Will Google Buy Formula 1. PART 1

Alex Hint
WILL
GOOGLE
BUY
FORMULA1?
PART 1

Feel free to download PART 1 of the book, “Will Google
Buy Formula 1?” in the following formats:
PDF
moby
epub
S
H
A
R
I
N
G

PART 1 of the book,
WILL GOOGLE BUY FORMULA 1?
by Alex Hint

Copyright
Translated by Anna Rasshivkina:
annarasshivkina@gmail.com
Co-author Kelly Norman:
kkellynorman@gmail.com
Copyright © 2013 by Alex Hint:
alex.hints@gmail.com
All rights reserved.
No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including
photocopy,recording, or any information storage and retrieval system, without permission in writing from the publisher.
Please do not participate in or encourage piracy of copyrighted materials in violation of the author’s rights. Purchase only
authorized editions.

Will Google buy Formula One?
Wait, is Google really buying Formula One?
What would this give Google?
What, on the other hand, would it give Formula One?
And finally, what would it give us, the Formula One devotees—all of those who, with unbroken
interest, have followed the Championships year after year?
And for that matter, what would it give those who aren’t interested in Formula One at all? (Wow, hard
to believe that such people exist.)
That’s what this book is about.

Preface
PART 1. THE PROBLEMS
1. SHOW. A Shrinking TV Audience. Or, For Whom the Bell Tolls?
2. SPORT. Pay Drivers: Are They the Best of the Best?
3. BUSINESS. You Say You Want to Be a Millionaire? Become a Billionaire, Then Buy a Formula One
Team
4. BUSINESS. Money into the Wind
5. BUSINESS. A Global Sport and Its Earnings
6. The Winning Formula: A 3-in-1

PART 2. THE SOLUTIONS
1. Money From the Wind Toward the Good of Mankind
2. A Hopeful Course in the 2014 Regulations
3. To Patent or Not to Patent? That is the Question
4. Our Main Heroes and the Formula of a Partnership
5. Formula One in the USA
6. A “Big Bang” on the Little Planet: a Formula for Generating Money for Formula One (In Numbers)

7. Upside Down. Or Is It the Other Way Around? A Formula for Success for the Race Tracks
8. Formula One at a Crossroads: Which Path Will It Choose?
9. The Formula One Fan of Tomorrow
10. The Formula One of Tomorrow
11. Without a Suit
12. Will Google Accept This Challenge?
AFTERWORD

To the FIA Formula One World Championship and Google, Inc.

Formula One means:
•High speeds
•First-rate engineers
•Cutting-edge technology
•A leader in its field
•Enormous popularity
Google means:
•High speeds
•First-rate engineers
•Cutting-edge technology
•A leader in its field
•Enormous popularity
How would the partnership of these two leaders
change the world for the better?

(Note: The last lines of this book were set down with the flick of the chequered flag of the final race of the 2013
season.)

One out of fourteen people in the world watch Formula One. What’s
Formula One? We know it’s a 3-in-1: show, sport and business. This synergy is what makes Formula
One incredibly interesting, attracting an audience of millions from all corners of the world. That’s why
Formula One became a world-class sport and earned the honorific, “The Queen of Motorsport.”
But it’s not just sunshine and roses in this kingdom—there are a few systemic problems and
negative tendencies. Let’s try to sort through these issues, and attempt to devise some solutions that
would not only make Formula One more interesting, but also give it a fresh impetus for growth—and,
on top of that, could make Formula One useful for people all over the world, regardless of whether
they’re Formula One fans or not.
It’s always been true that “Those who seek will find.” After all, the gold mine is right beneath
our feet. We only need to add a few lines to the existing algorithm, fix a couple of bugs, and our
Formula will delight us with how perfect its results become.
To find those bugs, we first need to concentrate not on what the program doesn’t do, but on
what it does. 1 So this is exactly how we’ll start our stroll through the code of Formula One. And if we
manage to correct those bugs, then the financial well-being and longevity of our “Queen” will stop
being cause for concern, and we’ll be free to simply admire her beauty and magnificence with a light
heart.
1 Mehran Sahami, see.stanford.edu,Introduction to Computer Science | Programming Methodology, CS 106A, Handout #6 , “Using
Karel with Eclipse”, Sep. 26, 2007, http://see.stanford.edu/materials/icspmcs106a/06-karel-in-eclipse.pdf

