Category: My Opinion

Does America Need F1?

Does America need F1?  Does F1 need America?  Given the current state of the US’s only F1 track, the struggling Circuit of the America’s (CotA), as reported by Motorsport.com last night, they seem to me to be good questions.

I believe America wants F1, but does it need it?  No.  Wants and needs are two different things.  I WANT an Aston Martin Vantage Volante, but I don’t need it.  In fact, having one would put upon me an un-needed and un-wanted financial burden.  This does relate, believe me.

The US has the largest, most diverse and most financially secure sports environment in the world.  Its an alphabet stew of the NFL, MLB, NBA, NHL and MLS.  Add NASCAR, IndyCar, NHRA and IMSA for the 4 wheeled world and WOW!  I haven’t even touched the so called amateur sports of the NCAA.  By contrast, Europe, South America, the Middle and Far East do not have as wide a range of popular, and profitable, sporting events as does the US.

F1 is an extremely expensive endeavor to host.  The cost to simply purchase the RIGHTS to host a race are phenomenal.  A couple of years ago, a report out of Australia stated that the 2010 Australian Grand Prix cost the Australian state of Victoria $31millionUS.  On top of that, there is an escalator clause increasing the fee 10% per year, meaning this years race will cost almost $40millionUS!  Much of that is covered by various parts of the local, regional and national governments.  The state of Texas pays the Formula One Management (FOM), through CotA, about that much for the US Grand Prix. It has become a political hot potatoe in Texas.  It is not very popular as the $27+ million the state pays out of a tourism trust fund far exceeds most anything else, combined, paid by the fund.  But there’s more.

The general agreements have FOM getting 100% of any on track advertising.  This is in addition to the total control of TV revenue from the rights they already control.  This allowed them to force the removal of the stars painted on the run-off area (representing the state of Texas) and the DeJoria Tunnel signs (as in Paul Mitchell Products/Paul DeJoria, a major contributor to the building of the track) off the tunnels among other issues, as both were considered unpaid advertising by FOM.

Consider this, no American sports league has this much control over their venue’s on-site advertising.  In fact, it’s this on-site advertising that supports the venue’s continued survival.  Ask Jerry Jones if he would  have built the Dallas Cowboys (you know, America’s Team) ATT Stadium if he COULDN’T get this advertising!  I would say not!

So what does CotA have to work with?  Attendance!  Believe me, if the Jacksonville Jaguars had to survive on attendance alone, they would have been done and gone YEARS ago!  According to Christian Sylt, in an April 2014 Forbes article, CotA had to raise their ticket prices this year 24% to $409, and even then this brings them only to the break-even point!  I can’t afford this.  Neither can most people.  So how do F1 races survive?

Many nations, particularly in the Middle and Far East, and Russia, pay $400+million for the races in the name of National pride.  The rest, barely make it.  CotA isn’t alone.  Both the German and Italian Grand Prix have had, or are having, serious financial issues due to what we westerners call government oversight and taxation issues.  CotA is having the same struggles too!

So, does the US need F1?  NO.  Like my Aston Martin Vantage Volante, an American F1 race is an in un-needed and un-wanted burden that we cannot politically, or financially, afford.  With the current FOM contract, it frankly does not make business sense.  There are other, better, opportunities provided by so many other sports where there will be more revenue.

Does F1 need the US?  Yes!  Given the above described sports environment, the potential financial opportunities and the market the F1 teams themselves cater to, F1 NEEDS to be here.  If given a more realistic contract, and CotA getting a larger percentage of on-track advertising, both FOM and CotA can make a lot of money.  Any way the ticket cost can be reduced, the attendance will rise significantly, again, benefitting both!

Does F1 want the US?  I think not!  The contract itself is one sided to the point of “take it or leave it”!  Bernie Ecclestone knows motorsports, ALL of it.  He knew/knows that NASCAR had a race planned for the same day, yet refused to make even that seemingly minor (to him) concession.  Why would someone spend $400+ for an F1 ticket when they could spend one quarter that amount for the NASCAR race and still have money for a beer.  That decision alone leads me to believe he was setting the US Grand Prix up for failure.

So there it is.  I believe that F1 needs the US but doesn’t want it.  The US, on the other hand wants an F1 race but realistically does not need it.  I’m thinking that unless something changes with FOM, in the next 2 to 3 years we’ll be traveling to Canada or Mexico to see F1.

A Brief Look Back At 2014

I sit here on the last day of 2014 looking back at at the year.  Overall, it was interesting and enjoyable.

The Good

GrandAm merged with ALMS and created the IMSA/Tudor Series and the North American Endurance Cup (NEAC).  It brought together the widest range of machinery we haven seen since the days of the GTP Uber-Prototypes.  To unify endurance racing in the US was necessary for both to survive.

