WHY BERNIE HAD TO LEAVE - NEWS SPECIAL
Anthony Rowlinson analyses Formula 1’s change at the top
Why did Bernie have to go? Empires decline, emperors fall, and so it is with Formula 1 and Bernie Ecclestone.
His remarkable 40-year run at the helm of the world’s most glamorous motorsport has come to an end because the business principles on which it was founded had come to be viewed as out of step with a digitally driven age.
Under Ecclestone, F1 was built into a business valued at $8bn (£6.4bn) on revenues generated by a) lucrative television contracts; b) promotional fees charged to circuits wishing to host grands prix; c) trackside advertising and d) exclusive paddock hospitality.
While each of these has served Ecclestone – and, latterly, the commercial rights holder CVC Capital Partners – extremely well, they were becoming outmoded. Television contracts, for instance, were becoming less prized as live audiences dwindled.
Hosting fees have also become out of reach for all but government-backed venues such as Azerbaijan, thus pulling F1 from ‘heartland’ venues. Trackside advertising deals have sucked revenue away from teams, and paddock hospitality packages have become less appealing to corporates, as tax laws relating to ‘freebies’ have tightened. In each of these areas there was a growing – though unspoken – sense that the sport’s commercial model had become outmoded and had lost touch with its lifeblood: fans. When Ecclestone spoke of wanting to appeal only to those wealthy enough to afford a Rolex, he may have been mischievous. Yet such comments underlined an uncomfortable truth: F1 was no longer connecting with its fan base in a way that it needed to in order to ensure a healthy future.
With an ambitious, aggressive and digitally savvy media company – Liberty Media – waiting in the wings to buy a controlling interest (a process that begun last September and was finally completed last week), Bernie’s days in control were numbered.
Will F1 miss Bernie, or can it prosper without him? Yes – and no. While Ecclestone, now chairman emeritus of F1, is unlikely to disappear completely from the sport he has held in an iron fist since the mid-’70s, the notion of him not being the man calling the shots will take some getting used to. The most severe of headmasters, Ecclestone’s word was the law in Formula 1, and for good or ill most would say they knew where they stood under his command.
Nonetheless, his departure gives rise to huge opportunities for Liberty to open up a sport that is famously, often deliberately, inaccessible.
Immediately, new F1 sporting chief Ross Brawn has spoken of the need to make the sport simpler to understand, with better racing and less complicated cars. American Chase Carey, meanwhile, the new F1 CEO, has spoken of “huge potential with multiple untapped opportunities”. Top of his wish list are believed to be greater social media engagement, more races on the calendar and the protection of heartland events such as the British, Italian, German and Belgian GPS. He has also stressed how important the voice of fans will be in shaping F1’s new future. “I have enjoyed hearing from the fans, teams, FIA, promoters and sponsors on their ideas and hopes for the sport,” he said.
Can Bernie be blamed for F1’s current failings? It would be foolish, possibly even unfair, to judge Ecclestone harshly for taking Formula 1 to a place where as much time is spent discussing its shortfalls as its brilliance.
For under Ecclestone a shambling, slightly chaotic and predominantly European minor-interest pursuit has become one of the world’s most valuable sporting properties, courted by blue-chip corporations, governments and celebrities for the lustre and allure it can confer. “He took a diamond in the dirt,” said Gordon Murray, Ecclestone’s one-time design ace at Brabham, “and made it shine.”
Yet in recent years, since the buy-in of CVC, Ecclestone’s naked pursuit of cash, on the specific instruction of his rights-holding paymasters, has been to the sport’s detriment. Multi-million dollar TV deals have been brokered with pay-per-view channels at the expense of free-to-air broadcasting, decimating TV audiences (and advertiser appeal) in many countries. Governments in Azerbaijan, India, Korea and Turkey to name but four, have paid hundreds of millions for the privilege of hosting a grand prix, only to find there are no fans to fill their glittering grandstands. And no show likes playing to an empty house.
Meantime ‘classic’ races such as the German GP have fallen from the calendar simply because promoters have been unable to find ways of attracting sufficient fans to pay the high ticket prices levied to offset hosting fees. Equally pernicious has been the grossly inequitable distribution of the sport’s revenues between teams. Simply put, F1’s internal reward structure allows the rich to get ( vastly) richer, while poor minnows, such as Manor, have been allowed to wither on the vine.
This is an F1 economy gone mad and Ecclestone has paid the price.
Who’s in the hot seat(s)? Replacing Ecclestone in day-to-day control are three wise men.
Ross Brawn, is too familiar to need introduction and he takes a role overseeing all sporting matters relating to Formula 1 as he comes back to the sport for the first time since his departure from the Mercedes F1 team at the end of 2013.
“It’s fantastic to be returning to the world of Formula 1,” he says. “I’ve enjoyed consulting with Liberty Media these past few months and I’m looking forward to working with the rest of the Formula 1 Team to help the evolution of the sport. We have an almost unprecedented opportunity to work together with the teams and promoters for a better F1 for them and, most importantly, for the fans.”
Increasingly familiar is new CEO Chase Carey, the moustachioed ex-lieutenant of Rupert Murdoch, who brings with him a reputation as a tough operator with balls of steel. The speed with which he despatched Ecclestone to an advisory, chairman emeritus, role is indicative of his approach to business, though he was effusive in his praise of Ecclestone’s vision and drive: “I would like to recognise and thank Bernie for his leadership over the decades.
“The sport is what it is today because of him and the talented team of executives he has led, and he will always be part of the F1 family. Bernie’s role as chairman emeritus befits his tremendous contribution to the sport and I am grateful for his continued insight and guidance as we build F1 for long-term success and the enjoyment of all those involved.”
Finally, Sean Bratches, also American and with 27 years’ experience as a senior marketing and sales executive for US sports network ESPN. He’ll be the man leading the drive to take F1 closer to its fan base and increase its appeal to sponsors and advertisers.
“I’m very excited to be joining Formula 1 and contribute to the continued growth of this extraordinary global brand and sport,” he says. “F1 is one of few truly global tier-one sports, and I am encouraged by the manifold opportunities to materially grow the business, work closely with current and future sponsors, race circuits, television rights holders as well as create next generation digital and on-site race experiences to best serve the Formula 1 fans.”
What’s going to change? It’s highly likely some changes will be felt immediately for those at the heart of the sport.
Ecclestone himself has a new role and several of his closest aides at Formula One Management are likely to be wondering if they’ll retain their positions under new management.
Liberty will run F1 from a new London office and is likely to begin a recruitment process to build a structure capable of delivering more medialiterate, digitally optimised feeds of everything it films, at and around grands prix (think apps, virtual reality, 360-degree cameras, fewer rights restrictions, live digital streams).
There is talk of central merchandising and promotion, closer collaboration with circuit promoters, and a better decisionmaking process for all participants (so expect the laughably ill-named ‘Strategy Group’ to be canned forthwith).
Calendar growth has also been targeted, as has a push for more North American races, even as heartland grands prix are protected.
Rules are likely to be simplified, too, as are technical regulations (for 2018) and some measure of cost-capping is likely to be introduced, hand-in-hand with a revised cash-distribution structure.
Overall F1 can prepare itself for an outbreak of long-overdue sanity– though this being Formula 1, anything can happen… and it probably will.