While reading this book, you will probably notice that the narrative style includes elements
of humor and irony. That is no accident. I wanted our discussion, instead of turning boring and
tedious, to stay light and informal. The simple and vivid analogies will help us communicate ideas
more clearly, and view the situation from a unique angle. Nevertheless, you can easily grasp all the
gravity and complexity of the questions we’ll be raising.
So, let’s explore each of the elements of Formula One one by one:
SHOW. SPORT. BUSINESS.

1. SHOW. A Shrinking T V Audience.
Or, For Whom the Bell Tolls?

1. SHOW. A Shrinking TV Audience.
Or, For Whom the Bell Tolls?
A fan, an audience: this is the foundation, the base of the base of Formula One. If there are no fans,
there is no Formula One. This is an axiom—just like, “Without an audience, there is no theatre.”
Without fans, Formula One couldn’t earn a penny. Only with a global audience numbering in the
hundreds of millions can billions of dollars be made. These means provide the opportunity to use
cutting-edge technology, conduct costly research, and attract the world’s best drivers and engineers.
But as we all know, in the past few years, the share of free-to-air (FTA) TV channels
broadcasting Formula One has decreased, while the share of premium channels has increased. What
does this mean? On the one hand, Formula One earns more revenue from broadcast rights;
accordingly, the teams get higher prize payouts from Bernie Ecclestone’s Formula One Management
(FOM). So it would seem that the teams should be sighing with relief. But in reality, things aren’t that
simple.
The teams’ budgets aren’t based just on FOM’s prize money. A substantial part of them
consists of sponsorship money. And the bigger the audience, the more money the sponsors pay. In the
move to premium channels, the audience is shrinking, which means that sponsorship rates will
inevitably go down. So it turns out that only the owners of the sport benefit.

But they aren’t the ones who create the show—the teams are. And in this situation, the fan—because of
and for whom all of this exists—loses the most and possesses the fewest rights. 2
Now let's look at Formula One’s prospects, considering the current trend of switching to pay TV, and
consequently, the shrinking audience.
A business whose foundation, whose basis of existence (for Formula One, none other than
its fans) is being squeezed risks ruin with no hope of return. How often have you seen a successful
business with negative growth dynamics? Basically, this is the road to nowhere. Sooner or later, the
business will simply cease to exist, and its remains will be sold under the hammer for a pittance. In this
situation, alarm bells should be ringing, and one should be taking urgent measures to turn things
around.
Do you remember the famous line of John Donne’s, “Never send to know for whom the bell
tolls—it tolls for thee?” We live our lives under the illusion that this will never happen to us—anyone at
all, just not to us. And truly, it is useless to ask for whom the bell tolls—what is useful is to remember
this, and to act, while act we still can.
Take a look at Yahoo, which used to be a giant in the IT industry in the old days. Thanks to
incredible efforts, it managed to stop its downfall. And now, Marissa Mayer is trying to steer it towards
a revival. But if the company had failed to hear “the tolling bell” in time, it’s possible that by now Yahoo
would be nothing but a Wikipedia page.
2 Allen, jamesallenonf1.com,“France followsUK and Italy to pay TV model for F1 coverage”, 2013, Feb.14,
http://www.jamesallenonf1.com/2013/02/france-follows-uk-and-italy-to-pay-tv-model-for-f1-coverage/

