Archive for the ‘Formula One’ Category

BBC cuts a worrying sign for minor sports after London 2012

The BBC announced on 6 October its plans for delivering programming and content through to 2017 in the context of 20% cuts mandated by the government. The sports budget will be reduced by 15%, which could hit some minor sports particularly hard.

Initial plans to cut some services in their entirety met with fierce opposition so the BBC has opted to make reductions across the board, including a previously announced 25% saving in the budget of BBC Online. Among the BBC’s media rivals in the UK, the plans have generally been accepted as sensible (see, for example, the Daily Telegraph and the Huffington Post).

In order to save money, the BBC will share the rights to Formula One in 2012 and 2013 with BSkyB. There will also be reductions to some unspecified smaller sports events and to sports coverage on the website.

With the start of the Olympic Games in London now less than 300 days away, the race is on for many of the sports involved to stake a claim to continuing BBC coverage after 2012. As Channel 4 has secured the TV rights to the Paralympic Games, Paralympic sports may believe their best option lies there.

Among Olympic sports, the likes of athletics, swimming and cycling must win medals and demonstrate spectator appeal. Other sports ambitious for British success at London 2012, such as rowing, hockey and gymnastics, will be hoping that the Games can help them produce stars that the BBC want to continue to feature.

While there are plenty of other TV broadcasters in the UK that cover sport – BSkyB, ITV, Channel 4, Eurosport, ESPN, newcomer and others – the BBC provides a sizeable audience on free to air TV and by far the most popular sports website (12.5m visitors a week, according to the BBC’s own figures). The BBC also has a heritage of covering Olympic sports which other channels rarely feature.

Even with the advantage of marketable British stars, Olympic sports will still need to offer the right kind of events to attract the interest of broadcasters, which is not straightforward (competition should ideally be live, conveniently packaged for TV, avoiding clashes with other events).

And then there are the issues of rights fees and production costs to consider. Only the most popular sports and events can successfully sell their rights to the highest bidder. In many cases federations or event organisers will have to pay for TV production and offer the feed to broadcasters. With advances in technology it should be possible to produce footage more cheaply than before, increasing the chance that an event will be screened on TV, even if it is not on one of the most popular channels.

It is clear that very few of the Olympic sports can be confident of TV coverage on the most popular channels in the UK after London 2012. The best way to guarantee interest will be to have high profile British stars. The pressure is on.

Michael Schumacher’s 20 years in F1 and sporting longevity

Today Michael Schumacher competes in the Belgian Grand Prix 20 years after his first appearance in a Formula 1 race. It’s a remarkable achievement and compares with some of the the most notable cases of sporting longevity.

Schumacher, who has won the world title seven times, is spending his 17th season in Formula 1 having retired from the sport between 2006 and 2009. Since his return at the start of the 2010 season he has not won a race and has often been out-performed by his much younger team-mate Nico Rosberg.

You might be forgiven for asking why he bothers. After all, his place in Formula 1 history is assured, he is one of the wealthiest sportsmen in the world and a serious accident can never be ruled out. Surely he should retire from racing, devote himself to family life and the various humanitarian projects he has been involved in? Why does he keep going?

Well, eventually he will retire, perhaps at the end of this season (as a recent interview seems to suggest), although he is contracted through to the end of 2012.

Great champions in sport sometimes retire on a big win, when they potentially have a couple of years left. For example, Michael Johnson quit after winning the 400m gold medal at Sydney 2000 when he still looked unbeatable.

Others continue until they reach a point where they realise they are not quite at the level they once were. Pete Sampras bowed out on a high as champion at the US Open in 2002 after struggling earlier in the year.

Of course many others are not given the choice: omitted by the selectors, ruled out by injury, failing to qualify. A further category of champion continues to compete willingly when they are no longer in contention.

Examples familiar to British sports fans include snooker player Steve Davis (still playing professionally at 54, 14 years after his last major tournament victory) and cricketer Mark Ramprakash (still playing for a county side almost 10 years after he was discarded by the England selectors).

