Since the initial uprising in Tunisia, followed by Egypt, most prevalent in Libya, the idealised potential outcome of the 'Arab Spring' as a force for change has been the centre-stage issue across the GCC and MENA.
How the actions of each country ultimately play-out toward a political and leadership end remains to be seen. The apparent popular opinion is that the absence or disposion of the ruling elite and their parliamentary powers will be replaced by a consensual, truly representation model.
Yet the true ideological spectrum between opposites of 'autocratic aristocracy' and apparent 'socialist democracy' is vast and complex. Regime change outcomes rarely the result of harmonious agreement, but realised through social leverage & rhetoric, in short playing to the crowd with promises easily made but ultimately far harder to keep, even if indeed the promise be genuine.
History is witness to the battles of regime change and indeed its failures. From a short-lived Cromwellian 'Protectorate' England of 1653-59, the French 'Terreur' period of 1793-4, post-WW1 German Socialism, and more recently the failings of Ukranian 'democracy' which reportedly has done little for the people en mass. Power and wealth instead switches to the hands of a different, new self-styled, often ego-centric, leadership.
Thus we have yet to retro-spectively witness whether the 'Arab Spring' brings about a new era of speedily injected positivism, or one of factional political infighting. History typically suggests the latter, which should be a warning to both incumbent 'leaderships' and the apparent 'freedom fighters'.
But of course, the reality is far more complex than portrayed.
As past examples have shown, leadership struggles inevitably create internal disruption and in turn economic disruption, so creating failing conditions across all of society, from the everyday workings of the public-sector to the strategic decision-making of the private sector. The reality of economic stability suffers at the hands of social idealism.
This appears the case in Bahrain.
Debate continues about the hosting of the Bahrain Grand Prix.
The original event date of 13th March was post-poned under the mounting pressure of social demonstration, the GP Asia series already abandoned. Bernie Ecclestone's FOM (Formula One Management) consulted the FIA, participant race teams and Bahraini officials and a new consensual date was reset for 30th October.
However new reports state that even that re-instated date is likely to been canceled.
This it appears is due to the race teams reticence to participate, this reticence no doubt generated by their corporate sponsors' understandable unwillingness to perceptually afflict their brands with the stain of metaphorical blood. It is after all a sensitive issue for all involved, and at this point in time, with stock markets stuttering, corporations are having to act defensively on the PR front. Thus the reticence of the F1 teams is equally understandable given their reliance on sponsorship.
However, without wanting to appear deliberately controversial, investment-auto-motives believes that the race should be run in an alternative format, for the long-term economic and social sake of Bahrain. A middle-way should be sought.
One that demonstrates to the people why F1 should be viewed not as a glamorous and frivolous 'western' event but critical as an economic hub, a wealth generator and of strategic industrial-policy importance for the population at large.
The cancellation of the F1 event would be a time-tabling inconvenience to FIA, and a re-scheduling inconvenience and cost to the teams. But to be candid they see it as little more than a track destination, focus instead realistically limited to their near-term goal of driver and constructor championships, technical attention directed at the track layout and facilities with commercial attention directed at maintaining sponsorship good-will.
Thus the sport itself is little effected by a Bahraini cancellation, the reported £24m loss for FOM hard to swallow but nevertheless able to do so given the global demand for hosting F1. Other EM nations offer welcoming open arms, themselves hoping to re-play the Bahraini/GCC F1 model backed by growing petro-dollar SWF pots.
But to Bahrain, the F1 event serves not only as a great national day of motor-sport which gathers a car-crazy population, nor does it simply spot-light Bahrain on the world-map as an emergent powerhouse or as a tourist destination. The F1 event demonstrates an economic growth path for the country itself. As the pinnacle of motorsport adeptly aligned to aerospace materials and science it serves as a technology platform demonstrator, its advanced technology aligned to many spheres from eco-power engineering & generation to creation of private light aircraft design and assembly, these but only 2 derivative applications that have been seen to assist ambitious EM nations.
Beyond of course it also represents a retail opportunity through merchandising for the events held at the track/stadia, merchandise which can be manufactured or assembled in Bahrain.
But critically, the F1 race highlights the infrastructural investment put in place to serve not only F1, nor only motor-sports, but the very nub of leisure-based industries that will help the cross-cultural integration of Bahraini's whatever their Islamic interpretation or their ancestral homeland.
In short, it gives a focus to the nation from which many social, economic and technical advantages have already been derived, and must continue to be derived. On the surface it may look like a vanity project for the Bahraini Royals and their guests, but the multiplier effect is proven, and appears to have much potential remaining therein.
The loss of a Grand Prix event cannot be conceivably compared to the loss of human life seen in the demonstrations. But if well managed a resumed Bahrain GP could act as to portray an optimistic future for the country, instead of the fractious one presently being transmitted to the world.
