54 replies to this topic

[helioseism]

F1 perfects formula for financial success

Some interesting numbers -- Monaco pays 0 to host the race!

[InSearchOfThe]

F1 perfects formula for financial success

Some interesting numbers -- Monaco pays 0 to host the race!

Interesting.

No offence, but wasn't the fact the Monaco pays nothing old news?

[speednerd]

I'm surprised that Marlboro is the largest sponsor in F1, yet Tobacco sponsors only contribute 1% of total sponsorship.

Edited by speednerd, 30 July 2013 - 19:21.

[helioseism]

No offence, but wasn't the fact the Monaco pays nothing old news?

Well I wasn't in the loop!

[maverick69]

"....... the majority of the other F1 teams have changed names at least once in the past five years. Caterham was Lotus, Sauber was BMW, Sauber was Spyker"

I think you'll find that is Force India old chap

[Ross Stonefeld]

Blah blah, buy Formula Money.

[kar]

An article from Bernard's lackey talking up F1 as some sort of money spinner.

It's almost like F1 were looking to go public or something.

[jjcale]

Gotta get that float going!

[pingu666]

interesting that monza only pays 7million

[muramasa]

Santander - Mclaren - USD66M
Vodafone - Mclaren - USD75M
Marlboro - Ferrari - USD100M

is that true? Maybe meant to be Ferrari then?
true that Santander is still with Mclaren but their logo isnt on MP4-28.

[Ross Stonefeld]

The infographic has McLaren and Ferrari for Santander.

[muramasa]

The infographic has McLaren and Ferrari for Santander.

oh i see

[kimifan88]

F1 perfects formula for financial success

Some interesting numbers -- Monaco pays 0 to host the race!

Thanks for this. Really impressed as Ive never seen numbers in F1 broken down like this before. The problem is that we could do with knowing a bit more! Like why Monza only pays half of the fee that Canada has to deal with. I get that Monaco is not charged at all because F1 needs it more than it needs F1 but once you start charging a fee shouldnt it be for the going rate?

[Ensign]

I always thought Monza's deal was due to Ferrari influence. That said last month BE warned that Monza isn't safe.

http://grandprix247....dropped-off-f1/

Edited by Ensign, 31 July 2013 - 02:16.

[OfficeLinebacker]

I clicked on the article and the first thing I see is the typos in the very first infographic. They're confusing millions with billions here. Either that or they are using the European convention of a period means a thousands-division, in which case why didn't they express it in trillions?

I find it hard to believe that the F1 group generates 1.5 trillion dollars in revenue.

[helioseism]

I clicked on the article and the first thing I see is the typos in the very first infographic. They're confusing millions with billions here. Either that or they are using the European convention of a period means a thousands-division, in which case why didn't they express it in trillions?

I find it hard to believe that the F1 group generates 1.5 trillion dollars in revenue.

Actually I think the typo is in the 2003 bar, which should be 729 Million (or 0.729 Billion). Then it all makes sense.

[shonguiz]

This is very interesting, i always thought CVC owned all ad that now ecclestone is only an employee.

Christian Sylt: The actual Formula One Group -- the companies that own the commercial rights to F1 -- is made up of multiple companies. We are talking about 30-40. They invest in multiple jurisdictions -- the UK, Jersey, Luxembourg, Switzerland, all over the place -- but the parent company of the group is called Delta Topco and they are based in Jersey. So, the owners of that you could say are the ultimate owners.

It is 35.5% owned by a private equity firm called CVC Capital Partners. The second biggest shareholder is an American company called Waddell and Reed -- they have got in the region of 20%. The third biggest shareholder is the estate of Lehman Brothers -- they have somewhere in the region of 12%. Bernie Ecclestone's family trust has circa 10% and Ecclestone himself has around 5%. It's a complicated structure.

[OfficeLinebacker]

Actually I think the typo is in the 2003 bar, which should be 729 Million (or 0.729 Billion). Then it all makes sense.

Well if the first thing I see is this type of typo, which is a pretty big one (three orders of magnitude error), then I'm not going to invest a lot of effort into reading the rest of the article. It's clear the author/editors missed it, what else have they missed and/or failed to fact-check?