While there were areas of concern, especially after Sebring (See “An Open Letter To IMSA“), it ended where it should have started, with P2’s being competitive with the DP’s.  The new P2 Coupes look great and can run with the DP’s, even win against them.  I want to believe there will be a better balance of power (BoP) going into the 2015 Rolex and Sebring races.

Having P2’s race in both the World Endurance Cup (WEC) and the NEAC puts some well known American Teams on the world stage.  In particular, Scott Sharps ESM and Patrick Dempsey’s efforts will show how racing in the US stacks up against the European ands Asian LeMans Series’.  For years, I have felt that our lack of representation internationally was bad for our domestic racing scene.  I look back at the days where the same teams racing at LeMans were at Daytona and Sebring, and our drivers had a yardstick which to compare to themselves to those across the pond.  This is a big plus!!  The dream of having an American winning LeMans, even a class win, now has traction!

Ford has become involved in the series with what I believe is the sweetest jewel of an American built engine.  The 3.5Ltr twin turbo-charged V6 is simply the best small(er) displacement motor around.  I have it in my Lincoln MKT and love it.  Any new manufacturer in the series is good for the series.

Porsche is back in the prototype classes with Mark Webber and the 919!  I simply love it!

WEC/Tudor double header at COTA.  Now we can compare the DP’s to the LMP1’s on the same track on the same day!  We can compare the GTLM’s to the GTE’s too!  Simply awesome.

The Bad

The initial officiating at both Daytona and Sebring was horrendous!  I figured Alex Job Racing would have left for the Pirelli World Challenge (PWC).  They didn’t, but several did, notably Flying Lizard, Turner Motorsport and Bob Stallings/Gainsco.  The officiating was the start, the costly changes to all the BoP changes and, well, the general cost increases for the “low budget” GTDaytona made the PWC’s format very appealing.  While GTD and PWC comparisons are generally apples and oranges, money is money and GTD is costly.

With that said, we have lost at least 7 teams: the 5 mentioned above, Level 5 motorsport (due in part to owner Scott Tuckers pending legal issues) and Pickett/Muscle Milk Motorsport (I have no idea why they left after Sebring).

The Ugly

The wreck of the Red Dragon at Daytona!  It was violent and a near death experience for all involved.  That anyone survived surprises me.  I Wish the best for Memo Gedley and Matteo Malucelli’s recovery and hope to see them both in race cars soon!.

The soap opera that is F1.  Need I say more…

 

 

Looking Towards 2015

the 2015 season kicks off in 3 weeks and I start fidgeting with excitement just before Christmas….  So, what do we have to look for?

What We Lost

Well, we are losing 3 teams to the Pirelli World Challenge!  GTD Champion Turner Motorsport, for one.  Flying Lizard and Bob Stallings/Gainsco have also left IMSA for 2015.  That’s 3 teams with 5 cars, 4 of them in GTD alone.  With them goes 10 drivers. (Anyone who argues that GTD has not gotten too expensive, remember this!  They left due to the costs of the series.)

We lost the Dodge/SRT Viper team in GTLM.  Thats a shame, right after winning the GTLM championship and screwing Jonathan Bomarito out of a championship that he rightfully won WITH Kumo Wittmer.  They both ran the same car throughout the season.  To put them in separate cars, though…  I understand the strategy but after all the work to get there only to split the drivers for the last year is an insult to the drivers.  It’s like pulling your best wide receiver for the Super Bowl!  No sir, I don’t like it!

Scott Sharp’s Extreme Speed Motorsports (ESM) and Patrick Dempsey Motorsports leaves full time Tudor for the WEC.  Both intend to do all 4 of the Patron North American Endurance Cup (NAEC) races.  OK, ESM kinda has to as driver Ed Brown is Patrons CEO.  However, I think that’s a good sign.  They are moving up from Tudor’s regional series to the World Cup of Endurance racing.  If they are competitive, and I see no reason for them not to be, it speaks volumes to the quality of the racing in the IMSA/Tudor series on the world stage!

What We Gained

We have a new prototype team and the return of two former stalwarts.  RG Motorsports is fielding a Riley/BMW for Ohio neurosurgeon Richard Gewirtz.  While they have yet to name drivers, its a start.

Starworks Motorsports is back, this year with a Riley-BMW in cool Martini colors!  After last year’s debacle with the Riley-Honda that struggled at both Daytona and Sebring, they bring a solid, competitive, package for 2015.  Its a package that will work, something they couldn’t do with the Honda in the DP chassis.

Krohn Motorsports returns with a Ligier-Judd for the full season!  The solid green cars return with the state of the art P2 package.  With the speed that OAK Racing showed with their coupes last year, this should be very competitive.

What’s Changed

Michael Shank losses Ford but gains Honda!  Not only that, they go to the Ligier-Honda P2 package. They should be fast!

