01/03/2006
FEATURE BY MIKE LAWRENCE
 |
The magazine, F1 Racing, has had its calculators working overtime and has come up with some facts about Formula One finance. Most of us could have worked out that Formula One spends £1.5 billion a year, but we haven't sat down and done the sums. F1 Racing has done that and the figure of £1.5 billion hits you between the eyes. There are countries whose annual GNP is less than what is spent to put on one race.
It's one of those articles that have been begging to be written, and my reaction was to curse that I hadn't thought of it. Nice one, guys.
Under British law, all company accounts have to be lodged in Companies House, the official UK government register of UK companies, and most F1 teams are based in England. F1 Racing got much of its information from this source, so the piece has a firm foundation. There seems nothing wrong with the supplementary sources, the informal information every journalist picks up, because everything fits.
I would not dream of poaching other people's work, but a press release was issued. F1 Racing paid an agency to assemble a story about their story and to send it journalists in the hope they would get a mention. It worked in this case, didn't it? I have mentioned the name of the magazine three times already. (Four times, but who's counting - Ed)
Top spender is Toyota on £290 million, followed by Ferrari on £250 million. Renault won the 2005 World Championship spending a mere £166 million, while Minardi got by on just £29 million. The Minardi budget sounds modest until you realise that it cost £750,000 to put one Minardi on the grid for one race.
On average, a single lap of testing, not including salaries, costs £720. That figure does not include the cost of researching, and making, new aerodynamic tweaks, most of which are junked. It does not include the cost of taking a test team to a circuit. It is £10 per second in wear and tear just on engines, tyres and brakes.
About four years ago, an F1 team was testing at Silverstone. The driver ended in a gravel trap. When the car was back at the pits, the engine was taken out and everything checked, you do not want bits of gravel in the system. The engine was put back and the driver went out again. He was brought in after one lap and the engine was changed. The original engine was taken out and was sent to the maker.
The team's agreement with the engine supplier meant that engines were run for exactly 300 kms, and that it is what had just completed. The engineers at the factory had to know that when they stripped the engine and took measurements of the wear of components. That is how precise Formula One has become. That is why engine makers were able to make the 'two race' engine, it was because they had all the data. They knew what components they had to make that bit stronger.
It perhaps explains that a road car engine which has been eight times around the circumference of the planet, as mine has, is no longer a rare event.
About a quarter of a century ago, Ferrari built the Fiorano test track and everyone else thought it an extravagance. Lotus had its own private test track, since the team was based on an ex military airfield, but Lotus never got round to fitting all the data acquisition gear. In the 1960s, Lotus turned up to test at Goodwood and Colin Chapman asked, "Anyone think to bring a stopwatch?"
Fiorano has repaid the investment many times over because the test team can drive there and go home at the end of the day. They do not need aircraft, hire cars, hotels and expenses. Take Fiorano into consideration and Ferrari's budget of £250 million must exceed Toyota's £290 million.
Members of Ferrari's test team see more of their wives and children, you only get one chance with your children. They can join the local choir or sign on to an evening class. That must be a hidden bonus for Ferrari.
F1 Racing also says that, in 2005, Red Bull spent £6 million on corporate hospitality while Toyota spent £7 million. That is serious money.
You possibly have a dining table you use occasionally when friends come around. You prepare a menu, buy special wine, you bring out your best cutlery, and one thing you do not do is to work out the cost.
How often do you use the dining table? How much does the space it occupies cost in terms of the mortgage on your home? We all spend on 'hospitality', but we tend not to look at the bill. In Britain, the dining table must cost around £50,000, when you account for the space, but you can call that a quarter of a million in central London. Toyota spends £7 million a year on corporate hospitality, that's barely £400,000 per race, and the caterer washes up afterwards.
I have the authority of John Cooper when I say that Cooper and Jack Brabham won two World Championships in 1960 on a budget of £10,000. I think that John's memory veered on the selective and did not include the trade bonuses Cooper earned from firms such as Champion, who made the spark plugs, and the money paid by Esso directly to Jack Brabham and Bruce McLaren for having them endorse Esso's fine products.