[Jazza]

In 2013;

Tobacco is 1% of Sponsorship.
Marlboro is a tobacco company.
Marlboro spends $100 Million
$100 Million equals 1% of sponsorship.
F1 therefore gets 10 Billion dollars of Sponsorship.

Article is BS. I wonder what else is wrong with it?

[Vitesse2]

Well I wasn't in the loop!

And of course the fact that Monaco still pays nothing to host the race has absolutely nothing to do with the fact that Bernie (and Max for that matter) were both made Commanders of the Order of St Charles by Prince Albert in 2007 ... funny, that ...

[Ross Stonefeld]

In 2013;

Tobacco is 1% of Sponsorship.
Marlboro is a tobacco company.
Marlboro spends $100 Million
$100 Million equals 1% of sponsorship.
F1 therefore gets 10 Billion dollars of Sponsorship.

Article is BS. I wonder what else is wrong with it?

I think they are saying tobacco is 1% of the companies, not the revenue.

[mangeliiito]

Red Bull's junior team Toro Rosso was put on the market (in 2008) and taken off the market because there were no bidders. How long is Red Bull going to continue funding that team when it is nowhere near as successful as the other?

Haha, talk about missing the point!

[William Hunt]

I think they are saying tobacco is 1% of the companies, not the revenue.

Indeed that's how I also understood it. And I think Marlboro should be forbiden to fund / sponsor Ferrari because we have a ban on Tobacco sponsorship and they so this way Ferrari gains an unfair advantage over other teams.

[Fastcake]

Thanks for this. Really impressed as Ive never seen numbers in F1 broken down like this before. The problem is that we could do with knowing a bit more! Like why Monza only pays half of the fee that Canada has to deal with. I get that Monaco is not charged at all because F1 needs it more than it needs F1 but once you start charging a fee shouldnt it be for the going rate?

First, don't be impressed with anything Slyt writes. Second, there is no going rate for a grand prix. Bernie looks for whoever is interested in holding a race, and then charges as much as he can get over some minimum amount.

[molpid]

Indeed that's how I also understood it. And I think Marlboro should be forbiden to fund / sponsor Ferrari because we have a ban on Tobacco sponsorship and they so this way Ferrari gains an unfair advantage over other teams.

But Marlboro sponsorship is not visible on the car, so it's alright. [Kind of strange why they still pour millions into Ferrari.]

Edited by molpid, 31 July 2013 - 15:27.

[Red17]

And of course the fact that Monaco still pays nothing to host the race has absolutely nothing to do with the fact that Bernie (and Max for that matter) were both made Commanders of the Order of St Charles by Prince Albert in 2007 ... funny, that ...;)

But irelevant in the end.
Monaco is the big cheese, and if memory serves me right they were on a one year deal up until a few years ago.

[Kalmake]

Indeed that's how I also understood it. And I think Marlboro should be forbiden to fund / sponsor Ferrari because we have a ban on Tobacco sponsorship and they so this way Ferrari gains an unfair advantage over other teams.

I don't think any of the countries with F1 teams have a ban on sponsoring a team? The ban is on advertising in media and events and it includes Italy.

[Fastcake]

But Marlboro sponsorship is not visible on the car, so it's alright. [Kind of strange why they still pour millions into Ferrari.]

I think they still use Ferrari imagining in the few countries that still allow tobacco advertising.

[muramasa]

heh, Ferrari F1 team's logo is left half of Marlboro logo.

Their new jacket is nothing but Marlboro box, that damn white blank space on belly still makes me laugh

[g1n]

I am surprised Marlboro sinks so much money in to Ferrari these days, I as a smoker , have sopped associating Ferrari with Marlboro many many years ago and no I do not smoke Marlboro's either. So I do wonder what that brand gets out of sponsoring f1? If even smokers do not see the link, then who exactly does?! hmm

[kimifan88]

First, don't be impressed with anything Slyt writes. Second, there is no going rate for a grand prix. Bernie looks for whoever is interested in holding a race, and then charges as much as he can get over some minimum amount.

But why can't he get more from Italy than Canada or at least as much? Its richer!

