2. THE BUSINESS OF F1 raconteur.net2 RACONTEUR20 / 03 / 2016
COMMERCIAL FEATURE
What unique IT
challenges does Williams face?
The biggest challenge that
we have is the constant need to im-
prove, and to innovate, to remain
ahead of the competition. The team
that works on the car is used to this,
of course, and so this is expected
across the board from everyone at
the company. Race tracks also tend
to have very little IT infrastructure
in place prior to a race, so we need
a flexible partner, such as BT, who we
cantrusttogetthejobdonetoahigh
standard in a short space of time.
How important is IT to
Formula 1?
The right IT infrastructure
is critical to our success because
COMMERCIAL FEATURE
W
hen BT joined forces with Williams
Martini Racing a year ago, it was
clear from the start that they were
a perfect match – two classic British brands
which combine speed and technology in
their quest for success.
Despite the obvious synergies, it was BT’s
first foray into Formula 1 and is the start of
an exciting collaboration between the two
companies. This is not simply a sponsorship
deal, but a true partnership designed to re-
turn Williams to the top of the podium.
“Our partners are our lifeblood,” says
deputy team principal Claire Williams.
“Without them, we don’t go racing.” And in
a short time BT has made itself an integral
part of the line-up.
The partnership comes at a crucial stage
in the team’s history. With 16 world champi-
onships and 114 grand prix victories, Williams
is F1’s third most successful team. However,
by its own admission, 2013 was its worst year
ever on track, scoring a mere five points and
managing no race finish higher than eighth.
For a team that had dominated F1 in the
1980s and 1990s, it was a wake-up call.
Williams resolved to change everything
around. In the wake of that season, a new
leadership team came together and put in
motion a series of plans to make some big
changes at the team, resulting in structur-
al improvements, a new engine partner,
Mercedes, and new personnel, including new
drivers Felipe Massa and Valtteri Bottas.
A proactive strategy to connect with
strong new partners was also instituted with
a focus on brands that would support the
team’s technical and digital transformation.
It was this programme that brought BT
in to collaborate around how technology
could support the team’s ambitions. “BT
has played a really important part in our
transformation,” says Ms Williams. “When
we started this in 2013, the big part we were
missing was the digital part. We discovered
that in an industry which is so fast moving
and so reliant on data, we had allowed our IT
capabilities to fall behind.
“The technologies and services that they
have provided to us have already had a ma-
jor impact on our performance and we can
see this on the race track.”
In the world’s most technologically ad-
vanced sport, data is king. BT enables mem-
bers of the Williams Martini Racing team to
communicate and collaborate with any team
member wherever they are in the world – at
the race track, in the race operations room
or even working remotely – which is key,
given current Formula One Management
rules that restrict the number of engineers
allowed to be trackside during a race.
BT’s end-to-end global IP infrastructure
facilitates secure high-speed communica-
tion between team members at the track
with engineers as far as 10,000 miles away
in the team’s factory in Grove, Oxfordshire.
Thanks to BT, huge quantities of data can be
shared and analysed in real time from race
tracks in locations ranging from Melbourne
to Montreal and São Paulo to Singapore.
It’s a highly competitive environment.
Each F1 car is fitted with around 200 sensors
which send out real-time information. These
sensors measure everything from engine
performance to fuel levels to oil tempera-
ture and tyre pressure. Teams predict their
finishing positions long before the lights go
out and the team often knows that a car is
about to suffer a problem several laps before
anything becomes visible to TV viewers.
“I don’t believe you can ever have too
much data,” says Ms Williams. “Data is what
helps us win. The data that we receive from
the car, and how our people interpret that
data and develop the car, is what separates
us from the competition.”
Williams is now enjoying its best run of
performance since the early-2000s and
with 13 podium places in the last two sea-
sons, it is looking to continue pushing for-
ward. Speed is everything in F1, both on and
off the track. Data must be analysed quickly
to give the driver an opportunity to react
to it, and information that shaves just a few
thousandths of a second off a lap time can
make the difference between winning and
losing a race.
BT’s network plays a crucial part in this,
allowing the team to run up to 1,000 race
simulations per minute. It also enables
quicker remote access to information, and
improves the performance and reliability of
demanding computing processes, including
applications which rely on video, telemetry
and voice. As a result, the team can now
interrogate its remote systems and export
the required information to the race track
in a matter of minutes, allowing for re-
al-time decision-making.
The new network infrastructure has been
further optimised through the deployment
of WAN acceleration capabilities, remov-
ing latency issues and helping the teams
prioritise certain data so that the most im-
portant data is always processed first. The
infrastructure is also intelligent, self-heal-
ing, and enables streaming of high volumes
of data across multiple datacentres and
numerous device types. This is important
for Williams Martini Racing’s IT team which
needs the right infrastructure to transport,
store, secure and analyse the enormous vol-
umes of data generated at each race.
After the race, updates are made to the
car based on analysis of the data, which
means the car on the grid at the end of the
season can be substantially better than the
one that lined up at the first race. As each
team makes improvements, its rivals are also
changing their own car, so the ability to an-
alyse data quickly and accurately is critical.
Gavin Patterson, chief executive of BT
Group, says: “This is a partnership that al-
lows us to showcase and test our technology
in the most demanding of conditions. It is a
great way to demonstrate to our customers
what technology can bring to their business,
but we are also learning more about what we
are capable of ourselves.”
Across the 2015 race season, 2.5 ter-
abytes of car and video analysis data was
transferred by the Williams Martini Rac-
ing team, equivalent to more than 4,300
HD television programmes. BT’s network
securely carries up to 140GB of this data
per race at speeds of 100Mbps. BT’s faster
network connection makes a tangible dif-
ference during the race weekend and devel-
opments such as real-time video analysis of
pit stop practice have enabled quicker de-
cisions that can improve car performance.
Prior to Williams joining forces with BT,
video analysis of pit stop and practice per-
formance had to be conducted overnight.
Computation of some performance data
has improved by 200 times.
Constant improvement is necessary in F1
to stay ahead of the competition. “Technol-
ogy in the past ten years in Formula 1 has re-
ally moved along, and now it’s all about the
new technologies that a team can develop
and bring to the race,” says Ms Williams. BT
is playing a crucial part in that.
In Grove, BT provides a campus LAN to
ensure a stable high-capacity service across
the entire Williams operation, from the
analysts working in the heart of the race
support room to non-racing services, such
as the team’s conference centre and sister
company, Williams Advanced Engineering,
which is located on the same site.
The capability to carry big data is particu-
larly important for operations of the team’s
wind tunnel which, according to Formula
One Management rules, can only be oper-
ated a limited number of times per season.
This means that every session has to pro-
duce the maximum amount of feedback and
data about the car’s aerodynamics.
And it’s not just about high-tech solu-
tions that wouldn’t be found in an ordinary
office. BT One Phone was recently installed
at Grove to give Williams staff the function-
ality of their desk phones from a mobile.
The team’s drivers have also felt the dif-
ference. Brazilian Massa, an 11-times race
winner and one of the most experienced
drivers on the grid, notes that nowadays,
when he climbs out of the cockpit, he is im-
mediately presented with all the analytical
reports he needs for the team debrief.
“From my perspective, the difference be-
tween before and now is that when I come
into the garage after a session, everything
is already on the screen – the data is there
to analyse,” he says. “Also, during a race, the
pit team can see any mistakes straight away,
like if I brake too early or too late. I can’t
hide anything!”
Q&A SESSION
WITH GRAEME
HACKLAND
GRAEME HACKLAND
It’s a big change from when he first joined
F1 back in 2002, but one which continues to
encapsulate the ethos of the sport. “It’s all
about speed,” says Massa. “The messages
that we give to the team and the messag-
es they send us back need to be the fastest
possible. We are not here to participate. We
are here to win.”
BT’s technology connects everyone at
the team, from Massa and Bottas to the
junior mechanics. “Team work is absolutely
critical to what we do,” says Ms Williams.
“Success comes from a really great group
of people who work well together, and can
communicate and collaborate effectively.”
One of BT’s most important roles is to pro-
vide a platform which enables the passionate
team members to perform at their optimum
level. “Our role is all about enabling the peo-
ple at Williams Martini Racing to be the best
they can be and to deliver the best perfor-
mance,” says Mr Patterson. “Technology on
its own doesn’t win races. It’s how it gets
used that makes things really exciting.”
It’s experience which will enable BT to im-
prove its services to benefit clients in other
areas of its business. It works with compa-
nies in diverse sectors, including engineer-
ing, healthcare and aviation, which all re-
quire real-time connectivity to solve critical
problems. The experience with Williams will
boost what BT can offer clients.
Ms Williams is in no doubt the partnership
has already been a success. “I think it’s in-
credibly exciting to see where our partner-
ship with BT is going to go in the future,” she
says. “We have a great platform from which
to work, and we’ve already seen that the
technologies BT has integrated within the
racing environment have driven improved
performance. It’s enabled our engineers to
work harder, to work smarter, and this is ex-
actly what we need them to be doing if we
are to close that gap.”
now we are moving data around
the world – data that has been
generated by a Formula 1 car
going around a track at 300 kilo-
metres per hour. Being able to
move the data in real time, over
a secure and reliable network,
allows our engineers to work
on that data and to feedback
to improve the performance of
the car.
