FORUMula1.com

[What's Burning?]

and that's a 2013 chart. one thing is shocking and the other is surprising. Ferrari get's paid more than the WCC even though they came in 3rd in the standings. Williams gets a special constructor's spiff even though they had an embarrassment of a year.

I know you've spoken about the living wihtin the means thing jabs, but it's not applicable IMO when teams like Marrusia and Caterham are having to make due with 1/6th or less of the money Ferrari earned for a mediocre results. I know you shouldn't spend more than you make, but if you don't make enough to begin with, the writing is on the wall. At least Caterham seems to have sponsors and made some money by coming in 10th place last year. It's a wonder Marussia got as far as they got.

Oh yeah, and CVC and Bernie get half the revenue. Give a few drops to keep the 11th and 12th place teams on life support and cough up 45 Million for Ferrari. The F1 team collective cough up the other 45 million Ferrari get. That's just hilarious.

[Jabberwocky]

It is a catch 22 really. The lower paid teams need to get more money from sponsors, sponsors are not going to pay much for a tail end Charlie who is only on TV when it is getting lapped. .. or crashed.

[Jabberwocky]

As for living to their means then if they can not live within the finance model then they should not continue. Love of racing will only get you so far.

Have we got a financial break down of what teams spend the money on.

26 mil for the engines wasn't it? Well that puts Marussia in the red already.

[CookinFlat6]

Interesting indeed, I havent seen it broken down to this level. Just a few minutes with a spreadsheet brings up the following discoveries
The evolotion of bribery and corruption is clear to see, the original agreement would have been 50/50, The teams/Topco,
Then Ferrari needed to be bribed to stay, and so Bernie pays their extortion demand, but only half - 2.5%, he actually robs the other teams of the other half of 5%. So he effectively makes the other teams collectively paying Ferrari to help them compete against themselves without realising, he actually breaks the 50/50 deal presumably without telling the teams and not showing them all the numbers
Then after Luca lets the cat out of the bag and/or Fota threatens to breakaway, Bernie is forced to bribe Red Bull and McLaren also. This time he obviously cant get away with robbing the other teams again cos they all know now, so the 'constructors championship bonus' is introduced to keep those 2 sweet, but hold on, Ferrari are still not happy, they are special, above everyone else so they need to be paid again, seperately as part of this new bribe 'constructors championship' - silly name RBR isnt even a constructor
But then hold on, whats happened next? Merc need to be bribed as well or they will leave this unfair competition, and they want justice for williams as well, so Bernie has to now introduce a 'historical' payment to Merc and Williams, never mind Mer have been around for a couple years, its a bribe, who cares what its called, again bernie has to wear the whole payment
And just when the snouts are all grazing, a new team starts complaining that they were lured in on false pretences and - well you know the pattern by now - Bernie has to bribe them, this time, lets make it a charity and call it 11th and 12th 'special needs' tranche
And the 50% (well 47.5% after Ferrari) total prizemoney has to be split amongst ALL the teams according to performance, but the guys at the top for 4 years are the ones complaining the most about ferraris extra skim from the supposedly 50% prize fund
And as if by magic they just happen to win for 4 years with flexy wings and TC (this is the best bit) making their total payout almost exactly the same as Ferraris


Ok 1 thing else - the lefthand side -Bernies 50% (less Ferraris skim) 47.5, when spread out according to the figures provided are actually wrong, there is a missing 0.15%
- thats a whopping 270 mill completely off the balance sheet and presumably in someones pocket that the printer of this diagram does not want us to know about and thinks we will be distracted by the bribery or too trusting to notice

i am gonna send an email to Saward asking who published this and ask them why they didnt fkn check it first, Anyone know who actually published this?

Edit: its Sawards own estimates and he has corrected the mistake recently

[Ferrari man 009]

I must admit that I do think it is a little skewed that Ferrari get more than all teams except McLaren, Red Bull and Mercedes simply for turning up. But then again I guess Ferrari are one of the key brands associated for Formula 1 and probably have a saleable value when FOM try and generate TV Revenues, Sponsorship, Promoter deals etc.

As harsh as it is on the smaller teams, Ferrari and Mercedes are going to pull in more casual viewers and sponsors than Marussia and Caterham.

