie may think profit sharing and equalization is ‘communism’ but giving Ferrari et al more money than others is funding a welfare state.
People may not want relevance to road cars, but the manufacturers sure do. Why else are they involved?
Cam,
I realise you’re probably a genuine fan of the sport and just want what’s best for the future of F1 and entertainment for “hardcore fans”. In suggesting that the hybrid power units are not entertaining you forget that we’re on course for 1000bhp performance. There are further improvements suggested with the proposed reduction of 5 seconds per lap by altering the regs on tyres, aero and mechanical restrictions.
MGU technology and other automotive innovations are most certainly relevant to road cars, as Jim says and to suggest otherwise is simply wrong; I should know as I work in this area and the technology I oversee on race cars goes on to be used in road cars.
All sport has regulations, or as you put it “artificial limits”. Others call it ‘the rules’.
I’m not suggesting that all is well in the world of F1, far from it, but regulations produce creative solutions to bypass those restrictions. If the backward-looking “raw horsepower” brigade had their way we’d be screaming round tracks at 250 mph killing drivers as they crash into straw bales and having no technical relevance to road cars or commercial relevance to the sponsors.
The world is moving on – jump on board!
Marketing, Jim. Brand awareness and top of mind is a big thing for consummer goods. Mr. X may want to finally decide to buy the Mercedes over the Jaguar because Lewis Hamilton won in a Mercedes on Sunday.
…. and Mr Patel gets smashed on Smirnoff on Sunday night because Force India has a fraction of the budget of Mercedes and so get nothing despite having the same PU.
A sensible spending cap is the only regulation that is needed. Who gets the biggest BANG for their bucks?
I tried to buy a Petronas the other day but it seems that Sainsbury’s don’t sell them
Which means you’re not their target consummer not that their strategy is flawed. Investing in motorsport, specially F1 is one of the ways to make a brand go global and get associated with adrenaline, challenge, etc in the process.
Dear Joe, all
Jim- do the manufacturers want true road relevance?? Or, do they want a formula that looks green & future tech, to add a wee bit of lustre to their brands?? Win on Sunday, sell on Monday.
Speaking as a single version of ‘people’ I really do want a formula that develops, with minimal lead time, technology that, at least potentially, improves the efficiency and performance of the average road car.
Cheers
MarkR
They want both
What’s the gut feeling here , Joe ?
Are they going to be investigated , or can they actually affect change without being forced by court action ?
Is Kolles’ name something of which you’ve heard rumour , or a random suggestion ?
What I mean to ask , I guess , is if it is some encouragement you’re offering him ?
Rumour
Bring back FOTA!
Majority rules, offer one voice to the team part of the equation.
I still think the FIA should mandate that all teams cars and engines should become public through the FIA web site four months after the first race and every four months after.
No incentive to spend $280 million to develop and engine, too much spending GONE!
A excitingly thought-provoking precis–thanks, Joe! I trust you are keeping careful notes for a future historical-perspective book on these times in F1. Don’t wait too long, I am 61!
(…and at that age, BTW, craving more information through every channel, including social media…)
The large teams will also resist cost-cutting in their pursue of the customer car business model. Regardless of what they say they are actively involved in driving the non-manufacturer teams out of F1.
Formula E is starting out with common chassis, well common everything nearly, But gradually introducing team constructed cars. (It also needs to change to battery instead of car swapping) Here we are in danger of ending up with half the field in the same car. The junior formulae already take care of that part of a driver’s career. Look how successful A1 racing was, did anybody see any of it? It was totally invisible to me apart from the odd result listing. Of course no doubt certain people ensured that it was not seen on terrestrial tv.
F1 while profitable on a ROCE basis, it is a very small part of CVC’s investments, I guessed it at 5% maximum. It has been in their portfolio longer than most investments, it would not be surprising if they quietly sold their remaining stake. The huge debts only make it a viable investment to hold if the future can be guaranteed. If FOM or Delta ceased trading, ie if F1 collapsed or became non-viable, the loans taken out for dividend distribution could become a burden, too big to bear, in which case the lender would be getting nervous. Bankruptcy and plane tickets could follow, leaving nothing behind but massive debts, piles of useless machinery and full lifetime employment for legions of lawyers.