What are your other key
IT concerns?
With around 650 people
working at the company, the ma-
jority of them based at our HQ in
Grove, we need to support every
one of them and all their com-
munications, networking and re-
mote-working requirements. Our
campus network needs to be able
to withstand high capacity data
peaks so that when we are oper-
ating our wind tunnel or receiv-
ing data from the race track, this
doesn’t impact upon our day-to-
day computing needs.
What is the one thing that
you always keep in mind when
making IT decisions?
Teams of our size in For-
mula 1 need to be really clever
about where to direct invest-
ment and resources, and the
thing I always ask myself is “will
it make the car go faster”. If it
makes the car go faster, then we
do it, and if it’s not contribut-
ing to that in some way, then we
don’t do it – it’s that simple. In
fact, for all types of businesses
there is the equivalent of “mak-
ing the car go faster” and tech-
nology should be driving that.
RACING ON THE INFORMATION
SUPER HIGHWAY
BT is helping Williams Martini Racing improve the speed of its digital technology and data processing
This is a partnership that
allows us to showcase and
test our technology in
the most demanding of
conditions
21grand prix races
around the world
200sensors on a
Formula 1 car
sending out real-
time information
140GB
of data generated
each race at speeds
of 200Mbps
of car and video
analysis data
transferred by
Williams Martini
Racing during the
2015 season
2.5TB
Williams Martini Racing IT director
3. 20 / 03 / 2016RACONTEUR raconteur.net 3THE BUSINESS OF F1
As the on-track action electrified it made
F1 even more attractive to TV stations and
in 2001 Schumacher’s success brought it to
the attention of German media giant Kirch.
It borrowed $1.6 billion from three banks to
acquire a 75 per cent stake in F1. State-owned
German bank BayernLB loaned $987.5 mil-
lion with Lehman Brothers and J.P. Morgan
each providing $300 million.
However, Kirch lacked the key to a fortune
as the terms of a 1999 bond issue prevent-
ed F1 from paying a dividend. By the time
Kirch collapsed under the weight of its debts
in 2002, it had not made any money from
the sport and, to this day, remains the only
shareholder not to have received a return.
The loans from the trio of banks were
secured on the F1 stake and when Kirch
went into administration they enforced
their security. However, in the vacuum,
they lost control of the business. When
CVC, the private equity firm, bought the
business from the banks, it didn’t make
the same mistake twice.
CVC bought F1 in 2006 in a leveraged
buyout funded with two loans – $965.6 mil-
lion from its investment Fund IV and $1.1
billion from the Royal Bank of Scotland. It
covered its back.
Buried in the articles of association of F1’s
parent company Delta Topco is the revela-
tion that CVC’s shares entitle it to appoint
representatives, known as I directors, who
can “exercise one vote more than the total
number of votes exercised by the other di-
rectors”. The articles add that the purpose
of this is “to ensure that the I directors will
always have sufficient votes to pass a resolu-
tion of the board”.
This control puts a huge premium on
CVC’s stake and its riches were unlocked
with a debt refinancing which allowed divi-
dends to be paid.
Over the past decade CVC has halved its
stake to just under 35 per cent and reaped a
$4.4-billion reward which comprises 31 per
cent of the total generated for F1’s owners. It
has given CVC a 351.8 per cent return on in-
vestment and its remaining shares are worth
another $3 billion at the latest valuation of
the business from $8.6 billion to $10 billion.
To put this in context, CVC had made 314
per cent on its €184 million investment in
British bookmaker William Hill by the time
it exited through share sales and an IPO in
2002. Likewise, the £30 million CVC in-
vested in stockbroker Collins Stewart gen-
erated a return of 292 per cent from share
sales and a 2002 IPO. Its biggest return is
believed to have been from the 2005 sale of
Spanish hospital operator IDC which came
to 831 per cent. F1 may overtake it if CVC
actually sells up.
According to CVC’s co-chairman Donald
Mackenzie, there is no need to do this.
“There is no end date. We have 12-year funds,
which we have to return the original money.
We have already done that. So the pressure’s
off. We like owning it [F1]; we don’t want to
sell it. There are always some people who’d
like to buy it – it’s a very good business.”
F1 has a history of accelerating returns
For good reason, Formula 1 is often seen as more of a business than a sport – with big money at stake
PROFITS RACE
CHRISTIAN SYLT
LUCY MORSON
T
he core revenues of Formula
1’s parent company come from
selling the rights to host and
broadcast races as well as ad-
vertising and corporate hospitality at the
tracks. In the early days of F1, teams made
separate deals with grand prix promoters
and television coverage was sporadic as it
could be cancelled at the last moment if
there were not enough cars to fill the grid.
F1 chief executive Bernie Ecclestone, who
was then owner of the championship-win-
ning Brabham team, saw that cash would
come from television. In 1981 he convinced
the teams to sign a contract committing
them to race. He then took it to TV com-
panies so they could guarantee coverage.
His company Formula One Promotions
and Administration negotiated the deals
and took a share of the proceeds with the
remainder going to the teams and the gov-
erning body the Fédération Internationale
de l’Automobile.
With guaranteed TV exposure, spon-
sors’ rates increased giving the teams
more money to spend on cutting-edge
technology in a bid to win. In turn, this
attracted the best drivers which made the
series even more appealing to broadcast-
ers. Big name car manufacturers, such as
Honda, Renault, Porsche and Lamborgh-
ini, became involved through supplying
engines to the teams.
Fierce rivalries and intense battles for
championship supremacy were the norm
in the 1980s with Alain Prost, Nigel Mansell
and Nelson Piquet all vying for glory
throughout the decade. However, it was Bra-
zil’s Ayrton Senna driving for McLaren who
got everybody talking. Arguably one of the
most iconic images of the era was his contro-
versial clash with team mate Prost in Japan
in 1989. It put both drivers off the track and
although Senna made it back on to win the
race, he was later disqualified for using an
escape road to rejoin the circuit, handing
the title to Prost.
The Brazilian also dominated the ear-
ly-1990s, winning consecutive world champi-
onships in 1990, following yet another con-
troversy in Japan with Prost, and in 1991
after a dominant season with McLaren.
British hopes too were reward-
ed at last in 1992 when, after years
of frustration and retirement threats,
Nigel Mansell stormed to championship
glory, becoming the first Brit to do so since
James Hunt in 1976 and setting the scene
for the rest of the decade, which was to be
largely dominated by his team Williams.
A new era beckoned in 1993 as Prost, now
also racing for the British marque, claimed
his fourth and final title before taking the
decision to leave the sport before the start
of the 1994 season.
Things were changing in F1, and with
fresh new talent in the form of Michael
Schumacher and Mika Hakkinen on the
horizon, to many it seemed as good as
it could get. Then Senna was killed at
the San Marino Grand Prix in 1994 after
crashing out from the lead and it looked
like the sport was facing its darkest hour.
However, Senna’s death drew the world’s
attention to F1 at a time when there was
plenty of drama on the track and the
sponsors were pumping in significant fi-
nancial support.
Over the next few years, television au-
diences soared, particularly in Germany
where fans were rewarded with their first
champion when Schumacher took the 1994
crown for his Benetton team.
Another dominant title for Schumacher
followed in 1995 in his final year at Benet-
ton before heading to Ferrari. It heralded
the beginning of a career that, though often
shrouded in controversy, would earn him a
place among the legends of F1 thanks to a re-
cord-breaking total of seven titles.
His first win at Ferrari came at the 1996
Spanish Grand Prix in poor conditions,
showcasing his skill and allowing audiences
worldwide a glimpse at his superstar status.
Schumacherwentontofinishhisfirstseason
for Ferrari in third position, behind the
seemingly unassailable Williams. He was
able to take the fight to Williams’ Jacques
Villeneuve in 1997, just a single point behind
when the championship rolled into Spain for
the finale. But a shunt with the Canadian put
Schumacher out of the race and ultimately
he was stripped of all championship points
for causing the collision.
He was runner-up in 1998 behind Hakkin-
en and a broken leg in a crash at Silverstone
the following year kept him out of the title
fight. By 2000, Schumacher and Ferrari were
back on form and their dominance of the
21st century began, cementing Schumach-
er’s position in the history books with five
titles from 2000 to 2004.
KEEPING F1’S WHEELS TURNING
It may seem like the biggest decisions in
Formula 1 are made on the track, but in fact
the most powerful people in the sport are
found behind the scenes.
F1’s nerve centre is the paddock, an
oblong tarmac space between the teams’
mobile offices and their transporters which
back up to the pit garage rear doors. The
area was historically a working environment
for team staff, but F1 chief executive Bernie
Ecclestone has made it one of the most
sought-after places to be in world sport.
The motorhomes are where team bosses
discuss race strategy, and drivers eat,
drink and wind down. They are essentially
the drivers’ locker rooms and passes to
the paddock cannot be bought. In itself
this adds to the allure and exclusivity of
the paddock, but that’s just the start. As
interest in F1 accelerated so too did the
desire for celebrities and VIPs to be seen at
the races, and the paddock is the place to
find them.
