The Freak Show of Formula 1
The Freak Show of Formula 1
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Fo11ow the Money 2015

Illustration for article titled Fo11ow the Money 2015

We’re just a few rounds into the championship and things are clearly heating up off-track. Lets try and take a look at some of the issues thus far that we’ll most likely be lapping off track throughout the season:

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“Freeze Walkers”

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How Red Bull view Totto Wolff

I do wonder in what other sport teams or players complain so much about equalizing the field. I’ve never heard the ATP tell Roger Federer, Novak Djokovic and Rafael Nadal to wear a weighted vests to bring the speed of their game on par with the rest of the tour. Or the NBA penalize Lebron with ankle weights to diminish his dunking skills; the World boxing Federation demand Wladimir Klitschko wear extra padded gloves to diminish his chances of K.O.-ing an opponent, or Futbol teams asking for a bonus if they beat the multimillion dollar Real Madrid squad which is probably worth at least 10 times more than some of the smaller teams. Simply put, in the words of perhaps one of the sporting world’s most unlikeable figures, if you want to come out on top, it’s about “HARD WORK, DEDICATION –Floyd ‘Money’ Mayweather Jr.”

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Illustration for article titled Fo11ow the Money 2015

After Vettel left, I’m pretty sure Horner feels like Jaime Lannister when his hand got chopped off. Now with the dismal Renault Engine and RB Chassis, he might be feeling like Cersei just squished his manhood.

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And such is the case of F1, where Mercedes is clearly ahead of the field. Not that other teams worked less hard. They innovated better than anyone and they reaped the benefits. They competed, under the same regulations as everyone else and won. Clearly the case of having Ferrari be a bit more on par in regards to race pace (more a tire issue rather than actually being close in outright speed) shows that teams can still improve and catch up. On the other hand Renault is an example that you can also drop back. Yet the stability of the rules is crucial for attracting other players. Look at Honda’ return. Even though they are having a dismal season so far, you must take into account that they are also a year behind in racetrack data and development. Data no simulation can compare to.

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And so, it is no surprise Red Bull are so vociferous on their quitting threats. Simply follow the money and you find the F1 Supremo (Bernie Ecclestone) calling out on the nature of the sport. First, Red Bull has sunk over U$ 1.2 billion into its team over the past 5 years. Second, they are one of the biggest sponsors of the sport and probably outspend every other team in paddock services, which in total makes about 20% of F1 revenue. Red Bull is more than an energy drinks company, it’s a PR and Marketing mogul, a master at promoting lucrative events and selling you experiences.

I’m sure Honda would like to throw cash at the problems they are having, but that would just further alienate the sport from reality. They were already forced to quit once and it doesn’t mean it can’t happen again. Furthermore a drastic change of the rules would simply underline the clear instability of the sport at a time when it is trying to bring in more manufacturers and sponsors.

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Illustration for article titled Fo11ow the Money 2015

You know nothing, Jean Todt

I had nothing but the out most respect for the man that successfully conquered the World Rally Championship and then revived the Scuderia. But unfortunately, most real life fairy tales come with some gory details. Late into his days as General Manager at Scuderia Ferrari, Jean Todt, became one of Max Mosley’s (the FIA President) worst enemies in relation to the cost cap. I’m partly glad of this, because the final proposal would’ve created a two tier system, which I strongly oppose. Yet to my belief, the cap itself went from a novelty of equalization to a necessity of survival of the sport.

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After the 2008 financial fiasco, companies have never really gone into placing all that money back into their extensive marketing campaigns.

“In 2004 pure cash external sponsorship was $1.2bn a year; ten years later the cash has dwindled to less than $350m and many of the major sponsors that used to bankroll the sport have left. Big spenders such as Hewlett-Packard, Vodafone, Japan Tobacco, Orange, British American Tobacco, ING, West, Telefonica, Siemens, Panasonic, RBS and Credit Suisse have all left the sport with only Santander and Martini arriving as replacements.” -TomRubython, Arabian Business-

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To further aggravate the situation, Ford (Cosworth), Honda, Toyota, BMW, FIAT (Ferrari), and Renault used to sink in an additional U$ 1bn through their team ownership/sponsorship, engine development aside, which was another U$ 1.5bn. Today F1 is lucky if it can get half of that money. Sports such as Futbol, Golf and tennis, have become much more attractive, signing lucrative multimillion dollar deals with teams and players alike. Sure, you might not get the same TV audience numbers yet, but the sponsors also gain a lot of indirect exposure to their brands, from all those t-shirts sold and used almost every week. Furthermore, these are sports were the rules have remained stable, and technology has but the slightest impact on the field, with basically no degree of controversy.