F1 sits in a closed ended fund managed by CVC. Ultimately it is answerable to its investors in that fund. A couple of years ago, the fund was coming to the end of its life and they had to offer liquidity to their investors. When the float failed, they managed to find some new investors who could buy out some of the old ones and also allow CVC to collect a massive performance fee.
The key issue that I can see is that the fund will soon be due for another liquidity event (as these are usually 3, 5 or 7 years) and CVC will need to pull another rabbit from its hat.
{pauses, in the doorway}
Thank you, Joe.
{leaves}
rassurez-vous pour le sondage du GPDA, j’ai 65 ans, des amis du même âge ont répondu… l’internet, twitter et autre n’ont pas de secret pour nous ^^
You are unusual
I don’t agree Joe – I believe you’re not too far off that age?! Maybe oldies tweet less.
Anyone who has a true passion for something tries their best to learn as much as possible about it. Unless they are a curmudgeon…I believe the French is “le encroûté”? After all, most men in their 60’s still think of themselves as 20… (holds hand up)
Jon – vieux croutons is a popular slang expression over here in France for old people. Also, tamalou (condensed of “T’a mal ou?” – sorry can’t type accent on u – litterally “where are you ill?”. Not that we are like that yet of course!).
What a can of worms!
Amazing the great lengths to avoid another column of revenue to shore up the mid and back-field. Granted a one-make chassis or a franchise car are partial concessions to solve the inequity in the revenue distribution but they also damage the very essence of F1.
Yes the EU is coming after Bernie and the Boys. They have actually learned a few tricks from their past, extremely long and boring investigation. That is they start to leak or brief selected newspapers about what they’re looking at with regard to the target business (Sport). They also start background briefing on the target – sports – business, hoping that word does get back to people like Bernie, and just maybe they do something. This way they cut down on the amount of time it takes, to get a result.
They are, from what little we know, looking at two main parts of Bernie business. That is how the revenue is paid out. What Bernie has done is not illegal in any way, just very different.
The first one is what he calls Heritage payments. These are the big ones to teams like Ferrari, $100M per year, Red Bull $70M, McLaren, & Williams $50M.
In other “sports”, these are called appearance monies. That is a promoter pays the star of the day, to come to his event. But here the monies are very different. From $50,000 to $200,000 as an average per event. Then wherever the “Star” finishes in the tournament, then they get a share of the prize monies, which are paid out, pretty quickly. (Within days)
The big difference is the amounts. Ferrari in theory gets $5m to turn up at each Grand prix per year, based on a 20 race season.
The EU would demand either all the teams get an “Appearance” fee, but more inline – realistic to other sports. Or they could ask him to drop it.
The second problem he has, and here is where he will come unstuck, is how he pays out monies from the prize fund, not based on where you finished that year, but over a number of years. If one looks at the current newly sign major TV rights for European football, which has a pretty similar amount in revenue to F1, and how they pay out the amounts to the football teams then that is a format that works and the EU and teams are happy with. Bernie knows within a few pennies how much he has each year, as he signs long term 5 to 10 year contracts with the circuits (Countries) and the TV companies, so no sense in holding over funds and pay out over a period of years.
As for theStragety Group, bad idea, and most likely would have to be close down. It should be all the teams or none. The FIA should be running and setting the rules, but don’t. The Commercial rights holder is doing their job, getting in maximum revenue; it is just the way they pay it out that is the problem. The ownership of the “Rights” holder should be in theory be a non-profit type – style organisation.
Points of order:
Bernie and CVC are promoters. What they do is not rocket science. They should get around 10-15% of the spread after costs, which I’m led to believe is the common margin for promoters. They should not own and control ‘the sport’.
