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COMMENT

07/30/2010
What is your image of a Formula 1 driver on an evening off? Chances are he’s in a Monte Carlo casino sipping a cocktail, a Rolex on one arm, a former Miss World on the other and a pile of chips on the table.

What’s the equivalent image for a NASCAR driver? A neon lit bar in a backwoods town in the Deep South, a can of Bud in one hand, a Marlboro in the other and a bag of chips on the table?

OK, the two extremes are exaggerated and the image of both drivers is perhaps a little dated, but the point is that F1 has, consciously or not, developed an image of jet-set glamour and exclusivity that no other sport on earth has achieved.

And a big part of that image is down to the heritage of the sport in Europe where wealthy young gentlemen raced the streets of Monaco as royalty, film stars and business tycoons watched on from luxury yachts.

So why did Bernie Ecclestone recently announce that the Monaco Grand Prix was the latest European race on his hit list?
 
Basically Ecclestone has said that European circuits are paying too little to host Grands Prix and that Monaco, which was paying nothing, was first in the dock. This week it got a reprieve with a new ten-year contract.

The incident has, however, highlighted some serious issues facing F1, which sponsors, without whom the sport would not exist, need to keep a careful eye on.

Ecclestone’s attacks on European circuits do have justification. He has, for example, also criticised the standard of spectator facilities, in particular at Britain’s Silverstone circuit, which inevitably fall well short of those at the brand new facilities in the Middle East and Asia.

The real issue, however, is that commercially F1 needs to be a truly global event to attract its massive TV and sponsorship revenues and to achieve this some races will have to be dropped. In recent years China, Malaysia, Bahrain, Abu Dhabi, Korea, Istanbul and Singapore have been added to the roster and the plan is to bring in Russia, South Africa and India in the next few years.

Already Austria, San Marino, France and the German staging of the European Grand Prix have been dropped from the calendar (although the European Grand Prix remains as a street race in Valencia).

Bernie Ecclestone is, of course, no fool. He’s made hundreds of millions of dollars from commercial rights in Formula 1, but was his latest pronouncement on European circuits, particularly Monaco, a bargaining chip or short-sightedness?

To create a global showcase, it was inevitable that some European races had to be culled. The calendar was too packed to expand internationally and still retain so many from one geographical zone.  

From a purely commercial point of view, the European circuits now struggle to compete with Asia and the Middle East in particular. Venues such as Malaysia, Abu Dhabi and Bahrain, for example, are thought to be using the Grands Prix for political ends. The national governments can see the huge prestige associated with hosting the event and are happy to subsidise the construction of state of the art circuits and the annual payments for the right to stage the races.

It is no longer a level playing field with European governments unwilling to offer such subsidies. European track owners therefore struggle to balance the need to pay for hosting rights with the need to invest in new facilities, which can run into tens of millions of dollars. Silverstone, for example, could really do with around $150m (and possibly more) to build new grandstands and other spectator and racing facilities. It has already embarked on a construction programme but finding a return on investment is difficult when the facility has only a couple of bumper weekends (it also hosts MotoGP in Britain) each year.

But what the major European circuits do offer is huge crowds of passionate and knowledgeable fans, something that can’t be said for some of the new venues.

Ecclestone knows that the bumper pay day that such circuits receive means that, financially and for a circuit’s branding, it’s imperative that they retain the Grands Prix. The danger is that they’ll go bust trying to square the circle.

And the danger for F1 is that in its rush to go global, it could lose a major part of its brand heritage. The sport has arguably already lost a lot of its character as corporates have taken over from people. Frank Williams is about the only team owner anyone can now name and drivers have a small army of PR minders to ensure that never a word is said out of place or that, heaven forbid, they come into contact with a member of the public.

Some of the new circuits have also been heavily criticised for not allowing overtaking and many fans now feel that the races have effectively become high-speed, low risk processions with the most technically advanced cars coming out on top.

Admittedly Monaco has not been great for overtaking for many years, but it is a special part of the sport’s heritage, as are such circuits as Spa in Belgium, Monza in Italy, Hockenhein and Nurburgring in Germany and Britain’s Silverstone.

For Formula 1 to flourish, it does need to have a global presence but not at the expense of its heritage. The sport is effectively funded by sponsorship. Sure, Ecclestone himself makes more from TV rights sales, but the teams rely on corporate backing and those corporates are very brand conscious. They don’t want sterile racing between characterless drivers in sterile atmospheres, they want excitement, glamour, passion and charisma. They are also increasingly aware of the environmental criticisms aimed at motorsport. F1 can address environmental concerns, particularly through highlighting the energy savings delivered to production vehicles as a result of research and development in motorsport. But the sport hasn't really succeeded in putting across a strong CSR message to date.

So was Bernie seriously ready to see an end to cars flying along the sea front in Monaco, one of sport’s great iconic images, or was he simply trying to extract a few million out of the Grimaldis?

Perhaps we’ve underestimated his strategy for choosing the circuits, revenues and facilities that he wants. Public announcements of his confrontational stance have worked well in this respect.

The question is – will he confront the fact that F1’s brand needs very careful management? International, hi-tech motor racing in modern circuits is relatively easy to arrange. What is difficult is to create a global audience that is passionate because it senses the sport has a future as glorious as its past.

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