Category Archives: Formula One

Formula One: Can F1 afford to wait until 2021?

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Barely a day goes by without one of the leading motorsport websites publishing comments around the future plans for F1. From louder engines to racing game inspired car designs, 2021 will amaze and inspire a new generation of fans. All of which sounds great, but it’s 2018. There are 3 seasons of Formula One between now and the promised fantastical future. The landscape of the motorsport industry can and will change dramatically in 3 years. Can Formula One really afford to wait?

2017 saw the introduction of the current set of technical regulations guiding the sport. Whilst cars are visually more impressive than there predecessors with the dimensions of the cars and tyres increasing. An overall increased emphasis on aerodynamics has had a dramatic impact on drivers ability to overtake with the 2017 season seeing less than half the number of overtakes of 2016.  At present, there appears to be no plan to address this issue, with the 2018 regulations seeing no modifications around aerodynamic regulations.

Mindful of a likely closer battle for wins, Mercedes, Ferrari and Red Bull Racing, may have focused the aerodynamic philosophies of their 2018 challengers around an ability to more closely follow a competitor, but without regulation changes a significant increase in overtaking from 2017 to 2018 is unlikely.

All this comes at a time the commercial positions of Formula One are coming under threat. Longstanding partners involved in the championship are defecting to the likes of Formula E or other sports, and at this time, prospects for new partnerships appear limited. With the Formula One business focusing their attentions towards 2021 why would a partner commit to the championship ahead of the ‘revolution’? The Formula One product from 2018 -2020 may be a difficult product to sell.

It is possible, Formula One management are focusing taking a strategy of focusing to the future with the view and expectation of teams demanding an earlier introduction of new regulations. With the Season 5 Formula E car set to make its public debut in the coming weeks, and Indycar looking strong with a new car concept, competition between championships is ever growing. Can Formula One and the teams committed to its success afford to wait another 3 years for change?

Formula One: Preparing for the budget cap

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The Liberty Media vision for the future of Formula One Teams is clear. The owners expect 12 commercially viable, profitable, franchises all capable of challenging for race victories. In his role as Managing Director of Motorsports, Ross Brawn, has been mandated with the task of delivering a strategy to ensure this vision is achieved.

12 commercially viable & profitable teams, on paper, sounds fantastic. With the variable of available finances removed, the resourceful nature of F1 teams will truly be put to the test. Outwardly it seems as though there is widespread support from the teams for such a move. Afterall, what business wants to spend more money? With representatives from leading teams including Red Bull Racing emploring Liberty Media to ‘ Save F1 Teams from themselves’ the route to implementing a budget cap should, in theory, be straightforward.

However, As with any commercial decision in Formula One nothing is straightforward. The first major hurdle to overcome is the existing structure around payments and the legacy of disparity. In 2017 Joe Saward explained the complexities around the current structure in this article. The existing structure rewards success and longevity, a something which is not overly inviting to a new team, nor geared towards a midfield team ever being in a position to surprise. In an estimated payment fund of $900M per season, the top 3 teams receive approximately 60% of the revenue, leaving the remaining, currently 7, teams to compete for 40% ($360M) between them. It is estimated that the smallest operational budget in F1 today is in the region of $100M, with only $50M coming from the championship, teams have a significant shortfall to cover.

A more appropriate payment structure would be equal distribution amongst all teams, with a proportional bonus for constructors championship position, similar to that seen in the Premier league as detailed here.  Unfortunately, in order to reach this point, the largest teams, with operational budgets believed to be in excess of $400M per season must agree to a cut in support from the system under which their team structure has been developed. What business would agree to lose as much as 50% of its funding without a clear view of how it will cut costs or increase revenue through other ventures.

Convincing; Red Bull Racing, Scuderia Ferrari, and Mercedes Grand Prix to agree to this change will be one of the key tasks ahead of Ross Brawn through 2018 and 2019 if a new system is to be introduced under the new commercial vision for the sport in 2020.