My rule of thumb is going by the publication not the writer. It's easy to tell which ones are reliable and they clearly have measures in place to stop celebrity dross, lies and low quality from entering their pages. Sticking with credible outlets has served me well through hackgate and Murdoch's scheming. He missed out on Snowden, the MPs expenses and that's no coincidence. After all the muck that came out about his rags you can understand why people would avoid them.

Anyway, back to CNN! This was written by CNN and I'm sure they can be trusted. They don't really have a political stand point in Europe (center left in the US if my memory serves me well) but they aren't scandal seekers. They are conservative despite being left!
I've googled Sylt and seen that he writes for the Telegraph, the Guardian, the Financial Times and the Independent which are about the only English papers which can be trusted. He doesnt seem to be fly by night as I went from one of his articles in the Telegraph to putting his name into the search box and he seems to have been one of their writers for over five years. I doubt that a paper like that would have someone on their books for years if they were dodgy. The same goes for the Independent, Guardian and Financial Times. I don't think they are up there with the Telegraph as one has sold up, one is too far left and the other hardly shows an opinion. But they are world's apart from the other rags out there!

Slyt also appears to be a regular guest on aunty as Google brings up videos of him discussing the biz of F1 on the BBC as well as CNN. Despite Saville and the gravy train to former leaders I still put my faith in them over any other station. I could find less details about the Formula Money except for a summary and list of customers on this page which is from their website so can't be verified like the papers:
http://formulamoney.com/intro.html

[Ross Stonefeld]

Sylt has been very good at making sure he is the go-to guy on anything related to the business of F1.

[kimifan88]

Sylt has been very good at making sure he is the go-to guy on anything related to the business of F1.

You are right. Had another google over lunch and found a series of links to the Daily Mail and Express. They date back to 2004 too. So it covers the whole range and isn't just broadsheets the Beeb and CNN as it seemed at first.

[Talisman]

You are right. Had another google over lunch and found a series of links to the Daily Mail and Express. They date back to 2004 too. So it covers the whole range and isn't just broadsheets the Beeb and CNN as it seemed at first.

Sylt does tend to cosy up with Bernie a lot, he is effectively Bernie's mouthpiece. It therefore doesn't surprise me to see him talking up the benefits of sponsoring the sport as a whole compared to putting money into teams.

[Talisman]

I am surprised Marlboro sinks so much money in to Ferrari these days, I as a smoker , have sopped associating Ferrari with Marlboro many many years ago and no I do not smoke Marlboro's either. So I do wonder what that brand gets out of sponsoring f1? If even smokers do not see the link, then who exactly does?! hmm

They can use Ferrari imagery in markets that don't ban cigarette advertising which include a lot of large emerging and lucrative markets. Also F1 is a great platform for entertaining clients and making B2B deals and they get to use a team everyone knows for this purpose.

[lambylamby]

Caterham was Lotus, Sauber was BMW, Sauber was Spyker.

??? Did I miss something about Spyker? :-)

[kimifan88]

Sylt does tend to cosy up with Bernie a lot, he is effectively Bernie's mouthpiece. It therefore doesn't surprise me to see him talking up the benefits of sponsoring the sport as a whole compared to putting money into teams.

As I said before, I don't judge articles by the writer but by the name on the door. The most reliable papers in England (I can't speak for other countries) have measures in place to keep out the riff raff which is why they manage to really get to the inside. Just look at the Guardian with its intelligence insights -it's on a roll and I bet uncle Rupert is seething because if it wasn't for the hackgate scandal all this may well have gone to to the Times.

Sylt is a bit of an enigma as he seems to run a little counter to my theory which has served me well for years. He has written for the most reliable and credible papers in the UK (the FT, Independent, Guardian, Telegraph) since 2005 according to our old friend Google. He is also a regular guest on the Beeb and CNN, again credit due to those over at Google. But then yesterday I discovered that he has also written for the Express and Mail since 2005 which are not in the same category in my opinion. All I can say is that he certainly covers the whole range and I would be very surprised if there are many other journalists who run this gamut.