It shouldn’t be confused with the Paddock
Club which is where corporate guests
network and fuel F1’s multi-million-dollar
budgets. Teams give passes to their
sponsors who, in turn, invite clients to do
business and close deals in the Paddock
Club. Potential sponsors are also invited
by the teams so that they can get an inside
look at what is on offer from a partnership.
It keeps F1’s wheels turning.
The Paddock Club is managed by Austrian
catering firm Do&Co, which has an army
of staff to make the venue work. Hundreds
of staff are involved at each race including
chefs, catering staff, electricians, security,
entertainers, florists, therapists and cleaners.
Security, logistics, construction and
catering tend to be handled by the same
contractors throughout the season meaning
that teams and sponsors know what they
will get at any race no matter where in the
world it is held.
Share this article online via
raconteur.net
With guaranteed TV
exposure, sponsors’
rates increased giving
the teams more money
to spend on cutting-
edge technology
in a bid to win
CVC
BAM
BINO
HOLDINGS
HELLMAN
&FRIEDMAN
LEHMAN
BROTHERS
BAYERNLB
W
AD
D
ELL
&
REED
EM.TV MORGANGRENFELL J.P. M
O
RGAN
BERNIE
ECCLESTONE
FIA
KIRCHGROUP
M
IN
O
R
**
SHAREHOLDERS
OTHER *
MANAGEMENT
2006-present
1997-present
2000
2000-present
2002-2006
2012-present
2000-2003
1999-2000
2002-present
Pre-1997; 2006-present
2013-present
2001-2002
Various
Various
4,363
1,301
2,096
4,169
103
286
2,380
966
1,275
1,275
849
440409
839
839
645
645
628
628
425
425
315
210
105
178
178
1313
286129
286
129
F1 SHAREHOLDER RETURNS ($M)
TOTAL
Dividends
Stake sales
1999 bond issue
Other
* Patrick McNally, Sacha Woodward Hill, Duncan
Llowarch, Judith Griggs, Peter Brabeck-Letmathe,
Sir Martin Sorrell, David and Tracey Campbell
** Norges, Texas Teachers,
Blackrock, Churchill Capital
F1 SHAREHOLDER
RETURNS BY TYPE
IN 2014
8%
10%
24%
59%
SHAREHOLDERS IN DELTA TOPCO*
CVCFUNDIV
34.6%
3.8%
5.2%
8.4% 12.2% 14.1% 20.7%
1%
WADDELL&REED
OTHERFINANCIAL
INVESTORS
LBIGROUP
BAMBINOHOLDINGS
BERNIEECCLESTONE
OTHERMANAGEMENT
FIA
*Ferrari SpA has one redeemable longest standing team share
Stake sales
Dividends
Bond issue
Other
F1 TEAM PRIZE MONEY 2010-2014
WHERE F1’S REVENUE COMES FROM
2010 2011 2012 2013 2014
$659m
$699m
$752m
$798m
$863m
Operating
profit
$519.8m
Race hosting
and broadcast
fees
$1,200.8m
$254.4m
Advertising and
sponsorship fees
Other
$161m
$89.2m
Corporate
hospitality
ticket sales
Vending and
concession
sales
$39.2m $29.4m
GP2
series
sales
Total
$8.26bn
Total
$3.38bn
Total
$1.4bn
Total
$1.07bn
$8.6-10bn
$14.1bn
latest F1 valuation
has been returned to
F1's shareholders
$4.4bn
has been returned to
CVC on its investment in
F1 since 2006
TOTAL
$1,774m
TOTAL
$14.11bn
Source: Formula Money
4. THE BUSINESS OF F1 raconteur.net4 RACONTEUR20 / 03 / 2016
COMMERCIAL FEATURE
How much does it cost
to stage a grand prix?
With just 21 races on the Formula 1 calendar, staging a national grand
prix gives the host nation the keys to a very exclusive club
COST
CHRISTIAN SYLT
T
here is good reason why countries
are so keen to host a grand prix.
With 425 million television view-
ers every year, Formula 1 gives
host nations high-octane exposure and
it puts them on the global sporting map
alongside exotic venues such as Monaco
and Singapore. Unlike the Olympics and
football World Cup, F1 is associated with
glitz and glamour, and takes place every
year. However, it doesn’t come cheap.
On the face of it, Formula 1 races seem like
they should be inexpensive to stage. After
all, the only facilities required are seats for
spectators and a stretch of tarmac for the
cars to race on. In reality this couldn’t be fur-
ther from the truth.
There is no such thing as hosting a grand
prix on the cheap, but the quickest way to
pull it off is to run a street race. They tend to
be located on public roads in cities or on the
outskirts of town, while permanent circuits
are purpose-built venues designed specifi-
cally to host high-level motor races.
Street races are cheaper to stage than those
on purpose-built tracks since they don’t re-
quire construction of a new venue. They also
promote the host nation more effectively as
local city landmarks are seen by the millions
of TV viewers.
However, the annual running costs of
a street race are far greater than those of
one on a permanent circuit. This is be-
cause temporary grandstands need to be
built and the roads need to be upgraded to
F1’s high safety standard, which is known
as grade 1 homologation and is set by its
governing body, the Fédération Interna-
tionale de l’Automobile.
At a total cost of $16 million, staffing is the
biggest single expense for operators of street
races with the marketing and organisation
team alone requiring a budget of around
$6.5 million. In total, running a street race
requires a crew of around 600 with the vast
majority being temporary workers. That ex-
cludes 120 firefighters and 550 marshals who
are often volunteers.
Next comes rental of grandstands which
costs around $14 million for structures
with 80,000 seats. Securing a 3.2-mile
street course with safety barriers and fenc-
ing costs in the region of $8 million which
is also how much it costs to rent the pit
buildings. Vehicle, office and utilities pay-
ments are around $6 million, with a fur-
ther $4.5 million of miscellaneous costs,
including cranes and approximately 350
fire extinguishers which need to be placed
every 15 metres around the track. Capping
it all off is a payment of around $1 million
for insurance.
In total, the annual operating cost of an F1
street race is in the region of $57.5 million.
Then comes the hosting fee. The average F1
race hosting fee is around $30 million, but
the sting in the tail of the contract is that
the price increases by as much as 10 per cent
every year. Most new F1 race contracts are
for ten years so by the end of the agreement
the annual fee comes to $70.7 million thanks
to the escalator clause in the contract.
It means that over the ten-year race dura-
tion, the bill for hosting fees totals an esti-
mated $478.1 million with the costs of run-
ning the race amounting to $575 million. It
brings total expenses to a cool $1 billion.
One way to avoid the high annual running
costs is to host a race on a permanent facility.
While this doesn’t require repurposing roads
and building temporary facilities every year,
it does incur a huge upfront cost.
There are two possibilities. The first is
using an existing circuit, but this means
the promoter has to settle for whatev-
er flaws it comes with and, unless it has
been designed with F1 in mind, it could
also require significant conversion costs
to ensure it is up to grade 1 homologation.
This alone can run into tens of millions of
dollars, but the rewards can be rich.
Last November, the Mexican Grand Prix
returned to the F1 calendar after a 23-year
absence with a race on the Autodromo Her-
manos Rodriguez track in the heart of the
country’s capital Mexico City. It was home
to the previous race and has been given a
new lease of life, with the highlight being
a new section of track weaving through a
baseball diamond which was packed with
fans on race day.
A total of 90,000 fans flocked to the track
on Friday, 111,000 on Saturday and 134,850
for the race on Sunday, generating an over-
all attendance of 335,850. Eye-catching
“Back in Mexico” banners were draped all
around the circuit, but the real impact was
felt further afield.
According to industry analysts STR
Global, the night before the race the av-
erage daily rate in Mexico City hotels was
$258.79, a 128.1 per cent increase on the
same day the previous year. Occupancy
in Mexico City hotels was also up and rose
64.4 per cent on the same day in 2014 to
81.8 per cent. Hotels, therefore, benefit
from the race being in the heart of the city,
which usually isn’t possible when build-
ing a track from scratch as so much space
is required.
The most successful example of this is
F1’s newest purpose-built track, Circuit
of the Americas in Austin, the capital of
Texas. It has hosted the United States
Grand Prix since 2012.
Designing a track from scratch gives the
promoter complete creative flexibility,
which can make all the difference when
it comes to attracting interest in the race.
In its first two years, the US Grand Prix
had the second-highest attendance of any
race, but slipped to fourth in 2015 as it was
awash with torrential rain.
Building the track cost around $270 mil-
lion and then comes the hosting fee as
well as the annual running costs which,
at around $18.5 million, are far lower than
those for a street race.
It means that over a typical ten-year
period, building a grand prix circuit and
hosting an F1 race costs around $933.1
million. Ironically, paying this is the easy
part of the process. The race organisers
then have to sell all the tickets, promote
the event and ultimately showcase the
host country to the world. That is F1’s
grand prize.
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raconteur.net
There is no such
thing as hosting a grand
prix on the cheap,
but the quickest way
to pull it off is to run
a street race
$1bn+
$933m
is spent on hosting fees
and operational costs for
an F1 street race over a
typical ten-year period
is spent on building a new
circuit from scratch and
hosting races over ten years
Source: Formula Money
The British Grand Prix should logically
be the most secure race on the
Formula 1 calendar as its home of
Silverstone hosted the first race of
the championship in 1950 and has the
highest attendance. However, talks are
now underway about selling a lease on
the track to luxury car manufacturer
Jaguar Land Rover to secure the future
of the race. So how did this happen?
