Bob Barnard Track Engineering

The earning figures for Formula One are a big story today, with Bernie and the teams getting a raise in income. But there is something wrong here that I need an accountant to explain. My arithmetic obviously does not work in the world of accounting. The gross revenue for F1 is reported at $1.08 billion. The teams received $658m divided between them, not equally of course. Bernie received $7.9m and the net income is $296m. So $117m seems to be an operating cost. It is then reported that CVC LOST $660m! Now to my mind this means that CVC's costs are $296 + $660m, yes/no? Now CVC is a venture capital group, so apart from some management fees, this must be interest on the debt? Is that possible? No wonder they are looking to sell F1. What am I missing?

Joe Saward has a piece that goes a bit further into illuminating the ever shifting world of F1 management.

http://joesaward.wordpress.com/

Formula One Administration has just transferred the F1 rights to a sister company Formula One World Championship, which is owned by Bernie's holding company SLEC which is in turn held by - well read it, I do not have enough space. Eventually we get to Delta Topco Ltd which has CVC and others as shareholders. You could lose a lot of money going through that lot, which is presumably the point. Other snippets is the sale of Instanbul Park between internal companies, presumably the F1 track the Turkish Gov't couldn't make pay, for $1, yes one dollar, an $11m write off apparently, but then how much did the Gov't write off? What does that say about the value of all those other monuments to ego and foolishness called F1 circuits?

In other news the Brazilian Federation has asked the FIA to look at the Interlagos track. Pedrosa has had successful surgery to unplug an artery trapped under the ironwork put in his shoulder after his accident last year. Let's hope he recovers quickly and is back in form to mix it with Stoner and Lorenzo. Jan Magnusson's son is setting fastest times in F3 testing, and Tony Fernandes is saying the name row is hurting sponsorship. I know how he feels, sponsors do not like uncertainty, especially over the person selling them something really has the right to it. I had exactly that problem with Eastern Creek when the owners were trying to sell sponsorship for the MotoGP that I was promoting. By the time that was sorted the time left for sponsors to exploit their investment was so short the value was greatly reduced.

Rain is forecast in Malaysia for the F1 race, fancy that, and in the monsoon season too. So, no movable wing and no more answers as to how it will improve overtaking, but there will probably be enough in the wet anyway.

Kimi had his first taste of NASCAR truck racing at a half mile oval and apparently did well. It was behind closed doors, so no real information is available, but it does not sound as if he stuck it in the wall.There are reports he is paying $100,000 a race for the ride, but I'm sure a sponsor will be all over that.

On LinkedIn yesterday a discussion started in the Motorsport Professionals Group as the result of an article in the Sports Business Journal quoting David Hill of Fox and the drop off in viewing figures. To quote the discussion, "Fox Sports chairman David Hill recently told the Sports Business Journal that “the biggest problem facing NASCAR is that young males have left the sport.” Fox reports that ratings among men 18-34 have declined 29%. This isn't just NASCAR's problem, folks, this is racing's problem. If new life isn't injected into the sport in terms of technology and overall interest - and soon - before you know it there will be nothing left but vintage racing all across the country."

Just as an aside, David was the Producer for the telecast of my first F1 event in Adelaide in 1985, he has gone far since then.

Anyway, this seems to have struck a chord with a lot of the Group and there are several comments. Regular readers to my blog will know I posed the question, "Is motorsport in danger of becoming a non-spectator sport?' a few weeks ago, and commented that NASCAR were removing seats so obviously did not expect the audience levels to return.

It's interesting that the comment above talks about injecting new technology. Is that in the way that people interact with racing, or in the cars and motorcycles? One of the Group said that technology was killing the interest, but how can that be when just about every category is "dumbing down" the technology in the interest of cost savings? NASCAR still runs carburetors and five nut wheels and COT that is virtually a spec car, IRL is a spec car, as is basically Grand Am, Moto2 and soon 3 in motorcycle GP's, ALMS has two spec classes to make up the numbers, and even F1, that pinnacle of technology has control tires, common ECU, engine rules that are virtually spec, and moves for more common components. This spec racing is not reducing "costs" because it is costing racing spectators and viewers.

Then there are those that say that the marketers are getting it all wrong. So did they have it right when NASCAR went through it's growth spurt? I doubt it, it probably had more to do with Dale Earnhardt, a larger than life character. Where are they now? Only Tony Stewart even comes close and they slap him down every time he shows a spark of life. NASCAR went through a fad, and thought it would last forever and alienated it's fan base to chase the yuppie. It went to new markets. Did you read the piece here a couple of days ago from ESPN F1 about F1 chasing new markets like Korea?

So then there are the sponsors, who are pushing the sports towards these new markets and younger generations. Have they asked anyone if that is what the people watching now want? The sponsors came in because the sport was successful, and then they want to change what made it successful, and are then annoyed that the audience drops. I wrote the other week about Martin Whitmarsh suggesting F1 needs to market itself better and commenting that there is a problem marketing a product that is not good. Red Bull is probably one of the great marketing stories of the decade, and I watch their cars and motorcycles all the time, and did try it once. Hated it and have never bought one since. You cannot make people like something.

That is probably the nub of the problem. We have a generation growing up that does not want to watch what we are offering. No amount of marketing or packaging is going to change that. Some sociologists can probably tell us why they think this is. Maybe they are all brainwashed about global warming and racing wasting resources. Would they all watch if we raced electric cars? Maybe they cannot watch two hour races, but GT have tried shorter races and I do not think more people watched them. Maybe because they can all race every track and every car on their X-Box in their lounge room or on their phone they do not need to go to the race or watch on TV. Then again, as they get older will they "find" racing and become a fan? I do not profess to know the answer. But if we change racing to suit them, do we lose the audience we have now?

I do know that most tracks being built are non-spectator tracks for people to drive their own cars fast. This has to tell us something about the future? We may not like it, but we are not going to change it by "better marketing." Perhaps we have to adapt to a new world, or go the way of the dinosaur?