A positive meeting in Geneva

There have been two days of meetings about the future of Formula 1 in Geneva and it seems, although the people involved are tight-lipped that progress is being made and the result is a positive one for the sport. Hallelujah! The details are not entirely clear, but it seems that all parties have agreed to cut the prices of the power units to customers, as has been reported, and they have agreed to make sure that everyone who wants an engine will get one. There will be some changes to the power units in 2018 (but not before) but the details are not yet finalised, but when that is settled the rules will stay in place until the end of 2020. I am also hearing that there will be only three gearboxes per driver per season, in order to reduce the costs. It remains to be seen whether there will be any announcements about all of this, but it would be a good idea to start the new season off on a positive note. One of the biggest problems of F1 in the last couple of years has been the negativity that has come from the sport. This has been picked up by the fans and that is not a good thing. However, the other day, Toto Wolff of Mercedes made avery interesting  observation to the German media.

“In the last season,” he said, “we generated $3 billion in advertising value, which means that this is the sum of money that we would have had to invest in TV and print advertising in order to achieve a similar result to our commitment in F1.”

That is mightily impressive, particularly when you look at the team’s budget, which is around $500 million a year, although this total is not the real cost to the company because that is obviously offset by money that Mercedes gets from sponsorship revenues, television money and all other revenues that come from the business, notably the fees for engine deals and, of course, merchandising. So they are getting useful technology and advertising. Ferrari is getting the same and the signs are that the Italian firm is making a profit out of F1.

And let us not forget that the technology is extraordinary. The automotive industry has spent more than 100 years trying to improve the thermal efficiency of its engines. Thermal efficiency is a measure the energy that goes into an engine and the energy that comes out in a different form. This has crept up slowly for more than a century but the best engines were only at about 35 percent two years ago. The F1 power units have hiked that to almost 50 percent today, and there is no way that this cannot be described as as anything other than a revolution. The sport should make more of this incredible achievement. In time these advances will seep through into production vehicles and I hope that when other car companies start to understand this, they will rush to join the F1 circus. The pioneers have paid a lot in terms of R&D but the technology will spread quickly now and that means that newcomers will be able to catch up, if they are sensible. I also hope that the manufacturers involved will stop being stubborn and will apply the same platform engineering thinking in F1, as they use across their product ranges, allowing for the same technology to be used twice or three times using different brands. Let’s see Alfa Romeo, Maserati and Chrysler in F1. Let’s see Alpine and perhaps Audi, Porsche, Lamborghini and Aston Martin as well. It is simply logic.

And then, if we have this, the sport can start to roll forwards again, attracting new people and new inspiration…

 

43 thoughts on “A positive meeting in Geneva

  1. Joe, do you think today’s announcement by Renault of emission problems with their diesel engine may hit their F1 plans?

  2. > and they have agreed to make sure that everyone who wants an engine will get one

    *An* engine, Joe, or *the engine of their choice*? With any stipulations or commitments in terms of spec, equivalence, etc?

  3. As a marketing professional, auto enthusiast and F1 fan, I cannot fathom why the thermal efficiency issue has not been shouted from the mountain tops. There are so many ways this can benefit F1 with absolutely no downside. And to be honest, I’ve never heard it mentioned anywhere except here on your blog.

    Surely F1 has a marketing department with marketing professionals. They are dropping the ball on this one big-time.

  4. Joe,
    Will the new price for client engines take effect this season? This would be a great relief for the financially desperate teams.

  5. Speaking of the sport, Marko said their use of the “alternative engine” in 2017 would be a precondition for them to stay inside F1. Now, as Red Bull was one of the major naysayers concerning the hybrid engines, will they now leave the sport as they are beaten and there will be no new engine concept? A man of his word?

  6. Joe, will reducing the number of power units/gearboxes really help budgets in a significant way? I was under the impression that the majority of spending occurred with the R&D involved, not the actual production of each unit. Perhaps I am wrong, but is there really much of a difference in spending for 5 gearboxes as compared to 3 in relation to the entirety of a teams technological budget?

    1. Good point and you got me thinking………

      If it’s similar to before the 3 is not an absolute it’s just the point at which penalties are applied. So they can use more. So the extra ones will still have to be built even if they aren’t used. You cant phone home on a Saturday afternoon and ask for an extra gearbox to be manufactured by teatime.