Built on the site of a former airfield,
Silverstone is owned by the British
Racing Drivers Club (BRDC), a group of
850 racing luminaries including Nigel
Mansell, Damon Hill, Jenson Button and
current F1 champion Lewis Hamilton.
Over the past six years, the BRDC
has tried to sell a long lease on
Silverstone to reduce the club’s
exposure to risk. The British Grand
Prix is the only event on the F1
international calendar to receive
no government funding. Instead,
Silverstone has to use the proceeds
from ticket sales and has had to boost
prices to match annual increases in
the F1 hosting fee, which comes to an
estimated £17.6 million this year.
The track has also been suffering from
a loss of rental income after leasing
280 acres of surrounding land in 2013
to business park operator MEPC to
clear is debts. The BRDC’s plight has
led to it paying the hosting fee for the
British Grand Prix in arrears meaning
that a letter of credit from bankers is
necessary for the race to go ahead.
As every year goes by the pressure on
Silverstone increases because the price
of its F1 race hosting fee rises by 5 per
cent annually.
REVERSING SILVERSTONE’S FORTUNES
COSTS OF BUILDING A FORMULA 1 CIRCUIT
$75m
TRACK
$50m
PIT BUILDING/
PADDOCK CLUB
$30m
MAIN
GRANDSTAND
$50m
EARTHWORKS AND
INFRASTRUCTURE
$30m
SPECIAL
ELECTRONICS
$15m
TEAM
BUILDING
$15m
MEDIA
CENTRE
$5m
MEDICAL
CENTRE
TOTAL
$270m
Source: Formula Money
COMMERCIAL FEATURE
W
hat do sponsors get from Formu-
la 1? Most fans think the answer is
pretty short. Sponsors get a logo
on the car, plus a few tickets for guests, a
marketing hook and that’s about it.
In fact, the relationship between
teams and sponsors can run deep. In
the case of Williams Martini Racing and
Randstad it’s a technical partnership
which covers everything from knowl-
edge-sharing to developing the next
generation of global engineering talent.
The logo on the car is merely a symbol of
a successful relationship.
Randstad is a great example of how
sponsorship really works. Randstad is
a world-leading HR services provider,
founded in the Netherlands in 1960. It
finds jobs for all sorts of workers, from
temporary labourers through to sen-
ior management at the world’s biggest
companies. The partnership with Wil-
liams began ten years ago, during which
time Randstad has repeatedly extended
and expanded the deal. It’s been a huge
success for both parties.
“The relationship began because of our
mutual need to understand the future of
engineering and IT,” says Randstad direc-
tor international marketing Joost Schriev-
er. “We are one of the world’s biggest re-
cruiters in engineering and IT. It is vital that
we understand what technologies and skills
are going to be needed in the future. For-
mula 1 gives us that insight.”
Fans of the sport will give you chapter
and verse on racing technologies which
have later filtered down to the main-
stream. Carbon brakes, sequential gear-
boxes, hybrid powertrains and traction
control began in Formula 1. Today they
are commonplace in road cars.
Furthermore, the fine tuning meth-
odologies used by the teams is a decade
ahead of anywhere else. Look at the aer-
odynamic computer simulations or the
use of industrial 3D printing to manu-
facture futuristic components. Being a
partner keeps Randstad immersed in the
innovations which will be shaping engi-
neering and IT in the years to come.
“It’s vital we know these things,” says
Mr Schriever. “It means we can give in-
formed advice to our clients and candi-
dates. That elevated knowledge puts us
above our rivals.”
There is a pay-off in terms of corpo-
rate culture. The electrifying energy of
the sport is the stuff of legend. It lifts
and inspires everyone involved. “We
love that we have shared values,” says
Mr Schriever. “Employees at Williams
and Randstad have the core goal of
striving for perfection. They need the
best drivers, the top engineers, peak
strategy and a great team to win.
HOW SPONSORSHIPS
REALLY WORK
Sponsoring a Formula 1 team is much more than getting a logo on the car
“At Randstad we work to get the best
candidates, the top talent and the opti-
mum recruitment strategy for our clients
so they can achieve their ambitions. Get it
right and magic happens. The F1 connec-
tion is a way for us to communicate this
mindset throughout our organisation, not
only in the UK but all over the world.”
Above all, the partnership offers a
radical way to deal with the biggest prob-
lem in the STEM (science, technology,
engineering and maths) sector, namely
how to encourage new talent to enter.
The UK alone has a shortfall of 40,000
science and technology graduates a
year, according to the government. A
Department for Business, Innovation &
Skills survey revealed only 15 per cent of
British children would consider a career
in engineering, with 40 per cent calling
it “dirty” and half calling it “boring”.
The problem is so severe the F1 teams
are worried it will affect their ability to
innovate. “I think that engineering has
a very poor image in the UK,” says Pat
Symonds, Williams chief technical of-
ficer. “That isn’t helped by the fact that
when you book someone to come and
mend your washing machine, they call
themselves an engineer.”
To address the issue, Randstad and
Williams created an elite institution. The
Randstad Williams Engineering Academy
is designed to identify talented young
engineers from around the world and
provide them with advice, mentoring and
guidance to secure a job in Formula 1 or
the career path of their choice. The cur-
riculum focuses on e-learning through a
web portal. Students must submit an an-
nual essay-based project. And through-
out the experience they are mentored
and tutored by the engineers at Williams.
Mr Symonds says he believes the ex-
perience can have a real impact on the
lives of the students enrolled. “I think at
Williams we have recognised there are
some very good graduates coming out
of university these days who are very
specialised and very on top of their sub-
jects, but sometimes lacking the over-
view some of us older engineers have
gained over the years,” he says.
“These days it gets more difficult for
students to get that overview. So we de-
cided to target students who have those
elements of leadership and cross-func-
tional engineering, who in themselves
could motivate others – essentially
looking for the students who will be-
come top F1 engineers in the future.”
Entrants come from all over the
world, including Portugal, Bahrain, Aus-
tralia, United States and UK.
The experts at Williams adore the Acad-
emy. Mr Symonds says: “It is a real joy to
see employees, who not that many years
ago were students themselves, putting
so much work into helping their younger
colleagues and thoroughly enjoying the
experience. It gives me a lot of pleasure.”
And the good work extends far beyond
the small number of lucky individuals
participating. Students globally will be
inspired to see engineering in a new light,
one that reflects the high-tech nature of
the job, which is as advanced, challeng-
ing and rewarding as anything in financial
services or coding, for example.
“The Academy shows what Formu-
la 1 can achieve,” says Randstad’s Mr
Schriever. “Our partnership has the
power to change perceptions across the
world and inspire a new generation. That
is why we get so excited about our in-
volvement with the sport.”
It may also get a few fans to think
again about the role sponsors play in the
sport. The logo on the car? It really is
just the start.
www.randstad.co.uk
The relationship began
because of our mutual need
to understand the future of
engineering and IT
10yrs
5. 20 / 03 / 2016RACONTEUR raconteur.net 5THE BUSINESS OF F1
Two-way traffic with F1 partnership deals
Consumer and business-to-business brands that partner with Formula 1 teams pay big bucks and get different types of bang for their money
PARTNERS
CHARLES ORTON-JONES
QUARTER PAGE
ADVERTORIAL
COMMERCIAL FEATURE
S
ponsors or Formula 1 partners get a
global television audience to mar-
ket their brand. But it’s hard to see
the value of having a tiny logo on a
car usually found ten places off the lead in
race far from the TV cameras. So, what’s
the payback?
One man who knows is Mark Gallagher. As
head of sponsorship for Jordan Grand Prix
between 1991 and 2004, and then founder
of Red Bull’s sponsorship department, he
has experience of getting some big brands
to hand over some awfully big cheques.
“For starters, we don’t talk about sponsor-
ship,” cautions Mr Gallagher. “It smacks of
patronage. We want a partnership. Teams
need to provide a wide range of benefits.
These will vary depending on the brand.
“For example, Vodafone is a consumer
brand, so it wanted visibility on the car and
at circuits, and a chance to market to the
wider public. Other sponsors, the majori-
ty in fact, are business-to-business. They
don’t have major branding needs. They use
the sport for other reasons. Companies in
data storage or analytics use F1 to create a
technical case study to impress clients. The
logo is not a big deal for them.”
A classic example of the latter is Ferrari
partner Infor. This privately held Ameri-
can software company builds industrial IT
systems for multinationals. Anna Wright,
Ferrari sponsorship manager for Infor, con-
firms that the image of a mutual working
partnership is totally true.
“Ferrari use Infor software for the building
of their GT cars. The CIO [chief information of-
ficer] of Ferrari has just done an interview with
amanufacturingmagazinetalkingabouttheir
four-year plan using our software,” she says.
