Some nice reasoning from
Ciro there ... I'll expand on some of those points, reflecting on a couple of other ongoing discussions here. So I will ramble on a while, hopefully not altogether pointlessly.
Ciro Pabón wrote:- The value of leading is roughly equal to 30 minutes of TV time with an audience that is not surpassed by any other sport.
- I estimate the order of magnitude of the european/american audience in the hundred million. Then you have Asia.
- The Superbowl has the same order of magnitude audience, but mainly in US.
- A 30 second ad at Superbowl costs around 2.5 US devaluated millions.
- The 15 minutes I estimate the cameras show the leader, at Superbowl rates, mean 75 million devaluated dollars, or, better yet, that's my estimate.
- If you invest, I don't know, 300 millions for year, you pay your "rent" by leading 4 races.
Those figures sound plausible, perhaps you should be contracted to manage sponsor relations by a team! The difference with F1, though, is that in Superbowl the ads are primarily directed at a fairly uniform market and due to the nature of the event can be sold and managed in a very concentrated fashion. Superbowl ads in themselves have become an "event", even. The dynamics of advertisement liveries and accompanying brand efficiency over a Global motorsport campaign are somewhat different and the "actionable customer interface treshold" can be higher. Some bang for the buck might be lost for the more diverse, complicated and costly efforts to turn reaction into action.
Ciro Pabón wrote:- The monetary value of winning is little. It has value mainly for the engineers and team bosses, to avoid being fired. You get some money from FIA, but this won't pay the investment.
- You can approach "the market" in two ways: by winning (or leading, whatever) or by doing something interesting, like Alonso has done in the last races. ING is probably grateful.
Surely this has been contributing to the impetus behind the OWG. Continuing with the Superbowl analogy (
though I won't grace my hunch with figures, sorry) through the race, something interesting has to happen every three minutes or so. In terms of media exposure, overtaking is the great equaliser, an valid reason for the TV director to take the cameras off the leading driver. I wonder whether the OWG was shooting for roughly 35 overtakings per race, all through the field? Plenty to make the event seem action packed and relentless. I'd much rather see more teams and a less gimmicky approach than flaps and push-to-pass, but the existing teams are currently too scared to take on a greater challenge. We'll see whether this will come back to haunt them yet.
Of course, overtaking is hardly the only "interesting" thing beyond leading a race and Alonso's current team Renault, for example, has done its bit to keep up with the times with its exemplary web presence (
a perfect match for their thrifty approach). As the negotiations to get a replacement for the Concorde agreement are infamously still ongoing, the teams should push to be allowed to make greater use of the new media platforms to shore up their economies. Any live media content produced aboard a team's vehicle, in a team's pit box and on the pit wall, plus any live team telemetry should be free for the team to broadcast over the internet. This wouldn't compromise overall coverage, but add to it while better addressing the "customer interface" dilemma with instantly actionable advertising benefiting the teams directly. Oh, and if anything akin to this is considered for implementation, I fully expect to hear from the parties involved ... or they will hear from me.
Funnily enough, the efforts to change the dynamics of F1 races - and new media opportunities - can be seen to defuse any realistic need for budget caps. Indirect income will be more evenly distributed anyway and the teams, if willing, should have an ever increasing amount of varied associations to make. Perhaps they shouldn't be rushed. By the way, the budget caps (
and all the different "five year plans"), distinctly remind me of all the trimmings of a communist economy. I don't know if the effects on F1 of expanding to countries that scarcely operate according to what is recognised as traditional free market economy is sufficiently explored and understood. If you think the sport has become less open and less welcoming of innovation, there's plenty more in store if we choose to go further.
Individuals with a knack for survival can of course play and thrive in any environment, but generally speaking the overall cost of proving oneself against some challenges can be too great as well. Obviously Bernie is having fun, being the player that he is; if disagreeing with the merits of democracy suits the bottom line, fine. And should the opposite be true, I have little doubt he'll champion representative government. At least given his public image, he seems to convey a very focussed pragmatism in business matters and is perpetually pushing the limits. I can only imgine, though, that the freedom to act and the power to act within those freedoms have an optimisation curve as well.
Mr. Ecclestone has made an art of operating at the limit of his powers and whereas the freedoms of the F1 teams are being chipped away, the balance and its ramifications will reassert themselves. The redeeming quality in Bernie's act is of course the tremendous leverage his extreme position provides, empirically demonstrating the potential of the sport. In so doing he's actually placing enormous faith in the teams, event organisers, sponsors, manufacturers and the FIA in trusting them to provide dynamic counterweight to his actions. I'm worried that a budget gap, as proposed by the FIA, is more like unsprung mass than a tuned mass damper in getting to grips with steering Formula One's momentum.
With Mosley's troubles this is an interesting time for Bernie to contemplate why and how the teams and the FIA are so ill at ease with the freedoms they have. My hypothesis is that at least partly, this follows from Ecclestone's domination of F1 assets as a brand (
courtesy of a deal with Max) and that imbalance the teams cannot compensate for; ultimately their attempts to defuse the financial pressures through self-regulation (
even if it's at odds with their other, such as technological, interests) will diminish Bernie's powers as well in a deflationary cycle.
Ecclestone has worked like hell to shore up his position with every bit of World economies' growth and emerging markets he could accommodate in F1. Time and space are running out however, not to mention scale related considerations emerging (
such as social and ecological sustainability). It is possible that Bernie won't have to make adjustments or compromises for as long as he's gripping the helm, but on the other hand it'd be very intriguing to see him navigate a change of course - as a matter of personal interest, no less. At least he should research the relative benefits of doing so.
Be as it may, I'm increasingly seeing the budget cap proposal as an inevitable, spontaneous symptom of a wider dynamic working in the backround, one that any one person cannot steer for its existence doesn't originate with individual perceptions. Doubtless some of the leaks can be patched with agreeing upon fixed costs for the duration of the current heading, but that doesn't amount to renewing the fleet nor does it directly enable it ... even if significant expenditures remain exempt from the limitations.
For an economist, I guess, theoretically a profit margin of zero is desirable - all disposable income is reinvested into developing, streamlining and expanding productivity. As such, a spending cap isn't very rational - when you envision something, the process of producing, using and benefiting from it determines the added value, not the investment alone. The rational explanation for freezing the V8s and imposing the budget cap while separating and liberating the auxiliary systems from the engine would be that gasoline powered ICEs are generally on their way out in relatively short order. Hmm.
I can't remember anyone suggesting that, apart from a vague memory of some BMW exec letting "eventually we'll go electric" slip (
in a subordinate clause). I thought it was Burkhard Göschel, when the FIA and the GPMA announced they had come to reconcile their differences towards the end of 2006 and I looked the interview up, but couldn't find him saying anything like that. Oh, well. Anyway, revisiting some of the earlier stuff about budget capping, the concept seems to have been pretty pliable - so I'd be surprised if it were to be shaped like the current proposal suggests either. I'm not categorically opposed to imposed limits either (
and the current proposal has merits to previous ones) but I'd rather see a healthier situation emerge by its own accord.
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