38 replies to this topic

[Ar558]

Will there be a tipping point where the combination of the inequitable distribution of revenues, uncapped spending and Bernie's drive to maximise fee's at all costs cause somebody (FIA?, the teams?, CVC?) to say no and we have to change. People who say F1 will die are mad, it will never die but it may not be run in the same way by the same people. I would say it will definitely happen when Bernie goes (he is 84 he can't have more than 5 years before he can't do the job at all) but maybe before. We need to be able to maintain a grid of 22-26 cars and have Grand prixs at the historic tracks(Silverstone,Spa,Monza,Germany at leats) at reasonable prices. Eventually they may have to just rip up all the current contracts( both concorde agreements and track deals) because otherwise F1 wont exist as the current incarnation. Maybe that wouldn't be a bad idea? F1 trademark would be bought by whoever succeed CVC  and they couldn't screw up the finance side much worse?

 

[pdac]

There will be a tipping point at some point. But Bernie is a fire-fighter. Whilst there is no fire, he won't change, but as soon as he sees an immediate problem, he'll take  action (whether, when he sees it, it'll be too late is another question).

[Incast]

Will there be a tipping point? Possibly, but it's very difficult to say.

 

CART collapsed in 2002 remarkably quickly, but that was because a feasible alternative, IRL, was waiting in the wings.

 

There is no realistic replacement for Formula 1, plain and simple. The biggest risk we have is that it will stagger on in a continually dying state, with CVC extracting every last penny before it completely collapses.

 

If I was to guess, based on the current situation I would say it is difficult to see the sport surviving beyond five years from now. Sponsorship has collapsed and the teams are almost entirely dependent on TV revenue. The only way TV revenues are going to go is down with the collapsing viewing figures meaning financially the sport is going to bleed even more.

 

The FIA has shown an astonishing lack of leadership, but this perhaps should be of little surprise when we look at what happened to the WRC over the past 15 years. Our only saviour could, bizarrely, be CVC themselves. They are in the business of making money. They like to buy low and sell high. It is in their interest to pump investment into Formula 1, to rescue it so they can ultimately sell it off for a higher price or float it on the stock exchange.

 

I'm not confident though, I just don't see anyone with the vision and leadership to fix this mess.

 

In many ways I regret investing so much time over the years following the sport, but I'll be watching in some form - albeit probably highlights - until its dying day.

[jurchenking]

I'm reiterating the views of people who have said the same things before.

 

F1 is the pinnacle of autoracing.  It is grossly expensive and very eco-unfriendly.  Teams which cannot afford to sustain in the long run or are eco-friendly for corporate image, should stay out.  Cut your cloth according to your size.  There's no shame in competing in lower formulas for financial or competitive reasons.

 

There should be no cost cap or engine downsizing.  If F1 ends up with 4 teams which fields 5 cars, so be it!  At least we experience the pinnacle of racing, where teams are free to showcase advanced technology at the expense of millions of $$$$ (which they can afford and willing to splurge to gain milliseconds advantage).  But we get finest quality racing.  And probably more entertainment because of inter-intra-team rivalry and controversial favouritism within certain teams.

 

F1 is in a mess because of failed attempts at levelling the playing field through frequent regulation changes and artificial cost caps.

 

Have no cost caps, unlimited testing, big size powerful engines, no aerodynamic restrictions, no tire restrictions, no fuel restrictions, no driver aids, no "radio-to-driver" hand-holding, no wireless software modification gimmicks.  Straight-forward full-on racing.

 

Should have just left it as it were in the 1980s-1990s.   

[loki]

 

 

CART collapsed in 2002 remarkably quickly, but that was because a feasible alternative, IRL, was waiting in the wings.

The only reason the IRL was still around was the Hulman family was throwing hundreds of millions of dollars at it, without which they never would have made it. The spiral for Indycar as a whole began in about 1996 and toward 2000 or so it was pretty evident that at least one of the series if not both weren't going to make it.  The IRL wasn't waiting in the wings as much as it was able to use the 500 and Hulman money to basically wait it out until CART spent all the money from the IPO.