Trips to the Ferrari HQ in Maranello max-
imise the connection. “We take customers
and potential customers to the Ferrari fac-
tory. We do events at Maranello. They get
to drive cars around the track. Being able
to talk to our customers about our work
with one of the most respected brands in
the world is a very big deal. It has a huge
impact,” says Ms Wright.
Even consumer brands take F1 partner-
ships way beyond the obvious advertising
stuff. Take the deodorant brand Sure Men.
It supported Lotus in 2014 and this year is
with Williams Martini Racing. Yes, Sure
Men has a snazzy Williams special edition
product coming out. But there’s so much
more to the deal.
“There are three pillars,” says Willem
Dinger, F1 manager at Unilever, which
owns Sure Men. “From a brand per-
spective, F1 and motorsport gives us a
great way to engage with men and their
passion points. Our campaign is about
protection and performing under pres-
sure. Motorsport allows us to land those
messages.” The drivers and engineers
will all be applying Sure Men at races to
assist this campaign.
The second ingredient is the tie-in with
the Williams Advanced Engineering, the
skunk works of the team focused on the
commercial sector. “This is a two-way
knowledge-sharing exercise between Unile-
ver and Williams,” says Mr Dinger.
“They are helping us improve our spray
drying towers, using thermal modelling to
cut energy consumption, so this relation-
ship gives us a chance to share best practic-
es and learnings.”
And the F1 connection gives Unilever
more clout when negotiating with super-
markets. “In Brazil and Russia we do barter
deals. We give them assets to get ourselves
better shelf position and visibility in-store.
It’s just another example of the benefits we
get from our involvement in F1.”
The sport is fun. Partners get to bring cli-
ents to races. It’s a major benefit. Mr Gallagh-
er recalls “wild days” at Jordan: “I am Irish,
Eddie Jordan is Irish and we played on that.
We were known as the party team. We did
the Silverstone rock concerts and they were
massive. We had George Harrison coming.
At our Monaco events we had Bono and U2.”
Brands tap into this. In the 1990s, teams
like Jordan did risque photoshoots with
Being able to talk
to our customers
about our work with
one of the most
respected brands
in the world is a very
big deal
young models dressed in the livery. To-
bacco companies such as Benson & Hedges
achieved incredible exposure. “It was very
nineties, but the tabloids and lads’ mags
lapped it up,” says Mr Gallagher.
These days, events are a little more taste-
ful or sensitive and far more imaginative.
Natalie Krushner, founder of NKrush, an
agency which helps teams and grand prix
host cities generate
publicity, says imagi-
nationisthelimitwhen
it comes to promotion-
al events. “We’ve done
things like drive-in
movie cinemas at the
track or hosting a fash-
ion show there. We’ve
held roundtables at
universities to engage
the students,” she says.
The essential point
is that brands can get
whatever they want
from a deal. Ferrari
sponsor Kaspersky Lab
Anti-Virus has used its
deal to learn about cyber security in cars,
which is a growing concern as vehicles
get hooked up to the internet. It has also
launched into cyber security for factories
and component makers.
“We have learnt how to speak the auto-
motive language from Ferrari,” says Alex
Moiseev, European managing director of
Kaspersky Lab. “We are now talking to car
vendors and OEMs [original equipment
manufacturers] about our products.”
German technology company SAP has
made huge strides through its tie-up with
McLaren. SAP provides cloud storage and
resource-intensive computing. It offers
McLaren use of its ultra-fast SAP HANA
platform to give the F1 team advanced da-
ta-crunching capabilities.
McLaren provides an angle for countless
case studies and magazine articles looking
at the platform. It’s a good way to show-
case the technology
to potential clients in
the corporate world.
Again, there aren’t too
many consumers who
make the connection
between the SAP logo
on the car and the
world of in-memory
computing. It doesn’t
matter.
Ultimately, it’s the
brands that decide
what they get out of
the sport. “My old mate
David Coulthard is
forever being asked to
do incredible things,”
says Mr Gallagher. “Red Bull got him to
drive an F1 car on the helipad of the Burj Al
Arab [Dubai skyscraper]. They put it on You-
Tube and it’s one of the most-watched clips
they’ve ever done. It shows the creativity
that goes on.”
In F1 anything is possible. That’s why
brands keep coming back.
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raconteur.net
They are helping us
improve our spray drying
towers, using thermal
modelling to cut energy
consumption, so this
relationship gives us a
chance to share best
practices and learnings
01
Jenson Button of
McLaren, whose
partners include
Mobile1, SAP and
Johnnie Walker
02
Lewis Hamilton of
Mercedes, whose
partners include
Petronas, Qualcomm,
Pirelli and Bose
03
Sebastian Vettel
of Ferrari, whose
partners include
Kaspersky, Hublot
and Shell
01
02
03
GettyImages
GettyImages
GettyImages
COMMERCIAL FEATURE
SINGAPORE IN
POLE POSITION
FOR HOSPITALITY
September’s Singapore Grand Prix is a date for your business diary
E
very race in the F1 calendar has a different
mood. Australia is the curtain opener.
Monaco is about drinking champagne
with supermodels on superyachts. Monza is all
about the tifosi morphing into a cacophonous
sea of red for Ferrari fans.
But if you want to make deals, meet industry
leaders and discover contacts from across the
globe, then Singapore is the race to be at.
The nation’s status as a major financial and
commercial hub with many multinational
corporations headquartered in the republic
makes it an ideal venue for business networking.
In fact, Singapore was crowned by the World
Bank as the “world’s easiest place to do
business”forthetenthconsecutiveyearin2015.
The island boasts one of the best airports
in the world which is served by many leading
airlines. It’s a mere 25 minutes’ drive from
numerous downtown five-star hotels,
shopping malls and coveted restaurants, all
which form the surroundings of the iconic
Marina Bay Street Circuit.
Set against the backdrop of heritage
buildings, modern architecture and a stunning
skyline,it’snothardtoseewhythe“jewelinthe
Formula 1 crown” continues to attract record
crowds and attention across the globe.
Since the inaugural event in 2008, the
grand prix draws a myriad of audiences
from business executives looking to reward
their clients and employees, people who
appreciate great music and entertainment, to
Formula 1 race fans keen to witness the world’s
finest drivers go wheel-to-wheel under lights
at speeds of up to 320km/h.
Having the race at night also means
executives can make full use of the day to
conduct their business activities before
convening at the Singapore Grand Prix in
the evening to wine, dine and network. Many
clients plan their company’s key activities
during the race week, leveraging the appeal of
the night race to reward loyal customers and
forge stronger business relationships.
The entire experience is orientated towards
the more discerning traveller. There is room
for more than 10,000 hospitality guests daily
at the Formula 1 Paddock Club, Sky Suite, Club
Suite and The Green Room where guests enjoy
world-class meal services, free-flow wines and
dedicated service by suite ambassadors, on
top of the spectacular views of the race action
from air-conditioned trackside suites.
Guests are spoilt for choice by a wide
spectrum of food and beverage offerings.
Previous editions of the night race showcased
signature dishes from celebrity chefs Jean-
Georges Vongerichten and Nobu Matsuhitsa,
as well as award-winning modern fusion cuisine
from local culinary talents. Specially built
bespoke spa facilities at selected locations
allow hospitality guests to enjoy a head-to-toe
pampering experience.
Once the sun sets, the Circuit Park
transforms into a massive party, complete with
mega-concerts in between track activity – all
complimentary for ticket holders as part of the
uniqueeventexperience.KatyPerry,Maroon5,
Noel Gallagher, Robbie Williams, Pharrell
Williams and Tom Jones are just some of the
superstarswhohaveperformedattheFormula1
Singapore Grand Prix.
The atmosphere can be felt at the
Paddock too. “The whole weekend feels
different.Youcanfeelthevibe–andthetension
and anticipation climb higher and higher as we
get closer to the race itself on Sunday night,”
says McLaren-Honda driver Jenson Button.
ReigningworldchampionLewisHamiltonadds:
“This race is always a highlight of the season: a
great city which looks really spectacular under
the lights with the tricky street circuit below –
my favourite kind of track to drive.”
Come September 16-18, downtown Singa-
pore will once again host the Formula 1 night
race with a vibe so incredible, nothing else
comes close. For a hospitality experience
that’s second to none, e-mail hospitality@
singaporegp.sg or call (+65)6731 5900. For
general tickets, visit www.singaporegp.sg
The F1 FORMULA 1 logo, F1, FORMULA 1, FIA FORMULA
ONE WORLD CHAMPIONSHIP, GRAND PRIX and
SINGAPORE GRAND PRIX and related marks are
trademarks of Formula One Licensing BV, a Formula One
group company. All rights reserved.
If you want to make deals,
meet industry leaders and
discover contacts from
across the globe, then
Singapore is the race to be at
LOGO
6. THE BUSINESS OF F1 raconteur.net6 RACONTEUR20 / 03 / 2016
directly into road cars. We are using some
technology for cooling invented here and
that technology is being used in the next
generation of S-Class as well. It is all be-
cause of the development on-track abso-
lutely,” he says.
“So that is happening. It is a reality and this
is why the hybrid six-cylinder turbo engines
are so important for us.”
Mr Wolff has experience on both sides of
the fence. He drove in both the Austrian
and German Formula Ford championships
between 1992 and 1994, when he scored
a class win in the Nürburgring 24 Hour.