F1 has reached a postmodern stage. The white heat of technology on which it partly built its brand is no longer relevant. If we want technology, cars and powertrains that are road and industry and relevant then the current regs are a clumsy and expensive fudge. F1 had to decide what it wants to be. Technologically relevant or a high octane entertainment? Formula E had rather stolen a march on the former, so something more akin to the latter is probably the better bet in the short to medium term.
Are the current cars too easy to drive and not spectacular enough? Yes – I think most people can agree on that. Is the move to get the cars back to the kind of laps times where they were in the mid-Noughties the way to go? Again, I think most fans (and drivers) would say, ‘yes’.
Are multiple constructors using innovative engineering and aerodynamic solutions part of F1’s DNA? Yes.
Are most Tilkedromes anodyne and boring? Yes (what was the cut on that deal I wonder?) How about a mix of classic tracks that are part of F1’s DNA and new tracks that present genuine (designed even) overtaking opportunities.
There are no easy solutions in all of this but I think these are good points of order in which to start the discussion.
Bravo Joe! That was the most erudite and complete essay ever about the problems and issues of the sport. My hats off to you!
Like any ecosystem that moves towards a monoculture and pushes out diversity one finds less innovation and less competitiveness. Which is where we stand now in F1. The last “privateer” standing or shall I say sitting is Sir Frank cast from the mold of the Colin Chapmans, Ken Tryell, Lord Hesketh and Jack Brabhams. I’m American but lived in outer London from 71- 77, I went to Brand’s Hatch and Silverstone yearly for the GP. Six wheeled Tryrell’s, Ford Cosworth engines, Lola chassis, 3 kinds of tires, it was less 800 people at a factory tinkering with data sets than what engine you took off the shelf and which driver could drive to the edge and not get killed. We don’t need the death part back but the driving to the edge of the car’s and driver’s ability would be nice.
Even if the EU launches an enquiry, it’s probably going to take a long time to complete it. In the mean time F1 will continue to wither on the vine, particularly when you’ve got 4 team principles acting like a bunch of spoiled children who refuse to do anything to help the show return to something that interests fans instead of continuing to turn them off.
While Formula E is never going to replace F1, it appears to have people behind it who have a long term plan to bring more constructers on board. Once they work out how to make a Formula E car go up the hill at Monaco and if F1 still has no viable plan, then I’d be worried that sponsors and fans will start to drift off in greater numbers…..
Electric racers with sufficient grunt are to be welcomed, and could be a source of enthusiasm (test drive a Tesla 85D if you doubt this), yet the soul of motor racing must be a combustion engine–at least in part, and at least for the forseeable future. The demi-furor about sound confirms this in principle. The ideal configuration is probably a core combustion engine allied with supplementary electric power…by Jove, that’s exactly what we have today! One pines, though, for the ripping-sheets-of-steel sounds of the past…ah, well, there’s always historic racing.
Honestly not interested in FTA broadcasts, they are omni-directional and largely fixed in time and space. ie at 1pm at home on your tv or recorded on your Sky box ect.
My interest in F1 would be magnified by having a web portal direct from FOM offering any time access to the race through the multiple visual and data feeds on offer and team audio that isnt cherry picked. Oh, and im happy to pay for it.
I know its probably coming with the Tata deal, but feel like this should happen sooner than maybe is possible with current contracts, although i did hear that FOM can take back online rights anytime they please.
here here, fed up of all this fta talk. If reverting back to normally aspirated engines is be going back in time, I’m firmly of the opinion that fta is exactly the same. If my dad (60) can log into a site and stream the F1 race (as he does with my SkyGo account) then anyone can do it – he’s useless with a computer but loves F1.
The FIA (or whoever it is) should offer free streaming with adverts or subscription and no ads. Simple and been done by many successful music streaming sites. It would also anger Murdoch greatly so I’m all for it. 🙂
> If my dad (60) can log into a site and stream the F1 race (as he does with
> my SkyGo account) then anyone can do it
If they have a fat enough pipe, that is. I tried watching the TT highlights via ITV Player after a scheduling conflict ate the planned recording and it was an exercise in frustration. That’s in the dinosaur-infested wilderness that is NE London, not some far-flung corner of the Empire.