That said, while it is understandable it simply isn't fair. The Premier League system of get the revenue and split the pie into 20 equal pieces is a lot fairer.

[Jabberwocky]

Merc are a historical team, you can trace their lineage all the way back to Tyrell lol

[CookinFlat6]

If it smells like a bribe, and eats like a bribe and sh!ts like a bribe, no matter what fancy name bernie calls it - its still a bribe

Whats next, to call a bribe a 'special hush payment so they wouldnt tell the taxman?'

Its so blatant that its comical, no actually its very scary

[CookinFlat6]

Another interesting point will be for the Tifosi to notice that Williams, the only other listed company on that grid received less than half of Ferraris income from racing. And its no secret that Ferrari turnover is way in excess of its FOM income, i.e extra funds are pumped in each year on top to allow it to compete in F1. Williams has hovered around small profit or loss depending on special non long term one off factors. However we can safely say its income above the FOM pay out is tightly regulated and very accountable and well scrutinised

Any shareholder looking at Williams and Ferrari this year, with Ferrari spending at least 3 times Williams in total to finish down the road, with Williams cutting it with a great driver mix of talent and sponsorship vs Ferraris Seb and Kimi contracts, well let say a lot of questions will be asked. Mainly, what is our benefit from 1/3rd of a billion a year sand what will be our benefit when we cut expenditure to Williams level if we cant beat them now?

I am really not sure Ferrari F1 will make it into 2016

[What's Burning?]

Well the chart shows their earning from the CVC deal, not what they actually spend. The there's the sponsor revenue. There's no telling how much money Red Bull, Ferrari and the other bleeding edge teams actually SPEND.

So we're seeing only 1/3 of the picture. Although to be sure, the teams further down are spending less. If you really wanted to put the rubber to the road here, the real formula is what a team spends for each WCC point when you factor all revenue and all expenses.

[CookinFlat6]

Ferari shareholders will know exactly what the numbers are for Ferrari and Williams and will also know the relative grid position. I reckon Ferrari spend 3 times as much as Williams and Williams are whipping them on track. If they dont start reversing this, then there will be discussions like 'do we need to make F1 engines?' , 'can we let the Clienti section (which has now been merged with the F1) continue in F1 and we pull the factory team, maybe let Sauber or Marrusia carry the name etc etc'
Imagine sauber effectively became Ferrari, painted its cars red and used the logos etc and made the ferrari name more prominent in its F1 entry

Who would really notice the difference? And Ferrari save 300-400 mill a year by no longer finishing a couple of spots ahead of sauber

[Ferrari man 009]

I am really not sure Ferrari F1 will make it into 2016

[sagi58]

I am really not sure Ferrari F1 will make it into 2016

But, some just need to hold on to whatever slim hope they can find!

[LRW]

A bit of a long read, but the guy certatinly has some 'interesting' opinions:

Exclusive: F1 boss Bernie Ecclestone on his billion-dollar brand

Scathingly sanguine about the financial woes of lesser teams, casually chauvinistic and claiming to open doors for governments, the F1 supremo pulls no punches in this interview with Campaign Asia-Pacific brand director Atifa Silk.

Formula One boss Bernie Ecclestone is a polarising figure in the eyes of many. A powerful negotiator and master dealmaker, he has built Formula One into a multibillion-dollar global operation, having identified early on the potential of television to turn the sports property into a worldwide spectacle. In the process he has made billions from his management and ownership of the commercial activities, and earned both fear and respect from admirers and detractors alike.

At 84, however, Ecclestone is under assault on several fronts. The futures of two teams - Caterham and Marussi - hang in the balance. Pressure is mounting for a new strategy to tackle Formula One issues, from the spiralling costs and declining television audiences to falling sponsorships figures. Ecclestone, who has fought bribery allegations in London and Munich, has lived through many of the sport's ups and downs.

Our first interview takes place at the Singapore Grand Prix, where he had just signed a seven-year deal with Fox Sports. A few weeks later we meet in London at Formula One Management's offices. He reflects on the need to build Formula One into an entertainment property, the trends in sponsorships and why he won't take to social media.