Barring accidents and ill-health, athletes will be retired for a long time so they may decide to continue competing for as long as they can. No doubt occasional victories against young tykes bring great satisfaction and help prove the critics wrong. The commentary box, coaching or administrative positions are not for everyone.

In the cases of Schumacher and Steve Davis, they were respected and feared by the fans in their heyday rather than loved. Years later the adulation comes more easily. Jimmy Connors might be another who comes into this category. Is a longing for public acceptance one of the motivations to keep going?

What athletes really prove by continuing on the circuit when they are no longer contenders is their genuine love for what they are doing. When the money is no longer a major factor and titles are not a realistic ambition, what is left is the enjoyment which brought them into the sport in the first place.

For this reason I would like to see fans and media show more appreciation for the long-serving athletes and players who battle on rather than slipping easily into their place in the commentary box.

If Michael Schumacher can manage one last Grand Prix win I for one will be cheering.

Formula 1 deal re-opens old debate: free to air v pay TV

Formula One announced on 29 July that the BBC and Sky Sports will share TV broadcast rights in the UK from 2012 to 2018, leading to howls of protest from fans. In a trade-off between revenue and audience reach, Formula One is trying to get the best of both.

The BBC will show half of the races live on TV with the corresponding qualifying and practice sessions. It will also keep highlights and radio rights for all of the races. Sky, meanwhile will show all races, qualifying and practice sessions live.

The key issue for British consumers is that the BBC only charges an annual licence fee per household of £145.50 (frozen for six years from 2010) whereas an annual subscription to Sky Sports will cost an additional £487 with future rises all but certain.

There are several million Sky Sports subscribers in the UK but the potential audience is a fraction of that on the BBC.

For the Formula One rightsholder the additional revenue is highly desirable. The racing teams will earn a share of the increased pie but they also need the largest possible audience to maximise their appeal to sponsors.

According to news reports (see for example the Guardian), they will be seeking clarification on the deal.

Sky has been very successful with its sports broadcasting, driving subscriber numbers through live football rights in particular. Formula One has a large, loyal fan base, many of whom are probably not existing Sky Sports subscribers so it seems a good fit. However, the big question is whether hundreds of thousands of additional customers will now sign up for Sky Sports because they want to watch the full season.

Production costs for broadcasters covering the Formula One season are very high due to the constant travelling and technical demands. Without the advantage of exclusive rights and a captive audience, it could be that either the BBC or Sky Sports find the costs too onerous before the end of the contract in 2018.

For the future health of Formula One it is important that new young fans are constantly being recruited. While Formula One earns revenue from many markets, the UK is one of the largest.

Cricket and other sports have debated in the past the rights and wrongs of accepting the highest bid for TV rights (which tends to come from pay TV stations) or the option which will give the broadest audience (usually from free to air TV stations).

After European Union intervention, rights for the UEFA Champions League in the UK have been shared among different TV stations. The outcome is a certain level of confusion among spectators but they do at least have an opportunity to watch a selection of matches on free to air TV. According to the Independent, European law may prevent national TV rights deals in future.

For the moment Formula One’s deal looks a reasonable compromise but it will take time to see whether it is getting the best of both worlds – huge revenue and a broad audience – or an unsustainable mish-mash.

Fans may be unhappy but Formula One is in a strong position – many other sports would be delighted to face the same dilemma.

Sport tackles new frontiers

When FIFA President Sepp Blatter announced in December last year that the 2018 and 2022 World Cup tournaments would be played in Russia and Qatar respectively, it was a surprise to many football fans but not to the bookmakers.

This decision continued a trend: where China led in 2008, the other BRIC countries are following. Between 2014 and 2018 Russia and Brazil will both host the Olympic Games and the World Cup, the two mega-events in sport which reach a TV audience of three or four billion with several hundred million watching the most popular live broadcasts. India has already put on the Commonwealth Games, co-hosted the Cricket World Cup and may submit an Olympic bid. And as Qatar proves, it’s not only the BRIC countries that are getting involved. Formula One has also been making a determined effort to appeal to new markets recently, adding races in Abu Dhabi (2009), Korea (2010) and India (2011). The planned race in Austin, Texas in 2012 can even be classed as expansion into a new market given Formula One’s patchy record in the USA.

