Archive for the ‘ F1 Business ’ Category

The technology has changed but the culture hasn’t (yet)

Bernie: still not quite there with the internet. Photo by Darren Heath

Bernie: still not quite there with the internet. Photo by Darren Heath

M’learned colleague James Allen is calling it “The deal that changes F1 forever” and he may just be right. Up to a point, Lord Copper…

Formula 1’s deal with Tata Communications means the sport will be able to transmit (and, in theory, receive, but we’re getting ahead of ourselves here) from every grand prix via Tata’s global fixed line network, rather than renting a one-way satellite link.

Advantage Bernie. For some time now the Formula One Teams Association has been pointing out that increasing numbers of people consume sport via the internet. Unfortunately, until recently whenever the word “internet” sailed into the F1 ringmaster’s ears, his cerebellum translated it thus: “freeloading gits trying to get somefink for free.” Readers of moderate age may remember the protracted trademark battle Bernie fought with the Chiswick-based proprietors of… before he eventually capitulated (in a manner of speaking) by simply buying them off. And indeed, there is still a team of people at FOM HQ whose sole purpose is to issue YouTube with cease and desist orders whenever anyone has the temerity to upload a post-1980 F1 video to it.

Bernie: don't cross the streams? Photo by Darren Heath

Bernie: don't cross the streams? Photo by Darren Heath

But FOTA had a point, which is that revenues from the sale of TV rights will inevitably decline. Yes, Sky is about to engage in the mother of all who-can-piss-higher-up-the-wall contests with the BBC, but elsewhere in the TV ecosphere broadcasters are withdrawing resource from the sport or getting out altogether. The Tata deal will enable FOM to tie up pay-per-view streaming deals with Apple, Netflix, etc, while still milking the likes of Sky until the teats run dry.

This will open up more choice for viewers, with the caveat that the inevitable consequence of more choice is the gradual withering of free-to-air platforms. The question then is what kind of choice do you get? In eschewing Sky, say, for a web stream, are you simply swapping one set of presenters and packages for another, or will you be able to access a variant of the basic feed? Will the web streaming service be packaged as such, with its own presenters, pundits and ambulant cameramen? (just what F1 needs – another bunch of goons barging around the paddock as if they own the place. See here for what happens when camera jockeys forget that getting a shot of Bernie walking into a motorhome is less important in the grand scheme of things than avoiding clonking a driver on the bonce)

Much is being made of the Tata infrastructure being bidirectional, which will open up “interactivity”. I doubt much will come of this unless FOM can squeeze revenue from it, perhaps in the manner of those TV quizzes where you enter by ringing a premium rate number. There’s a reason doesn’t have a forum: Bernie may not know much about the internet, but he knows he won’t earn a bean from providing a free platform for sociopaths to hee-haw at one another. After all, FOM’s digital people have got better things to do, such as composing stiff emails to YouTube…

Ferrari joins the Sierra club

When Ferrari announced that its new Formula 1 car was to be called the F150, many car-savvy folk commented on the fact that Ford has a long-lived US-market model of the same name, give or take a strategically placed hyphen. Today’s news that Ford is taking legal action against Ferrari – citing trademark infringement and claiming punitive damages under anti-cybersquatting legislation – was therefore almost inevitable.

This situation is not without precedent in F1 and the car industry as a whole. 20 years ago Porsche got uppity when Leyton House gave its new Ilmor-engined chassis the designation CG911.

Looking further back, Ford itself ended up at the wrong end of a lawsuit when it launched the Sierra in 1982. A kit car manufacturer called Dutton had been marketing an incredibly ugly soft-roader (ironically enough, based on Ford Escort mechanicals) called the Sierra for three years.

It would have been a classic David vs Goliath victory, save for the fact that neither side quite got what they wanted, although Dutton was awarded costs. Neither managed to prevent the other from using the name, on the basis – said the judge in the case – that kit cars occupied an entirely different automotive category to production cars. Perhaps there will be a similar outcome in the Ford vs Ferrari tangle?

Edit: Ferrari has acted quickly to defuse the issue and tweaked the nomenclature of its car. It also issued a statement which said:

On the subject of the name of the new Ferrari Formula 1 car, the Maranello company wishes to point out that it has sent a letter of reply to Ford, underlining the fact that the F150 designation (used as the abbreviated version of the complete name, which is Ferrari F150th Italia) never has, nor ever will be used as the name of a commercially available product – indeed there will definitely not be a production run of single-seaters.

Time for some realism on Lotus

Lotus-Renault's official livery

Lotus-Renault's official livery

Pictures released last week of a Renault bedecked in black and gold and wearing a Lotus badge on the nose amply demonstrate that Dany Bahar and the Group Lotus crew have landed a stinging blow against the ‘other’ Lotus. The pictures, accompanied by an exclusive in AUTOSPORT magazine, set in motion a host of sulky Tweets from bigwigs in the ‘other’ Lotus (hereafter referred to by the business’s formal title, 1Malaysia Racing) and a spasm of irk from members of various fan forums on the internet.