The task is far from simple, the infrastructure of the top teams has been built around a mindset of a limitless budget. If a budget cap of $150m per season were to be introduced in 2020 with no consultation from the teams, it would be almost impossible for the top teams to comply. From a personnel headcount perspective alone a team such a Mercedes Grand Prix, with in excess of 1400 employees, if an average salary of $50,000 is applied, the team commit 46% of its budget to salaries before considering building a car. Without modifying the current team structure, introducing a budget cap within the next 3 seasons, unless Liberty Media expect teams to make more than 50% of their workforce redundant, is not feasible.

On a more positive note, there are indications that the top teams in question are preparing for the change. A budget cap in Formula One will not mean that the likes of operating entity such as Mercedes Grand Prix or Red Bull Racing will be limited to an expenditure of $150M per season, rather their allocation of resources to F1 will see this limit applied.

As a result, it is highly likely that diversification will be a key element to the future of F1 Teams. Over the past decade, McLaren and Williams have established an industry-leading position in the application of engineering solutions developed to improve performance in motorsport being incorporated into manufacturing processes and commercial entities.  For these teams, this third-party business will likely continue to grow. it is, however,  unlikely Ferrari or Red Bull Racing will view this as an appropriate use of resources or brand credibility.

Instead, expect the very top teams to move towards expanding their foothold in other forms of motorsport.

  • Mercedes Grand Prix has already made steps in this direction with the announcement of a commitment to Formula E team from season 6 of the championship. This alongside the development of the Mercedes Project One, which to many is a clear indication of Mercedes ambitions to return to Endurance Racing. A return which with LMP1 regulations under review and the prospect of the reinvigoration of the FIA Global Engine strategy, Mercedes are well positioned to find success.

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Credit to Sean Bull Design for the concept Mercedes Formula E livery 

  • Similarly, Red Bull Racing through their partnership with Aston Martin has acknowledged an interest in taking the Valkyrie racing, and under guidance from Ross Brawn will no doubt be seeking to bring the Toro Rosso team entirely in-house.

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  • McLaren has taken the decision to take control of their GT programme, and have already explored further engagements in championships including Indycar following the positive coverage generated through the one-off partnership with Andretti Autosport at the Indy 500 in 2017.

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  • Ferrari continually talks of a return to Endurance Racing, and could, similar to Red Bull Racing consider a strategy of an in-house B-team with which budget cap compliance could be achieved.

In conclusion, political posturing between the top teams in Formula One, Ross Brawn, and Liberty Media throughout the 2018-19 seasons will likely overshadow on-track performances. Fans of the sport should take any empty threats from top teams to walk away from the sport as just that. Empty threats. The financial implications of such a move make the option unviable. Instead, teams will double down on motorsport, getting involved with more championships, with the eventual winner being the fans.

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Formula One: Confirmed – Renault will not feature in McLaren team name designation

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McLaren has confirmed that Renault will not be referenced in the official team name designation for the 2018 season. Whilst Renault branding will feature within the team environment and livery as would be expected in a customer power unit relationship, the team will not be referred to as McLaren Renault.

As speculated on this site in September 2017, such a move will facilitate a single focus for the McLaren brand and enable consistent naming conventions should the team implement its own Power Unit solution under future F1 regulations.  Unlike fellow Renault customers, Red Bull Racing, McLaren have not taken the route of rebadging their Power Unit.

The Renault Power Unit supplied to Red Bull Racing has been badged TAG Heuer since 2016, in an agreement which saw the LVMH owned brand end a long-standing partnership with McLaren switching to the Milton Keynes based team.

The naming convention surrounding Toro Rosso’s relationship with power unit partner Honda is yet to be confirmed.

Formula One: Scuderia Ferrari IQOS

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Following yesterday’s article in which the prospect of Scuderia Ferrari carrying IQOS branding was explored, designer Sean Bull got in touch to share his vision of a possible 2018 livery for the Scuderia.

Philip Morris International, as title partners of Ferrari, will likely seek to include IQOS naming rights within a partnership announcement in order to maximise coverage and brand exposure. As such the team may well be referred to as Scuderia Ferrari IQOS, following the previous Scuderia Ferrari Marlboro naming convention.

Sean‘s concept livery harks back to Ferrari livery style of the early 90’s using black as a secondary colour throughout the design. The use of black on the front and rear wing would likely appeal to the team’s designers, with the fine detail of aero intricacies being more difficult to make out in rival team ‘spy shots’.

