As we get ready to head for Budapest, the Concorde Agreement is due to be signed, which should bring in a new co-operation between the teams, the commercial rights holders and the FIA.
I noted some comments yesterday by Mario Theissen, the team principal of BMW Sauber, about the need for the teams to have more say over the venues visited by the Formula 1 circus. I’ve heard these sentiments expressed many times before, but it will be interesting to see what traction they get this time around.
Presently there is no race in North America, the largest market for most of the manufacturers and many of the sponsors in F1, while there is a threat to the races Germany and the UK, with Hockenheim unable to pay, Nurburgring unwilling to go back to an annual event and Donington not sure to be ready for 2010. F1 commercial boss Bernie Ecclestone has long maintained that in the 21st century, Europe will become the third world and regions like the Middle East and Far East will become the first world.
That may be some time away yet and the major TV markets are still in Europe, as witnessed by the fact that there is pressure to delay the start times of races in the Far East.
This season sees the arrival of a second race in the Middle East with Abu Dhabi and next year F1 will go to South Korea.
The manufacturers present in F1 have been applying all sorts of pressure on Ecclestone and on the FIA over the past year or so, culminating in the announcement at Silverstone of a breakaway series.
They backed down from that after talks with Ecclestone and his partners CVC and there will be an uneasy accommodation going forward with the manufacturers keen to push certain priorities. One of them is definitely the calendar. It makes no sense to have a race in Turkey attended by fewer people than there are in the paddock and yet to have no presence in North America.
Race promotion is the second largest source of revenue for the F1 commercial rights holders, making up 27% of the total take (TV and media is 37%). CVC’s projections are for revenues from race promotion to rise by almost 10% per year, from $304 million in 2006, for example to $425 in 2011 and $445 in 2012. This will not be achieved by cutting hard-up venues some slack.
The model lately has been to jettison events if they cannot afford the increased fees and this has seen the loss of Indianapolis and Montreal among others. Although the teams receive 50% of all commercial revenues, they argue that a balance needs to be struck between pushing for maximum returns and securing a foothold in the key markets, which will have wider benefit for the teams, their backers and the sport in general.
“We have to make sure that we are in the important markets, ” says Thiessen.
“It is always a matter of finding what the right balance is between what we can earn, what Bernie can earn, and what is important for the market.
“I would expect a much closer co-operation between the commercial rights holder and the teams if it comes to such decisions in the future.”
It’s not a question of “if”, it is a question of “when” it comes to such decisions.
This goes back to the topic of ‘dictatorship’, much in the news a couple of weeks back. In a benevolent dictatorship, one man makes the key decisions for the benefit of all the participants.
The calendar discussions will be an early acid test of how the new relationship is working between teams and commercial rights holders. FOTA was not able to negotiate a veto over venues F1 visits in this peace deal, but this will show how much influence FOTA and its manufacturer activists are having over F1 affairs in general.