Now days, teams depend heavily on the revised revenue payouts handed out by Bernie and Co which we already know favor the big teams. Back in 2004 the bottom three teams got 25% of the money, but now it’s only 10%. With Ferrari, Mercedes, and Red Bull raking in the big bucks, it’s not hard to imagine why at least two of those oppose any revision to the money they get.

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F1 stands to lose almost half of the grid in just two years. And as much as I laude Haas for entering the sport, I’m sure eventually he’ll be siding with the few independent teams left asking for a more equitable share of the revenue. Just look at Vijay Mallya, he’s worth as much as Haas industries, yet has grown tired of pumping vast amounts of cash into a sport that is more of a money drain than a healthy marketing platform. Worst of all, with the EU already looking into banning liquor from sponsoring sports, it would be a no brainer for him to quit if the team is not somewhat profitable. That is despite the prize money he will get this season for ending 6thoverall. It’s estimated that between Lotus, Force India, and Sauber, together have losses of U$ 300 million in the past 12 months.

“When I introduced swingeing restrictions on engines in 2004 the teams spent the same money developing more efficient airboxes — it was ridiculous, impose a limit on one thing, they develop another and so it goes on.” –Max Mosley-

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Though he once protected Ferrari’s interest, Todt has been hard at work trying to find ways to cut the teams spending themselves unto oblivion. But with Ecclestone strongly against it and six of the top teams forming the so called F1 Strategy group, it is unlikely that any measure that can have a significant impact might pass.

Furthermore the exclusion of the smaller teams also puts them at a disadvantage when trying to promote any kind of dialogue in the rule changes.

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Show me the Money Bernie!

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Bernie Ecclestone as depicted in Peter Jackson’s LOTR Trilogy

Stock Markets have had it pretty good this year thus far and I can only hope they continue to do so. What does this have to do with F1? Well for years now, Bernie has been trying to float the sport on the Singapore stock market (most likely not the NYSE due to some elaborate money Ponzi scheme). This would potentially allow a company to purchase F1 which hypothetically could mean the end of the Fan unfriendly and painfully slow adaptation of technology for broadcast F1 is used to. It’s rumored in the financial world that Discovery Communications and Liberty Global are some of the interested parties on acquiring F1. A fresh leadership could be what the sport needs to maintain its viewership status. But with falling TV figures and Circuit fees, it’s hard to justify any asking price. Blaming this on the dominance of a single team is the easiest scape goat.

“The viewership is just spread in different areas because today people can watch on these iPads or on even telephones.” –Bernie Ecclestone

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It’s surprising that Ecclestone understands that viewers are enjoying the sport through other mediums, yet neglects them so much. Though I’m against it, Formula E’s fan boost proved quite a success in engaging fans and casual viewers. It got to the point where in a discussion with my friends one said Formula E would become the next UFC and F1 sink into the status of Boxing. Though I largely disagree due to the relevance and need for improvement on internal combustion engines, it’s important that F1 engages fans and casual viewers through the “young” social media Ecclestone clearly does not understand. If one of those two American conglomerates where to purchase F1, I’d expect them to remove the internet barriers Ecclestone has been so keen on erecting. Furthermore, it could also help the sport increase its viewership in a crucial car market [the US] while helping it retain and increase its engine/chassis suppliers.

“The FIA believes that unfettered technical competition is part of Formula 1’s DNA, and would like to see this flourish, but in an environment of strong, responsible and innovative management, not a spending race.

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It is no surprise that Bernie has been so outspoken since Mercedes proved dominant in F1. With falling viewership, it’s getting harder to justify the asking price of the proposed floatation of the sport. Moreover, it’s getting painfully hard for him to defend his position if teams keep dropping off from the grid. If I where Bernie, I’d follow Mosley’s call for a compromise under which the sport could flourish and bring back that technological push manufacturers want. The cost cap that is being proposed is one under which teams would be given a much more technical free reign as long as the cars comply with a dimensional and safety limits. I think more than once I’ve clamored for a further aero push and technical development in F1. Besides road relevance, what better way for manufacturers to give us our beloved ultimate car test than by having V-12s, V-10s, V-8s, or V-6s, turbo, bi turbo, supercharged, hybrids, kinetic recovery, torque gap filling engines duking it out on track lap after lap. What if Ferrari decided to stick to it’s guns and go V-12 on everybody? Maybe Honda, or a new Toyota come in with a V-Tech inline four bi turbo of an engine, Yo! In this case, I’d say, let them race, but they should do so by being sensible. Sometimes the best innovations don’t come from throwing money at your problems, but rather from a lack or a limit of resources.

It’s just a shame that most of the forces of change within the sport are reactionary, just like in their safety protocols and standards. They don’t come from the need to actually improve F1, but rather from the need of each individual team to protect its own interest or “technical (resource) advantage”. Once you start following the money, you can start to see a clearer picture of the truer intentions of each player, on or off the Grid.

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For these and other occasional ramblings, you may follow me on Twitter @Menebrio

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