FT SPECIAL REPORT The Business of Formula One Friday March 13 2015 www.ft.com/reports | @ftreports Sport needs dash of excitement Inside Concerns over funding to the competitive tension between Hamilton and this fellow team driver damp hopes for a more NicoRosberg. His solution is a makeover,with more competitive season, exciting-looking cars, and noisier say Roger Blitz and engines producing in excess of 1,000 James Allen horsepower which are more of a chal- Interview: Red Bull’s lengefordrivers. Christian Horner Others think the solution is to move ewis Hamilton, Formula on from the long and colourful Eccle- A ‘eureka moment’ led One’s reigning world cham- stone era. The 84-year-old survived an him to stop racing and pion, is hoping not to have it end-of-season coup attempt engineered manage instead all his own way this season as byDonaldMackenzie,theco-founderof Page 2 L he sets off in pursuit of F1’s biggest shareholder CVC Capital anothertitle. Partners, who wanted to shoehorn on to “You’rehopingthatit’sabitofabetter the F1 board a new chairman with exec- Off colour yearforthelikesofMcLarenandFerrari utive powers. Ecclestone would have Teams are struggling to sothatwehavemorepeopletorace,”the noneofit,althoughitwouldbeastretch make their brand more 30-year-old Briton said in an interview to say that his position is now unassaila- thismonth. ble. visually appealing Stars such as Hamilton, who drives However,this is not the first season to Page 2 for Mercedes, are meant to have an begin with question marks about Eccle- unsentimental, single-minded stone’sfuture.Inalllikelihooditwillnot The search for the approachtotheirsport.Anddeepdown, bethelasteither.Somehow,theshrewd, Hamiltonclearlydoes. F1 chief finds a way of hanging on — to perfect fuel formula Buthishankeringforamorecompeti- the frustration of some and the admira- The days when cars ran tive season speaks volumes for the state tionofothers. on a witches’ brew of ofF1.Foralltheglobalreachofthesport But regardless of his survival pros- and the excitement associated with fast pects, the long-term problems have not chemicals are long gone cars, wealthy backers and exotic race gone away. Maurizio Arrivabene, Fer- Page 3 locations,thesearedifficultdays. rari’steamprincipal,wantsa“realrevo- Funding issues are proving trouble- lution” in the way the sport presents The logistics race some.ThebigquestionamongF1’steam itself to fans. So does McLaren’s chief principals, owners and investors is: executive,RonDennis. behind the scenes Whereisthemoneycomingfrom? For this season, F1 may struggle to set A small village has to BigTVrightsdealssecuredinthepast the world alight with an exciting cham- be transported each 12 months by the English Premier pionship. Certainly,the early signs from time F1 moves on League — £5bn over three years in the pre-season testing are unpromising. Page 3 UK market alone — and the US National acutely on the grid. Towards the end of $10m each from a separate fund, from On track: Hamilton’s Mercedes team has looked Basketball Association ($24bn over last season, two teams went into admin- whichtheotherteamsareexcluded. Mercedes F1 confident and is working hard on nine years) make sports such as F1 istration,CaterhamandMarussia,while Thisunbalanceddistributionwillper- driver Lewis improving reliability — the only factor tremble. If football and basketball are questions remain over the financial sist through to 2020. But there is little Hamilton brakes that prevented it from winning every On FT.com picking up bigger slices of the TV rights resilience of Sauber, Force India and sign of the big teams being willing to during a testing race last season. It remains the team to pie,wheredoesitleavetherest? Lotus. yield on this. No surprise, then, that the session at the beat. F1receivessome$1.5bnayear—nota StayinginF1,letalonebeingcompeti- smaller, less-established teams have Catalunya circuit Ferrari has shown some signs of sig- bad showing. But growth is hard to tive, is a daunting challenge. All teams started to voice their frustrations pub- in Montmelo, nificant improvement but will not be envisage. F1 appears to be in managed are struggling to find new sponsors, licly. near Barcelona title contenders. McLaren is back to the decline, on the basis of most indicators while the hybrid turbo engines, intro- Thereisarealprospectthatoneorall Reuters/Albert Gea drawingboardasitbedsinanewhybrid such as TV viewing figures, race ticket duced last season, more than doubled a of the independent teams may fail enginewithpartnerHonda. sales and number of participants, while team’senginebillto$20mayear. beforetheendoftheseason.ForceIndia This leaves Red Bull and Williams as TV rights fees are fairly static. Sponsor- Marussia (now renamed Manor is struggling