That means finding a solution that is amenable to all stake-holders.
To this end, investment-auto-motives believes that the race should take place on 30th October as re-scheduled, in a sensitive manner.
But that it may have to do so with the basic 'rules' the event re-written. As for the hosting itself by the Al-Khalifa Royal family, less ostentatious glamour - thus in keeping with Islamic tradition - and greater explanation of F1's strategic role for the national good. If social unrest continues with likelihood that the race attract demonstration, it should be run as a televised yet 'closed' event, this not simply as an order by the ruling elite directed at the public, but themselves displaying their similar abstention / deprival ; the race still run to demonstrate the Bahraini promise and contribution to Grand Prix as part of its 'international economic pact'
The race teams should agree with their sponsors as a uniform understanding that corporate sponsorship decals will not be displayed, thus cars run 'naked' in the spirit of both social understanding and the teams and drivers implored to drive as true gentlemen, reflecting their heroic forebears and demonstrating an ethical standard which itself could be more broadly influential.
The easy ploy for all concerned is to abandon the Bahrain GP Race, but this would simply demonstrate to the world that major advances made by the Gulf nations are being internally eroded - so replaying the age-old negative Arab stereotype.
The more difficult but historically significant ploy is to re-interpret the challenge as an opportunity, all stakeholders - Crown Prince Salman Al-Khalifa, Bernie Ecclestone, Team Bosses & Sponsors - intent on demonstrating to Bahraini's and the world alike that a sensitive 'one-off' an alternative formula can be attained.
One that is able to display the true nature of F1 as both social glue (without typical propaganda) and as serving as a (well communicated) foundation-stone to technological comprehension and self-competence and so as critical economic pillar.
Showing posts with label Abu Dhabi F1. Show all posts
Showing posts with label Abu Dhabi F1. Show all posts
Wednesday, 8 June 2011
Saturday, 23 April 2011
Micro Level Trends - Formula One - "Gordon Bennett!"...Murdoch Seeks Re-Configuration
Born as the son of a regional 'press-baron', Rupert Murdoch has arguably surpassed the achievements of other legendary 'father-son' press-barons, himself expanding the NewsCorp empire's commercial reach across the globe. The media conglomerate holds too many newspaper, magazine, book, TV, film, web-site and sports names to list, but primary titles being: Dow Jones, The Wall Street Journal, Fox, 20th Century Fox, SKY (inc. BSkyB & ITV in the UK), STAR TV, LAP TV. National Geographic and MySpace.
The corporate build strategy has been both vertical and horizontal, building inter-connected backward and forward value chains, aswell as exploiting geographical expansion as 2nd world countries morphed into EM regions; thus typical conglomerate activity. Thus Murdoch and NewsCorp have been seen as both a welcome antidote to monopolistic national-service media, or as villainous global press giant intent on world domination.
Of course, whatever the viewpoint, NewsCorp is a NASDAQ listed company and as such participant in the frenzied growing media sector alongside the likes of TimeWarner and the Walt Disney Co, aswell as challenged by a raft of 'arriviste' EM region TCT (Television-Communications-Technology) companies who themselves seek home advantage.
Murdoch's latest reported ambition is to take control of the effective management and so media rights to Formula One motorsport – a much coveted sphere given its global TV reach and track & team sponsorship deals. The equally ambitious and tenacious Bernie Ecclestone has been the 'F1 supremo' for decades, himself building-up both his 'ownership' of the sport as effectively its publicity broker whilst also maintaining and raising the standard of the sport's glamour and commerciality, largely by ensuring that the financial injections into infrastructure by government backed 'new world' EM countries are paralleled to a lesser extent by 'old world' countries re-investing in their F1 racetracks.
Thus, Ecclestone has undoubtedly been the driving force behind the sport, adding global exposure through new infrastructure and media transmittal, which in turn drove ever more valuable commercial sponsorship deals which in turn generated bigger R&D and operational budgets for the F1 teams involved. A veritable virtuous circle of value-building until the 2008 financial crisis effectively 're-set the chronograph' for the sport, which alongside broadly changed FIA regulations to both flatten the playing field between dominant and new-entry teams and introduce new realms of eco-tech into the F1 cars which should theoretically provide technology trickle-down years later into VM's own road cars.
Murdoch well understands how the shape of the sport has developed, and recognises that from a broad-brush valuation perspective, now at just past the bottom of the economic cycle and with renewed traction, F1 itself sits at the beginning of a new era. He sees the new & renewed infrastructure that can draw entertainment-seeking crowds for F1 and other events / festivals, he recognises its global reach for massive audience viewing potential, and critically believes that 'public access' to F1 – and so its potential commerciality (value-advantage) - is limited by present-day TV, website and general media rights.