So, what’s going on in our kingdom? Only rarely do the team leaders or a few others involved with
Formula One express concern. The loudest voice on these matters is Ferrari’s president, Luca di
Montezemolo. He deeply understands the necessity of change, and of new approaches geared towards
retaining the existing audience and attracting new fans, especially among the youth. 3
He’s repeatedly spoken out about Formula One’s problems. He is a person who is vitally interested in
the sport's success. But even he, with all of his authority and love for the sport, has not been able to
markedly change the situation.
We can agree or disagree with some of his views, but there’s one thing I know for sure: our
main goal is the same. We all want the show to go on; we all want the sport to flourish; we all want
Formula One to interest as many people as possible, to be as accessible as possible, both in terms of
watching it on TV, and in terms of going to the Grand Prix.
It’s possible that in order to shatter the deadlock, the sport needs more of our support, the support of
500 million fans—those because of whom the show exists. And then, those, on whose shoulders the
future of Formula One rests, will no longer be able to ignore the chorus of voices of such an enormous
audience.
3 Andrew Benson, BBC SPORT Formula 1, “Bernie Ecclestoneera close to ending, says Luca Di Montezemolo”,Dec. 21, 2012,
http://www.bbc.co.uk/sport/0/formula1/20809314

The alarming facts speak for themselves. In 2008, the TV audience numbered around 600 million
people; in 2012, it was only 502 million. 4 And this is in spite of the fact that the 2012 season was
recognized not only as the most interesting of the past five years, but also as one of the most
interesting in the entire history of Formula One. 5 And if a small fluctuation in the number of viewers
wouldn’t call for concern, then such a steep decline sets one to some serious thinking. And, as it should
be, the mind lets us see what our eyes cannot.
That is, what future awaits our sport, if every five years Formula One continues to lose 100 million of its
viewers? That’s right: by 2040, the sport will simply cease to exist. But do we really want this to be
Formula One’s fate?
4 ESPN Staff, ESPN F1, “F1 TV audiencesfall in 2012”, Feb. 17, 2013,
http://en.espnf1.com/f1/motorsport/story/100893.html
5 Keith Collantine, F1FANATIC, “2012 rated the best season of the last five years”, Dec.3, 2012,
http://www.f1fanatic.co.uk/2012/12/03/2012-rate-race/

To prevent this outcome, we must all become allies, regardless of our status: whether we are a fan, a
team or an investor. And none of us must forget that without fans, Formula One wouldn’t earn a cent.
The show cannot go on without its fans.
And yes…“The show must go on.”
TASK #1:
Turnthe decline in audience around.

2. SPORT. Pay Drivers:
Are They the Best of the Best?

We all love Formula One. We love it for its breathtaking wheel-to-wheel battle, for its
beautiful overtakings, for its unexpected tactical moves. We cheer on a certain driver or team. Some
eagerly follow the cars’ technical evolution, the move of drivers and engineers from one team to
another, the appearance of new faces in the pit lane. Each new person brings fresh ideas and original
approaches—and who knows, maybe he’s the one who will become the new Ayrton Senna or Adrian
Newey.
Behind the scenes of Formula One, there lies a different universe—one where severe
passions boil. Ah, how they boil! No wonder Formula One is occasionally called “The Piranha Club.”
This is a place where remarkable plots are woven. This is a place where dreams come true and hopes
crumble. And all of this is madly fascinating and captivating. They are all elements of the show—each
one is just a tiny brick in the skyscraper we call the FIA Formula One World Championship.
We all have our own interests and preferences. Still, above all, for all of us Formula One is a
sport. And a sport, in turn, is primarily what happens on the track. The central players here are the
drivers. These are the men who evince the efforts of the entire team: hundreds of exceptional
professionals, incredibly devoted to their work.
Each member of a team gives to his work not only his knowledge and skill, but also a piece
of his soul, a piece of his being. Qualified as they are, they could easily find work close to home and
spend every evening with family. Only a truly committed person, with a genuine love of his work, is
ready to bear the separation from family, the perpetual moving and the cold comfort of hotel rooms.

