WhiteBlue wrote:F1 Darwinists like Pup think that the big teams with huge financial muscle and endless resources should be allowed to do as it pleases them. Having a grid of five or six teams would not worry these people if the big teams can run more cars.

WhiteBlue wrote:

myurr wrote:As an aside it's more important than ever that the rules are clear and fairly judged, rather than be based upon the whim of the FIA. With budget limitations in place the interpretation of the rules is going to be more important than ever before - with FIA judgments having season long implications for teams performance. I don't have much hope.

The rule making is responsible in the first place for having clear and fair rules. Then it is the responsibility of the FIA to implement it fairly.

Lets have a look at the latest hash we had this season. It started with the FIA saying the downforce should be limited to 1.25 tons. Everybody agrees about the reduction of downforce but the teams said they don't want a fixed number and set up the OWG to work out a rule based on aerodynamic research. After two years of delay the reduced downforce configuration was applied. Only a clever guy at Super Aguri fond a loop hole in the OWG rule to bring in double deck diffusors. SA go bust and their engineers or their ideas end up at Brawn, Toyota and Williams. Now the ball is back at the FIA and it takes a decision to make the DDD legal for all. The decision is clear and the same for all.

So who fucked up in this case? Obviously the teams because their rule proposal was ambigous and not clear. Who gets the blame? The FIA because they agree to the rule that was written by the teams. Had they implemented their own version against the teams the rule had been clear. We can learn from this example that one should not allways put the blame to the federation. If they dictate the rule they get fire. If the adopt what FOTA wants they get fire as well. In any case they get blamed.

Pup wrote:

WhiteBlue wrote:F1 Darwinists like Pup think that the big teams with huge financial muscle and endless resources should be allowed to do as it pleases them. Having a grid of five or six teams would not worry these people if the big teams can run more cars.

I guess the appropriate response is to paint your version of F1 as some sort of socialist racing utopia, where budgets are dispensed by the FIA Central Committee, and equality for all is guaranteed. But, being one of the three remaining socialists in America, I can't bring myself to crib from the Fox News playbook.

The thing about racing is that it is inherently a capitalistic endeavor. There's no public good to racing, at least not one that can't be otherwise satisfied through a multitude of other existing venues. So there's no moral imperative (yes, the drama, I know) to ensure the success of independent teams vs their massively funded counterparts - or vice versa, for that matter. It's all simply a matter of economics to 1) maximize the value of the sport and 2) to manage the distribution of that value among the participants in a way that grows/maintains/keeps alive the whole endeavor.

So it's a business, plain and simple. Bernie is the CEO, CVC are the shareholders, the teams are the employees, the circuits and media are the distributors, and we are the customers. The FIA is what it is - an outside regulator. Each player, with the exception of the FIA (theoretically), participates due to the value they receive and their goal is to maximize both the overall value of the sport and their personal share of it. FOTA is no more than a trade union, in every sense of the word.

Like Ciro said, F1 gains its value through the insane amounts of money that are spent. Why is F1 the pinnacle of motorsport, as we're told? Are the cars the fastest? No. Are the drivers the best? Debatable. Is the racing so downright riveting that I can't bear to miss a race? Hardly.

And yet we watch religiously. And spend the rest of the year boring each other to death about it. Obviously we do think that it's the pinnacle of racing. We've assigned the sport a value, and we've done it solely on the irrational belief that if the drivers are paid the most, if the teams spend the most, if the races cost the most to attend, and if the rich and famous think it's the best, then undoubtably it is. And to a large extent, it does become just that. A self-fulfilling prophecy of sorts, because the spectacle that results is more than the sum of its parts.

Like I said earlier - if there is a threat to the sport today, it is a threat on CVC, not the teams. The teams will spend what they spend. Most are debt free, and as long as the cost to enter the sport is reasonable (it's downright profitable at the moment), then we'll have cars on the track. If there is a problem with the teams, it will come from a the income side rather than the expense. If CVC begins to make less, then the teams will get less - and if the sport loses value to it's sponsors, there will be less of them to go around. And obviously, the more teams we have, the worse both of those problems would be.