It seems he wants to do for F1 what SKY did for the televisual and experiential evolution of football / soccer, in which it bought the TV rights and added new user-functionalities by which the user could better command his/her interactive viewing and so personal enjoyment of the game. But beyond this, Murdoch sees the commercial value of world-wide mobile-phone user-bases and the ever increasing importance of smart-phone connectivity, which is transforming (and leading) people's interests and thus disposable spending profiles.
Hence the reported talks with Carlos Slim Helu and America Movil. His Mexico City based mobile telecoms network, itself with sizable EM market reach across Mexico, Latin America, the Caribbean aswell as 'low-end' USA. It sits as the world's 4th largest network provider to 265m users and has laid over 290,000 kms of fibre optic cable, the most expansive coverage yet.
Beyond telecoms Carlos Slim Helu has interests in aluminium and tyres, thus natural corollaries to the motor industry, and sought in 2008 to buy the Honda F1 team, with his sub-company Telmex now sponsoring Sauber F1 in 2011 season.
Of course none of this is lost on Bernie Ecclestone or CVC Capital Partners, his latter-day business partners in FOM (Formula One Management), the impact of the TCT sector a highly visible force for F1's commercial evolution given team sponsorship by the likes of AT&T, newer team entries by Virgin(Media) and of course that Sauber F1 deal with Telmex.
The eco-tech re-orientation of F1 in its vehicle development has arguably made for a greater and more direct link between F1 high-tech and next generation premium and mainstream cars, which is all to the eco-good and re-energisation of western automotive manufacturing. But the real challenge for those that lead the entertainment face of F1 is to grow its global commerciality. The obvious question for the investment community is “who is best placed to commercially grow that external face of the F1 business model?”.
By the very nature of the reported bid offer Murdoch intimates that Ecclestone & CVC have limited means to do so when compared to the leverage a JV between NewsCorp & America Movil, the former's influence 'inside' the sport, whilst the latter's influence 'external' through a plethora of media networks and channels.
Beyond stating in typical style that the report of a Murdoch bid is “rubbish”, Ecclestone & CVC will probably ultimately counter that his/their track record is the “proof of the pudding” and that they as the 'F1 brokers' are at ease sitting in that chair. Themselves then able to access the type of technical media advantage Murdoch-Slim offers through FOM's own self-created enterprises with TCT partners. Simply then a 'business as usual' extension using other media operators and telco providers, theoretically similar to having companies such as the UK's ITV bid for F1 transmittal rights, the television network accompanies by the telco network..
The F1 website Pitpass.com naturally defends the Ecclestone position, interestingly however, itself leveraged to suggest a F1 Ecclestone 2010 valuation of £6bn - £7bn. Furthermore, as a remote voice-box for Ecclestone & CVC it tries to rub salt into the issue by stating that if indeed a sale agreement was reached it would include a premium 'over-payment' due to the fact that Murdoch used his Sky News business editor Mark Kleinman to initially air the possible bid, instead of approaching privately.
So, the typical political confutation of such a matter roles on.
Yet, as ever in the complex world of business – especially in F1 - there are differing layers of possibility to any commercial imperative – especially so when involving an intrenched F1 supremo and a global press-baron.
Firstly, the leaked news story by Sky News could have been conceived as a first-step to initially buoy both NewsCorp and America-Movil's respective NASDAQ stockmarket valuations.
Secondly, such a move also re-ignites concerns for Eccelstone that the threat of a rival race series re-emerges in this case a successor to A1GP, conjured up between Murdoch and the team bosses to once again ply pressure on FOM given the re-tabling of the 'F1 Concorde Agreement' with the FIA (Federation Internationale de l'Automobile) which provides the basis for the profit-sharing of commercial rights income. Here it would be no surprise if Murdoch has been wooing team bosses with better paper-based income projections under his business model, given that any take-over bid would be better achieved with persuaded team bosses. Thus an agreement could have been privately made to have Murdoch publicise his bid intention at this critical juncture.
Motorsport seniors equate the involvement of a press-barons as both positive and negative, useful for injecting (always much needed) cash into the sport, but weary in the knowledge that the sport itself serves the purpose of a publicity vehicle for the press-baron's own commercial interests. It is an echo that harks back to James Gordon Bennett II, the legendary American originator of the Gordon Bennett Cup who offered recognition and reward to those American, English and German pioneers who counter the competitive technical advantage the French auto-manufacturers had at the very end of the 19th century. Critically his races being nationality-based set the traditional national colours/liveries for GP cars over the decades to come, but were latterly lost with private team involvement and commercial sponsorship.