It remains to be seen if Philip Morris International will seek to promote its e-cigarette business through Ferrari in 2018, based on fan response to the rumour, the move would be positively received.

Click here to check out Sean on Twitter for more motorsport livery work.

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Formula One: Missing Sponsors

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As the clock struck midnight on December 31st 2017, many sponsorship relationships throughout the F1 Grid reached their conclusion. In the coming weeks and months, numerous new agreements will be announced at both a team and championship level as attention focuses on the season ahead. For myself as a lifelong fan of the business of Formula One, now aspiring to develop a career in this side of the sport, this period between commercial contract expiry and new contract announcements can be fascinating.

No team will encourage media to make a story out of the end of a partnership, so don’t expect any press releases confirming a departure, instead head to the partner’s section of the website of the team you follow and see if you can spot the brands or names suddenly missing from the list.

A well-publicised partnership expiration is that of the relationship between Santander and Scuderia Ferrari.  A partnership many believe will be replaced by the promotion of long-term team partners Phillip Morris introducing e-cigarettes to Formula One with the brand IQOS. If true, e-cigarettes could represent a high-value sector of sponsors for F1 moving forward, assuming advertising challenges can be overcome, and OEM’s including Mercedes and Renault are comfortable with the association.

Intriguingly, whilst Santander has been removed from the Scuderia Ferrari Website, it remains on the McLaren (no longer McLaren Honda) website. Santander, whilst no longer a brand represented on the McLaren livery have been partnered with the Woking based team since Alonso first joined the team in 2007.

Can you spot any other team websites with mysteriously missing partners? There are some out there which may surprise…

Formula One : The Future of Pirelli in F1

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Pirelli returned to Formula One in 2011 as the sole tyre supplier and official championship partner. Pirelli, founded in Italy, recently acquired by ChemChina, joined the championship with a clear mandate from Formula One Management to ‘spice up the racing’ through the development of a range of tyre compounds with significant performance variables and accelerated levels of degradation. Initially, this new philosophy around tyre performance at the pinnacle of motorsports was well received with a positive response from fans and media around a new element of unpredictability surrounding an F1 weekend.

However, as teams and drivers adapted to the Pirelli approach to tyre compound chemistry, car set up and driving techniques evolved to minimise the challenges the tyres presented. This led to increasingly aggressive approaches to performance and degradation levels in tyre development culminating in the “challenging” 2013 British Grand Prix in which teams were supplied with tyres which were not capable of performing at the levels required. The result of which was a race which saw numerous failures throughout the field and a strategic re-evaluation from Pirelli.

In the seasons since 2013, Pirelli has maintained the vision of producing a range of compounds with varying levels of performance and high levels of degradation but with a more conservative approach. The result of this restraint has been races in which teams and drivers focus on tyre management over performance, understanding the optimal approach to a race has often been to extend the life of a tyre rather than push it to its limit. As such, in recent seasons, drivers have rarely complimented the performance of Pirelli’s efforts over a Grand Prix weekend.

Creating positive media coverage in a sole supply situation will always be a challenge. Since there is no competitor to beat, victory becomes the default leaving the only newsworthy coverage that of failure.  In such an environment it can be a challenge to understand how Pirelli quantify benefits from its sponsorship of Formula One. Over seven seasons they have developed a reputation for producing tyres with excessive degradation and minimal differentiation beyond coloured side walls. Would an F1 fan seriously consider buying Pirelli tyres for their own car based on how they perform in Formula One?

So where does this leave Pirelli?

At the end of each season, Pirelli produce an end of year summary detailing all every fact and figure imaginable around; corning speeds, top speeds, lap times, number of overtakes, number of compounds used by each driver and the figure which stood out to me the most, the number of sets of tyres produced in a season.