Shortly afterwards his driving career came
to an abrupt halt as his sponsorship was
withdrawn through no fault of his own.
Countryman Karl Wendlinger had crashed
heavily at the Monaco Grand Prix and, with
both Ayrton Senna and Roland Ratzenberger
having lost their lives just a fortnight earlier,
Mr Wolff’s sponsor Alu König Stahl didn’t
want to remain in motorsport.
Mr Wolff made his return to racing in the
early-2000s when he finished sixth in the
2002 FIA GT Championship with further vic-
tories in both the Italian GT Championship
and the 2006 Dubai 24 Hours.
However, the main focus throughout the
second stint of his career was on manage-
ment. Investing in the Williams F1 team set
him on his way, until he got to Mercedes.
Engineers from Mercedes and its parent
company Daimler are placed in the team
to broaden their experience and vice
versa. It benefits both sides in a unique
way. “The benefit is getting experience
in a different level. If you are a high-po-
tential engineer in Stuttgart, you have
the ability of diving for a year into the F1
world which is a much smaller organisa-
tion and is less hierarchical. It gives you a
different edge,” says Mr Wolff.
Although Mercedes owns 100 per cent of
its F1 engine division, it has a 60 per cent
stake in the team with 30 per cent in Mr
Wolff’s hands and the remainder owned
by former F1 champion Niki Lauda. Its real
impact is felt far beyond the team itself. Re-
search in 2013 revealed that the Mercedes
F1 team and its engine division spent $195.6
million with 1,500 UK-based suppliers, cre-
ated 125 jobs during the year and had a total
wage bill of $109.4 million, bringing the eco-
nomic benefit to $305 million.
COMMERCIAL FEATURE
TECH TRANSFER
CHRISTIAN SYLT
SAM HALL
TOP TIPS
CAROLINE REID
T
he eternal question in Formula 1 is
whether the cost of competing pays
off. Car manufacturers spend hun-
dreds of millions of dollars annu-
ally on racing in return for brand exposure
and to help develop their road cars. If anyone
knows whether it works, it’s Toto Wolff.
Mercedes bought its F1 team in 2009 for
an estimated $120 million from former
boss Ross Brawn and other management
members. For the past two years it has
raced to victory with British superstar
Lewis Hamilton at the wheel and Mr Wolff
at the helm. It hasn’t just dominated the
standings with its own outfit, but also with
all the teams that use its engines.
Grand prix spin-offs
impact road cars
How much is winning the Formula 1 title really
worth? A lot, according to Toto Wolff, boss of
reigning champions Mercedes
Williams is powered by a Mercedes and
finished in third place last year; as were
Force India and Lotus that finished fifth
and sixth respectively. Mercedes made the
most of changes to F1’s regulations in 2014
which saw 2.4-litre V8 engines switched to
more-efficient 1.6-litre V6 turbo hybrids.
None of the teams had any experience with
the V6 so it levelled the playing field and
Mercedes came out on top. It didn’t just
help it on track, but off it too.
Mr Wolff reveals that the development work
on the new V6 at the Mercedes F1 engine shop
in England has led to advancements in the
road cars it manufactures in Germany.
“Many people say technology transfer is
just a marketing story – I can tell you from
here, it is not. The S-Class is running on
a six-cylinder turbo engine, and the way
we optimise our engines in terms of effi-
ciency and power deployment translates
Many people say
technology transfer is
just a marketing story –
I can tell you from
here, it is not
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raconteur.net
Track record can teach
business a thing or two
There are few working environments quite like the high-speed,
high-pressured world of Formula 1, but that doesn’t mean there aren’t
lessons to be learnt by other businesses
1.NEVER UNDERESTIMATE THE PERSON
SITTING AT THE TABLE OPPOSITE YOU
Former Ferrari driver and ten-time race
winner Gerhard Berger explains: “I re-
member as a racing driver going into the
season, you could easily think that you
were great and everything was under con-
trol. But someone else comes good and
strangely you realise that you don’t have
it. So you must make sure you always re-
spect the competition. It’s the same when
you do business – you need to make sure
to always keep your eye on the other side
of the table.”
2.TEAM WORK IS FAR FROM EASY
According to former Jordan team head of
marketing Mark Gallagher there is more
than one type of teamwork and under-
standing how they interact can be the
key to a successful business. Mr Gallagh-
er says it’s not just about the impressive
ability of a group of mechanics to build
a car or undertake a pit stop, or of engi-
neers to design and develop a car. “I’m
talking about the complete team from
senior management down to factory floor
sweeper and the degree to which everyone
understands the leadership vision, buys
into it and genuinely works together to
succeed,” he says. This is something that
a Formula 1 team must get right if it is
to make it to the top step of the podium.
“Team work is easy to talk about, difficult
to unlock,” Mr Gallagher adds.
3.PLAY A LONG-TERM GAME
It’s no accident that the most successful
teams in F1 have been around for a long
time. Predictions of quick success have
typically met with failure and usually
demonstrate a complete ignorance of the
complexity of the sport, says Mr Gallagh-
er. He cites the example of the BAR team,
which debuted in F1 in 1999. The team
management foolishly predicted they
would win their first race. “They not only
showed how little they knew about F1, but
ultimately set themselves up for a huge
and immediate fall, which is of course
what happened,” he says.
Mr Gallagher also draws attention to
big-spending car manufacturers who have
entered the sport, only to quit when they
failed to match the success of their rivals.
“To some extent several of the car manu-
facturers who entered F1 during the 2000s
also showed they didn’t understand the
importance of building a long-term plan
for success, learning from mistakes and
developing strategies to compete effec-
tively against teams which had dominat-
ed the industry for 20 years,” he says. “So
when success continued to elude them,
and then the economic going got tough,
they were gone.”
Mr Berger agrees: “You just have to stay
with it and keep pushing. That was the case
when I was on the race track and that’s the
same on the business side of things. The
real success stories in F1 are the stayers
who are there year after year, like Ferrari,
McLaren and Williams. They all have good
years and bad years, and they accept those
difficult years and this is an important
strength. It’s heavily competitive and the
good times will come – and that’s the same
in business.”
4.DESIGN IS KING
“Small businesses tend to innovate to try
to steal a march on the bigger opposition,
especially in terms of entering the mar-
ketplace,” says former Jaguar team prin-
cipal Tony Purnell. “This approach needs
a degree of brilliance in product develop-
ment, something which tends to be a mix
of engineering cleverness coupled with a
razor-sharp perception of what’s important
to the marketplace,” he says. Just occasion-
ally these two skills combine in one person.
Mr Purnell witnessed this following exten-
sive changes to aerodynamic regulations in
2009. He says: “[Red Bull Racing technical
director] Adrian Newey acted like Steve Jobs
at Apple in seeing what was really required
and not just following everyone else, cou-
pled with a big war chest of money to fund
the development. After nearly five years of
failing at product refinement, Newey leapt
over everyone.” Red Bull went on to win the
next four championships.
Toto Wolff in the pit during practice for the
Austrian Grand Prix in June 2015
Danii Kvyat and the Red Bull team in the pit during
the Malaysia Grand Prix in March 2015
COMMERCIAL FEATURE
I
ndustrial 3D printing is one of the most
exciting breakthroughs in manufacturing.
It’s used by Nasa to build space shuttle
parts. And it’s economical enough for engi-
neering students to play with as they gener-
ate their own innovative prototypes.
Formula 1 has been a fanatical user of in-
dustrial 3D printing for a while. All F1 teams
rely on it both in the development phase
and to make race parts. It allows the teams
to create components which would be im-
possible to craft using traditional methods.
Williams grand prix engineering opera-
tions director Simon Wells is a vocal evan-
gelist. “Industrial 3D printing allows us to
bypass traditional methods for manufac-
turing prototype parts, such as producing
patterns, moulds and set-up tooling,” he
says. “This enables us to go straight from a
CAD [computer-aided design] model to the
machine. Within a few hours you have this
physical part ready to test.”
By now most people are familiar with
how 3D printing works. The most common
version at the industrial level is laser sinter-
ing. Layers of powder are fused by a laser
(hence the acronym AM or additive man-
ufacturing). It’s ideal for making compo-
nents of all sizes from micro-scale to large
and complex parts.
Mr Wells says his F1 engineers use laser
sintering for all manner of jobs. “AM ma-
chines are used for producing low-volume
complex prototype parts, mostly for aer-
odynamic development, but also for some
full-size F1 car parts. This technology allows
us to produce these parts in incredibly short
time frames,” he says.
Williams’ new spin-off operation, the Ad-
vanced Manufacturing skunk works, is also
a big user of industrial 3D printing. Mr Wells
reveals: “In Williams Advanced Engineering
we use the machines for producing proto-
type parts for a variety of applications. These
range from automotive and motorsports
projects to aerospace and defence projects.
In this area the technology allows us to pro-
duce prototype working models without in-
curring high tooling and set-up costs.”
Naturally, F1 teams demand the absolute
best of any technology they endorse, which
is why Williams uses AM machines by EOS.