Yeah sadly the ITV player lacks the bandwidth required for the demand. iPlayer had the same problems early on but addressed them, ITV haven’t. BT Sport also had (and still having) issues with demand at the same time.
Hopefully with Tata involved bandwidth wouldn’t be an issue.
Pushing for FTA is also about securing the future.
I’d love to know how many of the current F1 mechanics and engineers are childhood fans who didn’t grow up with Sky in their homes.
yes but that’s how it was at the time, I’m sure they all listened to music through a Walkman, HiFi or CD player and probably recorded the races on VHS (I’ve a stack of them in my loft) My point is that FTA TV only reaches a limited ‘ageing’ demographic.
Making content free and available on the Internet will see viewing figures go through the roof and they’ll be able to advertise around that. Those interested can then subscribe and lose the ads – as a business model this has been done and proven to be very effective – see Spotify as an example, Google have their own version and now so do that small company called Apple.
There’s a big difference between pay-walled SkyGo and “free and available on the internet”, I didn’t understand that you were pushing for the latter rather than the former.
TOTALLY agree with this. I’d pay £5-£8 per race to watch all the content online, when I wanted to.
Formula 1 appears to be a very profitable cash cow for CVC and the other investors but they cannot unload their interest in F1 because potential investors are put off by the intrigue and slightly dodgy people and arrangements in running it.
Except that the teams are not really inclined that way. If F1 is such a good prospect with $1.8bn p.a. why don’t they all go to their banks get a loan for a proportion of CVC’s investment and collectively buy them out? The sport is run by the participants while making enough profit to pay off the loans.
This is logical, but they don’t want the liabilities etc. The answer is to create a neutral “foundation” with plug-in ownership for the competitors. If they leave they are no longer owners. This foundation needs to do the job required to promote the sport properly without needing to pocket half the cash. The first thing would be to get rid of the debt load and invest in areas of the business that have been done badly: merchandising, multimedia, cinema etc. Then also need to cut better deals with promoters so that they can afford to improve their facilities and lower ticket prices.
Great idea, surely the teams have looked into it though? Can’t believe a shrewd business man with a keen interest in F1 like LDM wouldn’t have done this years ago?
He had different goals
Great article Joe.
F1 is in a mess simply because of greedy folks who don’t believe in sharing. The so called investigation if they honestly investigate will just be to keep us fans at bay or pretending to to give us some form of hope that it’ll get better. Thousands of comments about the negativity is more than enough to make you lose interest in this sport. Frankly it’s rather shameful for this brand labelling themselves the pinnacle of motorsport.
Young people are more savvy in the social media but not in F1 definitely.
Please also note a young lad attention spell is too short. F1 is a complicated sport not a teenager worshipping pop idols kinda fan base. So that young lad has to have some form of knowledge and must be patient to a point of enduring which usually comes from following their parents who love the sport to the core.
Anyway Bernie does not need young fans but Rolex buying fans who don’t even bother about the sport except maybe swipe his hand across your face so you can see he’s bought a super expensive watch.
F1 has to fall down hard then it can rise up again. When you arrive on the top of Mt.Everest you have to descent in order to conquer the peak another time.
So Joe, where does Gerhard Berger sit in all of this? He’s been sniffing around all the heavy hitters at each GP for a while now.
TK dismissed he is trying to take over McLaren on the last notebook segment & said it was/could be more to do with overturning the BE show…
That would be interesting…
Maybe he just likes motor racing, had a doctor’s appointment in Rochester, wanted to see his old mate Jean. Sometimes things are what they seem. I don’t see Gerhard doing anything much at the moment. He may be watching and giving opinions to people but that’s about it.
What’s TK?
@speedster – Ted Kravitz.
Ted Kravitz, F1 talking head
As always, it all hinges on the money.
Engine designs have to be industry-relevant because the teams cannot afford to simply buy ludicrous prototype engines and engine manufacturers cannot afford to develop dead-end technology at a massive loss. The teams pay a price they can afford (just) and engine manufacturers still make an operating loss on the projects, taking benefits in R&D and staff development as a return on their spending.