In 2017 Pirelli produced 38,788 sets of F1 tyres, which equates to approximately 3,258 tons of tyres. Of these, only 12,920 sets (1,085 tons of tyres) were actually used. This means two-thirds of F1 tyres produced in 2017 were never raced and simply destroyed. Whilst Pirelli makes it clear all tyres were recovered, a system in which such a vast number of tyres are produced and shipped around the globe and never used is hugely wasteful and frankly embarrassing for both the manufacturer and the sport. The strategy of an ever-increasing range of tyres being made available for a Grand Prix weekend has resulted in the requirement of an inefficient and cumbersome supply chain. Something which will only increase in 2018 with further tyre compounds and team selection freedoms being added to the Pirelli ‘menu’.

In recent years Michelin, a leading industry competitor, have repeated statements that the current philosophy of Formula One around the use of tyre degradation as a key variable in racing, is of limited strategic merit and is not in keeping with how they believe tyre technology should be presented in motorsport. Instead, Michelin has focused their efforts in Formula E and the World Endurance Championship, showcasing innovations around all-weather tyres, low profile tyres (18-inches, compared to the 13-inch profile used in Formula One), and minimal degradation allowing competitors to push the performance of a tyre throughout an event.

Increasingly Formula One and its regulations are focused on reducing unnecessary waste. limiting fuel use through a race, and limiting the number of power units available to a team through a season. This focus on efficiency appeals to existing OEM’s in the sport including Mercedes, Renault, and Honda, and again sits in contrast to the wasteful and confusing approach mandated to Pirelli. For the 2018 season there is no longer any opportunity for Pirelli to change their approach to racing, but with minimal technical regulation changes set for 2019, perhaps the management of Formula One should look to change the conversation around Pirelli’s role in F1 and encourage the manufacturer to innovate relevant style.

For 2019, perhaps Pirelli should look to consider a simplified approach to tyre compounds, produce tyres with increased variance in performance yet minimised levels of degradation, and adopt 18-inch low profile tyres, enabling the end user to better relate to the product they see racing on a Sunday.

It is understood 2019 is the final season of Pirelli’s current agreement with Formula One. Without change, will it be their last?

Formula One: Underestimate me at your peril – Marchionne to F1

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Underestimate me at your peril. The resounding subtext pointed in no uncertain terms towards Chase Carey and Formula One from Sergio Marchionne at the launch of Alfa Romeo’s title partnership relationship with the Sauber F1 Team this weekend. 

The long rumoured return of Alfa Romeo to Formula One with the Sauber F1 Team was finally confirmed earlier this week. The announcement of the return was closely followed by an invitation to the worlds motoring media to attend a press conference in Milan. On the face of it, the objective of this event was to confirm 2018 Sauber F1 Team drivers Charles Leclerc and Marcus Ericsson with Antonio Giovinazzi taking on a 3rd driver role and to unveil the 2018 livery theme. What transpired was a master class in negotiation from Chief Executive Officer of Fiat Chrysler Automobiles (FCA) Sergio Marchionne.

After a period of observing, tinkering, and to some extent grandstanding, the final races of the 2017 Formula One season have seen Liberty Media begin to share their vision for the future of Formula One. Until now, key protagonists set to be impacted by this vision have largely kept their views to themselves or at least limited opinions to isolated sound bites. Sergio Marchionne and FCA, have now firmly stuck their head above the parapet to makes themselves and their views clear for all.

Elaborate team and sponsor launches are something which for many had been consigned to the history books with the vast majority of team unveiling now taking place minutes before pre-season testing on a chilly pitlane in Barcelona. Yet this weekend saw the team finishing plum last in the championship host over 400 media representatives from all over the world at the Alfa Romeo Museum situated just outside of Milano launch a sponsorship less than one week after the end of the season. With media from the US being flown in First Class with 48 hours notice, it would be conceivable to say that the budget of this single event exceeded the marketing and activation budget of the team for the entire season. Sergio Marchionne wanted an audience for his message, and he wanted his audience to leave the event singing his tune.

In addition to the media contingent, Sergio Marchionne and FCA invited newly reappointed FIA president and former Scuderia Ferrari Team Principe Jean Todt to attend and speak at the event, alongside Formula One CEO Chase Carey, with Sauber F1 Team owner Pascal Picci. So with the stage set, Sergio Marchionne opened the event, in Italian, focusing on the great news of Alfa Romeo returning to Formula One. This was followed by Mr Todt waxing lyrical about the passion of the brand and its significance with motorsport. Chase Carey then took to the stage to applaud FCA for bringing Alfa Romeo back to Formula One, he acknowledged their history in the sport and spoke of his enthusiasm for their return. Then the big reveal, driver line up confirmation and an indicative view of the team livery.