In November 2015, Williams acquired a
third EOS machine to complement its two
EOS polymer printers. The EOSINT P 760
is a modular plastic AM system capable of
building components of 700mm x 380mm
x 580mm. Two lasers fuse the polymer
powder at an astonishingly quick rate of
700cm3 an hour.
“We chose EOS because we identified
them as a world leader in additive manu-
facturing technology,” says Mr Wells. “We
want to work closely with EOS to establish
focused areas of development where we
can realise the benefit that this technology
delivers and use it to improve the perfor-
mance of the Formula 1 car.”
For EOS, the Formula 1 link is proof of
the maturity of the technology. Stuart
Jackson, EOS regional manager for the UK
and Ireland, says: “There is a perception
that F1 takes risks in the pursuit of glory.
That is completely wrong. F1 is an arena
where the slightest mistake would be ex-
tremely costly, both in terms of human life
SHAPING THE FUTURE
OF DESIGN WITH
INDUSTRIAL 3D PRINTING
Formula 1 and the aerospace industry are blazing a trail using industrial 3D
printing to create innovative engineering parts
and in financial outlay. These teams can’t
mess around. They need standards of re-
liability which exceed any other industry.
Maybe only aerospace is similar. Which is
perhaps why aerospace was currently the
fastest adopter of industrial 3D printing
and a huge market for us at EOS.”
Other sectors are following close be-
hind. These include medical devices, auto-
motive, consumer goods, logistics, oil and
gas, and even field sports. Athletes are de-
manding bespoke casts for broken bones
and using industrial 3D printing to utilise
the optimum materials.
A wonderful demonstration of the pow-
er of industrial 3D printing can be seen in
F1’s little cousin, Formula Student, a race
series run by the Institution of Mechani-
cal Engineers for undergraduates to help
them learn a variety of technical skills in a
fun environment. In 2012, the Rennteam
Uni Stuttgart won support from EOS. They
used CAD software from Autodesk Within
to design a new type of “knuckle”, which
connects the wishbones, axle, track rod and
breaking. It’s a key component.
The goal was to make the knuckle
more rigid, yet lighter. Yannick Löw, from
Rennteam Uni Stuttgart, explains that the
old method was exhausted. “We produced
the part using the classic precision casting
process. This, of course, led to limitations
in freedom of form, which meant that the
part’s potential could never be fully real-
ised. Even back then we’d decided that for
the 2012 season we’d investigate new, inno-
vative ways of manufacturing the steering
stub axle,” he says.
Industrial 3D printing meant proto-
types could be churned out without lim-
it. Each iteration can be subtly tweaked.
By contrast, metal casting needs a fresh
cast each time, which is time consuming.
Furthermore, 3D printing permits new
shapes deemed impossible with casting.
Lattice micro-structures of variable den-
sities, found in nature, are a forte.
“Our machine honed powdered metal
granules with the help of a laser, layer by lay-
er, into the required part,” explains Nikolai
Zaepernick, director of strategy and busi-
ness development at EOS.
The weight of the part was reduced by
660gms, saving Rennteam Uni Stuttgart
35 per cent, and at the same time the en-
gineers succeeded in increasing rigidity by
20 per cent – big numbers in motorsport,
which translate into faster lap times and re-
duced fuel consumption.
The result? Rennteam Uni Stuttgart won
the Formula Student Germany 2012 title.
This sort of technology is now accessible
to all, says EOS’s Mr Jackson. “If a com-
pany wants to experiment with industrial
3D printing, they can get parts made by a
third party. For example, Digits2Widgets
in Camden Town will print on demand in a
variety of materials.”
The first step is to call EOS. “There is a
list of third-party service providers on our
website,” says Mr Jackson. “It covers 50
machines in the UK alone. We can talk you
through the whole process and introduce
you to a partner who owns the right ma-
chine for you.”
When companies become habitual us-
ers then they can think about acquiring
a machine.
“We would encourage anyone involved
in cutting-edge design to take a look at in-
dustrial 3D printing,” advises Mr Jackson.
“It offers forms and shapes which have nev-
er been done before. The cost is incredibly
low. And the speed of production is so fast.
“That’s why F1 teams are relying on it. All
you need to do is get in touch and we can
talk about the potential of industrial 3D
printing to change the way you think about
your products.”
To find out more visit www.eos.info/en
We would encourage
anyone involved in
cutting-edge design to
take a look at industrial
3D printing
Laser sintering build process in action
EOS
Powder-based layer-by-layer additive manufacturing process
EOS
GettyImagesGettyImages
7. 20 / 03 / 2016RACONTEUR raconteur.net 7THE BUSINESS OF F1
TV audience
and marketing
keep F1 going
According to the latest figures, Formula 1
teams made a combined £217-million net
loss in 2014 – so why would anyone want
to invest in them?
FUNDING
CHRISTIAN SYLT
F
ormula 1 teams are considered to be
the glitziest trophy assets of them
all. With logos on the cars of some
of the world’s most well-known
brands and hundreds of millions of dollars
of prize money flowing into their coffers,
teams appear to be turbocharged cash cows
for their owners. In fact, it’s not so simple.
F1 teams are usually either run to break-
even or at a loss which involves the owners
pumping in more than the teams make in
revenue. And they do it in pursuit of victory.
The additional funds
tend to come from the
owners’ pockets or
debt and it is invested
on the understand-
ing that it is better to
win on the track and
make no profit rather
than make money
and finish low down
the standings.
Victory on the track
increases a team’s abil-
ity to bring in more
money from sponsor-
ship since brands are
prepared to pay more to be associated with
a winner. While team owners can get a finan-
cial return from selling a team in the long
run, what do they get when it is running to
break-even?
The answer is that if the owner is a private
individual, such as Sir Frank Williams who
has a 50.8 per cent stake in his eponymous
team, they can take an annual salary.
If the owner of a team is a company which
sells products, such as Mercedes, Ferrari, Re-
nault or Red Bull, the benefit they get while
the team runs to break-even comes from tel-
evision exposure of their logos on the cars.
It keeps the owner happy, but it is tougher to
keep the team ticking over.
The teams’ revenue generally comes from
three sources with each providing a similar
amount. They are all fuelled by F1’s global
television audience which totals 425 mil-
lion viewers annually, according to the
latest figures. The first key revenue source
is sponsorship and in this field money usu-
ally talks. The higher the cost, the greater
the exposure on the car.
However, some sponsors do not even get
presence on the cars and are instead known
as suppliers. This is a cheaper alternative
and often does not involve a cash cost. In-
stead, the brand supplies equipment or
services and, although
they don’t get exposure
on TV, they usually
receive many of the
perks which come with
on-car sponsorships,
such as passes into
F1’s exclusive paddock,
use of the team logo in
advertising and some-
times even driver ap-
pearances at company
functions.
Sponsorship com-
prises around 37.2 per
cent of the teams’ rev-
enue with 34.9 per cent coming from their
profit-share with F1. The series pays them
a total of 63 per cent of its annual profits as
prize money which amounted to $863.1 mil-
lion in 2014. Winning the title that year gave
Mercedes an estimated $109.2 million.
Payments from owners provides around
19 per cent of revenue and the market-
ing benefit from the exposure of the team
on TV compensates for this investment
despite it being intangible income. The
remaining 8.9 per cent of team revenue
comes from miscellaneous sources, such
as drivers who pay to race. They are a hall-
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Victory on the track
increases a team’s ability
to bring in more money
from sponsorship
since brands are
prepared to pay more
to be associated
with a winner
This year the Haas Formula 1
team becomes the first American
outfit in F1 since the 1980s and
has already made an impact.
Before the season began,
Haas completed a total of 474
laps in testing which is roughly
the equivalent to the distance
covered in eight races – not bad
for a new team.
Time has been the key to Haas’s
success so far. In mid-2014 Gene
Haas, the American tycoon who
is bankrolling the team, decided
to delay his F1 entry from 2015 to
2016. In turn his team didn’t have
to sign up to racing regulations
until late last year, which meant
that it could test for longer
without restrictions.
It also gave Haas time to snap up
equipment at bargain prices from
the Manor F1 team, which crashed
into bankruptcy late in 2014.
His shopping list included
Manor’s factory in Banbury and
around 250 staff work for the
Haas F1 race operations there.
The design division is based in
North Carolina at the premises
of the championship-winning
NASCAR stock car team which
Haas co-owns.
He is also taking advantage of a
new regulation which allows teams
to buy more parts than before
from established F1 marques.
Buying in more parts reduces
start-up costs and Haas is using a
Ferrari engine with a chassis made
by Italian manufacturer Dallara.
Initial costs of its UK division
were £10 million, in its first
five months, which is low by F1
standards. However, according to
F1 boss Bernie Ecclestone, Haas
will need to spend much more
than that. “A billion would last a
new team owner four years,” he
says. Time will tell whether Haas
has got what it takes.
CASE STUDY:
BANKROLLED BY A TYCOON
FORMULA 1 TEAMS’ NET PROFIT/LOSS 2010-2014 (£M)
Source: Team accounts/Formula Money
mark of teams at the bottom of the grid and
there is a huge gulf between their budgets
and those of the top performers.
In 2014, a total of nine of the teams filed
publicly available accounts with the only
exceptions being Ferrari, as its team is
a division of the famous motor marque,
and Sauber which is based in Switzerland.