We don’t know the names of the ordinary employees. An interview with one of them
appears only rarely. When it does, we’re offered a glimpse of the enthusiasm with which they talk about
their work, or the unique and difficult tasks they face every day, or the way they ended up with Formula
One. Some of them strove for many years to get this job, while others got there by virtue of chance—
each had his own unique path. But a man’s fate stands behind each of these stories.
We learn about nearly every comment made by a driver or a team principal—the media
seizes every word and promptly spreads it around the globe. But the stories of ordinary “Formulers”
(let’s use this name for the employees of a Formula One team) are often no less interesting. They open
up the curtains, and we learn what’s happening behind “The Queen of Motorsport”’s glossy exterior.
Behind those curtains, we find the hard work of hundreds of specialists in every field. They don’t have
salaries with a lot of zeroes, they don’t get awarded trophies, and they don’t have international fame,
yet they are still there. And day in, day out, they do their best to streamline the processes, to refine
each detail—even the most minor ones—all to give the driver of their team the best competitive car
possible.

And in the end, it’s the driver who gives expression to the possibility and potential invested in every car
by all of these people. This is why the level of the driver’s skill, mastery and experience is immensely
important—he’s on the very cutting edge. So it’s the sensible desire of every team to have the best
drivers in their ranks.
At least that’s the ideal. But do things actually work that way?
In a recent interview, Flavio Briatore spoke about the fact that only a few teams pay their drivers. The
rest invite “pay drivers,” who fund their own seats in the cockpit. As he suggested, this arrangement
probably doesn’t help the very best drivers to make it to Formula One. 6
Flavio has always been unusually able to do away with the chaff and describe the bottom
line in just a few strict words. Over the past two decades, Flavio played a prominent role in Formula
One. Under his command, teams were awarded World Constructors’ Championships, and drivers
became World Drivers’ Champions. Far from all Formula One teams’ directors can claim similar
achievements in their own portfolios. I think many will agree with me when I say that the paddock lost
something when he left. Flavio Briatore is an extraordinary person, and his success outside of Formula
One only confirms this.
6 Maurice Hamilton, Autosport.com,«Interview: Flavio Briatoreuncut», Apr. 27, 2013,
http://plus.autosport.com/premium/feature/5284/interview-flavio-briatore-uncut

But let’s get back to the drivers. Well, is Formula One currently a venue where only the very best
perform? I don’t think many people would answer this question affirmatively. But at the same time, we
all perfectly understand that this isn’t happening because of the teams’ greed. In a nutshell, for them
this is a question of life or death—their future participation in the Championships is at stake. They are
forced to act this way.
So it turns out that something is awry in our kingdom. And if something is going wrong,
that means we need to do something about it. But the time to act is now, before it’s too late.
TASK #2:
Adjust Formula One’s business model in a way that lets the starting grid represent
the very best drivers.

3. BUSINESS. You Say You Want to Be a
Millionaire? Become a Billionaire,
Then Buy a Formula One Team

Some of you may have heard people say something like, “Do you want to become a millionaire?
Become a billionaire, and buy a Formula One team.” This business has always been a risky one. But
unlike past times, if you decide to take up business in Formula One today, your odds of success are
approaching zero. 7
Maintaining a Formula One team is a pleasure that doesn’t come cheap, and at this point,
only a few teams turn a profit. So you won’t find a long line of people wishing to join the ranks of the
lucky ones involved in the sport.
What’s more, no one was even willing to take up the baton of HRT, the now defunct team
whose assets were sold for a pittance. And that was already an established team. Maybe not a large one,
maybe not one that managed to achieve anything extraordinary, but it was a platform to move forward
from—which, in any case, is simpler and cheaper than starting from scratch. They went to ruin, even
though they had Pedro de la Rosa, an experienced driver, who had brought with him the knowledge
and skill of years of racing, including as a member of a large and successful team. But alas, after three
racing years, HRT is nothing but history. In early 2013, rumors were circulating that a group of
Canadian and US investors were ready to buy the team, but talks stopped there.8 And there’s nothing to
insure other teams against a similar fate.
7 Paul Weaver, theguardian.com,“Seven F1 teams face crisis over looming bill for extra £1.32bn”, May 24, 2013,
http://www.theguardian.com/sport/2013/may/24/f1-teams-crisis-bill-costs
8 GMM Journalist, 'Scorpion'team could rise from HRT's ashes, Jan. 30, 2013,
http://www.motorsport.com/f1/news/scorpion-team-could-rise-from-hrt-s-ashes/

