I’ve been interested to see the reaction of Silverstone to the planned Circuit of Wales, regarding whether or not they are receiving ‘illegal’ state aid (see – http://www.bbc.co.uk/news/uk-wales-south-east-wales-26712038).
I can understand why Silverstone may be concerned with a further circuit cropping up in the UK, their new Wing, which sits in the middle of the circuit is an impressive facility, but one which will require a lot of utilisation in order to keep it viable. In 2007 we already had 19 paved circuits in the UK (see – http://www.amazon.co.uk/Motorsport-Going-Global-Challenges-Industry), many of which are struggling to keep the cash flowing in and are heavily dependent on one or two big races either in cars or bikes, so why do we need another one?

For me the argument is simple. We have a unique capability in the UK to design, manufacturer and develop motorsport products, services and technologies. The UK has the largest concentration of motorsport turnover relative to GDP anywhere in the world and anything that adds to this capability is, in my view, a good thing. I understand that those who are fighting to capture as many big events as possible would see this as a threat, but if we take the perspective from UK plc it is a huge opportunity. But there’s a further point, if we capture the imagination of young people in the area who have never been to a circuit before, we may increase participation and the size of the cake, then we may also get some new Adrian Newey’s, Ross Brawn’s and perhaps even (showing my age) a Tom Pryce.

 The debate over the 2012 Bahrain GP seems to have split many in the F1 fraternity between ‘yes it was the right decision’ – led, unsurprisingly, by those who were party to the decision e.g. Jean Todt and Bernie Ecclestone and supported by other commentators such as Jackie Stewart and Martin Brundle. On the other side were those who leaned towards ‘no it was the wrong decision’ – largely led by the UK press e.g. Richard Williams (Guardian), Byron Young (Mirror) and Tom Cary (Telegraph), and then there were those who were rather stuck in the middle and undecided – e.g. Damon Hill and, I have to admit, myself. One thing does seem certain, that F1 is a bit of an irrelevance in a country which is trying to deal with such deep seated problems, never have discussions on the details of DRS technology seemed so trivial and out of place.

There are two questions which seem to be hanging in the air. First as to whether it is right to place the teams and all those working in F1 into such a potentially volatile situation, and of course there are different views as to how much danger they were really in, the Force India incident was undoubtedly traumatic for those involved, and everyone was glad that F1 personnel were largely unaffected by the troubles in Bahrain. The second question seems to have been whether or not F1 can help or hinder in such a situation. It certainly seems that the unimpeded access which the F1 journalists appeared to enjoy allowed the opposition access to publicity which had previously been denied to them. The fact that, just as the F1 teams were leaving Bahrain, a Channel 4 News Crew was detained by the authorities suggests that the door may have been opened a chink for F1, but it is now being closed up again. However there will be a continued debate about whether or not there should be a Bahrain GP in 2013 (which has probably already started), and from that point of view further scrutiny will be brought to bear on the situation and the progress of the opposition in obtaining reforms. Time will tell. But one thing is clear, anyone who thinks a global sport, such as F1, is in some kind of vacuum and can ignore the political context in which it operates, is well and truly out of touch with reality.

John Hogan is a man who has seen it all in Formula 1. As a key part of Phillip Morris’s development of the Marlboro brand in F1 he has been behind the scenes of many of the shifts and changes over the last forty years. Having had the privilege of sharing a platform with him in the past, I know he is also pretty clear as to who the most influential people have been in the history and development of F1. In his view there are three: Enzo Ferrari, Colin Chapman and Bernie Ecclestone. Each has had a profound effect on the sport/business of F1 well beyond their respective organisations. Ferrari in building the world’s most renowned motorsort business, capturing the blend between mystique, glamour and the power of racing; Chapman in driving new technologies and commercial opportunities, providing the basis for today’s focus on aerodynamics and the use of commercial sponsorship; and Ecclestone by creating a global media product out of a series of fragmented commercial arrangements between race organisers and teams, which is today surpassed only by the Olympics and World-Cup Soccer, and they occur every four years. The big question of course is will anyone approach the contribution and impact that these three gargantua have had on the development of Formula 1? I don’t have a ready answer, but I think Tony Fernandes could be on the right track.

One of the biggest challenges for global motorsport today is not finding new F1 races, but building the grass roots enthusiasm that underpins the development of talent and expertise that are needed for the future. With purpose built F1 circuits in places like Malaysia, China, Korea, India and Abu Dhabi the problem they face is that, unlike those in the UK, Italy, USA and Japan there is virtually no grass roots infrastructure of racing to support them. The next big opportunity is therefore to embed motorsport in these areas, in a sense to build the foundations under the house, because without this there will be no sustainable future for these circuits.

