The answer to question number one is, could be better. From a business standpoint, Formula 1 is still making money, which is a good thing, at least if you're name is Bernie Ecclestone. If you're name isn't Bernie Ecclestone, things are a bit tougher for you. The problem is that attendance at the races is falling, as is television viewership. To make matters more difficult, it seems like the Formula 1 rights holders are in a conflict with the race promoters. In a recent Autosport's article (which is unfortunately behind their paywall, so I can't link to it), the promoter for the Australian Grand Prix was saying that the V8 Supercar race they held during the F1 weekend could not be a championship race because of the contract the race promoter had with Formula One Management. Specifically, the V8 Supercar race could have been a championship event, but the Melbourne race promoters would have owed Bernie Ecclestone another one million dollars. Frankly, that's just greed on Bernie's part.
Other F1 race promoters are having similar problems. A little while ago I wrote about the removal of the German Grand Prix from the 2015 race calendar. Once again, the race promoters at both the Nurberbring and Hockenheim could not make hosting a Formula 1 race financially viable. Obviously hosting a successful Grand Prix weekend falls largely on the shoulders of the promoter. Silverstone and Circuit of the Americas seem to be able to host successful events, so it is over simplifying the situation to completely blame Bernie for the race promoters problems. That being said, the anecdotal evidence of the Australian Grand Prix reported in Autosport suggests that the relationship between the race promoters and Formula One Management is strained at best because Formula One Management is trying to squeeze every penny out of the races that they can. There was another open wheel racing series where management tried to disproportionately distribute money to the management group. It was called CART. We all know how that story ends.
Perhaps the most infuriating part is that Formula One Management is stubbornly moving Formula 1 in a direction that makes the race promoters job even harder. In an interview with Campaign Asia-Pacific (Autosport's sister publication) Bernie talked about how he is not interested in marketing to a younger generation of Formula 1 fans. To summarize Bernie's thoughts, why would he want to market to a 15 year old, who is too poor to buy a Rolex, when he could market to a 70 year old guy with lots of money. Let me answer that question for you Bernie. That 70 year old guy is at the end of his life. He may have lots of money, but he's not going to be alive for that much longer, and one day, that 15 year old kid will one day have a career and some disposable income, but if you don't make that kid a Formula 1 fan now, he won't be watching F1 when he's older. Bernie's belief that he doesn't need to expand the fan base is part of the reason that TV viewership is dropping as well as why track attendance. So, not only does Bernie insist of squeezing as much money as possible from the race promoters, he feels that having a smaller F1 fan base somehow helps those promoters scratch out a profit.
Like I said in my article on the cancellation of the German Grand Prix, Formula One Management has let the idea of F1 being the world's premier racing series go to their head. As a result, they think that people will pay for Formula 1 at any price. The truth though is that there is a maximum price that the market will bear. Formula One Management needs to make sure that there is room for promoters to make a profit without making ticket prices too expensive for the average fan, as well as making sure that there actually are fans to sell tickets to. If the promoters can't make money, there are no races. No races, no Formula 1.
I'm convinced that the biggest problem facing the overall health of Formula 1 right now is the plight of the race promoters, but the teams are facing their own financial problems that can't be ignored. Tomorrow we'll look at the problems facing the manufacturers.
Other F1 race promoters are having similar problems. A little while ago I wrote about the removal of the German Grand Prix from the 2015 race calendar. Once again, the race promoters at both the Nurberbring and Hockenheim could not make hosting a Formula 1 race financially viable. Obviously hosting a successful Grand Prix weekend falls largely on the shoulders of the promoter. Silverstone and Circuit of the Americas seem to be able to host successful events, so it is over simplifying the situation to completely blame Bernie for the race promoters problems. That being said, the anecdotal evidence of the Australian Grand Prix reported in Autosport suggests that the relationship between the race promoters and Formula One Management is strained at best because Formula One Management is trying to squeeze every penny out of the races that they can. There was another open wheel racing series where management tried to disproportionately distribute money to the management group. It was called CART. We all know how that story ends.
Perhaps the most infuriating part is that Formula One Management is stubbornly moving Formula 1 in a direction that makes the race promoters job even harder. In an interview with Campaign Asia-Pacific (Autosport's sister publication) Bernie talked about how he is not interested in marketing to a younger generation of Formula 1 fans. To summarize Bernie's thoughts, why would he want to market to a 15 year old, who is too poor to buy a Rolex, when he could market to a 70 year old guy with lots of money. Let me answer that question for you Bernie. That 70 year old guy is at the end of his life. He may have lots of money, but he's not going to be alive for that much longer, and one day, that 15 year old kid will one day have a career and some disposable income, but if you don't make that kid a Formula 1 fan now, he won't be watching F1 when he's older. Bernie's belief that he doesn't need to expand the fan base is part of the reason that TV viewership is dropping as well as why track attendance. So, not only does Bernie insist of squeezing as much money as possible from the race promoters, he feels that having a smaller F1 fan base somehow helps those promoters scratch out a profit.
Like I said in my article on the cancellation of the German Grand Prix, Formula One Management has let the idea of F1 being the world's premier racing series go to their head. As a result, they think that people will pay for Formula 1 at any price. The truth though is that there is a maximum price that the market will bear. Formula One Management needs to make sure that there is room for promoters to make a profit without making ticket prices too expensive for the average fan, as well as making sure that there actually are fans to sell tickets to. If the promoters can't make money, there are no races. No races, no Formula 1.
I'm convinced that the biggest problem facing the overall health of Formula 1 right now is the plight of the race promoters, but the teams are facing their own financial problems that can't be ignored. Tomorrow we'll look at the problems facing the manufacturers.
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