Chip Ganassi (Ok, I AM NOT Spelling out the entire name…) drops Memo Rojas and his TelCel sponsorship and gains American Ace Joey Hand and Ford as primary sponsor.  This is a very interesting story to follow for 2015.  Ford IS releasing a new GT car at next months Detroit Auto Show with plans to attack LeMans in 2016.  That year is the 50th anniversary of Fords first win with the GT40.  Ford is teaming with Chip Ganassi to make this happen.  Ironically, Chip has both Chevy NASCAR and Indycar teams.  Though Roger Penske (a hero of mine) splits Ford in NASCAR and Chevy in Indycar, I see a big change in the future on the other side as neither manufacturer usually tolerates this kind of conflict of interest.

The FIA drivers ratings are kind of screwy.  ( I can use that word, my blog).  How is it Jordan Taylor goes to Platinum with only a win this season and Joao Barbosa drops to Gold after winning the championship?  Why are there so many top line drivers NOT able to get rides and so many people who, frankly, I don’t care to know, getting (or paying for) rides.  I mean, REALLY!  Ryan Eversley, Guy Cosmo, Spencer Pumpelly and others are not going to be here.  I think GTD should be broken up to a GTD-Pro and a GTD-Am (or Pro/Am).  But, maybe if the purses were bigger…  A story for another day!

What I Expect

I expect there to be another year of GREAT racing, with fewer controversies.  I think the P2 Coupes will be even more competitive with the DP’s.  I feel the Depth in the Prototype class is better than in many years, including 2014.  I think fewer cars in GTLM and GTD will actually improve the racing throughout.  2015 is going to be a great year.

Something to look forward to will be 2016, which is just out of sight.  With GTD going GT3, I feel many PWC teams, many who have wanted some endurance races, will come over.  Maybe only for the NAEC.  But the depth of machinery will be very exciting.

F1 as a Business… Not Working for Me…

The F1 season is over, and though I have only been a casual fan, watching very few of the actual races, I have been observing the politics with keen interest.  Chris Harris wrote a very interesting article on Jalopnik.com on F1, stating that Americans expect everything to be a sport (to paraphrase) but noting that F1 is actually a business.  With F1 in apparent crisis, I have some thoughts and opinions.

Let’s look at F1 as if it were a business.  F1 is owned by the Formula One Group (FOG, which seems to be what they are in at the moment, a fog), which itself is owned by Delta Topco, out of the Jersey Isles in Great Britain.  It is made up of CVC Partners, Wadell & Reed and LBI Group and they are effectively the board of directors.  What is not owned by them is owned by Bernie Ecclestone (along with other much smaller interests) and he is its CEO.

The individual teams and tracks may be looked at as either franchisees or semi-autonomous divisions of the much larger business.  Each keeps a separate set of financials but are tied to the overall well-being of the larger corporation.  I say this as all teams share in the revenue with the Strategy Working Group (AMG-Mercedes/Petronas, McLaren, Ferrari, Red Bull and Williams) getting a majority of that money.

The product they sell is F1 racing; the glamour, the technology, the personalities and, lastly (it seems), the on track action.  This is what FOG sells this to the TV broadcasters.  They buy the rights to televise the races in their respective media markets.  Now, this is what makes the sport run.  From here, several entities make the money.  The television rights holder gets money from companies wanting to advertise in the various specific markets.  The Teams get money from companies putting advertising on the cars and drivers. The Tracks get advertising dollars from race naming rights.

But all of this is driven by the belief that enough people are watching the race to make it financially worthwhile.  And what they are watching are F1 races.   People want to see a compelling story on the track; the popular driver winning, the under-dog boxing above its weight, the new driver making a headline.  Like a soap opera, they want an evolving story line, changing race to race.  As the season winds down, people want to see a fight for the title.  We Americans want to see “Game 7 Moments”, those last minute upsets when the title is decided at the last second.

So, where are we now?  

By the fourth race of this year, we knew 2 things; AMG-Mercedes/Petronas would win the constructors title and either Nico Rosberg or Lewis Hamilton would win the Driver’s Championship.  Knowing that, why watch the season?  It’s like reading the last chapter of a book first.  And, as I have said before, I don’t watch a race to see who finishes 3rd, 4th or 5th.  I want to see the winner fighting for it!

The finances are taking a toll…

At the start of the season, F1 had 11 teams.  With Marussia is out of business and Caterham close to dead, F1 is down to 9 for 2015.  The top 5 richest teams get a significant amount of the shared FOG revenue, making them richer, with the bottom teams getting a very small amount.

There are essentially 2 pots of money FOG distributes to the teams.  The first has TV revenue equally among the top 10 teams with new teams getting $10 million. On top of that teams get a prize pool based on the previous years results and “success, results, heritage and longevity”.  In other words, FOG can give more to any team for just a good old boy.