Atifa Silk: What was your ambition with Formula One?
I was racing when I was 16 years old. I've always been racing motorcycles or cars. After that I was the head of a race team and ran a race team, and then doing what I do now. I took over things in the late 70s but unlike most of the successful businesspeople who tend to think they're geniuses, I think most of us are just lucky and happen to be in the right place at the right time.

I grasped the opportunities that were in front of me, whereas lots of people don't, but afterwards say, 'I could have'. The people that have become successful have seen an opportunity and taken it, whatever it is. I never thought about being global. It just happened. Things fell into place. Early on I understood that television coverage would be important and I took control of the television side of things and made a lot of changes with broadcasters out there - more or less European and Asia, rather than America. I took control a lot more, so that was important.

Atifa Silk: What does the Formula One brand stand for?
That’s a difficult question to answer. I suppose it is a major sport and most sports are in the entertainment business. Sometimes we tend to lose track of the entertainment and get caught up a bit more on the technical aspect of Formula One, which I’m not happy about. We are very technical and we need to stay that way but I’d rather see a bit more effort on the entertainment. That normally balances itself. And it will because we’ve just gone through a particular phase, so when we’ve workedthat out, we’ll be back to where we were. Obviously for people involved in Formula One for marketing we have a worldwide audience and an audience in the right bracket for people that are perhaps what you might call up-market. We’re different to the football crowd, if you like. I’m not saying there’s anything wrong with that market at all. Quite the opposite: the football audience is a super market but I think they’re a different type of viewer.

Atifa Silk: How can you bring more of the entertainment factor into Formula One?
Entertainment is what people want to see. If you asked me tonight to go to the ballet and said it’s fantastic, I would say, it’s not for me. Sure, it’s good entertainment for a lot of people but it doesn’t suit me. If I asked people who like ballet if they wanted to go to a Formula One race, they wouldn’t particularly want to go. We don’t know what people like and don’t like. Maybe if I tried it, I’d love ballet. I just can’t understand the reason why they have these girls dancing on their toes. Why don’t they get taller girls? It would be so much easier. Today, there are so many forms of entertainment. I may be speaking against us, but previously the amount of
entertainment was limited. There were fewer TV channels. People didn’t have much choice and now they’ve got plenty of it. So there’s generally a lot of competition.

Atifa Silk: What makes Formula One special?
People like winners and losers. At Formula One, you have one winner and a lot of losers. People can support a particular driver, or a team. Ferrari used to have such fantastic fan support and now they’re not winning as much, and you can see that their popularity has dropped off. In the old days you’d see people walking around with Ferrari flags and the whole place would be full of red. I don’t see that anymore. It’s quite strange because you don’t see people walking around with any flags or waving them like you used to. The world
changes. It’s not a case of kids growing up; it’s a case of everybody growing up, growing into a different world. You’ve seen how it changes. What’s popular one year, isn’t the next. Now, there’s not as much noise from these cars as there used to be, so people are complaining. The good old days were actually the best. But that’s how people are. Women in particular like to criticise.

Atifa Silk: Is Formula One in crisis?
No. Good or bad, I’ve been around Formula One a long time and I’ve seen it all. I used to own a race team and for 18 years I ran a
successful team and won world championships. There are always people that haven’t managed to run their business commercially successfully. They spend more than they have for income. We’ve seen this happen before and this is what’s happened again. We’ve had, I believe, more than 60 different teams since 1950, so people come and go. Ferrari is the one team that has been there from day one. A lot of people come into Formula One and they really haven’t looked to see exactly what it means. The fact is, to be super competitive you’ve obviously got to keep up with the others so you have to spend, whether people like it or not. You’re not going to win
races on the cheap. If they haven’t got the budget that allows them to spend they will eventually disappear. It’s like a poker game; if you haven’t got enough money because there are big dealers in there, don’t play the game. So, unless you can ante up with the others don’t join the game. Trouble is, they all think it’s going to be a miracle and they’re going to get a good hand. It’s the same in poker. It doesn’t happen.

