Writing a paper on F1

"My bird IS the word" (mybirdistheword) 04/30/2018 at 20:01 • Filed to: None

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Sports marketing, final project. 10-15 pages. Any suggestions by people who, you know, actually watch F1? Because I don’t.

My business school teachings have left me honestly amazed it has done as well as they have. The potential pitfalls from a business perspective are simply staggering. Hard to watch, hard to find out info, Hard for teams, hard for tracks, Not a ton of merchandising potential cause the teams and cars change every damn year. I wouldn’t even invest in this with Donald Trump’s money.

Highlander-Datsuns are Forever > My bird IS the word 04/30/2018 at 20:19

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It’s Bernie’s fault.

My bird IS the word > Highlander-Datsuns are Forever 04/30/2018 at 20:21

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Yeah, I think he just gets kudos for monetizing F1, not for actually being good at business.

Highlander-Datsuns are Forever > My bird IS the word 04/30/2018 at 20:36

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Good at business for himself.

zipfuel > My bird IS the word 04/30/2018 at 20:44

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It helps to see it from a more global perspective: in the USA it’s probably behind college netball in terms of viewers but in Europe and elsewhere it’s had a gigantic TV audience for decades and that has translated into massive revenue both from licensing and sponsorship. Its also arguably the most glamorous sporting spectacle out there which attracts luxury brands with huge margins to burn on aspirational marketing.

Now today there’s danger as the importance of TV is waning and they were increasingly firewalling out new fans by being on pay channels and offline but liberty seem to be turning that around.

themanwithsauce - has as many vehicles as job titles > My bird IS the word 04/30/2018 at 20:45

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There is a strange relationship between car manufacturers and #brands and the sport as a whole. Like the reason why we’re not doing V10s and V12s or even V8s is allegedly because all engine manufacturers don’t want to do it unless it has road car relevance. And of course, lots of technology, oil, and computer companies are onboard with the sport still....but it’s weird that they have the sponsors that they do, in some ways.

I’d also look at the reluctance of the sport to adopt to the internet age but also look into the rapid changes and adaptations they made in that field in the past year or two alone (like launching a streaming service...eventually)

AntiSpeed > My bird IS the word 04/30/2018 at 20:52

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Bernie Ecclestone went from owning a motorycle parts shop outside of London to owning a car dealership, to owning an Formula One team, to becoming the shark of sharks that nobody dared mess with for more than 3 decades. He went from a lower-middle class family to a net worth of over $3billion. He’s made a lot of unpopular decisions, but to say he’s not good at business couldn’t be more wrong.

F1 business is absolutely fascinating . If you want a really good read, Bernie’s Game: Inside the Formula One World of Bernie Ecclestone chronicles his live as I described above. It goes into a lot of detail about the FOCA/FISA war, where he, representing the Formula 1 teams, fought for control of the sport with Jean Marie Baleastre who was head of the FIA. After that book you’ll have a much better understanding of F1 business, even though today it’s considerably different than it was in the 80's. No Angel is another good Bernie book.

Anyways, the reasons you listed are partly why F1 teams are only owned by car manufacturers and billionaires. Owning a sports franchise isn’t something you do to make money, it’s a status symbol.

The way F1 has worked for a long time is that the millions upon millions of dollars from the various national TV deals F1 makes are collected into a pot. Bernie took his cut (a HUGE cut) and the rest was given to the teams. The shares are divided amongst the teams based on their finish on the previous year’s constructors championship. Teams finishing higher get more, and Ferrari gets an extra bonus because they’re Ferrari. The exact amounts everyone gets are closely guarded secrets. For many of the teams that’s probably the largest chunk of their income. I’m not sure how that has or will change under Liberty Media.

Ash78, voting early and often > Highlander-Datsuns are Forever 04/30/2018 at 20:53

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Hillary won fair and square!

/s

My bird IS the word > themanwithsauce - has as many vehicles as job titles 04/30/2018 at 20:53

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Their website still sucks ass at providing info. Really no excuse for that.

My bird IS the word > zipfuel 04/30/2018 at 20:58

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Yeah. I wonder if F1 isn’t popular because NASCAR crowds them out, but there really isn’t a good way to actually tell without market research.

My bird IS the word > AntiSpeed 04/30/2018 at 21:05

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Honestly the structure is completely sideways. It looks to me like the whole sordid thing is propped up solely by marketing deals, and that the actual sport itself doesn’t generate much value. It’s easy to rag on Bernie, but with this project I am mostly covering F1 right now. With that in mind, it looks like he gave up about a decade ago. Crochety old man syndrome anyhow. I would say he is very good at making him and the sport money, but there is a whole “cover your ass, prevent sudden collapse” element that hasn’t been accounted for. I think they have basically just skirted catastrophe this whole time.

AntiSpeed > My bird IS the word 04/30/2018 at 21:34

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Bernie was never able to penetrate the US, and he doesn’t understand digital media. But he was an expert at squeezing every last bit of profit out of tradition media. And out of pretty much anyone who he wanted something from.

F1 is propped up by TV, the manufacturers, and a couple of billionaires. It’s the most-watched sport in the world aside from the World Cup, which is only every 4 years. The global tv audience convinces the manufacturers to pump money into it and convinces billionaires to pump money into privateer teams, partly to promote their own businesses.

I majored in sports management and one of my classes was taught by a guy who amongst a lot of other things ran the Dallas Stars. His main theme of the class was that sports franchises don’t make money. Even the most profitable NFL teams only make ~$20million per year in profits. Which isn’t much when you consider the hundreds of millions of revenue they generate. Enzo Ferrari and Colin Champman (the owner of the original Lotus F1 team) sold sports cars in part to fund their racing teams. Mercedes, Ferrari, and Red Bull are not profitable, they’re a line item on their owners’ marketing budgets. They do it because of the image F1 gives their brands, and it gives them a global stage to showcase their engineering prowess.

AntiSpeed > My bird IS the word 04/30/2018 at 21:43

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You should read those books. Even if you can’t finish them in time for your paper, like I said they’re absolutely fascinating (it’s also one of my favorite subjects!). You’ve said you don’t follow F1 so forgive me for assuming you know more or less about the sport than you actually do. But up until recently, Bernie was Formula 1. If you understand him you’ll understand Formula 1. At least the business side of it.

Also you’d be astonished how many people in motorsport are absolute knuckleheads when it comes to business. For fuck’s sake it took them almost 70 years to figure out that if they put a company’s sticker on the car that they could make money from it.

AntiSpeed > My bird IS the word 04/30/2018 at 22:21

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The US is generally very hostile to foreign sports. On top of that we already have NASCAR, which is as American as it gets. The lack of American drivers and consistent US events until very recently have made it very difficult for F1 to take hold in the US.

(sorry I keep popping up here, I’m obsessed with this stuff and I rarely get to talk about it!)

My bird IS the word > AntiSpeed 04/30/2018 at 23:56

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Always looking for good books. Every time a millionaire is made there is always something to learn.