[dave34m]

Maybe its time for the teams to start a break away series like they nearly did in 2010

[Peter0Scandlyn]

 F1 wont exist as the current incarnation. Maybe that wouldn't be a bad idea? F1 trademark would be bought by whoever succeed CVC  and they couldn't screw up the finance side much worse?

 

I take your point. 

However that incarnation word you used, I feel should instead be incarceration?.......

[Murl]

 

If I was to guess, based on the current situation I would say it is difficult to see the sport surviving beyond five years from now. Sponsorship has collapsed and the teams are almost entirely dependent on TV revenue. The only way TV revenues are going to go is down with the collapsing viewing figures meaning financially the sport is going to bleed even more.

 

 

Realistic assessment.

 

I wonder how many in positions of leadership have vision this clear?
 

[Nathan]

 And in 5years the world economic picture may be different and corporations spend, spend, spend again.

 

Maybe its time for the teams to start a break away series like they nearly did in 2010

Let's say they do this.  Will all the teams have the financial ability to equally share the cost of starting up such a series, establishing the TV production, logistics and administrative needs?

 

What would it cost? Even if they did would things change course? Why would they lower race hosting fees?  Wouldn't pay-per-view be more financially intriguing?  The teams are at least as fiscally greedy as Bernie and CVC.  Their survival and success depends on it.

Maybe people here are the ones lacking vision?

I think pay-per-view can make the teams good money, money that can offset sponsorship losses.  Currently TV money is around $650 mln USD/year.  With 20 races they would need to make $33 mln/race.  At least 25 million watch each F1 race as is now.  If FOM or a break-away-league charged $10/race (cheap frankly) and this led to a ratings decline of 75% they would make twice as much from TV as they do now.  And even if team and track side sponsorship declined the same 75% they would still be in the black by comparison.

 

PPV is the future of TV, especially once broadband becomes the norm.  It won't be long before you buy cable channels individually (unless you live in a crazed protectionist country).  I wouldn't be surprised if in 10-15 years the NFL/EPL etc. do much the same and F1 looks like an innovator.

Edited by Nathan, 22 March 2015 - 05:05.

[ClubmanGT]

PPV is the future of TV, especially once broadband becomes the norm.  It won't be long before you buy cable channels individually (unless you live in a crazed protectionist country).  I wouldn't be surprised if in 10-15 years the NFL/EPL etc. do much the same and F1 looks like an innovator.

 

This approach only works if you want to follow one sport.

 

Split those payments out across multiple sports and things start getting very expensive very quickly. 

[punknhedd]

I think there's a decent chance F1 is already past the tipping point - it just isn't obvious yet.  Wait until the second world money pits start to run dry.  Meanwhile, the sport seems intent on ignoring the interests of the true fan base.  Manufacturers leaving, teams folding, and now the cancellation of the German GP are the canaries...

[Murl]

 And in 5years the world economic picture may be different and corporations spend, spend, spend again.

 

Let's say they do this.  Will all the teams have the financial ability to equally share the cost of starting up such a series, establishing the TV production, logistics and administrative needs?

 

What would it cost? Even if they did would things change course? Why would they lower race hosting fees?  Wouldn't pay-per-view be more financially intriguing?  The teams are at least as fiscally greedy as Bernie and CVC.  Their survival and success depends on it.

Maybe people here are the ones lacking vision?

I think pay-per-view can make the teams good money, money that can offset sponsorship losses.  Currently TV money is around $650 mln USD/year.  With 20 races they would need to make $33 mln/race.  At least 25 million watch each F1 race as is now.  If FOM or a break-away-league charged $10/race (cheap frankly) and this led to a ratings decline of 75% they would make twice as much from TV as they do now.  And even if team and track side sponsorship declined the same 75% they would still be in the black by comparison.