The 'national race' idea was the core- philosophy behind the failed (but ever notionally hovering) A1GP race series, a championship intrinsically built around the car-manufacturers participating in F1, but seeking greater share of the commercial rights revenues which FOM and Ecclestone – CVC received. Thus A1GP was created as both a threat and bargaining chip in negotiations with FOM in the lead-up years to the previous Concorde Agreement in which F1 participants agree revenue share. It served its purpose to an extend, but eventually failed when VMs backed-away from the project, faced with depleting motorsport budgets, improved Concorde terms and unwillingness to leave the top-table that is traditional Grand Prix., even if it meant re-creating the origins of Grand Prix as A1GP (now notionally titled A10GP) promise.
For that promise, by default of being 'nation-based', means that a motorsports based international technology race could arise, today the likes of Venezuela, Russia or indeed China able to buy its way to winning, just as Germany did during the 1930s with Auto Union and Mercedes' 'Silver Arrows'. That then would only quicken the pace of brain-drain and technology shift from the Triad countries to the EM nations.
However, as a press-baron with undoubted Asian, Latin and global power, some might think Mr Murdoch could indeed feasibly orchestrate such a a re-direction of the sport via his involvement, simultaneously breaking what from an outside perspective appears an 'old boys club' hold on GP / F1, even if historically there have been successive power-grips on the sport. In doing so, effectively re-locating the power-base from 'insiders' (Ecclestone once a GP team boss) to an 'outsider'.
The concern inside F1 is that the championship itself might become subservient to, and so negatively re-shaped by, the commercial agenda of Mssrs Murdoch & Slim. The major concern being a loss of F1's 'aspirational aura' which serves 2 critical issues. 'F1 Aspiration' underpins the intrinsic business model which functions on a top-down basis (from premium hotel viewing balcony for Royalty to the availability of Ferrari merchandise in London’s premium Regent Street). And 'F1 Aspiration' also serves as a national development template for EM and developing nations, seen as both a national coup which puts it on the international map and furthermore the associated infrastructure provides an engine of economic growth both as a F1 tourist destination and as an entertainment centre for other cultural and commercial events.
Ecclestone has then built a true worldwide F1 legacy, one which he will not give-away easily, even if that means CVC sensibly taking the money if agreed terms could be met, Ecclestone might well want to remain as 'Chairman of the F1 Board' with a new partner replacing CVC (whom ever that might be) to protect his legacy. The typical 'GP hero' attitude is to drive to the very end.
Thus Ecclestone might be willing to replace CVC with another effectively silent-partner, but instead of simply being a collaborative party, Rupert Murdoch's ultimate intend must be to break the FOM powerhouse, and install his own commercial model.
Ecclestone calls the news story "Rubbish", yet is no doubt well aware of the intention, a parallel play of Murdoch's son James's effort to break the BBC's power-base relative to BSkyB's own growth hopes.
The accompanying diagram to this post (only available for the length of the post itself) shows investment-auto-motive's perception of the 'new' commercial model that would be ultimately proposed by Murdoch & Slim / NewCorp-America Movil.
It depicts the F1 commercial arena in a Venn Diagram style, on the left hand side 'F1's external world': that of the transmittal network and portals, and on the right hand side 'F1's internal world' depicting a matrix structure of teams and sponsors'. The tie-up between NewsCorp and America-Movil would be a natural one of complimentary operational activities and geographical coverage, thus setting the scene for infrastructure and customer portal ' interface, able to span Triad & EM worldwide reach.
This global reach, multi-portal business model would then theoretically allow Murdoch-Slim to demonstrate a 'supercharged' business model thus able to offer a more sizable income stream to the F1 Teams through the Concorde Agreement; itself possibly unchanged in terms of percentage splits. In short the divisions of the pie stay similar, but the pie itself grows. The model also gives Murdoch-Slim a reciprocity, since their empires could then probably better directly solicit the individual sponsors of the F1 Teams, the philosophy being that NewsCorp and America-Movil could offer a one-stop-shop multi-faceted global advertising base, thus the sponsors/clients could either save on advertising costs via their 'wholesale advertising' package, or with similar budget better target their messages.
This effort undoubtedly also has China in its sights given the size of its burgeoning car market and Murdoch's own marriage to Chinese-born Wendi Deng Murdoch (with his own Anglo-Chinese scions to control the business in later years.
To conclude, NewsCorp & America Movil have comprised an alternative F1 commercial model that better interlinks the 'internal' and 'external' facets of the motorsport, thus probably able to reach a broader and deeper worldwide audience. Yet simultaneously, its overtly commercialist attitude also generates a very real risk to the brand integrity and 'social good works' the present commercial model under its prime orchestrator has been able to achieve.
The future of F1 depends on a morphing of the innately commercial, a deepening of the motorsport's innate 'old personality' (where levels of honour matches the level of glamour) and where these two facets can be overlayed onto the national cultures of Em and developing countries.
F1 can be orchestrated to be a vehicle for economic and social good, aswell as financially a lucrative platform; the future of the sport and its socio-economic and cultural trickle-down depends on such a holistic attitude.
