Carey draws up the battle lines

30/11/2017
NEWS STORY

While there is no doubting his business acumen, and his knowledge of his chosen field, it is a fact that in terms of Formula One, the sport's new supremo, Chase Carey, is well outside his comfort zone.

Listen to him talk about business, about communications and media and you are listening to a man who appears to be on top of his game. But when it comes to talking F1 specifics, there is a nervousness, a tension in the voice, and the same pretty much goes for the sport's new commercial boss, Sean Bratches.

It is because they are well outside their comfort zone that they needed a direct link into the sport, someone who not only knew it back to front but was capable of being their eyes and ears. Step forward Ross Brawn.

In describing himself as "poacher turned gamekeeper", Brawn does himself a gross injustice, for he was to poaching what Lewis Hamilton is to race driving, a master.

Quite why Brawn accepted the role isn't immediately clear, after all he certainly doesn't need the money. On the other hand, having won F1 titles with numerous teams, including his own, not to mention his success outside F1, perhaps the idea of going one step further, effectively filling Bernie Ecclestone's boots, appealed.

With Liberty Media's plans for the financial future of the sport yet to be outlined, far less agreed, at present all parties are trying to take things cautiously, though the engine rule proposals allowed both sides to fire a few warning shots.

Come the issue of money however, it is going to be all out-war.

At the best of times trying to get the teams to agree on anything is like herding cats, particularly obstinate cats. When it comes to their life blood money however, that's a different matter entirely.

Already expressing unhappiness at the thought of the revenue stream diminishing the bigger teams are already making noises, so by the time Liberty Media begins to outline its plans, later this month, you can expect the first serious screams of derision.

Not only is Liberty seeking to even out the prize pot, it is seeking to do away with the bonuses paid to the likes of Ferrari, Mercedes and McLaren. On top of this, and further diminishing the prize pot, Liberty is spending money on various projects it claims will take the sport forward... be it logos or the event witnessed in London last summer.

Indeed, not for the first time, Ross Brawn has the opportunity to build an F1 team on other people's money, which if nothing else appears to have saved the careers of a number of former colleagues who appeared destined to spend their remaining working years genuinely working on the gardens.

While the teams grumble about the fall in prize money, which is around 13% down on the same period last year, Carey warns them, in no uncertain terms, that one has to speculate to accumulate.

"I think the sport has been underserved by a continual short-term focus," he said in an official F1 Q&A. "I think we've got some fresh momentum back into it.

"A lot of things were not going in the right direction in recent years," he continued, "but this year attendance is up, viewership is up and I think we've got a much more positive spirit behind it. The sport needed fresh energy and investment.

"To grow things, well, to use an American phrase, there are no free lunches," he said. "We didn't have an organisation that was able to properly develop, to build the sport. We had no research, we had no marketing, we had no digital organisation and realistically if you don't have capabilities like that, you are going to fall behind.

"When you're building a digital organisation, usually you have costs before you get returns. If you're building research capabilities, normally you have to invest in those before you get to use them. It's the reality of building capabilities that haven't existed.

"To do things like the Trafalgar Square demo, to do things at broader fan fests, requires investment," he insists. "However, all are investments in the future of the sport. From the teams' perspective, sure, everybody would like to have free lunches and get the growth without the investment. The world doesn't work that way. I think that there is an understanding of and an appreciation for what we're doing, and in many ways we're very much agreed on what needs to be done for the sport.

"When we started the year, the first three months of the year we had three people," he said. "If you look at things like the marketing and research and digital, our head of digital started three months ago, our head of marketing started four months ago.

"We have been putting the team in place as the year has evolved and in many ways a large part of our operating organisation is new. Before, we really didn't have a large part. We had a financial and legal staff but we didn't have an organisation able to support the business operationally."

Quite how the teams will react to being told about "free lunches" remains to be seen. However, the fact is that the teams themselves are already investing vast amounts of money just to make it to the grid.

Christian Horner has said he is happy for the smaller teams to receive more money, though he is adamant that he doesn't want to see it comes out of his share. No doubt he, and his colleagues, will feel the same about Liberty's 'investment' in the sport and its desire for the teams to pay their share.

In essence, without going into the nitty-gritty, the teams' prize money works out at around 55% of the total revenues of F1, leaving Liberty with 45%. Admittedly, this is not pure profit as Liberty has various costs, considerably more than under Bernie, but will the teams be prepared to share them. We think not, especially when they will have little say in how Liberty spends the money?

Traditionally, costs like salaries (only three people back then according to Carey) and freight came come out before the teams got their share, but now Liberty is increasing some of those existing costs (like salaries) significantly and is also heaping on a whole load of new ones, so the costs are considerably higher than the teams expected when they agreed to how the prize money is decided.

As for "free lunches", if only there was a Friday press conference coming up, as we're sure Toto, Maurizio, Christian et al would be only too happy to comment.

Article from Pitpass (http://www.pitpass.com):

Published: 30/11/2017
Copyright © Pitpass 2002 - 2020. All rights reserved.