Remember how Peter Sauber had to take emergency measures to save his stake after BMW announced
its retirement from the sport? And now, right before our eyes, the team with a twenty-year history has
entered trying times once again. Peter Sauber, the founder of the team beloved by many, is once again
forced to fight for its future.
Or, you could look at Force India, which is fairly successful from a sports point of view. One
can’t help but feel that we enjoy its performances only because of the team leader, Vijay Mallya’s,
exceptional enthusiasm.
And here’s another example: Lotus, a team that for two years has consistently succeeded in placing, or
even taking first place. It would seem that they, at least, shouldn’t have any problems. But even that’s
not the case.
Each team’s situation is different, but nobody is immune to the threat of financial insolvency—it hangs
over all of them like the sword of Damocles.
Only a handful of teams leading the standings feel relatively safe. But even the McLaren team, which
took third place in 2012, finished the year with financial losses. 9
9 Adam Cooper, msn.foxsports.com,“McLaren F1 Team Sustained Financial Loss In 2012”, Oct. 2, 2013,
http://msn.foxsports.com/speed/formula-1/mclaren-f1-team-sustained-financial-loss-in-2012/

The way things are going, can we be sure that the show can go on for years to come? How long will the
travelling circus be able to keep traveling, if almost its entire band falls ill, and most of their horses
can’t leave the stables?
Let’s go back to the notorious 2005 USA Grand Prix, when only six cars competed. Yes, that was
another kind of problem. But what difference does it make for the fans why most of the teams didn’t
make it to the starting grid—whether it was because of tire problems or money problems? What’s
important is that the crowd, in effect, was deceived. People paid considerable money to enjoy a show,
with many buying their tickets months ahead of time and planning their vacations around it. Then
they languished in trembling anticipation, counting down every day to the start of the race. But what
did they see?
It was like if Lewis Hamilton and Nicole Scherzinger went to a concert—let’s say Metallica—
and James Hatfield, the lead singer, wasn’t on stage—and nobody was on stage except Lars Ulrich, the
drummer. Of course, Lars could put on an amazing show all on his own, but Nicole, being a singer,
probably wouldn’t be completely satisfied with a concert like that. Or if Fernando Alonso and his
friends decided to support their favorite soccer team, FC Barcelona. They showed up at the stadium,
and out of all of FC Barcelona, on the field were just the goalkeeper, a couple defenders and Lionel
Messi playing offense. Fernando looked at the other half of the field: the same picture. I bet Fernando,
Lewis and Nicole could smile at this scenario if they saw it in a comic book, but definitely not in real
life.

What I’m getting at is this: how many Formula One fans will remain if only four teams can participate
in the races?
Most of the teams are experiencing serious financial trouble. To be confident in their future, Formula
One’s business model needs to be changed.
TASK #3:
Adjust Formula One’s business model so that all of its parties can have solid financial foundations
and confidence in tomorrow.