James Gordon Bennett himself, would no doubt have much to say, yet his own legacy towards a world of general improvement still has as much resonance in the 21st century,as it had at the very beginning of the 20th century.
The corporate build strategy has been both vertical and horizontal, building inter-connected backward and forward value chains, aswell as exploiting geographical expansion as 2nd world countries morphed into EM regions; thus typical conglomerate activity. Thus Murdoch and NewsCorp have been seen as both a welcome antidote to monopolistic national-service media, or as villainous global press giant intent on world domination.
Of course, whatever the viewpoint, NewsCorp is a NASDAQ listed company and as such participant in the frenzied growing media sector alongside the likes of TimeWarner and the Walt Disney Co, aswell as challenged by a raft of 'arriviste' EM region TCT (Television-Communications-Technology) companies who themselves seek home advantage.
Murdoch's latest reported ambition is to take control of the effective management and so media rights to Formula One motorsport – a much coveted sphere given its global TV reach and track & team sponsorship deals. The equally ambitious and tenacious Bernie Ecclestone has been the 'F1 supremo' for decades, himself building-up both his 'ownership' of the sport as effectively its publicity broker whilst also maintaining and raising the standard of the sport's glamour and commerciality, largely by ensuring that the financial injections into infrastructure by government backed 'new world' EM countries are paralleled to a lesser extent by 'old world' countries re-investing in their F1 racetracks.
Thus, Ecclestone has undoubtedly been the driving force behind the sport, adding global exposure through new infrastructure and media transmittal, which in turn drove ever more valuable commercial sponsorship deals which in turn generated bigger R&D and operational budgets for the F1 teams involved. A veritable virtuous circle of value-building until the 2008 financial crisis effectively 're-set the chronograph' for the sport, which alongside broadly changed FIA regulations to both flatten the playing field between dominant and new-entry teams and introduce new realms of eco-tech into the F1 cars which should theoretically provide technology trickle-down years later into VM's own road cars.
Murdoch well understands how the shape of the sport has developed, and recognises that from a broad-brush valuation perspective, now at just past the bottom of the economic cycle and with renewed traction, F1 itself sits at the beginning of a new era. He sees the new & renewed infrastructure that can draw entertainment-seeking crowds for F1 and other events / festivals, he recognises its global reach for massive audience viewing potential, and critically believes that 'public access' to F1 – and so its potential commerciality (value-advantage) - is limited by present-day TV, website and general media rights.
It seems he wants to do for F1 what SKY did for the televisual and experiential evolution of football / soccer, in which it bought the TV rights and added new user-functionalities by which the user could better command his/her interactive viewing and so personal enjoyment of the game. But beyond this, Murdoch sees the commercial value of world-wide mobile-phone user-bases and the ever increasing importance of smart-phone connectivity, which is transforming (and leading) people's interests and thus disposable spending profiles.
Hence the reported talks with Carlos Slim Helu and America Movil. His Mexico City based mobile telecoms network, itself with sizable EM market reach across Mexico, Latin America, the Caribbean aswell as 'low-end' USA. It sits as the world's 4th largest network provider to 265m users and has laid over 290,000 kms of fibre optic cable, the most expansive coverage yet.
Beyond telecoms Carlos Slim Helu has interests in aluminium and tyres, thus natural corollaries to the motor industry, and sought in 2008 to buy the Honda F1 team, with his sub-company Telmex now sponsoring Sauber F1 in 2011 season.
Of course none of this is lost on Bernie Ecclestone or CVC Capital Partners, his latter-day business partners in FOM (Formula One Management), the impact of the TCT sector a highly visible force for F1's commercial evolution given team sponsorship by the likes of AT&T, newer team entries by Virgin(Media) and of course that Sauber F1 deal with Telmex.
The eco-tech re-orientation of F1 in its vehicle development has arguably made for a greater and more direct link between F1 high-tech and next generation premium and mainstream cars, which is all to the eco-good and re-energisation of western automotive manufacturing. But the real challenge for those that lead the entertainment face of F1 is to grow its global commerciality. The obvious question for the investment community is “who is best placed to commercially grow that external face of the F1 business model?”.
By the very nature of the reported bid offer Murdoch intimates that Ecclestone & CVC have limited means to do so when compared to the leverage a JV between NewsCorp & America Movil, the former's influence 'inside' the sport, whilst the latter's influence 'external' through a plethora of media networks and channels.
Beyond stating in typical style that the report of a Murdoch bid is “rubbish”, Ecclestone & CVC will probably ultimately counter that his/their track record is the “proof of the pudding” and that they as the 'F1 brokers' are at ease sitting in that chair. Themselves then able to access the type of technical media advantage Murdoch-Slim offers through FOM's own self-created enterprises with TCT partners. Simply then a 'business as usual' extension using other media operators and telco providers, theoretically similar to having companies such as the UK's ITV bid for F1 transmittal rights, the television network accompanies by the telco network..
