Quicksand sinking
We live in strange times. Austerity is the necessary norm while stock markets boom, bankers are despised, currencies fluctuate wildly; and tax, tax, and tax some more is the battle cry of the bien-pensant bourgeois left, so consumed by their politics of envy. Money is tight, budgets ever trimmed, a reflection of the mood.
What’s this got to do with Formula 1?
Well, our sport is a luxury. A multi-billion-dollar entertainment behemoth played out on the global stage, in so many ways the play-thing of the über rich – be they blue chip brands or multi-millionaire team benefactors. All are 100 per cent reliant on the world’s economic outlook.
And that outlook is possibly the most challenging, confusing and uncertain it’s been since the 1930s.
When was the last time the number of planned grands prix in a year dropped relative to the previous season’s count? As I write it is just days since the 2013 calendar was finally confirmed, since Turkey, Portugal, France et al proved themselves unwilling or unable to be the never-seriously-likely-to-happen and subsequently cancelled New Jersey event’s replacement.
At some point over the past several months grand prix stalwart countries Germany, Spain and Belgium have all appeared less than sure about their races’ futures, reflecting both global commercial realities and the daunting economies of scale faced by circuits staging Formula 1 events.
Sure, not all is gloom and doom. UPS are newly on the Ferraris, Infiniti’s purple sparkles on the Red Bulls and Williams have announced an Expirian deal but – save for a few minor deals elsewhere – for the teams, that’s just about it.
Red Bull is an interesting case. Can it really be healthy for any sport to be so dominated by a multi-national marketing company?
Two teams that suck-in big sponsors, Six world titles in three years. A reputedly significant say in the way the sport is heading, dismissive of the Resource Restriction Agreement, and they even have a car manufacturer sponsor their team. Call me old-fashioned but shouldn’t car companies be in the driving seat rather than merely a source of revenue for a drinks manufacturer’s racing activities?
This is not healthy and is surely the wrong way around. When the monkey starts to control the organ, any sport needs to have a serious look at where things are headed.
In a recent conversation, a respected management consultant with a lot of F1 experience opined to me that “F1 is surrounded by quicksand”. His words echo those of a CMO at a major brand with a long F1 history (but no present involvement) who said, “F1 lost its appeal to many major sponsors when a marketing company [Red Bull] was allowed into the sport and then started to dominate it.” He believes F1 should always be “driven” from the top by car manufacturers and likened the whole series now to a “marketing exercise”.
Don’t get me wrong, Red Bull do a fantastic job and have – both on and off the track – raised the bar to such levels that many of their competitors in racing and marketing are left scratching their heads. It’s the sport as a whole, and their possibly overly strong position within it, that concerns.
Commercial rights supremo Bernie Ecclestone is no doubt very pleased to welcome major new partner Rolex to the show. The Swiss timekeeper joins recent arrivals Emirates, UBS, LG and Tata in pouring hundreds of millions of dollars into ‘his’ sport. Trouble is, 40 per cent of that revenue flows straight out of Formula 1 to a third party in the shape of private equity firm CVC Capital Partners.
While it’s good to have so many blue riband commercial heavyweights signing up to be associated with F1 as a whole, it’s not so good for the people who build the cars. Maybe Bernie’s money men are just doing a better job, maybe not, but the result of a number of the big fish in an ever-shrinking pond choosing the ‘umbrella brand’ is that the teams are having to find funds from elsewhere – hence the rise of the pay driver.
Sergio ‘Checo’ Perez may be in McLaren’s eyes the coming man, but one suspects a fair proportion of that thinking is influenced by the young Mexican’s rich benefactor, Carlos Slim Jr, the handsome heir to the Telmex billions and son of the richest man on earth. Technically, of course, Checo – who is paid by the team – is not a pay driver as such. Even so, given McLaren’s record of employing the best of the best, and the imminent departure of Vodafone as their title sponsor, there must be an ulterior motive here. Any Formula 1 team, let alone one of the very top drawer outfits, can’t really afford to let a significant and valuable piece of racing car real estate go for free for too long; note that the rear wings of the MP4-28s are emblazoned with the logo of McLaren’s in-house cartoon venture ‘Tooned’, as those of last year’s MP4-27s were.
And what’s happening at Williams? Sure the Didcot outfit has a welcome cash injection from Expirian but we may still have the worrying situation where the very future of one of the most respected teams on the grid could be affected by the death of a political leader. Recently deceased Venezuelan president Hugo Chávez personally approved state oil company PDVSA’s backing – to the tune of £29m a year – of national hero Pastor Maldonado. Since the opposition political parties are making far from supportive comments regarding the money flowing to F1 from a country with such endemic poverty, the results of the soon-to-be-staged election could bring an end to this revenue stream which is so vital not just to the driver but also to the team.
In so many ways Formula 1 is at a crossroads. Bernie still runs the show but with endless speculation regarding his desire for a legacy – and the matter of who will take over when Mr E exits to run that race track in the sky – potential sponsors, manufacturers, circuits, promoters, et al, are wary of taking the plunge.
F1 has long lived in a bubble, seemingly protected, ignorant and/or dismissive of commercial realities in the ‘real’ world.
Reality is now biting and biting hard.
Please enjoy my 2013 Australian Grand Prix picture gallery by clicking here.