However, global expansion also increases risk. The 2011 Bahrain Grand Prix was cancelled at short notice due to political unrest, and attempts to reschedule it were met with strong opposition. High profile sports events can be disrupted in any country but sponsors and broadcasters will be wary about committing investment if they perceive significant political, economic or reputational risk.

For a growing sponsorship industry and other stakeholders in sport, these new frontiers present both a challenge and an opportunity. New markets are challenging because the global HQ and local managers may be unsure about how to make the most of a major event, especially if the sport is unfamiliar to local consumers. On the other hand, successful sports sponsorship could give a brand a real boost in an important territory.

Sponsorship can help achieve a number of objectives ranging from enhancing the brand or the organisation’s reputation through to business development and building relationships. The internal communications opportunity is often a significant factor too. Although the emphasis and approach will vary by country, the majority of major sport sponsors are mass-market consumer brands.

Government relations objectives tend to be a higher priority for sponsorship in those emerging markets where strong political connections are essential for business success.

The fundamental appeal of sport sponsorship is that major events provide an effective way to reach a large audience at the moment when they are pursuing one of their own interests through media channels (or actually at an event). Naturally, sponsorship innovates in step with the media industry – mobile apps are in vogue this year as sponsors seek new channels to counter the decline in audiences for individual TV stations.

A few global brands with sponsorship experience, such as Coca-Cola (an Olympic partner since 1928, believe it or not) will have significant local market presence and expertise virtually everywhere. However, the same may not be true for other brands of Western origin which are still feeling their way in emerging markets. Even if they are familiar with sponsorship, they may need local expertise to make it relevant. By contrast, ambitious local market brands may be looking at sponsorship for the first time, eyeing the potential for international promotion.

Sponsorship activity which works in one part of the world may not be right in another. In its marketing campaign for the Beijing 2008 Olympic and Paralympic Games, McDonald’s changed its well-known slogan to “I’m lovin’ it when China wins”, in an appeal to Chinese national pride. Adopting a similar strategy, the Canadian elite athlete training programme before the Vancouver 2010 Winter Games was called “Own The Podium” but it faced criticism from some commentators who took offence at the name.

In summary, the fact that major sports events are gravitating to emerging markets presents new opportunities for brands. Successful sponsorship programmes in the countries where the major events will take place in the coming years will combine international best practice and local market understanding to create a carefully tailored approach.

So, what should brands be doing now to prepare to take advantage?

1) Look at your brand’s objectives in emerging markets and consider whether sponsorship could help, especially if countries such as Brazil and Russia are relevant to you

2) Put together a team that combines sponsorship expertise and in-depth market knowledge to research the options

3) Consider whether your brand could provide an important value-in-kind product or service to a sports event. If so, the organisers will welcome you and there will be a logical way to promote the association

4) Recognise that Olympic and World Cup organisers restrict sponsors to a very specific exclusive category. If you need more freedom another sports property may be a better option

5) Think about your competitors’ objectives – would it worry you if they sign the deal?

Bahrain Grand Prix: what would you do?

Will the first Formula 1 Grand Prix of the season take place as scheduled or not? The race is planned for 13 March in Bahrain, where there have been violent clashes between protesters and the security forces in recent days, leading to several deaths and many injuries.

While the people of Bahrain may be preoccupied with their wider concerns, the race organisers both internationally and locally face a difficult dilemma just three weeks ahead of the race. There has been extensive media coverage of the story (see for example Reuters and Al-Jazeera English).

There are a number of questions to consider:
- If the race goes ahead, will it be safe for all concerned?
- What is the deadline for making a decision?
- What do the teams and other stakeholders think?
- What are the reputational risks of running the race/cancelling?
- What are the financial implications of going ahead/cancelling?
- If the race goes ahead will everybody participate?
- What kind of precedent is being set?

It will be very hard to know if the right decision has been taken even after the event. The race may pass off without incident but at the cost of reputational damage. Or, if the event is cancelled and the region is peaceful during the competition,  it could still be claimed that the Grand Prix would have provoked trouble.

