What is wrong with this picture?

I’m going to venture out of my usual terrain, and allow myself to talk about the sport of Formula 1 in general. This is brought on by a tweet this morning by the CEA, the (fabulous) crew of fire marshals at Monza (and Imola). The tweet shows the start of restoration on the tarmac at Parabolica. It jarred me to realise that even Monza has raised the spectre of no longer being able to host the Italian Grand Prix.

This summer has been oddly and uncomfortably full of ruminations and reflections as to what’s wrong with F1. Commissions have been formed . . . and disbanded. Those asking the question itself are accused of negativity. And meanwhile, a spine tingling championship is underway, with team orders given and followed, team orders given and disobeyed, and drivers battling as much with their minds as with their cars. And the cars – brand new, beautiful machines with power trains that are stunning in their sophistication. Is there anything REALLY wrong at all?

Let’s imagine something, to help me illustrate my answer to that question.

I’ve just built a bottling factory. Modern, efficient, state-of-the-art. And you, well you have a soft drink you need bottled. A very popular soft drink indeed. People all over the world want to drink it. And you want to use MY factory to bottle it!

When the time comes to do the deal, you tell me “there’s just one thing Gary. Our business model is a bit . . . unconventional. You see, normally I’d pay to use your factory. But since my beverage is SO popular, YOU’RE gonna have to pay ME for the privilege of hosting my drink”.

I guess you see the concerned look on my face. My factory cost money to build. It costs money to maintain. Everybody ELSE rents my factory when they want to use it. I seek reassurances.

“Don’t worry a bit, Gary, you can run guided tours and have people pay to see your factory working. And you can serve them lunch!”

I guess you see what I’m getting at. I’ll have to charge $100 for a tour, and get 100,000 people over the weekend. No way that’s gonna happen. A guaranteed loss. Every time. Damn.

Right now, as we all know, for $15 million or so, a circuit can buy the privilege of hosting an F1 race. And all it has to do to recoup that is to sell tickets and hotdogs. A lot of VERY expensive tickets and hotdogs. Not one cent of the TV revenues generated by that race, and not 1 metre of signage around the circuit can be used to generate revenue for the circuit itself.

It’s not FOM who makes F1 tickets astronomically expensive. It’s the circuits. Do the math. You need to make up several million dollars with three days of tickets, food, and beer. No wonder it’s only races with government support that avoid the year to year threat of bankruptcy.

So here we are with the backbone of the season, with virtually every European F1 circuit, either under severe financial threat . . . or gone. Spa, Monza, Silverstone, Hockenheim, Nurburgring, etc. This is insane.

Why do these circuits not do what any normal owners of crucial and rare resources would do? Form a cartel.

Why do the owner/operators of the “classic” circuits of the season not band together to put an end to the bizarro world of F1 circuit use. You want to use our infrastructure? It will cost you this much, plus a percent of global TV revenues (averaged over a season, to avoid late season races, with their bigger box offices, earning more just by their place in the calendar), plus some portion of the signage at our circuit.

Sure Bernie will bluster. He’ll threaten to go elsewhere. And to some extent he will go elsewhere- he’s been “going elsewhere” for years now. But remember a few things:

  • F1 homologated circuits are not a dime a dozen. They are rare birds indeed, and the lag time from project to race is YEARS.
  • Google earth is littered with abandoned Tilke-domes, each having cost $200-400 million. Think Istanbul, Korea, India. (What will archeologists in 500 years think these things were?) Only governments awash in petro- (or narco!) dollars will keep building these white elephants, and even that will ultimately peter out. Even the most corrupt autocrats have better ways to waste $400 million!
  • Even if FOM moves strategically away from Europe, it’s wrong to think that the circuits will be losing a prestigious money-making event (countries might be, clubs might be, fans might be . . .); in FACT, they’ll be (temporarily, see below) losing their biggest headache of the year. As a taxpayer here in Belgium, the question of who exactly is going to foot the known and expected loss from the upcoming Belgian GP is a perennial favourite, of which I’m growing quite sick.
  • FOM cannot, by the nature of the series, reduce the number of European/North American/South American races well below half (or slightly more) of the season. How many corners on ANY new-ish circuit do you remember? Is there an Eau Rouge? A 130R? A Becketts-Maggotts complex? A Tabac? This is not a diatribe about circuits, but dammit, they really ARE intimately involved in what we love about the sport. People will not get up early, or stay up late, to watch a race if this is not felt viscerally to be a EUROPEAN series. They’ll watch the evening news, and see the best overtakings and the results . . . and there go your TV revenues Mr. E. Sooner or later, European races will have to comprise close to the bulk of the season, with a smattering of exoticism added, because it’s F1.