In addition we see many of the world sports car manufacturers fighting to go even further upmarket. In a market segment which is already well populated by powerful brands such as Ferrari, Porsche, Mercedes and Aston Martin we now see firms like McLaren and Group Lotus also trying to enter this space. Of course everyone wants high value products which can make massive margins due to their brand strength (just look at the success of Harley Davidson as an example of this), but that’s just the problem everyone wants to be there and so the competition is immense, and this of course puts downward pressure on margins. The big opportunity is not to go for the obvious high value end of the market, but the low value, low price segments which has the potential to grow the market and grow the enthusiasm that is needed to underpin and engage with motorsport in emerging markets. That is exactly where Tony Fernandes seems to be heading by linking his F1 project with the Caterham Car company, I think the opportunities here are immense, and it could be that Fernandes is making a small step on the road to becoming the fourth F1 visionary.

It looks like the F1 Paddock will be back at Silverstone next year, I wonder if the pink limo is Damon's?

There are undoubtedly winners and losers in the recent announcement that Silverstone had secured a seventeen year deal to run the British Grand Prix from 2010 to 2028, with a ten year ‘get out’ clause for either party. The first, and most important winner is the British Grand Prix, although F1 is very much a global activity, there is no doubt of the importance of the British Grand Prix to both those teams that reside in the UK and to F1 as a whole. The second winner has to be Silverstone and, in particular, Damon Hill, Richard Philips and their negotiating team, who appear to have built the kind of relationship with the F1 Commercial Rights Holder (Bernie Ecclestone) that had been impossible for previous management teams. The loser is of course Donington, and although Donington was often portrayed as the ‘upstart’ in this story, it should not be forgotten that Donington is a circuit of historic standing – it regularly ran Grand Prix races in the 1930s, and also hosts one of the greatest collections of Grand Prix machinery in the world. It is a tragedy that it is now left disfigured in the initial attempts to rebuild it as a base for the British Grand Prix. Furthermore Donington have also lost the British round of Moto GP to Silverstone which they hosted in 2009.

The interesting question for me is whether or not there has been some kind of government support to enable the deal to be made. Certainly there have been no fanfares on this subject, but given the history between the current government and F1 it is perhaps unsurprising that this is the case – remember the special exemption granted to tobacco sponsorship at the British Grand Prix and then Bernie’s donation to the labour party coming to light? Well even if you don’t, a lot of politicians do! If you were a member of a private club would you commit to making a large pay out for seventeen years (estimated at £310 million) without any guarantee on revenues?

2010 Calender

September 4, 2009

EMC, well known manufacturer of F1 wing mirrors (you need to look closely!)

EMC, well known manufacturer of F1 wing mirrors (you need to look closely!)

Last night I gave one of my ‘business lessons from Formula 1’ presentations to a group of highly enthusiastic sales managers from the information technology company EMC. EMC sponsor the Toyota F1 team and the sales director joked that when he told people at parties who he worked for the usual response was – don’t you make wing mirrors for F1 cars?! The audience were from all over Europe and at the end a group of Belgians came over and asked me whether I thought we might loose the beautiful Spa-Francorchamps circuit to more lucrative deals being done in the far and middle east. My answer was that I hoped not, but that Formula One Group’s need to service their debt to CVC Venture Capital (which has been loaned by RBS – so I guess that means you and I) places some fairly heavy financial demands which the old, traditional, non-subsidised circuits are in no position to meet. It also made me reflect on how next years calendar was shaping up.

Autosport is always well informed in these matters, and recently Jonathan Noble and Dieter Rencken posted the draft calendar which is due to be approved by the FIA World Motorsport Council later in the year.

March 14 Bahrain (Sakhir)
March 28 Australia (Melbourne)
April 4 Malaysia (Sepang)
April 25 Turkey (Istanbul)
May 9 Spain (Barcelona)
May 23 Monaco (Monte Carlo)
June 6 Canada (Montreal)
June 27 Europe/Mediterranean (Valencia)
July 11 Britain (Donington Park) or Europe (Silverstone)
July 25 Germany (Hockenheim)
August 1 Hungary (Hungaroring)
August 22 Belgium (Spa-Francorchamps)
September 5 Italy (Monza)
September 19 Singapore (Singapore)
September 26 China (Shanghai)
October 10 Japan (Suzuka)
October 24 Brazil (Interlagos)
November 7 Abu Dhabi (Yas Marina)

The calendar follows the long haul sandwich structure that we have this year, with the season starting off with an air freight (as opposed to using trucks) leg in Bahrain, Australia and Malaysia, before moving back to Europe until a rather lonely Canada requires a quick hop across the Atlantic before another European chunk of six races before the final stint of long haul culminating in Abu Dhabi.

