Ouch, this economic crisis thing is hurting...
DECEMBER 2, 2008
BY JOE SAWARD
The world economic crisis is not good news for Formula 1, but it may be a catalyst for change that will improve the way things are done in the sport.
We often forget that F1 racing is a luxury that the world can live without - if necessary. It is a form of escapism for many of those who tune in to watch the races, but do they really care? Or will Dancing with the Stars and Desperate Housewives do just as well? With their credit wound in, will people be spending the same on luxury items such as race tickets or will they stay home and watch TV.
I know the answer to that already, having spent some time recently on Transatlantic flights. The planes are getting to be very empty...
All this means that there is going to be a squeeze on race promoters, because they will make less than they had planned to make but will still have to pay the same race fees to the Formula One group.
Even before the current troubles began, race promoters were complaining about the cost of staging Grands Prix.
The landscape of the FIA Formula 1 World Championship has been quietly changing. Back in 1998 there were 11 of 16 races held in Europe. The "flyaway" Grands Prix were in Argentina, Australia, Brazil, Canada, and Japan - all countries with a healthy tradition in the sport. The following year Argentina was replaced by Malaysia - a country with no serious racing history. The calendar expanded to 17 races in 2000 to make room for the United States, but since then Europe has been under pressure. Belgium has been in and out of the calendar, while Austria fell by the wayside in 2004 when F1 expanded to 18 races with the additions of China and Bahrain. In 2005 the arrival of Turkey pushed the race count up to 19. In 2007 Europe lost San Marino and the two German events were merged into a system of alternating an event. This year Europe gained a race in Valencia and expanded to Singapore - but the sport lost Indianapolis, a major setback for the sponsors and manufacturers.
Next year F1 will gain a high-paying race in Abu Dhabi, but will lose both France and Canada. This means that there will be eight races in Europe and nine flyaways - and no events in North America. Of the remaining European events, Belgium, Hungary and Italy have government funding, while the two Spanish races are heavily dependent on the success of Fernando Alonso. The British and German Grands Prix - two of the longest standing in F1 - are in serious danger. Even Turkey has struggled and is now run by a company owned by the Formula One group. There is constant pressure on the Australian GP because of mounting losses, and even in China there are questions about the amount of money being wasted in Shanghai. The word from Japan is that Toyota has decided that it does not want to fund a race at Mount Fuji and is giving up its alternation with Suzuka in order to save money.
Future races that are lining up are in India and South Korea with projects in places like Qatar, Russia and South Africa. There is talk of a revived US Grand Prix, but it is only talk at the moment.
The Formula One group believes that local governments should be involved in the funding of events, as they are with other major sports, notably the Olympic Games. Unfortunately this attitude is not one that has met with much positive feedback in F1's traditional markets, where elected governments are wary of committing public funds to Formula 1. The Formula One group argues that cities that host the Olympic Games also lose money but that the prestige that comes from such events gives them the potential to earn much more from increased investment and tourism in the years that follow. It also argues that F1 is an annual event and not a one-off, once in a lifetime, spectacle. This is true, but the counter argument is that F1 is less exclusive an event than the Olympic Games and thus does not warrant the same level of investment.
This all may have something to do with Bernie Ecclestone's desire to see Formula 1 race winners awarded with gold, silver and bronze medals - an Olympic concept - to try to create the perception that F1 is on the same kind of level as the Olympic Games.
It is an interesting argument, but there is no doubt that at the moment F1 is finding itself increasingly marginalised to countries where there are no traditions and no real interest in the sport. The experiments in Malaysia, Bahrain and China have shown that building up interest is not easy to do and F1 has been forced to start looking at night races to keep up viewing figures.
Some argue that F1 should remain where the fans exist in Europe, while others take the view that in order to continue growing in the longer term F1 needs to be going into the new markets and building audiences. But is there really any hope of success? Is it not like trying promote cricket in Croatia?
A good example is the slow progress that has been made by soccer - the world's favourite game - in the United States. Growth began in 1994 when the FIFA World Cup was played at nine stadiums across the country. This led to the establishment of Major League Soccer in 1996 and the success of the US team in the 2002 FIFA World Cup helped to win converts. Growth has been slow, however, because until recently soccer was not played in schools. This meant that the older generations had no exposure or knowledge of the sport. This is now changing but competition with American football continues to be a problem.
In the developing world, motor racing is a new concept but as car sales increase so people are becoming involved although it is interesting to note that drag racing has made just as big an impact as F1 in the Middle East because people can relate to the idea while F1's wildly exotic cars seem to be too far removed from day-to-day motoring to have the same effect. Efforts have been made to create formulae for the locals but the costs involved in this mean that it is prohibitively expensive for all but the very wealthy. The answer probably lies in investment in local racing, creating the infrastructure needed to find talented youngsters in karting and then to putting them through low-cost formulae and hoping that one or two will have sufficient talent to make it in international racing. The problem is that this all costs money and Formula One does not see itself as the organisation that should invest in that.
Inother words, F1 has become a cash cow for a bunch of financiers and while they may be happy with the situation, the sport is not.
A little more investment would be a very good idea... not only for the sport, but also for the Formula One group, as if it continues to take and give nothing back, there will inevitably be a negative reaction from the sport.
It is sure as eggs is eggs.