Enormous advantages would accrue from a system like this. Not least would be a significant lowering of ticket prices, and an opening of the sport to a wider audience AT THE CIRCUIT. And as you all know, once you’ve seen this sport live, you’re hooked forever!

A different system for distributing revenues from the sport would vastly increase the “health” of the infrastructure supporting it. The team principles, until now staggering by how completely they ignore the long term interests of the sport that gave them all yachts and Gulfstreams, and FOM itself, would have to make do with slightly less. But the pillars of our sport would survive and flourish, and government support for what many view as a frivolous pastime would largely become unnecessary.

Rant over.

23 thoughts on “What is wrong with this picture?

  1. Hi Gary,

    Another great post, I couldn’t agree more. I’d vote for you to be president!!!!

    I have in my time attended a few GP but I really cant see myself ever going again. Instead I make sure I visit the Goodwood circuit revival. It has a great atmosphere and is sold out every year, two years ago at the handing out of trophies and the end of the day on Sunday waiters took round trays of cake and Champagne (in proper Champagne glasses) to ALL the members of the public standing on the start finish straight watching the proceedings. I’m not a fan of the aristocracy but Lord March hosts a brilliant event and that’s before you even see the near priceless pieces of automotive history being driven in the manner they were designed for. Then there’s the aircraft, Two Lancasters among many others last year, I took my Mum and Dad and 6 other of my family. I would not dream of doing that to the British GP, I’d have to remortgage my house!!!!

    Like other comments here I am sick and tired of the sleaze in F1. I have a feeling BE is deliberately running F1 into the ground, as to his motives for that there could be many. Money would obviously feature in whatever they are. I remember Martin Brundle shoving a microphone under Bernie’s nose a few years back when there had been a story about how much money he’d made on some deal. Martin asked Bernie if he believed in reincarnation, Bernie looked confused (a look he’s often got for the cameras) so Martin followed up with “Are you saving up for your next life?”

    Keep up the good work Doc you are much appreciated

    Neil

  2. Need the EU directorate of competition or whatever it’s called to look into FOM’s abuse of monopolistic power if there’s to be any change. Otherwise they’ll (sport’s owners) continue to bleed it dry).

  3. It’s not just a problem with the circuits but also with the numbers watching on TV. Since the BBC lost the rights to televise all the races live here in the UK there has been a dramatic decline in TV viewing figures. Like many people I will not pay for Sky F1 and now prefer to read live blog online. My husband, who has watched F1 as long as I can remember no longer bothers with the races and my son, who had inherited his father’s interest in the sport appears to have transferred his allegiance to football.

    The sport will dwindle to being the preserve of the rich only if Bernie continues to exclude such large numbers of people. Gary – BBC are actually televising Spa live this weekend and I know you are going. I’m pleased you have a chance to go in person but this message is on behalf of all the fans who will never be able to attend a circuit anywhere in the world but used to love watching free on TV.

    http://f1broadcasting.wordpress.com/2014/06/06/why-f1-is-still-experiencing-a-viewer-decline-even-with-vod-included/

  4. We won’t be entering in the discussion, if not to say “thank you” for the kind words (as always!) – and for the insight.
    Motor sports are our passion, truly, and no place like Monza is home to that passion. We can only hope that we won’t be evicted soon – together with millions of tifosi. That would be devastating: for us, and for the sport we all love so much. Thanks again for following us!

  5. FIA destroys the sport. Circuits are important, but FIA and Mr. E doesn’t want to understand. Some European circuits off (like Imola), some are so stupidly reconstructed that they looks stupid and races there are boring. Hockenheim was literally ruined, so is Monza – and every current Eropean F1 circuit. And Tilke-Dromes sucks! Stupid boring so-called “f1 circuit” which are all the same. When i heard about Azerbaijan next year i decided not to watch Formula 1 next year. It just doesn’t make sense anymore.

  6. Spot on! The sport is still great, what is killing it is the arrogance of FIA an FOM and the sheepish scared behavior of those involved, ie: teams and circuits. I agree that once you’ve seen the sport live you’re hooked for lifetime. One thing though, the sound has to come back.

  7. The balance between track owners and FOM may be turning. Melbourne has just renegotiated its F1 race for 2016-2020 and it has retained some commercial rights, including trackside signage. As a local I’m relieved! I suspect that FOM is worried about the lack of visual appeal on TV of races held in empty tracks and needs races with big crowds that look good on TV like Melbourne. The expansion of races into countries with no history of motor sport leads to empty races and the subsequent commercial failure of races. When will FOM learn the lesson from Turkey, Korea etc? We need Imola not Azerbaijan! Traditional races with big live crowds make for better TV viewing and thus raise the value of the TV rights.