 

PPV is the future of TV, especially once broadband becomes the norm.  It won't be long before you buy cable channels individually (unless you live in a crazed protectionist country).  I wouldn't be surprised if in 10-15 years the NFL/EPL etc. do much the same and F1 looks like an innovator.

I liken it more to the newspaper model. (from the teams' pov; no one honestly gives a cr@p about CVC, and the sentiment is mutual)

 

So we (used to) pay a token amount to buy a newspaper. It is not how they make money though. Advertising. Advertising. Advertising.

 

F1 teams and the sport in general is a giant mobile billboard. It sells stuff. The price of admission to a race or broadcast is irrelevant. What makes F1 viable is being able to throw consumer messages to as wide an audience as possible. CVC don't give a f***. They are there to rake off as much as possible as quickly as possible. Right now they are on the edge of a cliff in terms of cashflow. The number of sh!ts they give about F1 teams and the long term future of F1 can be counted on...I don't think we have developed a device capable of measuring something like that.

 

F1 will be lucky to survive into the next ruleset. Innovation better come before then or it never will.

As long as Bernie lives it is very difficult to see F1 making the leap into the 21st century.

[Tourgott]

There will be a tipping point at some point. But Bernie is a fire-fighter. Whilst there is no fire, he won't change, but as soon as he sees an immediate problem, he'll take  action (whether, when he sees it, it'll be too late is another question).

 

Huh? Bernie already said a few times "we have to change things immediately". He might not be perfect, for sure he is not but I think he is one of the few people who actually have the perspective - despite his age.

[Ali_G]

The only reason the IRL was still around was the Hulman family was throwing hundreds of millions of dollars at it, without which they never would have made it. The spiral for Indycar as a whole began in about 1996 and toward 2000 or so it was pretty evident that at least one of the series if not both weren't going to make it. The IRL wasn't waiting in the wings as much as it was able to use the 500 and Hulman money to basically wait it out until CART spent all the money from the IPO.

By all accounts, TG lost the Hulman-George family over 1 billion due to the IRL. Madness.

[johnmhinds]

Huh? Bernie already said a few times "we have to change things immediately". He might not be perfect, for sure he is not but I think he is one of the few people who actually have the perspective - despite his age.

Bernie only ever says what you want to hear in the moment.

He has been broken down by the press several times in interviews and has admitted that things need to change.

But what things has he actually changed?

The change F1 needs is a leader that will think about what's best for the sport instead of following the money all the time.

[Rasputin]

I'm afraid that F1 as we know it is a lost cause and will soon collapse, this is what Mateschitz can see and just wants to get out asap.

[Tourgott]

But what things has he actually changed?

 

He said, back in the days it was much easier for him to change things because he could act like a dictator. I agree with him. This "strategy group" is annoying. They have so many meetings. They talk and talk and talk and nothing happens. F1 is in a critical situation. As long as they do not agree on that and continue to block each other, it's hopeless.  That's the worst part.

Edited by Tourgott, 22 March 2015 - 08:59.

[chunder27]

How could F1 be seen as a leader in PPV when football have been doing it for decades? Bernie already tried it once, true PPV that is and it fell on its arse, and what he has now is not really PPV.
That model is boxing, WWF etc, where the only way you can watch anything is by paying a sum for that event alone. And for them it works just fine, it is the way you get the best fighting the best, the up coming Mayweather fight will probably cost more than a hundred dollars, utter insanity to pay men that are already insanely rich. But they do perform, like wrestlers I suppose.
F1 has come late to being behind a pay wall, cricket, football rugby union, horse racing, tennis and rugby league all have been that way in the UK for donkeys years. you can only vote with your feet. Most Motorsport is not really worth paying for unless you are an uber fan, as a casual watcher little of it is worth a dime really, it's arich post with with participants an does little for anyone involved other than the competitors, unlike other sports like rugby, soccer that have comunity involvement and education at a core level as well as money!