Aero performance has to be hobbled because the circuits cannot afford to endlessly reshape their corners and run off areas to ensure safety. Limiting cornering speeds by attacking aerodynamic (and tyre) performance is the only safe solution for everyone present. Circuits spend what they can on safety improvements, but are apparently mainly making a loss on hosting a race, hoping to recover the losses on promotion of future events.
I like Mr Mosley’s communism (slightly ironic, given his political background) though I’m not keen on the two tiered system – it seems likely to result in yo-yoing comparative performance between the two “classes”.
Food for thought: Renault is spending more in F1 than Mercedes is. Is it really down to money, or is it how you use the money?
Joe it is purely down to how you use the money. Renault is not using it wisely, and that is a management problem, as you have already highlighted.
Funny thing, Renault has just opened a Bank, yes that is correct, a Bank, where you can put in either £100 or a £ million pounds here in London. It is not a simply car finance company, but a full on UK Bank, with a license and will take deposits’ from the general public.
So Joe would you put in your savings to a Bank owned and run by Renault?
They seem to be doing strange things Renault, opening a Bank and having Tony’s wife on the main board as a Director of a Car company…..oh well we learn something new every day it seems.
I was commenting more on the status of F1 in general rather than the varying fortunes of individual teams and/or engine suppliers.
F1 engines have to be industry-relevant because F1 teams aren’t rich enough to pay the kind of prices you’d need to have a “true” racing engine in the back – the kind of prices at which there would be a workable business model for independent F1 engine builders like PURE.
As it stands, the money isn’t there, so to get as high performance an engine as possible, F1 has to bend to the whims of the road car market, using engines which incorporate features that car companies want to develop, rather than ideas that F1 wants to develop.
Jem, if you watch the massive free coverage from France this weekend, you will see Porsche, Audi, Toyota & Nissan fighting it out with very technically advanced cars that probably work on a budget that wouldn’t keep Frank Williams in business, but which obviously works for those Manufacturing Companies, 2 of which being joined at the hip but still rivals in the WEC!
Further, there are strong rumours that BMW will soon join in the series, and Ford will be dipping a toe in the GTs too, so it seems, which may also lead to an involvement in the main series.
So why are these huge Manufacturers entered into a series no one is watching, why are they not enthusiastically building cars for F1? And why doesn’t someone ask the racing divisions of these Manufacturers why they are in such a dead end series instead of sitting with their tongues out at Bernie’s table? Is it possible that the answers generated might not be in sync with the F1 message??
“So why are these huge Manufacturers entered into a series no one is watching, why are they not enthusiastically building cars for F1? And why doesn’t someone ask the racing divisions of these Manufacturers why they are in such a dead end series instead of sitting with their tongues out at Bernie’s table?”
The answer to the first question lies in corporate decisions over cost-benefit analyses between F1 involvement and WEC involvement. You abstractly suggested an answer yourself : the odds are that the lower cost to competing in WEC means that it’s easier to justify the spending on harder-to-quantify benefits in staff development and R&D potential.
You’re absolutely right that the FIA and FOM should be keen to learn why other manufacturers aren’t queuing up – but it doesn’t surprise me that they aren’t.
Excellent text, Joe. But effectively, what would be your recipe? I see you support Max’s suggestion but is that your recipe as well? Do you care to have a recipe or, for the sake of journalism, you observe and comment and having a recipe of your own would mean you’re now part of the problem / solution and would compromise your position as journalist? Damien Smith of MotorSport Magazine recently wrote an article about how to run F1. It’s his recipe.
I don’t think I found the good recipe so far. Just like team owners mix the sport and the governance with their own interests, I feel the fans for the most part mix the governance and commercial discussion with the sport. We start talking about how unfair is Ferrari to make 5 times more than Lotus and end up talking about the sound of the engines.
In my point of view, what we need is stable sporting and technical regulations to be able to focus on the commercial / governance aspects of the sport. After this is done, whoever survives then can tackle the regs. The core of the regs needs stability so stakeholders can focus elsewhere and save the sport.