  8. Spot on!
    Mr E is a fantastic business man, but unfortunately grown too old and greedy.
    He is not a man who will break F1 overnight, but still I find it hard to believe that he is handling F1 with a long-term perspective in mind anymore.
    And now – a $100m settlement – who is ultimately gonna pay that check? Definately not Mr E’s pocket…

  9. Pingback: F1 Fanatic round-up: F1 better now than 30 years ago - Wolff

  10. after Mr. E’s ‘acquittal’ I honestly have lost my appetite for following anything that he’s involved in, and will not bother following the next GP even if Spa is my absolute favourite. Bye…

    • Acquittal! He certainly wasn’t acquitted … There are those who would say he settled the accusation of an attempted bribe with a real bribe. I of course wouldn’t dream of saying so! It speaks volumes about him, and unfortunately volumes about the bizarre German system of justice.
      Mr E. is an unspeakably disgusting individual who has consistently dragged the practise of doing business into the gutter.

  11. Taking a wider view, it amazes me that the track owners have not banded together! You make an excellent point and where they (track owners) really have BE over the proverbial barrel is the small number of F1 homologated circuits. The time it takes to develop them is so long that if the owners did band together change could be effected in a short time.

    It has been my feeling that BE has taken full advantage of the almost blind desire by various governments to attract “economic development” by building these Tilke-rings (or by trying to keep the race at Silverstone, Monza, Spa, etc) and falling for the myth that the $$$ will follow. As we have seen in the US with governments footing most, if not all of the building costs for sports stadia and then turning them over to the team owners along with all of the revenues, this is actually a chimera. I can’t help but wonder how much of the financial woes experienced at the Nurburgring, Hockenheim and many other tracks are not a direct result of what it has cost them to stage an enormous money loser each year. The fact that these owners have not grasped that without them there would be no or at least far less F1 racing is beyond me.

    FOM embodies some of the worst aspects of how financial success has been achieved in the last 20 years and BE is at the center of it.

  12. Another fascinating post and I couldn’t agree more with you views!

    F1 is in danger of lossing more fans not only due to high tickets prices which the circuits are force to make fans pay but also by selling all the Tv rights to pay for view channels.

    it is clear to see that Berine is only interested in hosting racing in countries that can pay the most money but why? You only have to look at the grandstands (or lack of them in some places!) to see they are nowhere near full and I can’t imagine places like Bahrain, China or Malaysia even get close to seeling out or full capacity? I was at Silverstone last month and the place was rammed for the entire 3 days, in fact even the Thursday was busy and I spent 3 hours in a queue to do the pit lane walk there was that many people wanting to do it!

    I really think F1 need to tak a step back and realise that its the fans that are the most important factor and they need to start listening to their views and ideas and to that of these so called experts within the inner circle.

    Oli

  13. The teams tried to band together to force change. Bernie appealed to their inherent self-interest and left them split and powerless.

  14. As always, straight to the point Gary.

    The problem, as with all similar structures, not only in sports but in a much wider array of decision making, like politics for instance, is…… corruption.

    Mr.E has already settled for some us$100mil and got away with it… His words: “I was a bit of an idiot”….you can’t but feel sorry for the poor chap, can’t you… and that was just to keep himself in the loop…..Imagine what goes on on a micro level between him/fom//local authority/track owners/sponsors etc……
    As long as policy makers will allow the existence of Mr.Es, we will just keep being sheep in a herd, some paying a lot of money once every 5 years a for a ticket in their vicinity, others will keep watching the TV or Pay TV (some will do the holiday combo ofc, but is that really what it’s all about….?)…..

    Odysseus

  15. This is a very nice rant, Gary! I didn’t know that they have to pay so much for beeing able to host a single race. Was it always like that?
    I can’t afford a ticket for a race anymore, as the prizes are indeed beyond good and evil. I’m afraid that there won’t be any races in Germany, GB etc. anymore in the distant future. Bye bye F1 in Europe…

  16. I agree with the crux of your blog – but I’m sure Mr E has all the circuit contract periods and renew by dates perfectly staggered to avoid there ever being more than one circuit in a position to be looking for effective allies.
    I would, if I were him.
    (PS – I am most definitely not him! I’m over 6ft tall! )

Your turn to speak - write here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s