What followed was pure mastery. Sergio Marchionne returned to the podium for a few more words. In the space of 10 minutes, he politely panned the Michael Buffer COTA show, make clear FCA & Ferrari did not want to be part of a ‘dumbing down’ of Formula One, asserted the sport should be focused on technology over entertainment, and what could be the knock out blow, “our partnership with Sauber is until 2021, if we don’t like the direction the sport is taking at that point, we will leave and we’ll take them with us”

This rhetoric was delivered not only to a room full of media, but squarely at Chase Carey seated directly below the rostrum at which Sergio Marchionne made his speech.

Following this, team owner Pascal Picci and team principle Frédéric Vasseur returned to the stage for an open Q&A session. I would not like to suggest any questions were ‘planted’ but the position of FCA strength ahead of any negotiations with Formula One over the future of the sport was highlighted at every available opportunity.

Of course, Chase Carey and Liberty Media did not get to where they are today by chance, I have no doubt they have more than a few tricks up their sleeve as they head into negotiations with Formula One teams over the future of the sport. Sergio Marchionne has simply set the tone of future discussions and made it very clear he is more than happy for any discussion to be made in full view of the media and the Formula One fan.

Formula One: Improving the Show – Tune in to the #USGP Early!

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If you’re the type of Formula One fan that likes to tune into Race Day coverage 5 minutes before the start having grown tired of former driver pundits sitting on the fence over pre-race predictions, you might want to make an exception for today’s US Grand Prix.

As Formula One Management continue to evaluate new ways in which to engage with fans, one focus of this weekend is a plan to “showcase the talent”. Formula One drivers, with a few notable exceptions, have long been criticised for lacking personality and not engaging with fans. Formula One Management plans to start to address this in the build-up to the US Grand Prix this weekend with a new addition to the Show.

WWE legend Michael Buffer has been drafted in for the race and will announce each of the drivers as they take to the grid ahead of the race. At this time, it is unclear what format this will take, and how driver introductions will be incorporated into the pre-race schedule, but if Buffer’s profile in WWE is anything to go by, an approach of ‘Go big or Go home’ will be on the agenda. Perhaps in a bid to inspire drivers to come out of themselves in their introductions, Usain Bolt, who bought showmanship to the world of athletics, is a guest of Formula One Management this weekend at the Grand Prix, no doubt he’ll be offering advice to a few of the drivers less comfortable being the centre of attention. Can you imagine the likes of Pascal Wehrlein mimicking Usian Bolt’s classic moments seen here:

One driver likely to thieve in this feature of an F1 race will be Daniel Ricciardo, never afraid to out his personality out there for the world to enjoy:

For drivers still looking for inspiration for the big roll call, perhaps they should check out these classic moments from WWE. Will Formula One management open a social media poll for the best introduction?

Another key point of interest in the build-up to the USGP will be the actions of drivers during the National Anthem, and rather than read about the actions of any driver in a post-race write-up, fans would do well to watch for themselves and hear the rationale for any actions directly from the drivers.

Should any driver elect to take a knee or simply not attend the National Anthem ceremony ahead of the Grand Prix, there are two key points to remain mindful of. First, the process of drivers coming together at the front of the grid to collectively pay respect to the National Anthem of the country in which a Grand Prix is taking place was actually only introduced in 2014 at the request of Russian Grand Prix officials. It is not a long-held tradition within the sport. Secondly, Sebastian Vettel’s reprimand for missing the start of the Japanese National Anthem 2 weeks go set a precedent for other drivers. If a driver misses the National Anthem or behaves in a manner outside of the recommended procedure they can expect a reprimand and penalty points. Armed with this knowledge driver’s can make an informed decision around how to present themselves ahead of the Grand Prix with team’s well positioned to define a rational penalties with a precedent having been set.