Atifa Silk: Are you concerned about struggling teams and the impact this will have on F1?
Not at all. Nobody will miss the two teams because they’re not front-running teams; they’ve only got a name that people would know because of the problem they’re in. If you want to get recognised you’ve got to do something. This poor guy in South Africa [Oscar Pistorius], for instance, has got more interest because of what happened with him than when he was winning gold medals. He won medals and afterwards nobody thought about him. If this case hadn’t happened he would have been forgotten, probably. Same with these two teams. You need teams like Ferrari. If you go anywhere and you say to somebody ‘Ferrari’, they’ll know what you’re talking
about. If you say ‘Marussia’, they won’t. So that’s it. It’s brands again, isn’t it? Ferrari’s a brand and it’s a brand that’s particularly connected to a product and it’s known for that product.

Atifa Silk: Has Formula One become an impossibly expensive sport to be involved in?
Just don’t spend as much. These teams don’t need to be in financial trouble. They need to think about what they have got to spend and do the best they can with that. Take Williams, for example. Years ago Frank [Williams] had a very small budget and was generally in trouble. Yet he always paid every dollar that he owed. He ran his team accordingly with the amount of money he could come up with. He didn’t have dreams about competing with Ferrari. Eventually things got better and he built the business and now he’s where he is today. It’s the same for everything in life, isn’t it, really? It’s the same problem with ladies and credit cards.

Atifa Silk: When did you see the potential to expand into Asia?
When everyone used to say, ‘go West young man’, I went for it. It was about 20 years ago that I realised the West was more or
less burnt out and we needed to go East. It can be difficult for many international businesses to make decisions like that. It wasn’t for me. That’s what I said I was going to do, and that’s what I did. I believe that the people involved in business in Asia hadn’t thought about what they could do globally at that time. Perhaps it didn’t make sense economically. Either they weren’t interested in being global or they just hadn’t thought about it. Whatever the reason, they hadn’t taken the opportunity. In Asia, there have been massive changes. China is probably a good example of that. When I started going to China, everybody was riding bicycles; now they’re all in cars and you don’t see a bike. Somebody has taken the opportunity and done it. I think moving into countries that have a completely different culture you have to be careful; you might be pushing a product in a particular way that might even be offensive in some countries. That’s certainly not acceptable. When you move into a country you’ve got to immediately respect all their laws and their way of life. This is why I think the European Union will never work because you’ve got so many different countries with different ideas, different languages, different food, different religions.

Atifa Silk: Is Asia taking the opportunity now?
I don’t think many governments use [Formula One] enough. We open the eyes of the world and they don’t see it or use it. I mean, who had ever heard of Bahrain before we went there? Nobody. I didn’t even know where Bahrain was, but now I do. Singapore has been a great country, but all it used to be was a flight stop-over to go somewhere else. [With the Singapore GP], that’s all changed now. People have seen Singapore and experienced it, so they now think differently business-wise. Formula One is something that’s a bit special. If you look at the Olympics, it can cost countries a fortune and it’s a game between countries. They shout about winning the [bid to host] Olympics but nobody tells you what the cost associated with it is, and what they have achieved with it given that cost. I’m not sure about [the Olympics’] worth from a commercial point of view; it’s very expensive. But Formula One is very good, and it’s a fantastic door opener for everything.

Atifa Silk: Are audiences in Asia engaged with Formula One?
That depends on the TV coverage. It’s a problem if airtime on television isn’t there. Take China, which is a big country. They aren’t watching Formula One because nobody’s opened their eyes to it, so they’re not going to be engaged. We find that there’s a lot more interest in Formula One first when we are in a country and, secondly, because of that there is a lot of television interest. We have one race in Shanghai and that has to get on the television screens for us to engage people. The problem is the amount of interest from the
people that have the ability to broadcast it on television. You need people who want to be involved and want to broadcast. We offer the signal and anything can be possible with us, and there are people that have got the rights to broadcast anywhere.

Atifa Silk: How are the broadcast deals structured, specifically in China?
Bernie Ecclestone: They are normally five years. It depends on the broadcaster and the amount of money that the broadcaster would be able to produce in five years as opposed to today. I try to do a long-term deal and wait. China is strange. It’s the only country where we’ve got an issue and it’s with CCTV. When that happens you’re in trouble. And with CCTV, they’re in the luxury position to do what they want.