I’ve written before, with tongue firmly in cheek, that watching a pair of opportunist businessmen handbag each other over a moribund (if potentially lucrative) historic enterprise has echoes of the hilarious late-1990s high court spat between Bobby Gee and David Van Day over who had the right to tour under the name of 1982 Eurovision winners Bucks Fizz. The fans, however, seem to take it rather more seriously, and spent the past weekend hauling AUTOSPORT over the coals because of its perceived stance on the issue.

It’s a well-worn maxim that the easiest way to make a small fortune in motor racing is to start off with a large one. To succeed in F1 requires business sense and a certain agility, not to say more than a little ruthlessness. Only in the reductionist world of internet forums, where one is either a hero or a villain and nothing in between, do we find these saintly figures who arrive in the sport for purely altruistic reasons.

I say this because Tony Fernandes, whom I have every respect for, came to Formula 1 to make a profit, not to spend large sums of his own money breathing life into a dead name. The motive for this Lazarus routine with Team Lotus was pure entrepreneurship: he saw an opportunity in the orphan asset, set about obtaining it for a knock-down price, then added value with the ultimate ambition of selling the enterprise on to someone else.

This is not news in the Formula 1 world. The obvious ‘someone else’ was Proton, from whom he obtained the original licence to use the Lotus name when David Hunt, notional owner of the ‘Team Lotus’ rights, did not jump in straight away.

Trouble is, according to one of my snouts, Fernandes assured Proton that his team would be among the frontrunners in its first season. Oops.

Whatever configuration of the Lotus name is above the door, the 1Malaysia Racing Team is a remarkable achievement. Tony Fernandes thoroughly deserves to turn a profit from it: he put the right people together, resourced it adequately, and generated considerable goodwill by marketing the team vigorously. Having a Colin Chapman-style hat under glass on the pitwall was a stroke of PR genius. I hate to puncture any illusions held by fans, but this is a marketing exercise par excellence as well as a team with undisputed soul.

David Hunt may come to regret not getting on board sooner, for now there is another opportunist entrepreneur on the scene: Dany Bahar. He has grandiose plans for Group Lotus and a stipend from the Malaysian government, via Proton, to put them into action. Whether this self-confessed ‘non-car guy’ genuinely understands what he’s doing is neither here nor there for now. It is a fundamental axiom of the luxury and performance car market that execution and perceived quality are at least as important as style, and shortcomings in the former areas are the chief cause of Lotus’s failings over the past three or four decades.

If Bahar fails to deliver then he will not personally suffer, because he is playing with other people’s money: it is the Malaysian taxpayer who will take a bath, in much the same way as Ireland is now in penury because its banks lent injudiciously to ludicrous enterprises such as the Donington renovation.

Where does the team formerly known as Renault F1 fit into this? I don’t suppose they care so long as the cheque from Proton doesn’t bounce. The ‘reveal’ of their car in ersatz John Player Special colours was an inspired piece of mischief: 1Malaysia Racing had signalled their intention to move to that colour scheme some weeks ago, and had even invited fans to submit ideas. Crucially, though, Enstone’s graphic designers beat them to the crucial stage of getting an image into the public domain.

David Hunt, meanwhile, has been reduced to venting his rage at the state of affairs in various Norfolk-based newspapers, rather in the manner of Alan Partridge. He and Fernandes need to tread carefully. 1Malaysia Racing’s plans for 2011 hinge on a Renault powerplant and Red Bull’s tightly packaged (and aero-friendly) drivetrain, and the use of the Team Lotus name. If they lose the rights to the latter in court then a costly change to the team’s entry beckons, for they will lose their 2010 prize money if forced to do so.

Also, the word on the street is that they are perilously close to triggering a severance clause in the engine supply contract if they don’t lay down their weapons. Ghosn in 60 seconds, you might say…

Santander still banking on Alonso

Ferrari’s little strategic error last weekend may have cost Fernando Alonso his shot at the drivers’ title, but the team’s sponsors are still laughing all the way to the bank – so to speak.

Banco Santander, the multinational financial group which sponsors both Ferrari and McLaren (although in the latter team its branding appears only on the drivers’ overalls), has released figures from the Media Sports Marketing and Havas Sport consultants estimating the bank’s return on investment (ROI) from its F1 sponsorships at €270million in 2010, up from a previous estimate of €250million.

The bank also takes title sponsorship of the British, German and Italian Grands Prix.

Meanwhile, back in Abu Dhabi, Mubadala – an investment company run by one of the members of the royal family – is selling its five per cent stake in Ferrari back to the FIAT group. Mubadala reportedly paid €114million in 2005 for the stake, originally held by the Italian bank Mediobanca. The figure mooted for the current sale is €122million, which is a tidy sum given the travails of the automotive industry in recent years. The sale has come about because FIAT exercised an option to buy back the shares – an option it has deferred several times.

Mubadala is part of Abu Dhabi’s strategy to diversify away from fossil fuels and into tourism and technology by making key investments. We can expect to see the name return before long – indeed, the rumour mill is already linking it to a possible acquisition of the Formula One Group from CVC Capital Partners. That may be a little far-fetched, though…