The nine teams together made £1.4 billion
in revenue and the biggest winners were
former champions Red Bull Racing which
alone accounted for 22 per cent of the total.
The team’s biggest benefactor is Austrian
drinks company Red Bull which poured in
£60.5 million of its £204.6-million revenue.
Although Red Bull had the highest reve-
nue, it only grew 3.6 per cent on the previ-
ous year as the team already had the biggest
budget. It hasn’t translated into on-track
success as Red Bull struggled with F1’s
switch in 2014 from a 2.4-litre V8 engine to a
more environmentally friendly 1.6-litre tur-
bocharged V6 hybrid. The team won four
consecutive F1 championships with Ger-
many’s Sebastian Vettel, but was dethroned
in 2014 by Mercedes driver Lewis Hamilton
and finished in fourth place last year.
The worst performer was the Marussia F1
team as its revenue reversed by 57 per cent
to £26.2 million in 2014 when its owner,
Russian tycoon Andrei Cheglakov, stopped
paying the bills. The team has only scored
two points since joining F1 in 2010 and fin-
ished ninth in the standings in 2014.
In October 2014, Marussia crashed into
administration with total debts of £63.6
million and was rescued at the start of last
year by Stephen Fitzpatrick, the boss of
energy firm OVO. It was renamed Manor
and Mr Fitzpatrick reportedly planned
to invest £30 million of his own money
in the team. It was badly needed. In the
year ending December 31, 2014, Marussia’s
net losses increased more than ten-fold
to £52.8 million driven by reduced spon-
sorship and an increase in costs from the
switch to V6 engines.
Alexander Rossi of F1 team Manor, which saw losses
increase more than ten-fold to £52.8 million in 2014
Ferrari and Sauber did not file publicly available accounts
Caterham
-33.4
-38.5
-15.4
4.8
-57.7
-4.7
-52.8
-3.1
15.1
-24.2
-31.6
-51.1
-76.9
0.7 1 0.5
-56.8
-64.9
-8.6
1.4 0.8 1
-2.4
9.9
-40.3
Force India Manor
(Marussia)
McLaren Mercedes Red Bull Renault
(Lotus) Toro Rosso Williams
2012
2013
2014
GettyImages
FORMULA1
TM
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8. THE BUSINESS OF F1 raconteur.net8 RACONTEUR20 / 03 / 2016
Wise words
from a former
F1 champion
Three-times Formula 1 champion Sir Jackie
Stewart, who founded an F1 team which he
sold to Ford in 1999 for a reported $100
million, shares his views on the sport in 2016
INTERVIEW
JOE DIAMOND
KATE HEWITT
T
here is an aura surrounding Sir
Jackie Stewart. The waiters fuss
around the 76-year-old Scot as
he sits down for tea at his usual
table in London’s smart The Berkeley ho-
tel. He seems at home among the ornate
wooden panelling and fine china.
Sir Jackie, who was knighted in 2001 for ser-
vices to motorsport, is one of Formula 1’s elder
statesmen. Having gone from cockpit to pit
wall and several ambassadorial roles within
the F1 paddock, he is one of a few people well
placed to comment on just about all aspects
of the sport. And comment he does.
The beauty of interviewing Sir Jackie is that
one short question will yield an expansive
answer dripping with detail. One of his roles
is as an ambassador for luxury watch brand
Rolex and he doesn’t just recall the year he got
his first timepiece, but where he bought it and
even who recommended it to him.
He is like a grand raconteur regaling about
racing in days gone by and he isn’t afraid to
share his opinion on how times have changed.
One of the biggest alterations in the world of
F1 since the famous tartan graced the grid has
been the driver ladder. Back then, the likes of
Rubens Barrichello and Johnny Herbert were
picked on raw talent, as opposed to the mon-
ey-laden, nursed-and-nurtured nature of some
breaking into the big time in recent years.
“This whole idea of buying drives is a very
unfortunate thing and it spirals very neg-
ative structures within the sport,” he says.
When you sit and listen to Sir Jackie, he has
a very astute way of making even the most
complicated issues seem very solvable.
“For one thing – and this sounds bad – but
the cars currently seem to be too easy to
drive. Almost anybody can go fast in a For-
mula 1 car, if it’s a decent Formula 1 car,” says
the former champion.
“It’s not the drivers, it’s the cars. When the
car is good now – there’s Mercedes, then
there’s Ferrari, then there’s Red Bull, then
there’s Williams – anybody can get in those
cars and almost immediately drive them. So
therefore there’s something wrong that the
engineering has come to a point where too
many people can drive them.
“You’ve got to look at a time where there
was Jackie Stewart coming along in a Formu-
la 3 car and people thought, ‘Hello, he’s won
11 out of 13 races, he must be quite good, so
therefore he’s in a Formula 2 race now. And
then he won a touring car race and then a
world sportscar race’. So people then began
saying ‘We better hire him’.
“There is the arrival of both Max Verstap-
pen and Carlos Sainz Jr – both boys are very
nice by the way – but what’s happening
when they can get in those cars and go that
fast? It must be too easy. And that’s not me
saying it out of jealousy. I’m not saying that
it is easier now than it was back then for me.”
Sir Jackie campaigned furiously for years
to improve the safety of the sport, but does it
need more danger once again, as suggested
last year by Ferrari driver Kimi Räikkönen?
“People are taking liberties that we never
used to take in our day. We could not run wide
on a fast corner and expect to hold our posi-
tions,” he says. “The worst example of that
I think was Abu Dhabi 2010. All Fernando
Alonso had to do to win the world champi-
onship was to finish ahead of Vitaly Petrov’s
Renault. He followed him for the entire race.
“Petrov went wide four times off the
road – all four wheels – and never lost
the lead to Alonso. He scrambled back
on and Alonso still couldn’t get past him.
That wasn’t through Alonso’s inability; it
was because Petrov was still carrying the
speed. That’s wrong.
“We don’t want someone hitting a tele-
graph pole, or a farmhouse like I did, or a
grass bank like Stirling [Moss] did, but you
must have something else that stops a driver.
We’ve got to have something that doesn’t
burst the tyre or break the wheel, but means
the grip is not as good.”
Half a century ago, a young Jackie made
his first foray into F1 with Lotus as an
injury replacement for fellow Scot Jim
Clark. Lining up on the grid in Kyalami in
1965, no one could have predicted Stew-
art would go on to become a three-times
champion. He is in no doubt about who he
most looked up to.
“Jimmy was the best racing driver I ever
raced against without fear of contradiction,”
says Sir Jackie. “Fantastic. So smooth, so
clean, never went off the road.” Classy and
composed, Clark was a good friend from
whom he learnt several tricks and skills. “It
was Batman and Robin, and there was no
doubt who was Batman and who was Robin,”
says Sir Jackie.
Clark, a shy farmer from Fife, won F1
championships in 1963 and 1965, but will
be best remembered for the Italian Grand
Prix in 1967 when he dropped a lap down,
following a flat tyre change, before cata-
pulting his way into the lead. He matched
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and not taking anything because we’re piling
it back in, so that the value of the team was
being added’. Finally I did the deal because
they said, if we didn’t sell, they’d take their
engines elsewhere.”
It goes without saying that the ever-in-
creasing finances surrounding F1 have
raised the pressure on teams since the Stew-
art grand prix years; however, Sir Jackie
offers one piece of advice to the current
bunch on the grid.
He says: “When it came to talking to
sponsors, the minimum relationship for
me was five years. And I said we couldn’t
win a grand prix for five years with a
new team. But if you under-promise and
over-deliver, you’ll never get the sack.”
Some current outfits could do well to heed
these words of wisdom.FIGURING SUCCESS
OF JACKIE STEWART
ANDROID APP ON
This whole idea
of buying drives is a very
unfortunate thing and
it spirals very negative
structures within
the sport
his pole-position time in the process only
to finish third after suffering from a fuel
pump failure.
Stewart and Clark shared apartments and
set the standard for the next generation to
beat. Sadly, Clark was killed in a Formula 2
accident in Germany in 1968, but Sir Jackie
classes him as the greatest F1 driver to have
lived: “I always have looked up to him, I still
do. He was the absolute leader.”
Stewart retired in 1973 and since the 1970s
has become a leading light in the fight to
improve safety, overseeing the implication
of improved cockpit protection, rigorous
crash tests and effective recovery proce-
dures. Much of this had been done by the
mid-90s when, with Ford’s backing, Stewart
and his son Paul formed Stewart Grand Prix
which won its first F1 race in 1999. The team
became the Stewart family flagship.
Sir Jackie says: “Ford said they wanted to
buy our team. At which point I’m thinking,
‘Hang on, we’re making £5 million a year
01
02
03
01
Sir Jackie Stewart at
the Goodwood Festival
of Speed in June 2015
02
Stewart racing in Italy
in 1969, the year he
won his first world
championship with Matra
03
Stewart (right) with
Tyrrell teammate
Francois Cevert on the
podium after winning
the Belgian Grand Prix
in 1973
GettyImages
Corbis
Corbis
3
WORLD
CHAMPIONSHIPS
27
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WINS
43 17 15
PODIUM
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POLE
POSITIONS
FASTEST
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