Opinion: Alex Kalinauckas

While Formula 1 waits for a chance to start racing again, its future after the crisis may hang on how it deals with crucial cost-cap negotiations in the coming weeks

“F1 needs a 2020 season if it is to survive – Tv-only races will help but mean reduced income”

Formula 1 is caught in a cliche– a major crisis, which at the same time is providing opportunity.

Make no mistake, the coronavirus pandemic is a very serious threat to the championship, although its tragic impact on so many people and our societies in general must not be downplayed when discussing the comparatively trivial topic of sport. The upending of normality has forced us to rethink how we operate – and F1 is no different.

The current negotiations between F1’s stakeholders are critical. Mclaren boss Zak Brown warned of “four teams”potentially going bust. FIA president Jean Todt told Autosport that F1 needs a “new deal”. Thrown into stark relief by the threat to humanity, F1 is in the grips of an existential crisis. And so, these talks are the chance to change what was wrong before and build a new future that not only safeguards against threats such as the current pandemic, but also leaves the whole ecosystem healthier overall. There’s even talk of the teams becoming profitable in their own right…

There was positive news last week when Liberty Media shuffled its deck and transferred $1.4billion cash – part of a wide-ranging transaction between the F1 Group to Liberty Siriusxm – that meant F1’s owner could give advanced payments to those teams in desperate need. The plan to try to start the 2020 season with potentially two closed-door races in Austria, and then possibly two more at Silverstone, must also be welcomed – even if there are still major hurdles to overcome.

F1 needs a 2020 season if it is to survive. Tv-only races will help but they will mean reduced income overall as race-promoter fees will have to be lowered – Silverstone surely couldn’t even consider a spectator-less race without this – and some races won’t take place at all given F1 is aiming for 15-18 and there were supposed to be 22. There is also the possibility of sponsors seeking refunds or reductions from their deals and the threat of manufacturer withdrawal. Audi’s DTM exit could easily be a sign of things to come for other road-car companies with motorsport programmes.

Back to the opportunity. As many countries begin the arduous process of restarting their economies while minimising the risk of a second wave of coronavirus infections, businesses will be looking to the future with greater imperative than ever before. And F1 must look to capitalise on that through positive transformation.

“Change was required in any event,”says Richard Cohen, global head of motorsports partnership development at marketing giant CSM, which has recently brought brands including Dupont and DP World to the Renault team.“marketing has developed almost beyond recognition over the past 20 years. But motorsport sponsorship didn’t necessarily keep pace – in that it was mainly still stickers on cars and hospitality. Now, clearly, it’s gone beyond – there are additional assets. But if you look at what people were really selling, and what brands were paying for, it was still anchored in the old world.”

When they get back to normality, F1 and the teams will have to change the way they do business. Whether that’s by approaching different types of backers – some companies, such as those that facilitate homeworking (Zoom, Bluejeans etc), are doing well out of the lockdowns, which may even change the way we work forever – or reassessing what they offer in return for any sponsorship.

“Sport tends to bounce back more quickly than many other areas after an economic crisis – because it’s such a strong passion point,”says Cohen.“and if you want to engage with fans/ consumers who are in a positive frame of mind, there’s actually few if any better ways to do so than through sport. Ultimately, this is going to remain a priority and an imperative for the brands – they have to engage with their consumers.”

Cohen reckons that first-party data“is going to be at the core of the revenue models to come”. After all, even if F1 and the teams boast millions of followers on social media, it is still the tech giants that own the key data. But by operating slightly differently – offering fans exclusive offers, for example – teams can take this information to sponsors to create an improved return on investment.

But first, the cost-cap negotiations are critical. F1 simply must find a way to bring costs down and be more accessible to everyone: fans, through new broadcast-rights deals (“We now need for social platforms and broadcasters to co-exist,”says Cohen) that don’t lock the action away; and businesses looking to invest in a series that offers key performance-marketing opportunties and has a positive message to tell the world.

Bernie Ecclestone’s remarks about the hybrid engines – which are technological marvels – look worse by the day…

And, as Racing Point boss Otmar Szafnauer points out on page 25, the cost cap can level the competition imbalance that has hurt F1 for years. But to get there, all stakeholders must work together.

There are no guarantees, and the chance to improve F1 may even be unobtainable (quite how travel to any summer races will be possible remains unexplained). But there is a chance to make F1 fairer, healthier and better overall. If any good can come from the current nightmare, it simply must be seized.