[johnmhinds]

He said, back in the days it was much easier for him to change things because he could act like a dictator. I agree with him. This "strategy group" is annoying. They have so many meetings. They talk and talk and talk and nothing happens. F1 is in a critical situation. As long as they do not agree on that and continue to block each other, it's hopeless. That's the worst part.

He was the one that created the strategy group and gave the top teams more power.

Edited by johnmhinds, 22 March 2015 - 10:30.

[Clatter]

He said, back in the days it was much easier for him to change things because he could act like a dictator. I agree with him. This "strategy group" is annoying. They have so many meetings. They talk and talk and talk and nothing happens. F1 is in a critical situation. As long as they do not agree on that and continue to block each other, it's hopeless.  That's the worst part.

That's not true. A lot of things have happened because of the strategy group, the problem is that almost everything they come up with is utter rubbish that does nothing to improve the racing, spectacle or meet the targets that they state. Too many conflicting interests for it to ever really work.

[uffen]

I believe that the FIA should immediately cancel THEIR championships add instantly start afresh. This way the existing contracts and agreements become null and void. Sure there will be legal issues, but there are legal issues now. Then the FIA can relaunch with reasonable funding, sporting and technical requirements for both circuits and teams. If the existing teams really want to be in the premier series (i.e. "F1") the legal b.s. will stop and we can get back to sustainable racing.

[HoldenRT]

It's not our job to fix their problems or come up with solutions (unless they wanted to pay).

 

If they took care of business, we wouldn't have to hear about it.  It's funny when people like Bernie or the top teams criticise the minnows for failing, when they are doing the exact same thing.

 

If Bernie or others aren't in touch with the modern realities (especially in terms of the media or online side) maybe they should pay someone who does have a clue.  Maybe they can't afford it?  There is a massive divide between the people they want to watch and being able to put themselves in their shoes.  And a stubbornness in terms of using the same old methods over and over.  And lots of ego.

 

There's too many conflicting (self) interests, and like others have said.. a general feeling of just not giving a sh.t in terms of the big picture.  And projecting an image, that is separate from the realities.  An illusion.  It's like F1 is in it's own little bubble.  But as long as you can keep milking it.. who cares?  The whole F1 thing is very outdated and run by dinosaurs.

 

It's hard to predict what could happen.  It might keep going in some form for another 10 or 20 years.  Sometimes people panic about things and think things will change, but then they just stay the same for years and years.

 

Based on previous years, they'll probably just keep milking it, as it further deteriorates. I feel sorry for the drivers because they are just doing their job, and they can't control whether they were born in 1960 or 1980 or 1990.   

[HoldenRT]

That's not true. A lot of things have happened because of the strategy group, the problem is that almost everything they come up with is utter rubbish that does nothing to improve the racing, spectacle or meet the targets that they state. Too many conflicting interests for it to ever really work.

 

Very much agree.  They come up with solutions but they don't solve any problems, they just try to pander to certain issues or people but it's more just trying to 'appear' like they are fixing something, rather than addressing the core issues.

 

It's like they want to project an image of addressing certain concerns, that they are co operating or working together but underneath it all, there's still the self interests that motivate them all.  In my personal opinion, this is because F1 sets this example in terms of the management at the very top and it filters down into the rest of the teams.  Sort of like how children will mimick the behaviour of their parents.

 

There are many parallels between F1 and the worlds economy and the two seem very dependant on each other.  They have similar mindsets.  One of the simplest issues of all, do they want F1 to be a business or a sport?  Many sports around the world manage just fine and can be sustainable and entertaining at the same time but F1 is it's own worst enemy.  I guess it's inevitable that something has to change eventually.
 

[D28]

It would be myopic to pretend that F1 couldn't reach a tipping point; just because it has existed in some form for 65 years doesn't mean it can continue forever, without some sensible operating structure.