There’s no question there must be a financial health baseline so all teams are able to compete (franchise / foundation, whatever) but I believe that prize money based on performance is also well deserved for those who read the rulebook intelligently and win.
Any regs change for now should be focused on attracting the public back to TV and circuits. Large car numbers on the rear wing endplate would help a lot. I have been recently in Monaco for the GP and it was sometimes impossible to understand who was who. When Hamilton lost the lead it took me 2 laps to understand that Rosberg was really ahead. And I spent the whole race trying to identify Ricciardo and Kvyat. Unsuccessfully, I must say. Sauber must be praised for their large car numbers!
I think that we have to have a cap on budgets. That would be good for everyone. We have to have a redistribution of wealth. We have to have marketing and it would be good if we had a governing body.
Cost cap, OK. Difficult to regulate as teams can operate from a myriad of companies and not all are listed companies. However, I read mention of how important wind tunnels are and believe those should be banned and replaced by CFD only. It would limit costs, push that technology upwards and the tunnels could be rented out to others for side revenues, keeping the job of those who operate it today. I feel wind tunnels are dinosaur technology in the digital era.
Distribution of wealth. The communism idea. Great idea but hard to be implemented without an EU ruling or some enforcement of that kind. It’s not in the spirit of the current owner to invest in their asset.
Marketing. Fully agreed. Making the sport more accessible and educating audiences would be a huge help. Adjust the sport to the audience. Again, been recently in Monaco as a spectator and everything screams: you’re not welcome here. Not any different from any other F1 race in other circuits. I remember IndyCar in Vancouver once. Form 20 bucks you would go into the garage area where you could see all mechanics working on the cars. Digital media is a must. The current offer is slim and expensive. And not accessible to whoever is not a fan already.
Governing body. I believe it’s a question of time that Todt leaves and the next FIA president will certainly act differently.
How to start? Teams could change all that. The bottom line is teams don’t seem to agree on anything and act selfishly. Bernie made fortune on this. To bring out massive changes like these you’d need something like a very well oiled FOTA. Do you agree?
Why is it difficult to regulate?
Take McLaren as an example. It’s a non listed group of companies which has the F1 team, the road car manufacturing, the components business and even an events and catering company. By itself, there are many ways accounting can hide F1 R&D expenses away from control. If you add Honda, which is also a car manufacturer, they have several options to allocate F1 R&D in Honda prototype cost centers and it would be very difficult to track through accounting (or very expensive, to say the least). One needs to see how other sports with budget caps operate. Some input from a reader working to the likes of PwC or Deloitte could give some insight, please. If a control is feasible then, instead of a cap, I’d implement some other weird idea like, for each dollar invested in the team, there would be a mandatory deposit of another dollar in a fund that would be accessible by teams in need, complementing their sponsorship revenue, for example. This could eventually hold costs down but maybe also generate the positive side effect of less pay drivers.
Why the hell are you calling football ‘soccer’? You’re British for gods sake, its infuriating to read.
I may be British, but the British understand what soccer is and the Americans, who make up a decent percentage of the readership do not. Thus, I use soccer. The fact that you get upset about it means that you know what it means.
I am Australian of British heritage living in Singapore who has lived all over the world and I currently follow 4 different “football” codes.
So when Joe writes “soccer” – I know exactly what he means.
This is a very internationally read blog and to be infuriated because you are British smacks of something far worse.
Touchè
Touché even
Anyone from the US reading your blog is going to know when you say football you mean soccer. Even on the Premier League telecasts over here (they show almost every game) they call it football.
I am simply trying to help keep things clear.
‘Soccer’ is a word that has its origins in Britain. The upper class twits invented it to distinguish the round ball game from ‘rugger’.
Hi Joe, great blog entry. I too thought Max Mosley’s comments on a dual rule formula to incentive a cost cap were sensible. Do you think there’s sufficient support for the idea within f1 for anything to come of it?