From time to time team managers and other stakeholders do security assessments ahead of a sports event, as happened before the Commonwealth Games in Delhi. Although it is entirely responsible to listen to different points of view and survey the evidence, predictions are inherently unreliable – nobody knows what will happen in Bahrain. Whatever procedure is put in place for assessing risk, ultimately the decision will depend on the personal opinion of a small group of people.

When a significant perceived threat emerges in the lead up to a sports event there is a familiar pattern:
- The host country and organisers seek to reassure people
- The governing body or rights-holder will be supportive in public but frantically looking for an alternative in private
- Sponsors and TV broadcasters will wait to see which way the wind blows
- Athletes will look to their management for guidance and then make a decision based on their gut instinct
- Spectators will stay away if in any doubt
- The event will usually go ahead with less disruption than feared

In the specific case of the Bahrain Grand Prix the consequences of cancellation or postponement would be significant but not on a scale that would overwhelm Formula 1 as it begins a long season. In the context of a severe political crisis, an initial postponement seems likely.

What is the right decision? We will never know.

The opportunity of international name recognition

While visiting Argentina it is noticeable that many of the sporting stars who appear daily in the national media are very familiar to a British sports fan. This instant name recognition brings an opportunity which may not be fully recognised.

In the 21 October issue of Olé, the popular national sports newspaper, there were stories about Barcelona icon Lionel Messi, the Argentinian rugby team preparing for their forthcoming tour of the UK, rising tennis star Juan Martín del Potro and numerous pages previewing the weekend’s local derby between Boca Juniors and River Plate.

The focus for sponsors and rights-holders is often the country where a sporting competition is taking place but the media coverage can spread much further, depending on the nationalities of the participants. This has long been appreciated in Formula 1, where the nationality of drivers is a significant factor when teams decide who to hire. Football and basketball clubs are also well aware that a star name from overseas can help the fan base to grow in a new market - consider Beckham at LA Galaxy or Park Ji-Sung at Mancheter United.

However, the potential is much greater. It is perfectly plausible for a sponsor or rights-holder to create an event featuring hand-picked athletes or teams from specific markets. More often it seems to happen the other way around: the fact that a particular athlete or team is involved suddenly makes an event more attractive for a potential sponsor. Purists will understandably be concerned that qualification might be determined by a sponsor’s needs rather than on merit. Clearly there needs to be a balance between open and invitation-only competitions because fans will readily ignore meaningless contests.

At a time when many sporting bodies are under economic pressure, sponsors can be a little bolder in their negotiations. Even if they don’t go as far as creating their own event they may be able to influence  qualification criteria to increase the chances of key athletes or teams participating. 

For governing bodies and other rights-holders, uneasy at the prospect of having sponsors closely involved in their events, it is more important than ever to increase the depth and range of potential winners. If they succeed they will have a much stronger proposition to offer international brands. Unfortunately it’s easier said than done.

Football, rugby, tennis, basketball, volleyball and golf are therefore fortunate that the strength of Argentina’s athletes assures interest in their national media. However that doesn’t stop the Brazilians poking fun at their rivals’ struggle to qualify for the FIFA World Cup.

Ferrari and change: the only constants in Formula One

After today’s Fuji Television Japanese Grand PrixBrawn GP have all but won the Formula One Constructors’ Championship, which is a remarkable result in their debut season. Their drivers Jenson Button and Rubens Barrichello also head the individual standings with two races left. 

Brawn GP, led by Ross Brawn, was created in March from the Honda team which withdrew from Formula One at the end of last season. It’s not the only team to have changed since last year. In fact, four of the ten teams on the starting grid have at least a different name and several more changes are expected for next season.

Ferrari is the only team still active which was involved in the first year of Formula One in 1950. It is also the most successful with 15 constructors’ titles. Car manufacturers such as BMW, Honda, Toyota, Renault and Mercedes-Benz have dipped in and out of Formula One over the years while independent teams have also come and gone. A useful chart shows that Ferrari, Williams and McLaren are the three long-standing teams, each with over 30 years of continuous involvement. 