That said, I think the teams can adjust their budgets to what they receive. CVC on the other hand has enormous debt, and if their sources of income begin to wither - if their media parters, venues, and track sponsors begin to default or renegotiate at lower rates, then they will be unable to pay the debt. Because of the structure of the loans, however, that can't happen until the loans mature. In the meantime, they can just swap their interest payments for additional debt. If that happens, the sport will find itself in the hand of the banks once again. It would make the headlines, and the banks would take a huge hit. But as far as the sport itself is concerned, I don't see how it would be affected.

WhiteBlue wrote:All nicely said, only that you don't address the points you quoted in the first place.

F1 isn't just a business. It is owned by the FIA which represents the organized motorists and motor sport aficionados around the world. The business side is rented out but the FIA still has the right and obligation to direct the sport in accordance with their philosophy. So an element of common good is certainly involved, it is just not a socialist philosophy rather than the spirit of welfare of all motorists. This is why we will see an increasing element of sustainability and common sense beyond just making money. Left to Bernie and Montezemolo we would not have any new teams on the grid and the rules would eternally be made to suit Ferrari. I hope that Todt will continue a course of FIA independance once he identifies with his new team.

ISLAMATRON wrote:Cost is real, "value" is subjective... the BS marketing firm is selling a load of crap... The "value" of Brawn's "marketing" is exactly what they were paid for it(Virgin paid about 400K per race). If the value was any more than that the BS marketing firm(all of them are BS actually) sure did miss out on a huge commission. Instead of making up imaginary numbers they should have been lining up sponsors.

The Budget cap would have in no way "taken value out" of F1... that is just more marketing BS... 18 or less car grids is what would have taken value out of F1.

A billboard facing the highway holds the same marketing "value" regardless of what the person paid to advertise their product on it, the same number of eyes fall upon it. Same for F1, the winning car holds the same number of eyeballs regardless of how much it cost to be made/developed, anyone argueing any different is a liar, most probably a professional one, in the field of marketing.

Ciro Pabón wrote:It's true that Toyota, Bridgestone, BMW and Honda left: I think that tells us someting about car manufacturers and F1: it's the end of an era. FOTA is out.

Pup wrote:

ISLAMATRON wrote:Cost is real, "value" is subjective... the BS marketing firm is selling a load of crap... The "value" of Brawn's "marketing" is exactly what they were paid for it(Virgin paid about 400K per race). If the value was any more than that the BS marketing firm(all of them are BS actually) sure did miss out on a huge commission. Instead of making up imaginary numbers they should have been lining up sponsors.

The Budget cap would have in no way "taken value out" of F1... that is just more marketing BS... 18 or less car grids is what would have taken value out of F1.

A billboard facing the highway holds the same marketing "value" regardless of what the person paid to advertise their product on it, the same number of eyes fall upon it. Same for F1, the winning car holds the same number of eyeballs regardless of how much it cost to be made/developed, anyone argueing any different is a liar, most probably a professional one, in the field of marketing.

It's a common mistake to equate value and cost; but they aren't the same, and are not necessarily even related. If a shirt costs $50, that doesn't mean it has a $50 value to me. If it does and I have the money, I might buy it; but if it doesn't I won't. The guy next to me however might value the shirt at $70, so for him its quite a bargain. Cost can certainly affect perceived value, of course. I know a little about wine, for example; but not enough to properly value the wines offered on a restaurant's wine list, especially if I don't recognize any of those offered. So I default to the optimistic belief that the price of the wines accurately reflects their quality. That, or I'll sheepishly admit my ignorance to the waiter, in the slightly-less-irrational belief that he will point me to the best value for my money rather than to the wine the restaurant bought too much of or gets the best margin from.

An object's value is also affected by things with which it is associated. A shirt sold at Wal Mart will have less perceived value than the exact same shirt sold at Ralph Lauren. Likewise, a brand of wine will have less perceived value when advertised on a billboard in a poor neighborhood than when advertised on one in a fancy shopping district. It's irrational, but we're all victims - marketers might trade in BS, but their industry is far from being BS itself.

