Formula 1 and other stuff

Yas Marina Circuit CEO Richard Cregan

Here’s the good news: circuit owners have finally realised that they need to work a lot harder to provide fans with a worthwhile experience. And the bad? Inevitably, some of them see it as a means of squeezing your wallets harder.

Speaking at the Motor Sport Business Forum in Monaco, Nürburgring CEO Walter Kafitz told delegates:

“Circuits are part of the entertainment business, not just part of the sports business. Unlike in, say, football, people stay at a circuit all day – or all weekend. We have to keep them entertained. If you add value then you can demand more for the ticket.”

Bearing in mind that he was speaking in his second language, we shouldn’t read too strident a meaning into the use of that word ‘demand’. But only this week, the joy of many UK-based fans at the announcement from Silverstone turned to dismay when they contemplated the outrageous price of tickets. To get a family through the gates will cost hundreds of pounds.

It doesn’t have to be this way. For the model of a family friendly circuit, look to Abu Dhabi. The stakeholders in the grand prix – chiefly Aldar, the construction company, and Mubadala, the sovereign wealth fund (which also owns a stake in Ferrari) – planned the new circuit as a family entertainment venue that would offer a rich experience over the whole weekend. They did this because they knew they were bringing the sport to an audience that was entirely unfamiliar with F1.

Thus they built grandstands with a fairly conservative capacity, but specified that they could be easily expanded in future. They invested in educating their staff and their families about Formula 1. They invested in proper transport links, and built shopping malls and other attractions in the local area. The entire project was underpinned by knowledge of and respect for their demographic.

The upshot was a successful event that sold out easily and generated excellent feedback in a survey of public attendees and F1 workers. Compare and contrast with the soul-sucking grimness of other circuits that have been thrown together in the middle of nowhere and left to rot. I remember being at the Turkish GP in 2008 and quipping during the drivers’ parade that it would be quicker to introduce the crowd to the drivers rather than the other way around.

Richard Cregan, CEO of the Yas Marina circuit, said:

It’s about entertainment. It’s all about families, about giving every individual a positive experience – not just at the circuit but in the city itself. I don’t believe that you will have customer loyalty unless you go beyond the event. We’re lucky in that we’re working with organisations like ADTA [Abu Dhabi Tourist Authority] and Mubadala, who are helping to create that environment.

Silverstone appears to be in safe hands; Populous, the architectural consultancy charged with altering the circuit, also transformed the Millennium Dome into the O2. John Rhodes, a senior associate at Populous, described how they transformed the unloved white elephant on the Greenwich peninsula into a successful entertainment venue.

Initially we were looking to get about a million people a year to come to the O2. At the moment it’s about six million. The essence is that people go there to the event but then hang around afterwards. You have to create a destination that will encourage people to spend time there, regardless of whether there is a motorsport activity going on.

Maybe so – but someone’s got to pay for it. And it may as well be you, clearly…

Gérard Lopez, one of the Renault F1 team’s many suitors, is involved in several new media businesses. This morning he spoke at the Motor Sport Business Forum in Monaco and talked about how F1 needs to ‘reinvent’ itself: both in terms of how teams work as a business platform, to attract investment; and to properly embrace new media.

We see the whole environment as providing an opportunity. We’ve been involved in Formula 1 for some time as friends for some people, but never thought about getting more heavily involved than that. The situation is such right now that it provides an opportunity for new teams and new investors – it’s not a time of uncertainty but a time of change.

Times of change usually provide an entry point. We believe there is a chance to enter the sport and build a platform that sort of has to reinvent itself. If we were to become part of F1 we could be part of that reinvention.

If we were to do a deal, we would still be basing ourselves as a constructors’ team. That’s a different kind of business from a start-up. For us, what would be important is to provide stability over time. The business opportunities in F1 lie very rarely in making money out of your team; they should lie in making money out of the business platform that you have.

Put any seasoned executive into F1 and they turn into a big kid, essentially. It makes them much more approachable. So for us, F1 is an excellent business-to-business platform.

The teams can bring the sport closer to the audience. The sport and its environment is going to be forced to change.

Most of the broadcast contracts are based on a way of looking at things from 15, 20, 25 years ago. The fact is that in three or fours years’ time, most people in a lot of countries will be watching it not on TV as we know it today, but over the internet. And that completely redefines how you negotiate contracts and how you distribute content.

You can’t control the internet audience in the same way as you can control the television audience. It’s a similar process to what the music industry has gone through in terms of digitising itself. You have to figure out new ways of making money out of it, because at the end of the day that’s what keeps the sport alive.

Neville Wheeler, the director of the Cisco Media Solutions Group, talked about sports media being at a “point of disruption” which would provide opportunities.

We’ve invested heavily in helping media organisations, and especially sports companies who invest vast amounts of money on content rights, to look at different ways of being able to monetise those rights. Primarily that’s through digital media. For a long time there’s been a trend towards having bigger, better web properties with more monthly uniques than your competitors. But we’re seeing a change – from prioritising high volumes to seeing value for your audience as increasingly important.

As we all know, motorsport has a global audience, and we’ve got to a point now where you can have any content any time, anywhere in the world on any device. We’re trying to help media companies realise the full potential of the rights they’re paying a lot of money for; to do this they need to move away from focusing on how many people they can bring to their sites – and start finding new ways to engage with their audience, to find out interesting things about them. Personalisation of content and advertising, providing unique behind-the-scenes experiences – from that value you can create a revenue stream and a sustainable vision of business.