And it’s not only the teams which vary from one year to the next. Abu Dhabi will host its first ever Grand Prix in four weeks. In 2010 there will be races in Bahrain, South Korea and Canada, none of which are on the calendar this year.

As for sponsors and drivers well, you get the idea. Formula One lives in a constant state of change, which is perhaps inevitable given the fundamental role played by technology. It’s potentially confusing for fans, who can at least support individual drivers even if they move around from one team to another on a regular basis.

In the last six months Formula One has had to deal with numerous crises both on the track (life-threatening accidents, a deliberate crash) and off it (ill-advised comments from leading figures, a narrowly-averted threat by the teams to break away). Mercifully, the serious accidents are rarer than they used to be but the political and financial crises seem to be becoming more common. Nevertheless, Formula One rumbles on from one circuit to the next every couple of weeks from March to October, year after year. 

There’s little doubt that a new combination of teams and drivers will be back next season driving their modified cars on a different range of circuits. 

Faced with such contant change, the companies trying to benefit from Formula One need persistence and deep pockets. The likes of Ferrari, Bridgestone and Santander have strengthened their brands over a period of years by making big investments and by staying the course. Those who wish to join them should take note.

French Open Tennis: 1928 – ?

Most sports fans will have shared Roger Federer’s delight when he won his first French Open title today and so became only the sixth male player to win singles titles at all four Grand Slams.

Who might be the next player to achieve such a feat? Actually, there is a chance it will never be repeated in the same way because the French Open itself is said to be under threat.

There has been speculation in Spanish media that the new venue in Madrid could replace Roland-Garros as the venue for the Grand Slam played on clay. It was noticeable that the French organisers rushed to announce plans for developing their venue, including a retractable roof and new show court.

In an interview with Le Monde, the director of the French Open said he didn’t think the Madrid tournament posed a real danger because “what makes the tournament is its history, which cannot be bought”.

Tradition is immensely valuable for a sports venue because fans and athletes remember great encounters from their childhood. The dreams fostered by those experiences linger for many years so that the idea of moving an event can seem like sacrilege.

Traditional calendar events comprise part of the core script of sport: showpiece tournaments and finals which are held at the same venue or venues at the same time each year. Examples include national football cup finals, Formula 1 Grand Prix, cricket test matches and Grand Slam tennis tournaments. With interest from top athletes, fans and broadcasters virtually guaranteed, these are some of the most economically successful events in sport.

A separate category of sports competition is the franchise event, which is allocated by rightsholders to a venue and organising team based on a bidding process. Among these are the FIFA World Cup and many other individual sport world championships.

Nowadays the organisers of calendar events are increasingly facing bidding competitions. Formula 1 rightsholders, buoyed by the financial success of the series, have encouraged ambitious new entrants to build venues and challenge the incumbent hosts. For this reason the long-established Grand Prix in Britain and France have been threatened, among others. Similarly, the England and Wales Cricket Board instituted a bidding process for hosting financially lucrative test matches, resulting in a recent match against the West Indes being held at a new ground in Durham. When ticket sales were poor the choice of venue was criticised.

Although abandoning established venues for new markets is sometimes essential – no Arsenal supporter would now question the move from Highbury to the Emirates Stadium - nevertheless there are significant risks. Owners of sports events can ill-afford to alienate their core market.

There is little hard evidence that the International Tennis Federation is about to abandon the French Open in favour of Madrid but managers of all established sports venues would be well-advised to make sure that the memory of a capacity crowd rising to acclaim the great Roger Federer is not the only reason to maintain the status quo.

Monaco Grand Prix – Branding Genius

The glamorous Monaco Formula One Grand Prix which is raced through the streets of Monte Carlo was won today by Jenson Button, driving for Brawn GP.

Button, who has won five of the opening six races of the season, follows in famous tyre tracks. Previous winners in Monaco include most of the greats of Formula One: Juan Manuel Fangio, Graham Hill, Jackie Stewart, Stirling Moss, Ayrton Senna, Alain Prost, Michael Schumacher and many more. 

