Formula 1 and other stuff

Having listened to what the delegates in the first session at the Motor Sport Business Forum had to say about broadcast rights in the new media age, I thought I’d set the cat loose among the pigeons. So, when Chairman Allen invited questions from the floor, I asked:

Given what was said earlier about the broadcast rights being based on a model that’s at least 15 years old, do you think that Formula 1’s rights holder is holding back the sport by clinging on to this outdated model?

I fully expected an epidemic of fence-sitting, but the responses were very interesting. Neville Wheeler of Cisco said:

The pace of change in the internet in general is so fast that unless you’re prepared to break away from the shackles of the old way of doing things, you’re rapidly left behind. You will very quickly find that the people who are passionate fans will seek out and access the content in one way or another.

The smart organisations are trying to find a way of monetising those rights, rather than trying to create a walled garden to protect them as long as possible. We have to get to a point where the audience immersion, social media and associated technologies are a key component of the way motorsport – and sport in general – is delivered to the global audience.

I like the ‘walled garden’ analogy. It speaks to everyone who has tried to access a territory-locked live feed or put up a montage of racing footage on YouTube. FOM has a marketing department of 12 and half of them must be lawyers; one probably even has ‘YouTube Grinch’ in his or her job title.

Gérard Lopez from Mangrove Capital Partners said:

To most people, the so-called MTV generation is the modern generation. To us it’s not – it’s old-fashioned. People don’t buy music any more. Kids don’t watch television as much as they used to. People consume media in a different way. Even some video game platforms are being forced out of the market by on-line gaming. Rights holders have to touch their audiences differently.

It doesn’t make sense to try to charge people for something that they will figure out how to get for free. F1 will be available on the internet and you need to be prepared for that. The challenge is not in deciding what you give away for free but in deciding what sort of value you’re going to provide on top of that – elements that people are actually willing to pay for.

New Lotus F1 boss Tony Fernandes said:

I came from the music business. I left that business because it didn’t want to embrace the internet. I told them [Time Warner] that if they didn’t embrace it, the music industry would be destroyed. They were more concerned with EBEYDL – Earnings Before Everything You Don’t Like – calling it ‘cashflow’. I quit that day.

Social media is a fantastic way of reaching an audience and keeping them excited on a day-to-day basis. There’s a massive opportunity. But whatever you do, it has to be accessible and reasonably priced. There’s a fantastic app for the iPhone that keeps you informed about timings on a race weekend, but it’s pricey. I think F1 has to look at that.

Everyone I’ve spoken to has been enormously impressed by Tony Fernandes. He seems to be exactly the kind of driven, entrepreneurial, forward-thinking businessman F1 needs, and not a flim-flam man or a Walter Mitty type.

The next panel was about sponsor value, and one or two of the representatives echoed the sentiment that FOM needs to take a more proactive approach to marketing the sport – but more about that in a separate post.

If the weather is anything to go by, things are looking up. This time last year, Honda had just crashed out of Formula 1 and companies in every sector were feeling the economic pinch. As the Motor Sport Business Forum delegates converged on the seafront venue, the view was every bit as bleak as it would have been if we were in Margate. A biting wind whipped over the water and flapped angrily at our trouser legs as we trod delicately around the piles of dog excrement. The glamour of the grand prix seemed a million miles away.

This year there are blue skies and an inspirational-looking array of speakers. The only bum note was sounded by a PR agency boss I spoke to last week; he said he wasn’t coming, on the grounds that although last year’s forum was interesting, he didn’t actually generate any business from attending.

But there is always someone – or something – worth listening to at the Motor Sport Business Forum. Last year we had the spectacle of a bullish Simon Gillet unveiling his daring and highly improbable plans for the British Grand Prix at Donington, including the radical notion of closing down East Midlands Airport for the weekend to act as a massive park and ride scheme. It subsequently transpired that no such proposal had  been put the airport’s way – and that even if it had, the answer would have been, “Absolutely no. And who are you, anyway?”

What a difference a year makes. Or not, as the case may be. I was clearing some old files off my digital recorder last week and came across Max Mosley’s keynote speech from the 2008 Motor Sport Business Forum. Listening back to his opening remarks put the events of the past 12 months in chilling context:

The fundamental issue that confronts everybody is the world economic situation. From motorsport’s point of view, the difficulty is that nobody knows whether it’s going to get worse, or whether we’ve now seen the worst of it and it’s going to get better. The economists certainly don’t know, and the old joke about two economists and three opinions is absolutely the case today because nobody really knows what’s going on. It’s quite an alarming situation.

I think, as far as motorsport is concerned – or at least our area of it, which is international motorsport – it’s essential to plan for the worst case, and to have contingency plans in place which will deal with the situation if it does get much worse.

I think we have to face the fact that Honda pulled out because of falling car sales. And there’s no guarantee that the falling car sales, which affect all manufacturers, won’t fall further; and if they do, we’ve got to reckon with other manufacturers pulling out, not only in Formula 1 but other parts of motorsport. We have to plan for that contingency.

With that having been said, because we don’t know what’s going to happen it would be tedious of me to go in great detail through the various contingency plans we have in place. Suffice to say, they exist.

Mosley uttered these words against the backdrop of an economic climate that had taken an abrupt turn for the worse during October. The news of Honda’s withdrawal from F1 was still fresh; and although the other car manufacturers were banding together as FOTA to increase their powers of collective bargaining, no one could be certain whether others were preparing to follow Honda out of the door. TV news broadcasts at the time were padded out with helicopter shots of quaysides and rented runways filled with unsold cars.

Mosley has his knockers (although I’m sure they’ve all been paid for) but it’s clear that his single-minded attack on costs – and his determination to allow new teams in – was the correct course of action, even though it made for some rancour. Those who set themselves against it proved only that they were absurdly out of touch with reality. Many of them, incidentally, are now looking for alternative employment.

That said, I’ve been surprised at how out-of-the-loop some of the team principals have been. Easily done if you’re part of the private jet set, I suppose. You only have to look back at some of the public pronouncements made by the likes of Mario Theissen and John Howett to see how the principal of a manufacturer team can carry on swanning around the paddock like a master of the universe – even while the board is cutting the rope.

Nick Fry was the first team principal to feel the blast of the recession and he is one of the speakers at the Forum. His story of prospering against the odds will set the tone for what promises to be an interesting couple of days. Alex Tai of Virgin F1 will also be present, as will Talal al Zain of the Bahrain Mumtalakat Holding Company, which has a stake in McLaren. The keynote address will be given by Lotus F1 owner and Twitter aficionado Tony Fernandes. Very often it’s these kind of people – the ones who hold the purse strings – who are far more important than those who simply strut and preen for the cameras.

We’ll also hear from representatives of major sponsors including LG, Shell, Diageo and Hilton. Companies such as these are the engines of motor racing, whether their involvement is partly technical or purely commercial. They don’t go racing for fun, and in the present economic climate their spend has to meet very strict ROI criteria. It’ll be interesting to see how keen they (and their competitors) are to spend, and through what channels they intend to direct that investment. Although conventional ad spends remain in decline, to the detriment of many newsstand magazines, brand activation is as important as ever.

Thanks to the web, Formula 1 fans can now baste themselves in news on a daily basis. A panel of well-known F1 scribes including Jonathan Noble of AUTOSPORT, Alan Baldwin of Reuters and grandprix.com’s Joe Saward will discuss the triumphs and challenges of breaking news in the internet age. Journalist, broadcaster and prominent F1 blogger James Allen will chair proceedings.

Stay tuned…