Tag Archives: Ferrari

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: 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: 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. 

The three P’s of Formula One: Points, Penalties and Prizes – Paddock Magazine

The 2017 Italian Grand Prix served to highlight once again that current Formula 1 regulations around grid penalties for exceeding…

Source: The three P’s of Formula 1: Points, Penalties and Prizes – Paddock Magazine

Formula One: #5ForTheFans Shell Motorsport & Scuderia Ferrari fan Q&A

As the 2017 Formula One season got underway earlier today, Shell Motorsport & Scuderia Ferrari sat down to answers a series of questions from fans submitted through Twitter to Shell Motorsport. With Kimi, Seb and Shell’s Guy Lovett there is a sense of optimisation coupled with quiet confidence around their 2017 challenge.

Thanks to Guy for answering my question (@jonnywilde) in full and not giving the short response suggested by Sebastian!

Shell Motorsport will run more fan engagement sessions similar to this through the season, follow them on social media to get involved!

Formula One: A fitting tribute to a great man – John Surtees

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With the final day of pre-season testing for the 2017 Formula One season came the terrible news of John Surtees passing. It was on with a sombre feeling current drivers reflected on their memories of the true racing legend, of how he inspired them, and the times they had spent together.

As the weekend passed many have spoken about his record of being the only person to hold championships on both two and four wheels, something almost incomprehensible in motorsports today, but how many of us actually know the history behind such an achievement? Speaking to Mobil One’s The Grid John Surtees in his own words reflects on his career and what lead him to transition from two to four wheels in the first place. Sir Sterling moss goes on to detail the sheer drive and passion John Surtees applied to life.

I can’t claim to know a great deal about the history of sport beyond that which I have lives through, so for me this film gave a fascinating insight into a time in motorsport I can only dream of. The purity and passion of motorsport at this time is something current drivers and the sport in general should aspire towards.

Formula One: Kimi & Seb head to the beach

Ahead of 2016 Brazilian Grand Prix, Scuderia Ferrari drivers Sebastian Vettel and Kimi Räikkönen tried their hand at Beach Volleyball. In an event organised by long term team partner Santander the duo competed against each alongside banking customers who later took time out to explain the challenges of fitting training into a hectic life schedule.

Scuderia Ferrari and partners Santander, UPS, & Shell have gone to great lengths in 2016 to create accessible content for fans of the team to engage with their drivers in new and original ways.  The approach is clearly paying off as Kimi, notorious for not enjoying the commerical aspect of F1 life, can be seen in this film actually smiling!

Great job Santander!

Formula One: Kimi & Seb race across the border!

Whilst some drivers in the F1 paddock will have spent the week between the United States and Mexico Grand Prix relaxing on a beach, Scuderia Ferrari drivers, Sebastian Vettel and Kimi Räikkönen have been working hard on their very own “Top Gear” style race. Working with team partner UPS, drivers were challenged to deliver goods from Austin to Mexico city. Fastest delivery wins!

Dealing with customs, language barriers, and a distinct lack of humour, who will take the crown in the teams first race of the weekend?

Excellent piece of work from the UPS team!

 

Formula One: Iceman becomes Fireman – Kimi’s Job Swap

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In the build up to this weekend’s Malaysian Grand Prix, Scuderia Ferrari’s Kimi Räikkönen took time away from the circuit to try his hand as a fire fighter in the latest project in the  the Shell V-Power Job Swap campaign.

Job Swap, as the name suggests, takes Scuderia Ferrari drivers away from the familiarity of an F1 cockpit and gives them an opportunity to experience other roles in which vehicle and fuel performance are critical for a very different reason. Following Sebastian Vettel’s job swap with a Paramedic earlier this year, Kimi set out to go one better working Mohd Uzair bin Abdullah – a veteran with Malaysia’s Fire and Rescue Department.

Unsurprisingly when commenting on his experience tackling a purpose build obstacle course in an 18 tonne fire truck Kimi remarked “The fire truck is such a different vehicle to my Ferrari car, and it was a new experience to drive it.”

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Uzair mentioned, “getting the opportunity to work with Kimi to understand how he safeguards himself, helped me realise how similar we are in our jobs. Although we face different challenges, ultimately we both strive to protect ourselves so we can perform better at our jobs.”

“Initially, we were unsure what to expect from this unique activity. In the end, both drivers discovered the importance of preparation, and the vital role played by protection in the performance of both roles. Shell is committed to motorsports as an integral part of our Research & Development programme. Our innovations developed for the track help us make better fuels for our customers, enabling them to perform on the road with engines protected by Shell V-Power” said Shairan Huzani Husain, General Manager of Shell Retail Malaysia/Brunei.

With a strong performance from Scuderia Ferrari in the opening practice sessions for the Malaysian Grand Prix. Kimi and Sebastian look to be in a position to challenge for the top step of the podium this weekend. The team will be working closely with Shell to ensure the perfect balance between performance and efficiency as they seek to bring secure the best possible position in the 2016 Formula One World Constructors Championship.

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