3. BUSINESS. Money into the Wind

Formula One’s revenue and its distribution are trade secrets. But in our connected times, it’s relatively
difficult to keep the cat in the bag—some things still get leaked to the press and, thanks to the
Internet, they become available to anyone who’s interested. Working from this data, we’ll continue our
conversation about Formula One’s commercial position—in other words, about Formula One’s
financial behavior in the global economy.
The teams’ budgets have varied throughout the years. In pre-crisis times, the total budget of all of the
teams spilled past $3 billion. 10 Now the teams have had to tighten their belts—but, in any case, they
spend a pretty substantial amount every year. Now, let’s take up this question: what do they spend that
money on?
Flavio Briatore offered a very simple and concise answer: the teams spend colossal amounts
of money, “channeling the air up and down, and this and that [sic].” 11
Luca di Montezemolo has also repeatedly emphasized that aerodynamics is “too important”
in present-day Formula One. It’s hard to disagree with him. Why does Ferrari invest in technology that
can be used in space, but in no way in the automotive industry? 12
10 Christian Sylt & Caroline Reid, Motorsport-total.com,“Teambudgetsum zehn Prozent rückläufig”, Feb.15, 2010,
http://www.motorsport-total.com/f1/news/2010/02/Teambudgets_um_zehn_Prozent_ruecklaeufig_10021506.html
11 Maurice Hamilton, Autosport.com, «Interview: Flavio Briatore uncut», Apr. 27, 2013,
http://plus.autosport.com/premium/feature/5284/interview-flavio-briatore-uncut
12 SCUDERIA FERRARI RACING NEWS, ferrari.com, «Montezemolo: «Congratulationsto the winners», Dec. 20, 2012,
http://www.ferrari.com/english/formula1/news/headlines/Pages/121220-montezemolo-congratulations-to-the-winners.aspx

Now let’s remember what the word “wind” means. In a nutshell, it’s the flow of air, the movement of
air. Wind: that’s what Formula One is spending billions of dollars on. But when it comes to the matter
of serious business, the wind is far from the place where entrepreneurs want to invest their money:
Moneyshould make money,
not wind up in the wind.
That’s why manufacturers who, by all appearances, should be competing for the right to participate in
Formula One—where they could research and try out new technological ideas for their main
businesses—aren’t really striving toward this. It’s because the vast majority of developments in
Formula One can’t be applied in production cars.
This is one of the basic problems of modern-day Formula One, and it leads to other ones.
Think of Porsche, for example, who preferred to return to the “24 Hours of Le Mans” race instead of
participating in Formula One. A serious business isn’t ready to throw money “to the wind.” A serious
business wants to invest in technology. And if Formula One was to create those conditions, the
reaction wouldn’t take long: it won’t just be car manufacturers lining up before the elite club’s gates.

TASK #4:
Adjust Formula One’s business model so that it becomes a platform for developing and testing ideas
that are applicable beyond Formula One,
and not only in the automotive industry.

3. BUSINESS. A Global Sport
and Its Earnings

Formula One positions itself as a global sport, and this is true in a lot of ways. Throughout a season,
the World Championship travels across countries and continents—there’s a reason the Queen of
Motorsport is also called the Travelling Circus. Over its 64-year history, representatives of dozens of
nations have appeared on the starting grid, and the Grand Prix itself has been held in dozens of
countries; the map of hosting countries is constantly growing. Not long ago, a few more countries
joined the elite club: Formula One returned to the USA, and the debut of a Grand Prix Russia is at
hand. There’s a list of nations expressing their desire to host either their first or a returning national
Grand Prix. Formula One has a television audience covering nearly two hundred countries.
This is all true. This great work, done by Bernie Ecclestone, calls for a lot of respect. Now is a
great time to fit in a story about this remarkable person who’s devoted over forty years of his life to
Formula One. But over these years, which have been so inextricably tied to Formula One, so many
things have happened in Bernie’s life that to tell about them within the confines of a single chapter
would be an absolutely hopeless undertaking. But it’s no secret that, in a lot of ways, it’s thanks to his
efforts that we can enjoy this sport today—thanks to him that Formula One has taken on its current
shape and scope, and, what’s more important, gained potential that far exceeds today’s borders. We
must admit, the result is well worth it. So, let’s toast to Bernie’s health and longevity, so that he may see
a new turn in Formula One’s development—the sport that he’s devoted himself to for all these years.