And it's frightfully easy to destroy value. Levi's jeans is the great example of that. They used to be considered the epitome of what a pair of jeans was supposed to be, and had everything going for them - so much so that the only real competitors they had were in the lower end of the market. Then some bright MBA piped up and said that they would all be sailing magayachts if they cut costs and allowed Wal Mart to carry their products. They did, and long story short, practically overnight their brand's value was utterly destroyed and it almost took the company with it. Today, they are considered a low end commodity product, while countless others have sprung up to fill the void at the top.

Almost every market has a structure like this. If a company wants to enter a market, it has to decide how to position itself based on where it thinks the best profits are to be found - is it low-margin, high volume; or high margin, low volume? Do you want to be Nokia, with 26% of the smartphone market; or Apple, with just 8%? (answer: Apple)

F1 is obviously one of those elite brands. It's value in that respect depends on both concrete and ethereal factors. Sure, there's the direct value of the sheer number of eyes watching, but there is also the value that each set of eyes assigns to what they see. Because F1 is considered the pinnacle of motorsport, those who participate in it - be they a sponsor, competitor, or venue - take on the same cachet. And the more elite we perceive the sport itself, the more elite we perceive those who participate. Obviously, there is a perfect synergy then between the sport and sponsors like TAG, competitors like Ferrari, and venues like Monaco or Abu Dhabi - products that trade almost entirely on their exclusivity. Then there are those who want to capitalize on the sport's ravenous competition that all that money fosters - brands like BMW or Bridgestone for example, who want their products to be perceived as technically superior. The flip side is that there are brands which would gain little from associating themselves with the sport.

Here's an interesting set of stats to ponder. Surveys of NASCAR show that 72% of the fans would 'almost always' or 'frequently' purchase brands that are associated with the sport. The same survey of F1 fans? 28% In fact, more F1 fans would 'almost never' choose the F1 sponsor (32%) than would choose it! The reason for this isn't that NASCAR fans are somehow more loyal than F1 fans, but rather that F1 sponsors are advertising to a smaller, wealthier percentage of their audience. The rest of us are just voyeurs. Someday, right?

So this is why I'm bewildered at the FIA's stance on lowering the cost of the sport. When you lower the cost and reduce the technology, you eliminate the two primary factors in setting the sport's perceived value. The same number of people might watch and attend - perhaps even more - but they won't perceive the sport and those who participate in the same way. You've screwed the sport's fundamental economy. If F1 isn't the most expensive, technologically advanced and therefore competitive form of racing, then what is it? Just another series like any other. Take it down market, and be ready to suffer a similar fate as Levi's. It would survive, of course; and the sport that emerged might be the same or even more enjoyable to many of us. But it's position as the best of the best will be threatened.

Think about it. If right now, Ferrari, Mercedes, McLaren and Renault left F1 and instead focused entirely on LeMans prototypes, spending outrageous amounts, hiring the best drivers, etc., leaving F1 with budget caps and spec Cosworth engines, would you still consider F1 to be the pinnacle of motor racing? Hardly.

WhiteBlue wrote:All nicely said, only that you don't address the points you quoted in the first place.

F1 isn't just a business. It is owned by the FIA which represents the organized motorists and motor sport aficionados around the world. The business side is rented out but the FIA still has the right and obligation to direct the sport in accordance with their philosophy. So an element of common good is certainly involved, it is just not a socialist philosophy rather than the spirit of welfare of all motorists. This is why we will see an increasing element of sustainability and common sense beyond just making money. Left to Bernie and Montezemolo we would not have any new teams on the grid and the rules would eternally be made to suit Ferrari. I hope that Todt will continue a course of FIA independance once he identifies with his new team.

donskar wrote:Outstanding post, Pup. Very perceptive.

F1 will be the pinnacle or it will be replaced by a class that is. Humans crave the ultimate in all endeavors. Fans, sponsors, entrants gravitate that way.

I root for the underdog (usually), so I understand the romantic notion that less will be more. Let's examine the assumption that less money will guarantee more creativity: do some of us assume McLaren and Ferrari employ mediocre, run-of-the-mill engineers? Why will less money guarantee brilliant solutions? How will less investment ensure technial advances? How will (potentially) pushing F1 down closer to cheaper, less glamorous classes enhance its success and attractiveness to fans, sponsors, and entrants?