In order to get the sale of TV rights tied down under threat of the collapse of F1, Bernie Ecclestone made a deal at the time with the top teams for their support.  This deal created the second pot.  It is a $230 million budget specifically for those 5 teams: Ferrari gets $100 million, Red Bull gets $70 million, McLaren gets $40 million and Williams and AMG-Mercedes/Petronas each get $10 million.

The economy has not helped.  With the economy in a slump, companies normally willing to sponsor teams and drivers held on to their money to see how the economy would improve.  This meant there was less money around and the money that was there is going to the teams with F1 history and a record of success.  This forced many teams to lower what they charged, offer smaller sponsorship packages with the hope of getting more smaller sponsors. And the small teams now have a bigger hurdle to deal with.

When the subject of distribution of F1 money is raised with many team principals, the big teams argue its better to make the whole pot bigger, rather than change the percentage they make.  AMG-Mercedes Toto Wolff even went so far as to blame Caterham and Marussia of spending too much!  It’s easy for him to say, AMG-Mercedes gets $20million more from both pots than the 2 little teams. This attitude only continues the to widen the separation between big and little team.  This mindset is not at all healthy for a business…..

The engine that drives everything.

The change in engine formula (Power Unit is PU…whatever) has hurt everyone, with the smaller teams, who voted against the change, being forced to accept the significantly higher lease costs passed on by the big teams, I mean the manufacturers.  With a plan for $9 million leases more than doubled with the new engine, and the budgets shrinking due to the economy, the small teams were, well, screwed….

To me, it doesn’t make sense that the small teams are forced to rely on the manufacturers who, essentially, have their own teams competing directly against them.  Why would AMG-Mercedes give Force India its best engine when it has its own team competing directly against it!  And with results helping, to a small extent, determine the next years revenue sharing, there is a serious conflict of interest here and the small teams lose!   (That’s a story for another day).

The way the current rules are written basically legislates no room for adjusting the balance of performance (BoP).  While BoP has been an issue for years in sports car racing with many teams complaining about fairness, it generally works.  Look at the WEC, ELMS and Tudor for proof.  If all the teams are complaining, than balance was found, sort of.

In F1, there has historically been a method of maintaining competition.  The recently adopted rules (the new Concorde Agreement or CA) mean that if a manufacturer got a significant advantage, they could have it for years. This is because any changes have to be unanimous among the Strategy Group members.  Why should AMG-Mercedes accept any change?  It could have been any team that got it. Where the Strategy Group missed was with changing the basic design (from V-8 to turbo-charged, hybrid V-6’s), no method of balancing during the early development stages was considered.  Worse yet, they put in a restrictive design freeze.

Red Bull’s Christian Horner has even gone so far as to say Renault/Infiniti is considering leaving the sport.  If that is not a big red flag, I don’t know what is.

Bernie Sounds Off..

Bernie Ecclestone, the CEO of this business we call F1, continues to speak from the heart.  When your Bono or Bob Geldoff, its OK. But as a CEO, everything you say is considered the official word of the corporation.  AS I see it, F1 is targeting 70 year old men who own Rolex’s and not people on social media, like Twitter and Facebook. Young people need not apply.  It goes further, saying on one day F1 doesn’t need the bottom teams, then saying the next day they do.  This coming from a guy who compared women to appliances.

He has no filter for what he says in public.  I can only imagine what he says behind closed doors.  Ask Marge Schott and Donald Sterling about that.  As F1’s CEO, he needs to act more professional by keeping his thoughts to himself and speaking only to promote the whole of F1.  He doesn’t and that lessens the value of the product.  From just watching the news, how many CEO’s have lost their jobs to one or two off-handed comments?  A good board of directors has little tolerance for for this in the real world.  F1 is not the real world, unfortuntaely.

There is Good News!

There are some good things happening, though.  HassF1, with Ferrari power, are set to race in 2016.  Haas either has or has access to everything an F1 team needs.  Through the Stewart-Hass Nascar team in North Carolina, he has engineering from a number of universities, about a dozen composite companies and even owns the only full sized rolling bed wind tunnel in the US.

Audi, who has been extremely successful in the WEC with V6 turbo hybrids is looking closely at F1.  They have hired Stefano Domenicali, formerly of Ferrari, for a“non-motorsports” position. It doesn’t make sense for VW, who owns both AUDI and Porsche to have them both competing in WEC.  WEC’s loss would be F1’s gain.  I’m already imagining the Silver Arrows fighting it out again.

Still…

I still feel F1, the F1 Strategy group, FOG and Bernie are not taking care of the quality of its final product, the racing.  Bernie can’t shut up and The choices being made by the F1 Strategy Group are only in the best interests of the top 5 Teams and are not in the best interests of F1 as a whole.  If the top 5 teams get their way, we’ll have a 10 car F1 race  with little action at the front of the pack.  That’s not an F1 I would spend money, or time, to watch.