So, Formula One has come a long way over these 63 years, and it’s got some things to show for itself.
But the fact that Formula One’s worldwide broadcasting revenue is comparable to that from
broadcasting soccer’s Turkish Football Premier League should give us some serious pause. 13
Now, I have complete respect for any national championship of any sport, and I’m well aware that
soccer is much more popular than Formula One is in Turkey—after all, that’s the main reason the
calendar is missing a Turkey Grand Prix. But Turkey’s soccer championships can hardly be called
global—they’re not world championships, and their popularity certainly doesn’t span two hundred
countries.
Again, the English Premier League earns more just from their UK broadcasting rights than
Formula One does from all of its income sources. 14
Or here’s another example: Major League Baseball earns five times more than the Formula One World
Championships. 15
And when you’re comparing the World Championship with a National League, then you
can’t help but feel that the sport, show and business on an international level not only can, but indeed
must, earn much more.
13 Andrew Benson, BBC SPORT Formula1, “Pay as you go, go, go: F1's 'pay drivers' explained”, Jan. 27, 2013,
14 Andrew Benson, BBC SPORT Formula 1, “Formula 1 teams 'are in survival mode', says Whitmarsh”, Feb. 15, 2013,
15 Matt Snyder, Cbssports.com,“Report: MLB revenues in 2012 were $7.5 billion”, Dec. 9, 2012,
http://www.cbssports.com/mlb/eye-on-baseball/21335810/report-mlb-revenues-in-2012-were-75-billion

Thereby, a reasonable question arises: does Formula One’s income correspond to its status of a global
show, sport and business?
Now, let’s evaluate Formula One’s place in a financial arena of well-know global companies. To do this,
let’s look at the following data on some of these companies’ net profits in 2011 (in billions of dollars). 16
(I’ll put down approximate figures, which are enough for a general picture of the current situation.)
16 Elzio Barreto, Reuters,“UPDATE 1-F1 revenues to grow near double digits till 2016: UBS”, May 30, 2012,
http://www.reuters.com/article/2012/05/30/formulaone-ipo-idUSL4E8GU36L20120530
Company Net Profits (in billions):
Formula One $0.5
Ford $20.0
General Motors $9.0
Apple $26.0
Microsoft $23.0
Google $10.0
Wal-Mart $15.5
Coca-Cola $8.5
McDonald’s $5.5
Proctor & Gamble $12.0
Walt Disney $5.0

In using these numbers as an example, I’m not trying to say that Formula One is a tiny and
insubstantial drop in a giant ocean of financial sharks. I only want to bring some very simple questions
to light:
•Is Formula One squeezing out all 100% of its potential? Like, say, the best drivers do from their cars?
•Can Formula One step into the business ring as a “heavyweight”
without getting boxed around the ears?
•What steps does Formula One need to take to grow into a significant and solid financial empire?
TASK #5:
Adjust Formula One’s business model to increase its profitability to a level that fits its status not only as
a global sport and show,
but also as a global business.

6. The Winning Formula: A 3-in-1

In the paddock, it’s often said that for victory, everything needs to fall into place, all of the pieces must
come together. It’s a good sign if a team has the best drivers—that suggests they could realize the car’s
maximum potential. It’s a good sign if a team has the best constructors, too—that theoretically
suggests they’ll have the best car. And it’s a good sign when the weekend goes by without a hitch, and
the team can tune the car to the best setup. There are number of other factors, too, which in turn could
be divided into a great deal of elements—and in each of them, the team needs to achieve the best
possible result. But even this doesn’t guarantee victory, because another team could have achieved even
better results. All this is true for any Formula One team. But it’s equally true for Formula One as a
whole: the future of the Big Circus can only be successful if all of the elements come together, if all
three components of Formula One—sport, show and business—
are at their height.
Speaking of the sport’s components, let’s pause and consider two things: the drivers’ and the teams’
competitiveness on the track.
We could argue for a long time over the driver’s role today—about how much of the race’s
outcome depends on him—and we could try to figure out percentages for the driver’s influence vs. the
car’s. But what’s the point of that? I think a lot of people are more worried about who makes their way
to the starting grid: do the best and the worthiest have a seat here? I have no doubt that any driver who
gets the chance to make a debut at the Grand Prix is talented and well-prepared to participate in the
races; each driver proved this in the feeder series. Besides, the Super License isn’t given to just anybody,
and no team would put an amateur behind the wheel. But Formula One is the pinnacle of motorsport,
and this means that only the best should have a place here.