The F1 website Pitpass.com naturally defends the Ecclestone position, interestingly however, itself leveraged to suggest a F1 Ecclestone 2010 valuation of £6bn - £7bn. Furthermore, as a remote voice-box for Ecclestone & CVC it tries to rub salt into the issue by stating that if indeed a sale agreement was reached it would include a premium 'over-payment' due to the fact that Murdoch used his Sky News business editor Mark Kleinman to initially air the possible bid, instead of approaching privately.
So, the typical political confutation of such a matter roles on.
Yet, as ever in the complex world of business – especially in F1 - there are differing layers of possibility to any commercial imperative – especially so when involving an intrenched F1 supremo and a global press-baron.
Firstly, the leaked news story by Sky News could have been conceived as a first-step to initially buoy both NewsCorp and America-Movil's respective NASDAQ stockmarket valuations.
Secondly, such a move also re-ignites concerns for Eccelstone that the threat of a rival race series re-emerges in this case a successor to A1GP, conjured up between Murdoch and the team bosses to once again ply pressure on FOM given the re-tabling of the 'F1 Concorde Agreement' with the FIA (Federation Internationale de l'Automobile) which provides the basis for the profit-sharing of commercial rights income. Here it would be no surprise if Murdoch has been wooing team bosses with better paper-based income projections under his business model, given that any take-over bid would be better achieved with persuaded team bosses. Thus an agreement could have been privately made to have Murdoch publicise his bid intention at this critical juncture.
Motorsport seniors equate the involvement of a press-barons as both positive and negative, useful for injecting (always much needed) cash into the sport, but weary in the knowledge that the sport itself serves the purpose of a publicity vehicle for the press-baron's own commercial interests. It is an echo that harks back to James Gordon Bennett II, the legendary American originator of the Gordon Bennett Cup who offered recognition and reward to those American, English and German pioneers who counter the competitive technical advantage the French auto-manufacturers had at the very end of the 19th century. Critically his races being nationality-based set the traditional national colours/liveries for GP cars over the decades to come, but were latterly lost with private team involvement and commercial sponsorship.
The 'national race' idea was the core- philosophy behind the failed (but ever notionally hovering) A1GP race series, a championship intrinsically built around the car-manufacturers participating in F1, but seeking greater share of the commercial rights revenues which FOM and Ecclestone – CVC received. Thus A1GP was created as both a threat and bargaining chip in negotiations with FOM in the lead-up years to the previous Concorde Agreement in which F1 participants agree revenue share. It served its purpose to an extend, but eventually failed when VMs backed-away from the project, faced with depleting motorsport budgets, improved Concorde terms and unwillingness to leave the top-table that is traditional Grand Prix., even if it meant re-creating the origins of Grand Prix as A1GP (now notionally titled A10GP) promise.
For that promise, by default of being 'nation-based', means that a motorsports based international technology race could arise, today the likes of Venezuela, Russia or indeed China able to buy its way to winning, just as Germany did during the 1930s with Auto Union and Mercedes' 'Silver Arrows'. That then would only quicken the pace of brain-drain and technology shift from the Triad countries to the EM nations.
However, as a press-baron with undoubted Asian, Latin and global power, some might think Mr Murdoch could indeed feasibly orchestrate such a a re-direction of the sport via his involvement, simultaneously breaking what from an outside perspective appears an 'old boys club' hold on GP / F1, even if historically there have been successive power-grips on the sport. In doing so, effectively re-locating the power-base from 'insiders' (Ecclestone once a GP team boss) to an 'outsider'.
The concern inside F1 is that the championship itself might become subservient to, and so negatively re-shaped by, the commercial agenda of Mssrs Murdoch & Slim. The major concern being a loss of F1's 'aspirational aura' which serves 2 critical issues. 'F1 Aspiration' underpins the intrinsic business model which functions on a top-down basis (from premium hotel viewing balcony for Royalty to the availability of Ferrari merchandise in London’s premium Regent Street). And 'F1 Aspiration' also serves as a national development template for EM and developing nations, seen as both a national coup which puts it on the international map and furthermore the associated infrastructure provides an engine of economic growth both as a F1 tourist destination and as an entertainment centre for other cultural and commercial events.
Ecclestone has then built a true worldwide F1 legacy, one which he will not give-away easily, even if that means CVC sensibly taking the money if agreed terms could be met, Ecclestone might well want to remain as 'Chairman of the F1 Board' with a new partner replacing CVC (whom ever that might be) to protect his legacy. The typical 'GP hero' attitude is to drive to the very end.
Thus Ecclestone might be willing to replace CVC with another effectively silent-partner, but instead of simply being a collaborative party, Rupert Murdoch's ultimate intend must be to break the FOM powerhouse, and install his own commercial model.