      They will be manufactured and assembled in batches so it’s just a case of material and machine time, not a lot extra in the big picture.

      It may well be that the real benefit to this sort of rule is reliability, which will hopefull be transfered to production cars.

      1. Precisely. A complete red herring that I’m surprised is let pass! The upfront costs are the same for 3, 5 or 100. Casing will stay the same so gears, splines, bearings, etc, etc need producing + spares naturally. Compared to engines with their ancillaries this is ‘small change’…. Hundreds of thousands, yes but nothing in comparison.

  7. Any changes to the silly rule that penalizes a driver for engine changes, such that he is now 64 places behind P1? Also – maybe just me, but, do people watch races because of thermal efficiency? I don’t. Or is that more of an enticement for additional engine builders.

  8. The F1 power units have hiked that to almost 50 percent today, and there is no way that this cannot be described as as anything other than a revolution.

    When gas is $1.79 a gallon, I think waste of money may be an applicable description too. 😉

      1. I just read the headline in the Minneapolis Star/Tribune that says “Cheap gas fuels more trips, bigger cars.”
        What are Hybrid car sales doing now? Slumping perhaps? What are larger SUV and Pickup sales like now? Surging perhaps?
        Just saying that not many people are considering efficiency when purchasing a new vehicle when gas is cheap. It may be impressive that they have increased efficiency, but it isn’t going to sell a lot of vehicles at the moment.
        If your goal is the spend money to help sell your cars, then I feel that the oodles of cash spent on a 10% increase in thermal efficiency could have been better spent elsewhere, given the market conditions atm.

  9. Joe, as per this portion:

    “but it seems that all parties have agreed to cut the prices of the power units to customers, as has been reported, and they have agreed to make sure that everyone who wants an engine will get one.”

    Does this mean that Bernie [& perhaps Jean] will no continue with the plan for an independent engine supplier/builder for F1, or is it still ‘full steam ahead’ with that idea?

  10. I hope no one in F1 was reading about Nascar, because their CEO wants to have an automatic caution (basically SC) every twenty minutes

    1. This is set in stone for the Truck Series, but not the Sprint Cup or Nationwide Series’ (or whatever they are called now).

    2. In the truck series they will. I suppose you could argue that they are testing it out in a lower series before introducing it in the Sprint Cup series (or whoever will be the new sponsor in 2017). But then, lots of us always wonder about phantom caution flags when the cars get spread out.

      Stupid idea IMO but the truck series is losing support so NASCAR feels the need to try things. Me, I’d try more dirt rack races like they do in Eldora, the only truck race anyone cares about

  11. “The details are not entirely clear, but it seems that all parties have agreed to cut the prices of the power units to customers, as has been reported, and they have agreed to make sure that everyone who wants an engine will get one.”

    The wrong cobblers. I reckon you are wrong about pricing.

    Mercedes Benz look after their mates. Perhaps not racing, but they put racers in their old cars.

  12. how is limiting engines and gearboxes cost cutting when you are allowed to take another with a grid place penalty. My memory and therefore my conclusion from recent years can possibly demonstrate that no team was significantly disadvantaged by the grid drop penalty. They should change the rules to say 25 constructors points for a full engine and 15 for a gear box. Constructor Points reproted at Zero if a team starts going negative, but the real tally can be used to rank 2 teams at Zero end of the year.

  13. Well this is bad for F1 … No fast cars till 2018 now… I know you think these cars are amazing , as you are there at each GP , but I was in Austin, this is not F1 , there is no WOW factor anymore…. Why do we have Formula E… Some of things in life should stay the same…. Bread is Bread, no matter what… Men like fast , loud cars, not whats F1 has become… This is a testing play ground for manufacture…..

  14. “In the last season,” he said, “we generated $3 billion in advertising value, which means that this is the sum of money that we would have had to invest in TV and print advertising in order to achieve a similar result to our commitment in F1.”

    This statement doesn’t stand up to any sort of reasonable examination.

    I presume that the $3 billion figure is arrived at based primarily on viewership numbers, social media shares etc – ie driven by the number of people who watch the sport or who attend the races.

    If Mercedes had spent $500 million on football advertising, whose fanbase is multiples of F1’s then logic would dictate that there would be some sort of multiplier on your spend there as well – one that in all likelihood is higher than F1’s simply because of the number of people watching.

    So no Toto, you wouldn’t have had to spend $3 billion on print or TV to get the same exposure. That’s a nonsense.