Despite this, we all know that in the struggle for a race seat, the one who wins often isn’t the one who
outperforms the others, but the one with more sponsorship money. Does the sport benefit from this? I
doubt it. It’d be interesting to know whether a match with Brazil’s national soccer team would draw a
lot of fans if the field wasn’t filled with the best players, but with those who’d managed to find more
sponsors. It’s hard to even imagine a situation like that there. But we have a special kind of kingdom,
and here reality can take the most unlikely forms.
So it turns out that a money shortage has our teams gripped in its financial jaws, and it’s depriving
them of the chance to put on the starting grid only those who it was created and meant for: the very
best drivers.
But all of this is only one side of the sports component. After all, we all perfectly understand why many
teams are forced, against their wishes, to choose in favor of the driver with a more impressive
sponsorship portfolio: the team needs the money simply to exist. And the money, to put it very lightly,
is no chump change.
Not to mention, the purpose of any team isn’t to simply participate in the races, it’s to be
competitive in the battles—that is, to be a true contender and have a chance of fighting for the highest
standings. And to do that, they need a competitive car above all else. But a car like that won’t appear
with the wave of a magic wand—again, it costs money to engineer it.17
17 Sarah Holt, Sport.uk.msn.com,“How much do Formula 1 cars cost?”, Aug. 09, 2013,
http://sport.uk.msn.com/f1/how-much-do-formula-1-cars-cost

It’s no secret that if you were to place the stars of Formula One—Fernando Alonso, Lewis Hamilton,
Sebastian Vettel, Kimi Raikkonen—the World Champions, the leaders of their teams—behind the
wheel of a Caterham or a Marussia, it’s unlikely they’d be able to compete with even novice drivers at
the wheel of a Red Bull, Ferrari or Lotus. Even the mastery of a World Champion would fall short at
beating such odds.
So it turns out that a lack of money strangles most teams’ best intentions: they can neither afford to
invite the best drivers, nor to build the most competitive cars.
What it comes to is this: the sport side of things very strongly depends on how the financial
side of things is going. And if Formula One’s business model gave most teams the opportunity to make
money, and to gain independence from the amount of money their drivers can bring in, then both the
teams and the cars would be more competitive, and they could invite the best drivers without looking
through their pockets. And, as we know, the greater and tighter the competition, the more gripping the
spectacle is for the fans.
So, it turns out Formula One’s business model could use some improvement.

For the sport to not only remain popular, but to grow and flourish, we need to improve all of its three
areas. And it’s necessary to work on them constantly, just as the teams do: every day, they try to
improve their cars—even in the tiniest and, at first glance, most inconsequential details.
Standing in place isn’t a luxury Formula One can afford: if it rests on the laurels of today’s success and
indulges in self-admiration, it won’t have long to wait before crisis hits. Of course, from time to time,
one needs to stop and, if necessary, even take a step back—but only to look around and re-evaluate
which direction will lead to growth and success.

And neither in our fast-moving sport, nor in our fast-paced times, is there any room for mistakes…

Thank You!
Thank you for reading PART 1 of Will Google Buy Formula 1?
You may download the whole book from:
Amazon
Kobo
Feel free to give your honest feedback and share your opinions.
Twitter
Facebook
Google+
Best wishes, always,
Alex
S
H
A
R
I
N
G

Will Google Buy Formula 1. PART 1

Recommended

Recommended

More Related Content

Recently uploaded

Recently uploaded (19)

Featured

Featured (20)

Will Google Buy Formula 1. PART 1