Pup wrote:

donskar wrote:Outstanding post, Pup. Very perceptive.

F1 will be the pinnacle or it will be replaced by a class that is. Humans crave the ultimate in all endeavors. Fans, sponsors, entrants gravitate that way.

I root for the underdog (usually), so I understand the romantic notion that less will be more. Let's examine the assumption that less money will guarantee more creativity: do some of us assume McLaren and Ferrari employ mediocre, run-of-the-mill engineers? Why will less money guarantee brilliant solutions? How will less investment ensure technial advances? How will (potentially) pushing F1 down closer to cheaper, less glamorous classes enhance its success and attractiveness to fans, sponsors, and entrants?

Thanks, and I'll second your point as well. It's a bit silly to think that restricting budgets will somehow unleash some pent up supply of creativity; as if engineers have been hoarding their clever ideas for a day when budgets are finally capped.

Jersey Tom wrote:Budget caps don't limit innovation. If anything, they encourage it. Can't just throw money at the problem then.. have to creatively make the most of what you have...

Why Ferrari is tough on the small teams
November 6, 2009 by joesaward
The other day, in an apparently idiosyncratic press statement, Ferrari poured doubts on the viability of the Manor, Lotus, USF1 and Campos Meta Formula 1 teams. The Italian team said that just because the same number of teams were sitting around the table did not mean that they had the same quality. In some respects that is a fair point but it hardly seems like something that the team that leads FOTA should be saying. Surely, it is in FOTA’s interest to talk up the new teams rather than talking them down?

“We must also wait and see just how many of them will really be there on the grid for the first race of next season in Bahrain and how many will still be there at the end of 2010,” Ferrari said.

Hmmm…

And then today Ferrari boss Luca di Montezemolo is again talking about teams running three cars. What is that all about when there are, in theory at least, 26 cars on the grid next year?

The answer is obvious if you ever study Machiavelli. And it explains exactly what is going on at a political level in Formula 1. In the same statement Ferrari hinted that the reason that manufacturers are withdrawing from F1 is because of Bernie Ecclestone and Max Mosley. Ferrari did not name names but the implication was thicker than icing on a wedding cake. The team seems to believe that Mosley and Ecclestone drove the manufacturers out of the sport in an effort to break the power of FOTA. With a group of strong manufacturer-led teams working together, FOTA was strong. With a bunch of weak new teams, FOTA is not. All it takes is one of the new teams borrowing some money from Ecclestone and he will have power to influence FOTA. In the old days that was a role that was consistently filled by Flavio Briatore but the Italian started believing in the power of FOTA and saw an opportunity to take over from Ecclestone. The end result of this was that he fell from a very great height because he got caught doing something wrong and suddenly found that he had no friends at all. It was a long drop and a painful thud at the bottom.

The chances are that some of the new teams (and perhaps even some of the older ones as well) will end up being beholden to Mr E and that, therefore, is the danger for FOTA. So, strange that it may seem, it is actually better for Ferrari and others to try to talk down the new teams so that they fail and thus do not get a voice in FOTA business. If the numbers of cars falls too far, then three-car teams is the answer…

Are you following me?

FOTA had no say in which new teams were picked for 2010. However there are ways of dealing with the weak and feeble that the Spartans employed centuries ago: there was no coddling, if a child was weak it was left out at night on a hillside. Only the strong survived. Children were treated harshly to toughen them: they were beaten, made to march without shoes and forced to go without food. To survive they had to be tough. Clearly this is Ferrari’s belief.

Watch out too for the teams moving closer to the FIA. The federation has a new boss and he has campaigned saying that he will make the sport better and stronger. This means that ultimately he will try to get more money flowing into the sport and less going out. CVC Capital Partners is taking 50% of F1’s income and is giving it to banks. They are in it for the money and they have taken plenty already. They want more. The problem they face is that at the end of the new Concorde Agreement in 2012 the teams are pretty keen to cut back CVC’s take from 50% to around 15%, which is a much more sensible figure. The only way that CVC can hope to keep its current slice of the pie is if the teams are divided and conquered and so it is fair to suggest that the primary goal of CVC and its lieutenants in the next few years will be to break the power of the teams. The teams know this and they understand the dangers. In the circumstances they need to accept the losses that happen; they need to avoid getting allied with weaklings and they need to find strong new friends.