Ecclestone calls the news story "Rubbish", yet is no doubt well aware of the intention, a parallel play of Murdoch's son James's effort to break the BBC's power-base relative to BSkyB's own growth hopes.
The accompanying diagram to this post (only available for the length of the post itself) shows investment-auto-motive's perception of the 'new' commercial model that would be ultimately proposed by Murdoch & Slim / NewCorp-America Movil.
It depicts the F1 commercial arena in a Venn Diagram style, on the left hand side 'F1's external world': that of the transmittal network and portals, and on the right hand side 'F1's internal world' depicting a matrix structure of teams and sponsors'. The tie-up between NewsCorp and America-Movil would be a natural one of complimentary operational activities and geographical coverage, thus setting the scene for infrastructure and customer portal ' interface, able to span Triad & EM worldwide reach.
This global reach, multi-portal business model would then theoretically allow Murdoch-Slim to demonstrate a 'supercharged' business model thus able to offer a more sizable income stream to the F1 Teams through the Concorde Agreement; itself possibly unchanged in terms of percentage splits. In short the divisions of the pie stay similar, but the pie itself grows. The model also gives Murdoch-Slim a reciprocity, since their empires could then probably better directly solicit the individual sponsors of the F1 Teams, the philosophy being that NewsCorp and America-Movil could offer a one-stop-shop multi-faceted global advertising base, thus the sponsors/clients could either save on advertising costs via their 'wholesale advertising' package, or with similar budget better target their messages.
This effort undoubtedly also has China in its sights given the size of its burgeoning car market and Murdoch's own marriage to Chinese-born Wendi Deng Murdoch (with his own Anglo-Chinese scions to control the business in later years.
To conclude, NewsCorp & America Movil have comprised an alternative F1 commercial model that better interlinks the 'internal' and 'external' facets of the motorsport, thus probably able to reach a broader and deeper worldwide audience. Yet simultaneously, its overtly commercialist attitude also generates a very real risk to the brand integrity and 'social good works' the present commercial model under its prime orchestrator has been able to achieve.
The future of F1 depends on a morphing of the innately commercial, a deepening of the motorsport's innate 'old personality' (where levels of honour matches the level of glamour) and where these two facets can be overlayed onto the national cultures of Em and developing countries.
F1 can be orchestrated to be a vehicle for economic and social good, aswell as financially a lucrative platform; the future of the sport and its socio-economic and cultural trickle-down depends on such a holistic attitude.
James Gordon Bennett himself, would no doubt have much to say, yet his own legacy towards a world of general improvement still has as much resonance in the 21st century,as it had at the very beginning of the 20th century.
Monday, 2 November 2009
Parallel Learning – Motor Sports – Business Modeling Over Three Centuries & Beyond.
Maintaining the motor sports theme from the last post, the past weekend witnessed what must the the opposite poles of motor sport. Abu Dhabi hosted the 2009 World F1 championship's last race at brand new Yas Marina track...and in complete contrast almost simultaneously... in London the Apsley House Gate of Hyde Park bore the beginning of the Royal Automobile Club's annual London to Brighton Veteran Car Rally.
Thus, Sunday 1st November showcased not only the opposite ends of the chronological spectrum of the motorcar but also the diametrically opposed human sensibilities that create both spectacles.
Whilst in Saudi the F1 circus demonstrates the necessary 21st century technologies of carbon fibre, micro-second e-systems intelligence and KERs 'energy harvesting', in London the 500 or so largely 19th century technically derived cars quite literally 'paraded' wooden construction, hand operated advance-retard ignition tinkering and the constant kinetic energy concentration to maintain precious momentum. Behind the wheel, it was a case of the consummate hired professional driver contrasted against consummate owner-operator amateur.
Amongst the throng of setting-sun spectators at Marina Yas – implicitly the 'new' Monaco - sipping 'over-the-yard-arm' drinks the corporate influence held sway; Daimler's Dieter Zetsche socialising with his Aabar Investment associates (holding 10% of Daimler) in the McLaren-Mercedes' Pits or indeed the swathes of corporate hospitality and 'ex-pat' oglers. A drizzling London morning in contrast had its 'sun-up' spectators of all ages and backgrounds wear their winter coat, propping up an umbrella in on hand and sipping a flask-dispensed cup of coffee on the other, miraculously clapping as each block of the released vintage cars chugged onto Hyde Park Corner, saving their greatest cheers for the late starters who just about managed to get their car running, the driver as gleeful as if he had indeed 'won' the rally – which from an almost spiritual perspective – s/he had!
