The Fragile Business of Formula One
5 November 2014 by Marketing Team
As the troubles of Formula 1 continue to make the news, the FJG marketing team takes a look into the business side of the lucrative sport….
Following the events of the Japanese Grand Prix, the FIA have begun looking into whether open cockpits on cars which race side by side of speeds reaching 200mph are a safe design. Upon first inspection, it is clear the drivers head remains the only part of the body which is exposed, in fact the last two fatalities in Formula were both caused by head injuries, not to mention Felipe Massa’s 2009 head injury and of course the sport’s most recent incident involving Bianchi.
So is now the perfect time to revamp the sports vehicle design with closed cockpits? Unfortunately, during a meeting in 2013, the teams (drivers included) agreed the cars would look “ugly” with a closed cockpit of sufficient strength. Therefore the FIA had no backing within the sport and the cockpit proposal was rejected. Now, some may say why not simply go ahead and introduce cockpits to the sport regardless of whether the teams like it or not. But should the FIA take this route, the teams would turn their backs on Formula 1 and begin their own breakaway series, as they have threatened before, thus leaving Bernie with scheduled races and no cars to fill the grid.
You see, Formula 1 is much more than a series for talented drivers and awed spectators. First and foremost, the sport is a lucrative business with profits in excess of £250 million, therefore anything with the potential to jeopardise this is not tolerated. So if the teams cannot agree to the use of closed cockpits, then the sport (business) will not use them, it’s as simple as that.
One thing we know for certain is the potential fragility of Formula 1 as a business remains present: Last weekend in Texas, at F1’s most potentially lucrative untapped market of the USA, only 18 cars (out of 22) took to the track. Both Marussia and Caterham were absent as they are currently in administration and nobody knows when they will be back – if they will be back at all. But that is not an incident in isolation….
In 2005 at the USA grand prix there was a tyre disagreement which led to a race of just six cars, not 20 as per usual; In 2009, eight of the ten teams missed the deadline to submit entries for the following season due to disagreements over budgets and rule changes; In 2013 there was controversy over the signing of the new Concorde Agreement which governs the commercial side of F1, with the very real threat of a breakaway series only just averted; Later in the year there was an ongoing debate about exploding tyres; This year there has been Mr Ecclestone’s bribery case, the safety debate, and there is now the debate about a potentially title deciding double points race in Abu Dhabi.
There will always be an area of disagreement and difficulty over a sport which carries the potential for such high risks and high profits, no matter if that area is related to money or safety.
Many parties will no doubt be calling for improved safety and you can understand their concerns, but if closed cockpits are enforced thus causing many drivers to turn their backs on the sport and race elsewhere, Formula One could shut down quicker than it takes Hamilton’s Mercedes to reach 100mph. Many parties will also be calling for a review of revenue sharing and prize money distribution to protect the independent teams that struggle to make the grid, but the giants of Mercedes and Ferrari to name but two, will have something to say about that.
Think of it this way, if there was a ground breaking innovation or commercial agreement, but one which hurt the image of your business and therefore your own pocket, would you consider using it? After all, motor racing is an intrinsically dangerous business involving high speed. And where there are such extremes, there is potential danger around every corner, both literally and figuratively.