Recent experience of N American pro racing series show many ending or combining after short life spans, the most recent being the ALMS series. All these series had cost spreads and ticket prices miles below what F1 demands. Tickets for a decent seat at the Canadian GP list at well over Cdn $1000, and the race enjoys 3 levels of government funding. Prices like those are just not supportable long term,

if the spectacle is to watch a M-B demonstration  run, or have 10 out of 11 cars score points. This at least should be obvious to the F1

powers.

I note that the 2nd US GP is missing again from the 2015 calendar. Has Bernie finally given up on his pipe dream of a US race across from Manhattan?  Clearly at some point, the number of gullible businessmen or dictators willing to do business with Bernie will dry up, and who will promote F1 races then?

[loki]

This approach only works if you want to follow one sport.

 

Split those payments out across multiple sports and things start getting very expensive very quickly. 

Indeed separate offerings will get expensive, fast.   There is also a disconnect from some on the forum in the use of the term PPV.  In the broadcast business Pay per View (PPV) is for a single event, a one time fee of a one time airing.  What sat or cable channels provide mainly are subscription services. The subscription service model have proven more profitable for content providers and depending on the package can give a better value for the viewer.  Sometimes though that's not the case if the viewer isn't interested in all the other channels.  An a la carte offering will most certianly be more expensive if each channel was to have to be provided with separate pricing.  For example in the US we get F1 and Indycar on NBCSN, in July get NASCAR (and a bunch of it...) other various motorsport, MLS futbol  soccer, Premier League soccer futbol and a few hours of infomercials in the middle of the night.  

[Proto402]

The tipping point is when teams start to drop out, and I don't mean just the back markers, but the mid-pack teams like Sauber, Lotus, Toro Rosso (if Red Bull sells it and it doesn't find a buyer), and Force India.  Once that happens, everything should start going downhill until Formula One is cancelled.

[loki]

Bernie only ever says what you want to hear in the moment.

He has been broken down by the press several times in interviews and has admitted that things need to change.

But what things has he actually changed?

The change F1 needs is a leader that will think about what's best for the sport instead of following the money all the time.

He's changed the amount of profit CVC is making from F1.  It cost him $100 mil but he also changed the likelyhood of him spending time in a German prison...

[TheRacingElf]

F1 is already past it's tipping point, unfortunately the people who run this sport have no clue

[Proto402]

I don't think they're at the tipping point yet, but they are standing on the edge of a cliff.  There is a chance of moving away from it if FOM can change the distribution of the revenue to help out the mid-pack and back marker teams, plus maybe set aside the ERS and fuel flow systems to relieve costs, otherwise, it won't take much to push it over the cliff.

[Nathan]

 

This approach only works if you want to follow one sport.

 

Why only one?  I pay for extra access to NHL and NFL games, as well as most UFC boughts. $2-300 isn't going to break many banks, especially if you religiously follow a sport.  If FOM offered a internet package that provided all the races in HD, all the inrace info, select your cameras, quality complimentary programming and news, replayed great races from the past, how many wouldn't spend £200/$300 for a year for that?

 

 

F1 teams and the sport in general is a giant mobile billboard.

But that model only benefits those at the top.  For the Sauber/FI/Lotus/Marussia FOM incomes dominate their income sheets.  If PPV was to provide more cash, which route do they take?  Sponsorship is a hard business for minnows.  I would also suggest sponsorship is going to be further troublesome as other sports move into that area.  You're much wiser IMO to pay £30-40 mln to a ManUtd than McLaren, unless your product benefits from the F1 comparison.

 

 

CVC don't give a f***. They are there to rake off as much as possible as quickly as possible.

 

Yet it's been almost 10 years now.  Why wouldn't CVC give a f*** if they are trying to milk money off of the sport?  Do you get the most profit from not giving a ****?  Is that how you launch a successful IPO?  What people say about CVC doesn't make business sense. They are the successful business and here we have arm chair CEOs.
 

Edited by Nathan, 22 March 2015 - 18:45.

