Last month, I wrote about the way in which Formula 1 is constantly changing and how the sport must continue to adapt and change to do whatever is required to stay successful. One sign of this kind of thinking came with the Netflix F1 documentary series ‘Drive to Survive,’ which was primarily the work of Sean Bratches – who was F1’s Managing Director of commercial operations until just before the Covid-19 pandemic began in early 2020.
Sean was a visionary, and a man of boundless energy and ideas. Some of them were brilliant, some of them were not, but his lasting legacy to the sport will be ‘Drive to Survive.’ Bratches transformed F1 by developing more proprietary content and introducing digital platforms to better serve modern fans, while also introducing Formula 1 to new audiences around the globe. That has added value to the business – despite the setbacks of the pandemic. To put that into perspective, when Liberty Media bought the commercial rights holding company of F1 in 2016 it paid out $4.4 billion and with the debt that F1 had, F1 was valued at around $8 billion. Today, the business is reckoned to be worth around $13 billion – with the debt having been reduced significantly. Netflix is now filming for Season 4 of ‘Drive to Survive’ and, unusually for the streaming business, the sport is producing better numbers with each season. Normally, the figures for any Netflix series fall as time goes by. This had led to new fans, more live ticket sales, better TV ratings and bigger merchandise sales. All he really did was to rethink the way that F1 told its story… taking viewers behind the scenes in F1.
Chase Carey, who was the Chairman and CEO of Formula 1 before stepping back to become Non-Executive Chairman, was a man who let Bratches get on with it. Carey preferred to work in the background, but his legacy to the sport will be perhaps even more impressive than that of Bratches because Chase managed to get everyone involved in F1 to agree to a budget cap, while also delivering a new Concorde Agreement – with which everyone was not unhappy. These two things, when considered together, create something extraordinary. F1 teams have stopped being seen as money pits and now have the potential to become profit centres. We have begun to see the results of that with the takeover of Williams by the investment company Dorilton, and the sale of a third of McLaren to US investors.
When he was breaking ground on the new Aston Martin F1 factory at Silverstone the other day, Lawrence Stroll said that he is intending to evolve the team ‘into a £1 billion business’ in the course of the next four to five years. This is probably true. Stroll also said that he intends the team to become ‘a Formula One World Championship-winning organisation’ within the same period of time. I doubt that – at least in the current set of circumstances.
But Chase Carey’s legacy might help him…
The flaw in Stroll’s thinking is that a customer team is never going to be allowed to be in a position to beat a factory operation – at least not on a regular basis. Thus, if Aston Martin is to be successful in F1, it must have its own engines – or at least an exclusive supply of power units provided by a company that does not run a factory F1 team. Now, one can argue that perhaps Stroll will one day be able to buy the Mercedes engine division if the German firm decides to quit Formula 1, but, if you think about it, there’s no logic in Mercedes doing that, as the sport provides it with fantastic promotional value. Moreover, its outlay is being reduced because of the cap on spending and the increase in revenues. All of this means that Mercedes has an asset that is worth a great deal of money. So, why would the firm sell that unless it really needs to do so?
Aston Martin cannot go off and find a new engine partner because it really isn’t possible to have an Aston Martin-Chrysler, so the only logical conclusion is that Aston Martin will need to have its own engine programme, just as Red Bull is currently developing – having acquired the Honda F1 programme. Red Bull’s success between 2010 and 2014 was unusual in that Renault had bailed out of F1 as a team owner after the disastrous Singapore Scandal in 2009, but remained involved as an engine supplier, allowing Red Bull to have factory-supported status. Once Renault decided to return, Red Bull had to face up to the reality that it needed either a new partner – or in-house engines. In the end, it chose Honda and was lucky enough to be able to do a deal to acquire the Japanese firm’s F1 programme at a time when it doesn’t really make a lot of sense to sell.
To be fair to Stroll, he is not the only one in this situation, as the sport has three manufacturers who are enjoying the advantages of F1 without making the full investment in becoming engine manufacturers – Alfa Romeo and McLaren being the other two. Some think that Red Bull’s plan is to sell its entire F1 operation to Audi or Porsche, both of which are showing interest in being involved in F1 in the future when the engine rules change, but this makes no sense at all because both already have F1 standard racing facilities in Germany, and if they come into F1 they will start their own teams. So, why buy something that you have already?
Ultimate success in Formula 1 depends, therefore, on engines, as the age when teams using customer engines were able to win races has faded away. The sport is now set up in a way that makes it logical for manufacturers to be directly involved. There will still be customer teams, which are useful in many ways, but these are unlikely to ever be able to beat the factory teams. Thus, there will be a two-tier system in F1, and anyone who has ambitions to win World Championships needs to have either its own engines or to have a manufacturer that is willing to build engines and let others race them.
With F1 teams becoming more valuable and potentially profitable, it makes little sense for a manufacturer not to be directly involved.
The best thing for Stroll & Co to do is to argue for cheaper engines in the future…
Joe Saward has been covering Formula 1 full-time for over 30 years. He has not missed a race since 1988.