Atifa Silk: How can Asia help F1 grow?
Asia needs to get more involved. Funnily enough, something that has a lot more interest worldwide and in Asia is football because you know that you can turn on a television and watch English football, Premier League football, which a few years ago you might have been able to find it in a hotel on a channel but it wasn’t popular. And it was because of television that it became so popular, why it has grown massively.

Atifa Silk: Can you compete against football and make Formula One more accessible?
Children can go and get a football and play football. It’s not easy to get a Formula One car, or for that matter not easy to get into any form of racing, even go-karts, which is where most of the drivers have come through to Formula One. It’s still very expensive. There are probably millions of talented would-be drivers out there that will never get the chance. You need support from someone. The fact is we can’t make Formula One more accessible to people. It’s no different in a way to Miss World, if you like. It doesn’t mean she’s the most beautiful girl in the world. She’s one of the most beautiful girls in that competition. Like heavyweight boxers; there are probably better fighters out there who are even better than world champion boxers but just don’t have the opportunity to do it. It’s the champions that have had the opportunity. It’s the same with this business; it’s the guys that are here that are world champions and they have had the opportunity. Sebastian Vettel had support from Red Bull; without that he wouldn’t be world champion. So that’s how it is. Yes, it’s difficult to make a start. The teams are always looking for more talent, probably because they’re having to pay out a lot of money to the people they have now. They are waiting until the new breed [of drivers] comes through.

Atifa Silk: What is the trend in sponsorship that you’ve seen in recent years?
There are so many places that brands can put their money in for sponsorship. Why is that? Because there are lots more sports on television these days. They may not be on the premier channels and not with big audiences, but they’re there. Some brands, I believe, take the wrong approach. They spend little amounts in a lot of different places that don’t deliver much [return on investment]. We get massive audiences worldwide every couple of weeks; the Olympics in comparison is every four years and the World Cup is the same. So I don’t think people really research where they can spend their money and what results they get.

Atifa Silk: How much do the teams depend on sponsorship?
Bernie Ecclestone: Quite a lot, although it varies by team. So, for the large, successful teams it is probably 50 per cent of their budget, and the teams at the bottom of the grid need 70 or 80 per cent.

Atifa Silk: How much does F1 need sponsors, versus broadcasting rights or race fees?
Bernie Ecclestone: It’s not life and death for us. The income comes from promoters that run races, and have to be there to provide a service for the show or the television. Sponsors are there and, of course, if all the sponsors stopped it would hurt us financially but it wouldn’t cause as much damage as it would for a race team because we could cut our costs.

Atifa Silk: What does a major brand such as Rolex get for its Formula One sponsorship that other sports properties can’t offer?
They get worldwide coverage, and association with a premier sport. If you’re sponsoring the Olympics you’ve got to wait a long time for these things to come back. I believe the big sponsors want to be able to offer their clients some form of entertainment, an experience that money can’t buy. So, they get the use of the Paddock Club, which is just a little bit up-market, and if they sponsor us or one of the teams they can meet the drivers and it’s all a bit special. In terms of advertising budgets, I don’t know whether this is considered luxury spend. But if I put a new brand out there today, people worldwide will see that brand and be talking and writing
about it. Rolex do a very good job activating their sponsorship. Red Bull does a truly super job. We’ve got Singapore Airlines as a sponsor, as well as UBS and Emirates that do well with their sponsorships.

Atifa Silk: What’s the secret to Red Bull’s marketing success?
Bernie Ecclestone: They have a person that owns the company, who is a super marketing guy [Dietrich Mateschitz]. He got into Formula One, and built on the idea of using it as a marketing tool and he’s done fantastic job with it. In the end you can say because he had the courage to choose the right people that he had a four times world champion. Obviously that made his marketing easier but in the meantime he would have still been successful because he markets all the other things he’s involved in. He keeps his brand in front of the public all the time. He’s very good and very courageous at doing what he does. He picks the right things to do.

Atifa Silk: Could Formula One benefit from marketing itself more?
What could we say to people? It’s pretty obvious what we produce and what we do. Either people like it and buy or don’t like it. I’ve
had a lot of criticism lately because the television audience has declined. We have seen that decline in nearly all sports. Have the viewers declined? I doubt it. The viewership is just spread in different areas because today people can watch on these iPads or on even telephones. And its only now that we're catching up and finding out that if we lose 10% of our free-to-air television audience how much we might have picked up elsewhere as more people watch Formula One through other means.