The Express and Mail are direct rivals as are the Telegraph and Guardian. I was taken aback when I found links to articles in competing tabloids and had to punch Sykt's name into the search box to be sure. Anyone who thinks I am gaga take a look at the links below. If someone had told me about a writer who is a regular for the Express AND the Mail as well as the Telegraph AND the Guardian I would have questioned their sanity.

http://www.telegraph...yTe..."&Search=
http://www.guardian..../christian-sylt
http://www.thisismon.....hristian Sylt
http://www.express.c...ch/Sylt/?s=Sylt

What I can't work out is why anyone would want to write for the Express and Mail when they have the Telegraph, Guardian, FT and Independent under their belt. Googling further also shows that the guy has written about the business of F1 (intermittently it seems) for the London Evening Standard as well as the freesheet CityAM. That one is lesser known but it's are a wonderful City news resource which came down on the bankers like a ton of bricks. You can't fault that! As I said, it's an enigma to me. Didn't think I would ever say that about a journalist!

[Ross Stonefeld]

But that's more an indication that if your newspaper is going to cover the business of F1, it's easier to get Sylt to write something. Or he pitches them on a story he's got.

I saw him pop-up in a free business paper reviewing a hotel once.

[SophieB]

Let's get back to discussing the content of the article, please.

[markeimas27]

As I said before, I don't judge articles by the writer but by the name on the door. The most reliable papers in England (I can't speak for other countries) have measures in place to keep out the riff raff which is why they manage to really get to the inside. Just look at the Guardian with its intelligence insights -it's on a roll and I bet uncle Rupert is seething because if it wasn't for the hackgate scandal all this may well have gone to to the Times.

Sylt is a bit of an enigma as he seems to run a little counter to my theory which has served me well for years. He has written for the most reliable and credible papers in the UK (the FT, Independent, Guardian, Telegraph) since 2005 according to our old friend Google. He is also a regular guest on the Beeb and CNN, again credit due to those over at Google. But then yesterday I discovered that he has also written for the Express and Mail since 2005 which are not in the same category in my opinion. All I can say is that he certainly covers the whole range and I would be very surprised if there are many other journalists who run this gamut.

The Express and Mail are direct rivals as are the Telegraph and Guardian. I was taken aback when I found links to articles in competing tabloids and had to punch Sykt's name into the search box to be sure. Anyone who thinks I am gaga take a look at the links below. If someone had told me about a writer who is a regular for the Express AND the Mail as well as the Telegraph AND the Guardian I would have questioned their sanity.

http://www.telegraph...yTe..."&Search=
http://www.guardian..../christian-sylt
http://www.thisismon.....hristian Sylt
http://www.express.c...ch/Sylt/?s=Sylt

What I can't work out is why anyone would want to write for the Express and Mail when they have the Telegraph, Guardian, FT and Independent under their belt. Googling further also shows that the guy has written about the business of F1 (intermittently it seems) for the London Evening Standard as well as the freesheet CityAM. That one is lesser known but it's are a wonderful City news resource which came down on the bankers like a ton of bricks. You can't fault that! As I said, it's an enigma to me. Didn't think I would ever say that about a journalist!

This article is wrong. He is mixing rumours and / or facts which he must have been told in the past.

He quotes the teams get 47.5% of the prize money. He then quotes that Ferrari get 5% and the fund is approximately $500m. This is sort of correct but factually inaccurate at the same time.

1. The fund is c.$500m
2. This is made up of FOM sponsorship and licensing arrangements.
3. Ferrari take 2.5% from the top line (e.g. 2.5% of $500m which = $12.5m)
4. The remainder $487.5m is then split depending on the column structure and performance between other teams.
5. The % which teams 1-10 get in the constructors starts at 19% and reduces to 4%

Aside from all of this, the Concorde agreement which all of these commercial agreements stem from is out of date. The teams (except Marussia) have all got new temporary agreements in place to secure their commercial future with the rights holder. You only have to open your eyes and look at the current discussions and news articles about the new Concorde Agreement to see that.

[V3TT3L]

Philip Morris cancels Ferrari's Wrooom 2014.

The event held along over 23 years in Madonna di Campiglio was consider too costly.

No more journo free loaders = less support to Ferrari

[kimifan88]

But that's more an indication that if your newspaper is going to cover the business of F1, it's easier to get Sylt to write something. Or he pitches them on a story he's got.

I saw him pop-up in a free business paper reviewing a hotel once.