The point is that these were two very different events in almost every dimension, but they and every other type of motor-sport event should be intellectually deconstructed to better understand how new business models can be created from the merging of the core components: people, place and products. F1 and the London-Brighton are two types of evolved 'automotive circus' amongst the many today – both commercial and cultural. From the big-bucks budgets of say LMP, GT, NASCAR, DTM or WRC racing to the amateur world largely born from of regional street racing - started by those late 1940s US Hot-Rodders, that 'animal-spirit' echoed in a very different way by the Philippino 'Bone-Bike' racers.
The combination of (wo)men and machines, invariably lead to competition and spectacle at whatever level of the social strata. And as those machines become an ever greater part of people's and nation's culture so new spectacles are born. At one level say the RAC's Brighton run, Goodwood's Revival or as pure showcase Hurlingham's Salon Prive or Pebble Beach. At the other extreme the car's totem as independence provider for the economically-involved young has merged with other aspects of youth culture to create a realm of testerone-fueled spectacles, from 70s urban US Hispanic low-riding to 90s Japan's initiatian of 'Drifting' to the global phenomenon of audio/music 'sound-offs' (demonstrating the power of the owner's, audio-system). All this alongside the conventional desire for speed and spectacle provided by '(engine) chips and (body) kits'. In short 'auto-individuality' set within a context of 'auto-tribalism'.
Thus as we see most evidently purveyed by the newness of Middle Eastern F1 and the antiquarian nature of London-Brighton, global auto-culture is broad and varied, and regionally sits along national, populace GDP, time and cultural dimensions.
As stated previously, the world has indeed become a global village, but that apparent shrinkage has only highlighted the microcosmic detail that investors, the auto-industry, real-estate and entertainment worlds should better understand, build and harvest. “Long live the Car-nival !”
Thus, Sunday 1st November showcased not only the opposite ends of the chronological spectrum of the motorcar but also the diametrically opposed human sensibilities that create both spectacles.
Whilst in Saudi the F1 circus demonstrates the necessary 21st century technologies of carbon fibre, micro-second e-systems intelligence and KERs 'energy harvesting', in London the 500 or so largely 19th century technically derived cars quite literally 'paraded' wooden construction, hand operated advance-retard ignition tinkering and the constant kinetic energy concentration to maintain precious momentum. Behind the wheel, it was a case of the consummate hired professional driver contrasted against consummate owner-operator amateur.
Amongst the throng of setting-sun spectators at Marina Yas – implicitly the 'new' Monaco - sipping 'over-the-yard-arm' drinks the corporate influence held sway; Daimler's Dieter Zetsche socialising with his Aabar Investment associates (holding 10% of Daimler) in the McLaren-Mercedes' Pits or indeed the swathes of corporate hospitality and 'ex-pat' oglers. A drizzling London morning in contrast had its 'sun-up' spectators of all ages and backgrounds wear their winter coat, propping up an umbrella in on hand and sipping a flask-dispensed cup of coffee on the other, miraculously clapping as each block of the released vintage cars chugged onto Hyde Park Corner, saving their greatest cheers for the late starters who just about managed to get their car running, the driver as gleeful as if he had indeed 'won' the rally – which from an almost spiritual perspective – s/he had!
The point is that these were two very different events in almost every dimension, but they and every other type of motor-sport event should be intellectually deconstructed to better understand how new business models can be created from the merging of the core components: people, place and products. F1 and the London-Brighton are two types of evolved 'automotive circus' amongst the many today – both commercial and cultural. From the big-bucks budgets of say LMP, GT, NASCAR, DTM or WRC racing to the amateur world largely born from of regional street racing - started by those late 1940s US Hot-Rodders, that 'animal-spirit' echoed in a very different way by the Philippino 'Bone-Bike' racers.
The combination of (wo)men and machines, invariably lead to competition and spectacle at whatever level of the social strata. And as those machines become an ever greater part of people's and nation's culture so new spectacles are born. At one level say the RAC's Brighton run, Goodwood's Revival or as pure showcase Hurlingham's Salon Prive or Pebble Beach. At the other extreme the car's totem as independence provider for the economically-involved young has merged with other aspects of youth culture to create a realm of testerone-fueled spectacles, from 70s urban US Hispanic low-riding to 90s Japan's initiatian of 'Drifting' to the global phenomenon of audio/music 'sound-offs' (demonstrating the power of the owner's, audio-system). All this alongside the conventional desire for speed and spectacle provided by '(engine) chips and (body) kits'. In short 'auto-individuality' set within a context of 'auto-tribalism'.
Thus as we see most evidently purveyed by the newness of Middle Eastern F1 and the antiquarian nature of London-Brighton, global auto-culture is broad and varied, and regionally sits along national, populace GDP, time and cultural dimensions.
As stated previously, the world has indeed become a global village, but that apparent shrinkage has only highlighted the microcosmic detail that investors, the auto-industry, real-estate and entertainment worlds should better understand, build and harvest. “Long live the Car-nival !”
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