Atifa Silk: How can Formula One widen its reach (beyond television) to expand its audience base?
I’m not interested in tweeting, Facebook and whatever this nonsense is. I tried to find out but in any case I’m too old-fashioned. I couldn’t see any value in it. And, I don’t know what the so-called ‘young generation’ of today really wants. What is it? You ask a 15 or 16-year-old kid, ‘What do you want?’ and they don’t know. The challenge is getting the audience in the first place. I say to some of these people who start this nonsense about social media, look at what tobacco companies tried to do— get people smoking their brand early on because then people continue smoking their brand forever.

Atifa Silk: Do you believe there is no value in reaching this young audience?
If you have a brand that you want to put in front of a few hundred million people, I can do that easily for you on television. Now,
you’re telling me I need to find a channel to get this 15-year-old to watch Formula One because somebody wants to put out a new brand in front of them? They are not going to be interested in the slightest bit. Young kids will see the Rolex brand, but are they going to go and buy one? They can’t afford it. Or our other sponsor, UBS—these kids don’t care about banking. They haven’t got enough money to put in the bloody banks anyway. That’s what I think. I don’t know why people want to get to the so-called ‘young
generation’. Why do they want to do that? Is it to sell them something? Most of these kids haven’t got any money. I’d rather get to the 70-year-old guy who’s got plenty of cash. So, there’s no point trying to reach these kids because they won’t buy any of the products here and if marketers are aiming at this audience, then maybe they should advertise with Disney.

Atifa Silk: But can’t social media help you build or amplify fan engagement?
Bernie Ecclestone: How are you going to get all the fans to meet these drivers, who don’t even want to meet their girlfriends? You’re right that we should use social media to promote Formula One. I just don’t know how. They say the kids watch things on [tablets and phones], but it doesn’t mean they’re watching Formula One. And even if they are today, will they still watch it when they are 40? The world has changed so much in the last few years, and I doubt that’s going to stop. But with all the technology out there are limits to what we can do and the amount of time people can watch something. So, I’m not a great supporter of social media and I think we’ll find that a number of things will happen. Very shortly these companies like Twitter will be charging for anything that’s put on there
that looks vaguely commercial. Otherwise they can’t stay in business. Their shares have suddenly dropped 10 per cent this week, and it’s because people aren’t using Twitter as much.

Atifa Silk: What’s next for Formula One?
I think we’ve got to wait a little bit for things to settle down. I hope it settles down and we are going to be able to retain the audience. We’re never going to grow it. The only sport that’s really grown—not by marketing but through availability—is football. You turn the television on and you’ll always see a match, whether it is the English Premier League or something else, even in Asia. It may not be live because of the time difference but they’ve captured an audience and they want to see what’s going on.

Atifa Silk: What drives you? What do you say to the critics?
I run the business from day to day. I get up in the morning and I really don’t know what’s going to happen; I’m a firefighter. When the fires start, I have to put them out and we’re always having fires. I don’t say anything to these people because the majority of them don’t have the slightest idea what they’re talking about. They have to fill the columns of a newspaper and if what they write happens to be true it’s more by luck than anything else. They make up stories that they think the public wants to read, and nobody wants to read good news. Everybody in their life has got a problem so they’re so happy when other people have got problems. Good
news never sells. The answer is stay away. I had a book written about me called No Angel, which apparently sold very well in a lot of languages. This guy, Tom Bower, has buried a lot of very important people, from politicians to business leaders. I asked to speak to him before he started writing and I said: ‘I’m not going to try and persuade you to write anything except the truth but I will tell you one thing I’m no angel.’ He took that as the title of his book, and he bothered to find out the facts. But he had an easy job. I’ll tell you why: I’m really an angel.

[Jabberwocky]

I have been thinking of Bernie antics of late, I sort of get the feeling that he is not trying to run F1 as a sustainable business because he knows he will not be around for long. So is getting all he can out of it.

[What's Burning?]

Like he's figured out a way of taking it all with him.