to make it to the first race, the main challengers to Mercedes. But shipdealstrickle,ratherthanflow. Marussia F1) has been thrown a lifeline becauseofproblemswithsuppliers. they must catch up fast. Red Bull man- The German Grand Prix, a mainstay and is being rescued by a consortium Although there are signs that F1 chief agedthreeGrandsPrixwinslastseason, ofF1,maynottakeplacethisyeardueto including Ovo Energy boss Stephen Fit- executive Bernie Ecclestone is willing to Williamsnone. financial issues with the promoter, as zpatrickandex-Sainsbury’schiefexecu- offer a financial leg-up to the three Williams uses the same engine as Do safer cars make for interest in the sport in Germany tiveJustinKing. teamsstrugglingforsurvival,suspicions Mercedes, so it will be hard for it to beat less exciting viewing? declines. Fitzpatrick is a brave man. He has remain that he is eyeing a new make-up the works team. The best hope for a F1 is seeing a decline in Some good news is that race hosting Staying in committed to a budget of £60m a sea- of the grid, involving fewer teams field- competitive season rests with Red Bull fees are increasing, thanks to deals to F1, let alone son, funded from the team’s prize ingeitherathirdcaroraBteam. anditsRenaultengine. its global audience stage Grands Prix in Mexico, Azerbaijan money from last season and from spon- To his detractors, Ecclestone is a bar- Itdoesthesportnogoodifteamssuch and Qatar. But stakeholders question being sorship linked to its drivers, but also rier to the change that teams and other as Ferrari and McLaren are uncompeti- High cost of moving on the long-term viability of hosting three competitive, fromhiswallet. stakeholders consider vital for the tive. As Hamilton said: “The more peo- races in the Middle East — Qatar joins The plight of Caterham and Marussia sport’sgrowth.Forexample,heeschews ple,themerrier.Ifthecarsareclose,you to the grid Abu Dhabi and Bahrain on the calendar is a hasthrownaharshspotlightontheune- socialmedia. can have real races where you’re over- Caterham collapsed last — and Germany is not the only Euro- daunting qualdistributionofF1prizemoney. He is not blind to the sport’s short- takingandbattlingandthat’swhatIlove year with large debts pean Grand Prix where promoters are Ferrari receives a fixed upfront fee of comings though. F1 narrowly avoided a doing.” strugglingtomakethenumbersaddup. challenge $100m, Red Bull $70m, McLaren $50m “lousy” championship last season, he For the world champions and F1’s ft.com/reports Lack of new money is being felt and Mercedes and Williams roughly said in his end-of-season review, thanks fans,itmayjustbewishfulthinking. Traditional heartland cedes Innovations sound a to non-European venues note of controversy right about the cost. A supply of engines Engines to customer teams went from about Tracks Grand Prix. The race is scheduled to corporate hospitality, nearly all their $10m per season for the V8s to more take place on July 19, but there appears revenue comes from ticket sales — and Some teams stand to benefit than$20mforthehybrids,andplayeda virtually no chance it will be staged at since the onset of the financial crisis, more from the new hybrid role in the collapse of two teams (Cater- Longstanding events have the Nürburgring circuit, as planned. fanshavebeenlesswillingorabletopay ham and Marussia) and financial diffi- disappeared to be replaced The sport’s official schedule states the anywhere between €100 and €500 for a turbo, says James Allen culties for three other teams, Lotus, by Grands Prix in Asia, the venueas“tobedetermined”. race weekend. Meanwhile, in many SauberandForceIndia. The track is currently owned by auto casesthehostingfeespaidbyorganisers The noise issue is more subjective. Americas and the Middle partscompanyCapricornafteritsprevi- are subject to a 10 per cent automatic Motorsport has always been a labora- While for some the ear-shattering East, writes Simon Gray ous owner collapsed into bankruptcy.A increaseeveryyear. tory for the automotive industry. It was exhaust note of a racing engine is a vis- deal to stage the race with F1 chief exec- Financial issues were a factor in the Italy’s Monza circuit in racing that innovations such as disc ceralthrill,toengineersitisthesoundof utive Bernie Ecclestone — who bid disappearance from the calendar after brakes, seat belts and steering wheel- energy wasted. Hybrid turbo engines As the 2015 Formula One season begins, unsuccessfully to acquire the circuit 2008 of the French Grand Prix, another bers, but it would be nice to get more mounted gearshift levers were pio- are quiet because they are the most effi- there are still uncertainties about the from the state government of Rhein- of the original events, after plans to support from the British