Did you notice the word “glamorous”? You may have seen it used before in association with the Monaco Grand Prix. It seems to be the default adjective of choice. A quick Google search produces these results when the name of each Grand Prix is combined with ”glamour”: 
- Monaco GP 42,900
- Italian GP 16,800
- Australian GP 16,700
- Brazilian GP 12,400

It’s a very unscientific test but coverage of this year’s race demonstrates the point:
Eurosport – “glamorous principality
BBC – “Formula 1 at its most glamorous – “glamorous Principality of Monaco

As a positioning for the Monaco brand, this must be very valuable. In an interview with Le Figaro, Albert II Prince of Monaco said the race was part of the sporting, cultural and sociological heritage of the Principality. He estimated the economic value of the event each year as 100m Euros. Local residents also recognise this value and tolerate weeks of inconvenience while the track infrastructure is constructed before the race then demounted afterwards.

Monaco has a burgeoning reputation for sport. There is a popular annual tennis tournament; this year it will be the start point for the Tour de France; and local football team AS Monaco maintains its place in the top tier of French football. All of these other sporting activities benefit from the reflected glory of the Grand Prix. It is a considerable achievement for what is a tiny if attractive city-state on the south coast of France with a population of 33,000. 

Of course the glamorous reputation is not founded on the Grand Prix alone. Prince Albert’s mother was none other than Hollywood star Grace Kelly and Monaco has long since attracted the wealthy and their yachts with its favourable tax regime. It also enjoys a stunning coastline setting and a warm climate. The importance of the Grand Prix is that it provides the perfect opportunity for Monaco to showcase its assets.

But there are warning signs. As The Times and others point out, there were empty stands for this year’s Monaco race weekend and Formula One generally is going through difficult times. Perhaps Monaco will have to look to other events to secure its glamorous reputation in future.

Sport’s Seasonal Disorder

It’s the traditional time of sporting transition from winter to summer in the northern hemisphere but there is no shortage of rightsholders who believe they can defy nature.

At its root, the original Anglo-Saxon notion of sport involves men or women following around a ball of some description on a grass surface. Those sports which require near constant running (football, rugby, field hockey and so on) have historically been played in the winter months because the running keeps you warm, whereas the sports that inevitably lead to a certain amount of standing around (tennis, golf, cricket, baseball) are played in the summer and tend to have to stop when it rains.

Hence the Masters Tournament that took place last week in Augusta, USA was, as always, the first “major” golf event of the season and in England the cricket season has just begun. In Monte Carlo the first outdoor men’s tennis event of the year in Europe is reaching its conclusion.

Sporting rightsholders, who are virtually all based in the northern hemisphere, long ago worked out that they could extend their seasons by hosting events in places with the right climate. For this reason the global tennis season starts in January in Australia and golf’s European Tour goes to such un-European places early in the year as Dubai and South Africa.

So far, so good. But, under pressure in a crowded and competitive calendar, rightsholders sometimes seek to defy nature. The Formula 1 Petronas Malaysian Grand Prix in the first week of April was wrecked by a monsoon, which is a fact of life in the early evening in Kuala Lumpur in April. The Daily Mail and others criticised the decision to hold the race at 5pm to suit European broadcasters when a race held earlier in the day would have been less likely to suffer interruptions.

The second season of the Indian Premier League starts today in South Africa. When the event was first conceived it was squeezed into a short window in April and early May in the already over-crowded cricketing calendar. Such is the financial power of the Indian cricket economy that other nations have had to compromise and accept the disruption to their domestic schedules.

Due to recent tragic events in India, the organisers were compelled to move the tournament to another country at a few weeks’ notice. England was ruled out principally because there is too much rain in April to play a packed programme of fixtures. Instead, South Africa has taken on the challenging task of organising a big event with very little time to prepare. Although the weather is likely to be favourable and there is a  strong following for cricket in the country, the regular domestic season has just finished and it remains to be seen if the passion and enthusiasm of last year’s event can be replicated in another part of the world.

In the circumstances, all sports fans will hope that the IPL in South Africa is a success. Nevertheless, other sports rightsholders should take heed that it is a big gamble to host major events out of season and away from their regular home.