Looking into the crystal ball, I see the teams and the FIA working together to win the sport back from the financiers…

Convoluted? No, just business.

Why Ferrari is tough on the small teams
November 6, 2009 by joesaward
The other day, in an apparently idiosyncratic press statement, Ferrari poured doubts on the viability of the Manor, Lotus, USF1 and Campos Meta Formula 1 teams. The Italian team said that just because the same number of teams were sitting around the table did not mean that they had the same quality. In some respects that is a fair point but it hardly seems like something that the team that leads FOTA should be saying. Surely, it is in FOTA’s interest to talk up the new teams rather than talking them down?

“We must also wait and see just how many of them will really be there on the grid for the first race of next season in Bahrain and how many will still be there at the end of 2010,” Ferrari said.

Hmmm…

And then today Ferrari boss Luca di Montezemolo is again talking about teams running three cars. What is that all about when there are, in theory at least, 26 cars on the grid next year?

The answer is obvious if you ever study Machiavelli. And it explains exactly what is going on at a political level in Formula 1. In the same statement Ferrari hinted that the reason that manufacturers are withdrawing from F1 is because of Bernie Ecclestone and Max Mosley. Ferrari did not name names but the implication was thicker than icing on a wedding cake. The team seems to believe that Mosley and Ecclestone drove the manufacturers out of the sport in an effort to break the power of FOTA. With a group of strong manufacturer-led teams working together, FOTA was strong. With a bunch of weak new teams, FOTA is not. All it takes is one of the new teams borrowing some money from Ecclestone and he will have power to influence FOTA. In the old days that was a role that was consistently filled by Flavio Briatore but the Italian started believing in the power of FOTA and saw an opportunity to take over from Ecclestone. The end result of this was that he fell from a very great height because he got caught doing something wrong and suddenly found that he had no friends at all. It was a long drop and a painful thud at the bottom.

The chances are that some of the new teams (and perhaps even some of the older ones as well) will end up being beholden to Mr E and that, therefore, is the danger for FOTA. So, strange that it may seem, it is actually better for Ferrari and others to try to talk down the new teams so that they fail and thus do not get a voice in FOTA business. If the numbers of cars falls too far, then three-car teams is the answer…

Are you following me?

FOTA had no say in which new teams were picked for 2010. However there are ways of dealing with the weak and feeble that the Spartans employed centuries ago: there was no coddling, if a child was weak it was left out at night on a hillside. Only the strong survived. Children were treated harshly to toughen them: they were beaten, made to march without shoes and forced to go without food. To survive they had to be tough. Clearly this is Ferrari’s belief.

Watch out too for the teams moving closer to the FIA. The federation has a new boss and he has campaigned saying that he will make the sport better and stronger. This means that ultimately he will try to get more money flowing into the sport and less going out. CVC Capital Partners is taking 50% of F1’s income and is giving it to banks. They are in it for the money and they have taken plenty already. They want more. The problem they face is that at the end of the new Concorde Agreement in 2012 the teams are pretty keen to cut back CVC’s take from 50% to around 15%, which is a much more sensible figure. The only way that CVC can hope to keep its current slice of the pie is if the teams are divided and conquered and so it is fair to suggest that the primary goal of CVC and its lieutenants in the next few years will be to break the power of the teams. The teams know this and they understand the dangers. In the circumstances they need to accept the losses that happen; they need to avoid getting allied with weaklings and they need to find strong new friends.

Looking into the crystal ball, I see the teams and the FIA working together to win the sport back from the financiers…

Convoluted? No, just business.

WhiteBlue wrote:The explanation for Ferrari's opposition to new teams sounds somewhat lame. Ferrari do not want to compete the hard way but by every cheat or secret vetoed rule they can get. So the FIA is well advised to kepp filling the grid with independant teams and make sure they have an independant engine supply. It looks like this is developing rather nicely.