I totally get that if you wrote for front running papers like the Telegraph and the Guardian that will put you on the radar of those lower down the food chain who may then get the writer to do hotels or whatever. But why would the writer take all comers? Anyway, as I said, it's an enigma to me.

Back to the subject at hand as SophieB requested. @markeimas27 I have read widely that the main sources for the prize money are the charges paid by TV channels and money from countries which host races. Is there really $500 million in FOM sponsorship and licensing arrangements? I thought that F1's licensing deals were tiny compared to Nascar?

[Ross Stonefeld]

Well it's called being Freelance

500m is SPONSORSHIP and licensing. So if it's 498m and 2m...

[kimifan88]

Well it's called being Freelance

500m is SPONSORSHIP and licensing. So if it's 498m and 2m...

It's more than that but I don't know what! You find me another freelance who writes for so many competing papers. After time chez Google I count the Financial Times and Wall Street Journal, the Telegraph and Guardian and the Express and Daily Mail. I thought these papers were at each others throats? It really surprised me but we digress. I'm not sure I follow your analysis about the prize money. Where is the room for the TV and race money if the 500 comes from from licensing and sponsorship?

[Ross Stonefeld]

Because F1's income is close to a billion. So if 500m is trackside sponsorship and licensing, you have another 500 from TV and track fees.

Business reporting is relatively neutral, so it doesn't surprise me to see cross-over names. It's not like he's writing editorials about the welfare state, where it would be a surprise to see him in the Telegraph and Guardian.

[Kobasmashi]

Last I heard, Marlboro pays for Ferrari's entire livery and then the other companies that sponsor Ferrari pay Marlboro to put their logos on the car.... Santander will have signed a massive contract with Macca when Alonso joined them, which will have annoyed them royally when he upped shop after just 1 season

[OfficeLinebacker]

Let's get back to discussing the content of the article, please.

They fixed the error.

[kimifan88]

Because F1's income is close to a billion. So if 500m is trackside sponsorship and licensing, you have another 500 from TV and track fees.

Business reporting is relatively neutral, so it doesn't surprise me to see cross-over names. It's not like he's writing editorials about the welfare state, where it would be a surprise to see him in the Telegraph and Guardian.

Business reporting may be neutral but the papers aren't! Anyway, I don't see how we can get to the bottom of this. I chalk it up to being one of life's mysteries and a very very busy writer!
I get that F1's income is close to a billion but markeimas27 said that the prize fund is $500m and it is made up of FOM sponsorship and licensing arrangements. My point is that I thought TV and race fees make up the majority of the fund. Do they?

[Talisman]

Business reporting may be neutral but the papers aren't! Anyway, I don't see how we can get to the bottom of this. I chalk it up to being one of life's mysteries and a very very busy writer!

Those newspapers have strong rivalries because of differences in political opinion. Sport like F1 isn't political in this sense (Tories vs Labour) so they don't have a problem with hiring a freelance writer like Sylt and sharing him with other papers. Its also not as if the papers have staff on their payroll with sufficient knowledge to check what he is writing about either nor many other freelancers to approach willing to write about this topic and sufficiently knowledgable about it.

I'm afraid I don't view him as highly as you do so I take this article with a strong pinch of salt.

There are three ways of reporting on the business deals behind F1, something that noone, not FOM, the teams, CVC or the FIA really want anyone else to know about. The first is the Tom Rubython method which is to find out as much as possible warts and all and print it all then swiftly get sued and banned from the pitlane. The next is Joe Saward's method is to tread a fine line and leave out controversial stuff, printing news that the F1 insiders themselves find useful but not targetting outsiders specifically as a market. Christian Sylt's method is the third way, cosy up to those in power, get insider news ahead of other writers but also agreeing to be their mouthpiece. Remember Sylt is the writer who previously suggested little was likely to come out of the Gribkowsky case with respect to Bernie, good for calming potential investors in F1 but unfortunately not really related to what was happening in reality.

[Ross Stonefeld]

I get that F1's income is close to a billion but markeimas27 said that the prize fund is $500m and it is made up of FOM sponsorship and licensing arrangements. My point is that I thought TV and race fees make up the majority of the fund. Do they?

The prize fund is about 500m, because that's what is left over after the costs of F1/FOM and the money CVC keeps. So they start close to 1b and end up 500-600m.