So, if for no other reason than to hear the voice of Michael Buffer and to see Daniel Ricciardo throwing some magnificent pre-race shapes. Every F1 fan should take the time to tune into today’s pre-race show, Live on Sky Sports and Channel 4.

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Formula One: Turning the Red Bull Racing Aston Martin story on its head

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Amongst the #ToroHondaRenaultMcLarenRosso hype during the Singapore Grand Prix weekend, news of around Aston Martin increasing its involvement in Formula One with Red Bull Racing has started to solidify. Andy Palmer, Aston Martin CEO, when quizzed on the grid by Sky Sports F1’s Martin Brundle confirmed the business is keeping a watching brief on 2021 engine regulations, which should they fall favourably towards independent manufacturers, could lead to increased involvement of the brand. Should this be the case Palmer confirmed Aston Martin may seek to preemptt the regulation change by enhancing their visibility with Red Bull Racing possibly from as early as 2018.

This news comes at a time in which the media are speculating Red Bull’s long-term interest in Formula One may be dwindling, which has lead some observers to suggest a change of ownership of Red Bull Racing under the guise of Aston Martin. Whilst this is entirely possible, there are, in my opinion, a few to many creative leaps being taken for this outcome to be viable.

Firstly, lets address Red Bull or more specifically Dietrich Mateschitz’s diminished interest in Formula One. Red Bull entered F1 to sell a product, this objective is the same today as it was 30 years ago. In 2016 the Red Bull achieved more than $1,000M in media coverage from through Formula One. This far exceeds any investment the brand makes into the sport. With budget caps on the horizon, the business rationale for a marketing focused business to be involved with F1 will only increase. Should a $150M budget cap be achieved, Red Bull Racing can be assured of achieving this investment through existing sponsors, and prize funds. Red Bull stand to benefit from $1000M in free advertising.

2017 saw Aston Martin return to profit for the first time in over a decade. The business has stated ambitions around going public in the coming 5 years and are focused on expanding their automotive range to increase revenues. At this time, and in the mid term they are not a business capable of sustaining any form of Formula One engine development plan. Aston Martin Racing is a completely separate business to the Aston Martin which sponsors Red Bull Racing.

Returning to Dietrich Mateschitz. A serial entrepreneurr and self made billionaire. In recent years, he has seen the likes of McLaren diversify into the production of cars, and Williams create successful businesses in the application of their technology within a commercial environment. He is aware that the technical capability of the Red Bull Racing group is under utilised, something which will only increase under a F1 budget cap.  Projects such as Newey’s America’s Cup Project and the Aston Martin Valkyrie Hypercar project show an evaluation of ways in which the team can direct resources to other projects. Could this lead to an alternative direction for Red Bull Racing?

Rather than Aston Martin becoming title sponsor of Red Bull Racing, with a view to producing a power unit under the 2021 regulations. Could Red Bull be considering buying Aston Martin, supporting them in the acceleration of their automotive expansion plans, facilitating F1 power unit development, through their partnership with AVL, and using the proven brand power of Formula One allow Dietrich Mateschitz to evolve Aston Martin into a genuine competitor to the entire Ferrari Group.

Dietrich Mateschitz acquiring Aston Martin and reshaping his position in Formula One towards a Red Bull owned Aston Martin F1 Team, from a business perspective appears entirely more feasible than a company reporting $16M profit, having committed $550M to new road cars, suddenly investing $20M per annum in title sponsorship then paying to develop  an F1 engine.

All that being said, Red Bull, through offering half stories and snippets of information continue to dominate F1 news despite being unable to challenge for a world championship. The business continues to offer a master class in media manipulation. As in 2014, when F1 news was dominated by stories of Red Bull looking set to quit Formula One, Red Bull have an ability to create their own news to ensure they dominate the F1 headlines between the races.

Finally, despite quotes to the contrary, Red Bull Racing are very well aware that the best chance they have of securing a return to a championship challenging position is with a fully funded manufacturer. Talk of Aston Martin, in my opinion, is nothing more than a negotiating tactic around the terms under which the Volkswagen Group will enter Formula One.

Credit to Sean Bull for the fantastic livery creation supporting this article.