Hmmmm F1, I remember that sport, it used to have real cars with real gearboxes, oh and really nice sounding motors and the drivers actually drove them and there used to be this thing called overtaking and sometimes the underdog would win , now they look like oragami, sound like shit,all look the same , have more electric DC power than they do mechanical power, have little shaved nut sacked cry baby drivers like Hamilton ( please bring back real racers like Villanueve,Mansell,Prost,Senna or Schumacher)
F1 has disappeared up its own arse thanks to small man syndrome Bernie One stone who has been the dictator for far to long . Not sure what the solution is but fresh blood and bringing it back to the people would be a start oh and whilst you’re at it can we have cars with names of true automotive manufacturers and not piss tasting fizzy drinks as I am all up for hearing names like BRM,LANCIA,MASERATI,ALFA ROMEO,TYRRELL,AUTO UNION AUDI,RENAULT,HONDA etc again.
Rant over, going to watch the electric series now cause at least there is a Prost driving and if you turn up the volume really loud you can hear the glorious sound of that brush less motor which sounds almost as exciting as my refrigerator, but fear not as F1 is only a few seasons away from being the same.
but what about technical changes to slow cars down? what if someone under the cost capped less restrictive path builds a car that can corner much faster than what would be deemed “safe”?
why no system akin to performance ballast? we currently have development tokens, how about tokens awarded at each race, none for winner, tokens increasing down to last place? those that need the development are afforded the opportunity to do so. those that start the season with a opponent-crushing advantage, don’t get to improve. the off-season would still provide the engineers the opportunity to show what they can do, but in-season, the others would have an opportunity to catch up. combine with a more equitable share of the revenue, and you’d have the best of both worlds… freedom to innovate, and a cap on development spending.
The EU case would have no real merit whatsoever. If CVC (or parties potentially controlled by them) were controlling the global shampoo industry and limiting the players in the game in a way that meant that the best shampoo available was not the best that might be available for consumers should they (CVC etc.) not manage it in a way that was deliberately to the detriment of shampoo purchasers in the EU then it would be a 10 year long court case (See Microsoft, Internet Explorer, Google currently)
Its a fairly niche sport with private entrants. The court case (that won’t happen) would be binned within a year.
The best possible shampoo it can be argued, (in 2015 a basic necessity, potential health impacts if not regulated properly for all EU citizens, mostly produced and sold by a global oligopoly, etc. ad etc. of a Year 10 GCSE Economics project) is a far more likely target of EU governmental ire than a sport entered into by private teams where all players, whether customers, teams employees, suppliers are free and willing participants for personal benefit.
Joe – I pay for your magazine just to give back a bit for the insight you so often give into F1 in the blog. I agree with your overall stance – F1 could be better managed and sharing the wealth a bit better would be in the interests of the sport. Totally, I get your point of view and enjoy your blog immensely.
But your attempts at legal interpretation are awful. Just because you want it to be true and it seems reasonable does not make it likely at all – this certainly isn’t to be reserved to F1 stuff!. The last time you did it was over Van de Garde – your ‘Barrack Room Barrister’ stuff was awful tosh.
I’ve always thought “Or I’ll eat my hat” a singularly silly statement. So instead – if there is a case brought by the EU against FIA/F1/CVC Partners or similar within 12 months I will buy a Lock & Co Montecristo Super Fine Panama hat and give it to you for bragging rights/auction/prize or whatever you fancy.
EU charges will not lead to reform of the sport – or I’m down a hat. PM me for my details – I’ll escrow the hat – if such a thing has ever been done before!
Regards,
Daniel
Let’s see what happens…
A year later my hat is secure. Au secours F!
Slow year? 🙂
I actually bought a hat of that exact type for my birthday at the weekend. EU intervention won’t happen for another 3 years if ever in the post brexit wonderland/bed wetting episode (dependent on your views)
Nascar has usurped the four car rule largely by using customer cars. Which created a stronger mid field but at the expense of some of the start and part teams. Used to be there’d be 50 cars or so at most races for 43 spots. Between changes in the qualifying system, customer cars and the economy there are only a couple of extra cars at each race.