Look at what Cooper had to spend on its F1 cars. There was steel tubing and a few sheets of aluminium, and they got lost in the accounts. The engines were bought from Coventry Climax and the transmissions came from ERSA in France. There were never more than three mechanics on the team and the cars were towed on trailers. At the end of the season, the cars were taken Down Under, Jack and Bruce made good money for being there, and then they sold their cars. People were trampled in the crush to buy them.
Cooper won the title with £10,000, give or take. Multiply by twenty to get that into today's money and Cooper's entire budget for a season is less than Toyota or Red Bull spends on hospitality for a single race.
The downside is that, in 1960, Formula One was rarely on television. A race got a few column inches in some newspapers, a couple of sentences in others. Cooper had trade supporters, who then had to pay to advertise the fact that their spark plugs, or their tyres, had been used. A sponsor pays up front and gets television exposure, and the images are beamed round the world.
If you are involved in Formula One, as a constructor or sponsor, you give your top regional salesman a day out with the wife. You lay on the five star hotel, the helicopter, the VIP passes and you have that person's attention for the rest of his life. You also have the attention of all of his colleagues who didn't make the cut. Their wives will remind them, every single day.
A former Mrs Lawrence left teaching and joined Avon Cosmetics as a manager. It's called Avon because the founder was nutty about Shakespeare, and that works for me, Avon called a conference and Herself had to attend, leaving me to run the house, feed the sprogs, pet the cats, and so on. She returned home starry eyed, a born again Avon lady. They had been put up in a good hotel and they had been made to work. They had also been taken to see Cats when it had only just opened, when tickets were gold dust. Cats was the clincher, it was the perfect choice. Someone put in a lot of effort in to get those tickets.
A few days later a package arrived for me, from Avon. There was a letter from the Head Honcho thanking me for bearing with the disruption to my life that the conference had caused. A calfskin wallet was enclosed as a token of appreciation. I still use it, it's a quality item. Embossed in gold leaf are my initials, somebody took the trouble to find out that my middle name is 'John'. The wallets were not just handed out, they were first made personal.
I had been a schoolteacher for the best part of twenty years and had not even received a Christmas card from my employers. Nobody ever said, "Mike, you drove through a blizzard and got to work on time, well done. By the way, it has been noted that you have not missed a day at work for five years." I cherish that wallet because someone said, 'Thank You'.
Corporate hospitality is the easiest thing in the world to mock. I can name journalists who do it all the time and they get good mileage from it. Jeremy Clarkson springs to mind, he is obsessed with the guy who gets to Silverstone because he has sold the most photocopiers in his region. Jeremy, that is the way the world works. The guy who sells the most photocopiers is good at what he does, not only that, but he is creating employment down the line because people make the photocopiers. What is wrong with saying, 'Thank you'?
On one side you have fans of a sport who would sell their kidneys to get the special seat at Silverstone or Wimbledon, or for the Superbowl. On the other side you have the photocopier salespersons and their partners. They may not be in the least bit interested in the race, or the match, or the game, and there is no reason why they should be. Champagne is flowing and there are vol au vents. They are there as a treat, because they performed better than their colleagues. A company is rewarding people and that same company is picking up some of the tab for the sporting occasion.
Jeremy Clarkson is stinking rich, and I have no problem with that, he is a brilliant writer and TV presenter. He has also raised the status of all we Brits who write about cars. We used to apologise for what we did, now we are seen as glamour figures. Much of this is due to Clarkson, who is becoming a national treasure.
Do me a favour, Jeremy, lay off the photocopier salesman, selling photocopiers is what he does and, if he is given corporate hospitality, it means he is good at what he does. Senior management gets cuddled all the time and the shareholder picks up the bill. Stop sneering at the little guy because he is your audience. He put you where you are and he can change TV channels.
Most car manufacturers spend a lot of their hospitality budget on rewarding people who work for them, either in the factories or in the showrooms. That is a good thing to do because they are saying, 'Thank You'. They are recognising the people who do not appear on television, who do not get asked for their autograph. They are good, decent, people. They are the people in my street, in your street, who serve in my local shops and who serve in your local shops.
When Renault, or BMW, or Toyota, pays a lot of money to secure a prime grandstand site at a Grand Prix, we fans can get irked. We have to remember that they are subsidising the cost
of our tickets. They are the people who are throwing big money at the organisers. Another thing to remember is that they are thanking their people.
Saying 'Thank you' is never a bad thing.
To check out previous features from Mike, click here