      1. I’m not arguing that they didn’t get $3 billion worth of exposure. I’m arguing that they’d have wouldn’t have had to spend $3 billion in cash to get the same exposure in other sports either.

        I understand. Toto needs to make it appear as though F1 is the best spend for Mercedes advertising dollar.

    1. I think you are missing the point that there is more to brand exposure than simply the number of times the company logo is seen on a shirt/car.

      How many stories are written about the sponsors of football matches or championships as opposed to the teams? Arsenal for instance are sponsored by Emirates, how many times is that mentioned by the football press in stories about the team.

      You are reading a blog which, like the rest of the F1 media, gives regular and detailed exposure to the teams, In every story which mentions the Mercedes team, there is the name, in the headline and the first line of the story.

  15. Hi Joe,

    Perhaps a bit off-topic, but I’ve noticed that you have advocated manufacturers’ use of multiple brands in F1 for a number of years, now. I, too, think this is a no-brainer, to have Ferrari compete with sister brand Maserati, Renault with stable-mate Nissan, and Mercedes with, eh… well, Smart. 😉

    However, not even in the manufacturer-heavy years from roughly 2000 to 2009 have any of these parties tried this. So, perhaps to them, it isn’t so logical after all.

    Would you care to do a piece on this subject focusing on the positives as well as the negatives some time? I’d be very interested in reading such an article.

  16. “One of the biggest problems of F1 in the last couple of years has been the negativity that has come from the sport. This has been picked up by the fans and that is not a good thing.”

    I’m not sure I agree with this argument, Joe. Yes, there is a lot of negativity coming out of F1, but does it explain even partly why young people, let alone die-hard fans, are not embracing the sport as they used to? I’m a die-hard fan. I don’t think ‘ve been infected by the sport’s negativity (I care only about the racing), and I don’t think a unified front about the wonders of these new engines would make me look at the sport differently. What I do think is that the sport has some fundamental problems. For me, a combination of artificiality (DRS, the tyres), not so inspiring drivers (it doesn’t feel like a clash of titans), heavy cars, boring tracks, too many races, too much professionalism (vs. let’s go racing for the fun of it), and the fact that I have to buy a decoder to watch half of the season. The sport sadly has lost some of its glamour, and the owners touting the amazing efficiency of hybrid would not fix it, the matter is, I think, unrelated.

  17. 35% to 50% sure is a dramatic technological leap… What a pity for the manufacturers that the battleground has moved to petrol vs electric. I fear the horse has bolted before the marketing depts realised what they had in front of them.

  18. “they have agreed to make sure that everyone who wants an engine will get one”. Did they really use the word “engines”‘ and not “power units”? So does that mean that Red Bull can have a Mercedes PU after all? It can’t be that simple as this is F1 so I guess we have to wait for more details!

  19. Dear Joe, all
    I agree, the thermal efficiency of the PUs are amazing, and are most certainly revolutionary. In these days of global warming, it is bewildering that F1 does not promote the new technology, & in a very clear way, spell out the benefits to the planet of the technology. This when the average (non F1 ) person assumes that F1, and motor racing in general, as a bunch of environmental vandals.,
    Nevertheless, it is not just F1 that is remiss in this area. Neither Mercedes, Ferrari, Renault or Honda seem to have made much in the way of an effort to promote the PU’s, and, the potential trickle down effect of the technology to road cars. At least, not here in Australia.
    I am not absolving F1 of responsibility, but, the engine manufacturers seem to be singing off the same song sheet.
    Cheers
    MarkR

  20. All well and good, but, racing should be core of it all… Which isn’t now.

    When F1 finds a (fair) way to race close on track all these achievements will mean something. Otherwise, these are R&D outcomes to keep the technical value of the sport at the expense of the sport itself.

      1. After 2007, each season had a leading team with clear performance advantage. Many tried to catch up, but, none succeeded without the help of a regulation change and that is saying something.

        I’m not blaming teams doing exceptional job, but, I blame the regulations that can’t guarantee a fair playing ground.

        2014 hybrids for example, template for standardized, but, that doesn’t mean the engines will be on par with each other. Either regulations should have ensured teams get the baseline right, or made sure teams get opportunity to correct their mistake (after all, F1 looks to freeze engine development at some point – what good it is, if different engines go through equal and fair development cycles?).

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