The interesting questions are where are S.Korea and India who were both initially planning Grand Prix for 2010, these both now appear to be delayed to 2011 or beyond, but if they do arrive who will be bumped off? It is good to see that the Donnington/Silverstone question is explicitly included suggesting that there will be a Grand Prix in the UK next year. But what of the US Grand Prix? It seems that this, despite FOTA’s desires to have it reinstated, is still off the calendar, but it is interesting to see a three week gap between Canada and the Valencia GP, any chance a US race could be squeezed in here I wonder?

THE ARMAGEDDON SCENARIO

June 22, 2009

While there was much talk of talks and the need to find a resolution at the British Grand Prix this weekend, there is, as yet, no clear sense of how the current FIA vs FOTA situation will resolve itself. So if the situation is not resolved, what could the 2010 season look like? Essentially there would be two series, one run by FIA and promoted by Bernie Ecclestone and the other run by FOTA, and regulated and promoted by organisations and individuals yet to be defined.

The FIA Formula 1 2010 Championship.

As things stand there are currently five teams entered for this championship (if we disregard Ferrari, Red Bull Racing and Toro Rosso who the FIA say are confirmed entrants, but the teams themselves say they are not). Of the current F1 teams there are only two, Williams and Force India, and three new teams: Campos, USF1 and Manor. Both Williams and Force India have engine contracts in place with Toyota and Mercedes respectively, if we assume that these FOTA teams will not continue to supply engines to FIA championship contenders, then Williams and Force India will probably use Cosworth Engines, effectively making the FIA championship a single engine formula, great for Cosworth, but certainly not in the spirit of Formula 1. The FIA will also need to find another five teams, with potential new entrants Lola and N Technology pulling out these may come from Prodrive/Aston Martin, Litespeed, Formtech and Epsilon, assuming that their partners are still interested if they aren’t now competing against teams like Ferrari and McLaren. Either way the majority will be new teams with new drivers unknown to the F1 fan base.

The FOTA 2010 Championship

The first problem that FOTA will have is what to call themselves. The commercial rights holder for the F1 championship (Bernie Ecclestone) has been consistently firm in ensuring that any commercial operation using language close to ‘F1’ either pays significant licensing fees or changes their name. FOTA may try to do a deal with Tony Teixeira to use his A1GP name (Ferrari currently supply the engines for the series) but their options are not wide. The eight FOTA teams will also need to find a tyre supplier

Bridgestone tyres will probably not be available for the FOTA series

Bridgestone tyres will probably not be available for the FOTA series

(Bridgestone being contracted to F1, and no-one else is currently interested in spending the kind of investment needed to be in F1), Pirelli, Michelin and Goodyear are possible start points, but may need some financial incentives to get involved. They will also need circuits. If we assume that currently contracted F1 circuits would not be able to host a FOTA race then the obvious start point would be former F1 circuits – Silverstone and Brands Hatch in the UK, Montreal in Canada, Indianapolis in the US and Imola in Italy are all in the frame. FOTA will also need regulations and an organisation to enforce these. To make the business model work the series needs media revenue which in F1 provides around 20% of the revenues for the teams, this means deals need to be done with media operations to sell the rights to the series and this requires commitment and clarity for a number of years so that some return on investment can be estimated.

All in all when you begin to look at what needs to be done on both sides, a bit more talking to each other seems to be the best use of everyone’s time.

The prof checking out the track at Silverstone, F1 testing 2008.

The Prof checking out Silverstone Circuit, F1 testing 2008.

This weekend represents possibly the last time that Silverstone will host an F1 Grand Prix, well at least for the next seventeen years according to Donington Park boss Simon Gillett. There can be little hope that Silverstone would get the opportunity to run the Grand Prix in 2010 should the Donington circuit upgrading fall behind schedule, in similar situations in the past F1’s promoter – Formula One Management has simply taken the Grand Prix off the calendar for a year until the track is ready. This keeps all the circuits on their toes and helps to meet deadlines.

However it may not be all bad news for Silverstone. The lack of a grand prix will mean less of a spike in their finances and it also creates new opportunities for the circuit. It is more than twenty years since the British Grand Prix was shared between Silverstone and Brands Hatch in Kent. Brands has been taken over by Jonathan Palmer’s Motorsport Vision group and seems to have made itself a highly viable venue focusing more on corporate activities and bike racing.

So it will be goodbye to Copse Corner, Hanger Straight and Abbey Curve for at least the next seventeen years, unless of course tomorrow, when the FIA publish their final entry list, we see the FIA/FOTA schism that some are now openly predicting. If this does happen it could be that Silverstone is one of the first circuits signed up for the FOTA (or whatever they decide to call themselves) 2010 championship. Once again let’s see what happens on Friday!

Follow

Get every new post delivered to your Inbox.

Join 1,228 other followers