[Clatter]

Why only one?  I pay for extra access to NHL and NFL games, as well as most UFC boughts. $2-300 isn't going to break many banks, especially if you religiously follow a sport.  If FOM offered a internet package that provided all the races in HD, all the inrace info, select your cameras, quality complimentary programming and news, replayed great races from the past, how many wouldn't spend £200/$300 for a year for that?

 

A damn sight more than you think.

[Nathan]

Well if a person won't spend $300 to follow F1 I can see why sponsors aren't interested anymore.

 

I suspect such answers are mostly down to stubbornness/old ways/because its Bernie's idea/because people want things for free.

Edited by Nathan, 22 March 2015 - 20:17.

[Jackmancer]

There will be a tipping point at some point. But Bernie is a fire-fighter.

 

 

"You either die a hero or live long enough to see yourself become the villain."

[TheSnowman]

F1 is already past it's tipping point, unfortunately the people who run this sport have no clue

Sadly, you might be right. When it finally hits the wall, I think either US 2014 or Australia 2015, could be seen somewhat as the beginning of the end. This is when the fiscal issues in F1 really became evident on a Formula 1 grid as we struggled to make the numbers up.

 

I think that politically 2015 might be one of the most important years in F1 history, up there with 1980, 1982 and 2009.

Edited by TheSnowman, 22 March 2015 - 21:11.

[ardbeg]

Seems like F1 has problem to reach the younger ones, there are few 9-year olds that sit in their rooms reading magazines about races and tapes up posters of Vettel and Hamilton at their walls. Furthermore F1 makes a good job of pissing on the long term fans who more and more often forgets to turn the TV on when there is a races. What is left is a bunch of people that has been following F1 for 3-5 years. They will be bored soon. The tipping point is now. German GP is gone and it hardly made any headline in Germany

[ClubmanGT]

Well if a person won't spend $300 to follow F1 I can see why sponsors aren't interested anymore.

 

I suspect such answers are mostly down to stubbornness/old ways/because its Bernie's idea/because people want things for free.

 

This is something most people saying F1 should move to online-subs don't get.

 

$400 NZD to follow F1? Firstly, that's way too much. Secondly, such ridiculous pricing only works if  the the only sport you watch is F1. People don't have mountains of cash to throw at individual sports for coverage options. Add in cricket, rugby, maybe some other forms of motorsport and you've paid for your Sky subs many times over, and that's before you've paid for your internet connection. 

 

F1 doesn't exist in a bubble, and in a country like NZ, people will just ignore sterile F1 racing if it means choosing between that or a Super Rugby subscription. I suspect it will be the same with Football in the UK or other sports in the US. 

[black magic]

whilst cvc squeezes the life blood out of the sport thre is no real future.

 

what organisation will come along and buy them out? bernie never. lets remember he let them buy f1 effectively by then loading up with debt. good for him and his dependants - disasterous for the sport burdened now with debt. anyone name a venture that has actually thrived under this form of deal structure?? no - exactly.

 

can the others put thier self interest aside to make a combined takeover. not in my life tiem.

 

possibly the only way if for fia to take back the rights/ rename their own sport and will not happen becuase they either can't or lack the courage to take on cvc

 

bernie made it what it was ...

 

and bernie also destroyed it.

[jurchenking]

"You either die a hero or live long enough to see yourself become the villain."

 

Funny that it reminds me of Luca di Montezemolo though  .  Hero in the middle phase of his Ferrari career but villain at the end.

[Murl]

Well if a person won't spend $300 to follow F1 I can see why sponsors aren't interested anymore.

 

I suspect such answers are mostly down to stubbornness/old ways/because its Bernie's idea/because people want things for free.

 

 

Sponsors want to reach a large market.

 

With F1 rights choked off to satisfy cable the sponsors see much better value elsewhere.

You either get your brand in front of me, or I buy some other thing.

 

That's the reality for sponsorship.