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 FOM. Show all posts
Showing posts with label FOM. Show all posts
Wednesday, 8 June 2011
Monday, 26 October 2009
Industry Structure – The F1 World Tour – The Shared Traits of Donington Park & Dr Parnassus
The globalisation model has always relied on the seemless interaction of the 'new world' merging successfully with the 'old world'. That interaction became increasingly frictionless with Marshall McLuhan famously stated that since the 1960s we have lived in the 'global village', such is the technological inter-connectedness of the modern-world.
Beyond the more ethereal realm of telecommunications and into the physical, that marriage of a 'global village' and of advanced technology is perhaps best exemplified by Formula One. A now high exposure, highly commercialised 'sports-entertainment complex' which has created its own hyper-reality-world. An alternative reality in which the human psyche sits mid-distance between physical tangibility and the more remote yet powerfully immersive regions of cyber-space and the human imagination. For motor-sport enthusiasts and the public alike it is hyper-reality (see Baudrillard & Eco), engendered by its history, myth and expectation; a background presence that regionally comes alive only once a year with a weekend bonanza, and where dreams become reality.
Without doubt, F1 is the spiritual successor of the traveling circus. With that showmanship in mind, the show much be ever 'bigger and brighter', drawing inspiration from all quarters to for 48 hours present the biggest show on earth.
Presently the century old silver-screen serves-up 'The Imaginarium of Dr Parnassus' at cinemas. On-screen the central character, the good Doctor leader of a famtasy show for the mind, finds himself peddling via horse and cart a show from a bye-gone age that has become evermore ineffectual and irrelevant to the expectations of the modern ausience – even though the esoteric offering is in itself a wonderful delight.
Dr Parnassus is lost between old and new worlds, that is until the new arrival of a 'johnny-cum-lately' with better commercial instincts and new ideas to update the show.
The film's plot serves as an analogy to the 'old-world' vs 'new-world' situation facing the owners of British motor racing circuits – none more so than Donington Park, the poor cousin to Brands Hatch, Silverstone and Goodwood.
In the world of Formula One, the iconic names of Monaco, Spa-Francorchamps, Nurburgring, Silverstone and Suzuka trade on a combination of their international repute and inter-continental accessibility. Whilst the newer global tracks such as Sepang (Malaysia), Shanghai (China), Sakhir (Bahrain), Istanbul (Turkey) and Yas Marina (Abu Dhabi), are able to offer a 21st century experience thanks largely to hefty government funding seeking a recognition and status on the global stage.
Within the UK, the fight for the modern home of motor-sport has been an ongoing process since Brooklands lost its monopolistic lead in the late 1920s with in I933 Donington Park heralding the first sealed-track. As the best of its type at the time it hosted the British round of the World Grand Prix through the 1930s until its WW2 closure and Silverstone's effective over-taking of Donington Park in 1948 and its secured F1 title since 1987.
For decades Donington Park found itself in the same constrained circumstances as Dr Parnassus, an offering – centered on its asset-base - that was initially slowly but now quickly becoming outdated compared to the modern ilk, enjoying only periodic small infrastructure adjustments limited to the those only strictly necessary to maintain basic BRDC club standards.
The motorcycle, car and truck race loyalist crowd maintain a core audience, and so revenue from gate-receipts, restaurant covers and commercial leasee rents provides an income; but it seems this is a low level of revenue compared to its international peers. In truth, given the history and nature of the circuit-loyal crowd, the basic provision service has worked, since those who typically attend for “the machines and the action”, not the odd spectacle and social schmoozing. They generally have lesser disposable incomes and so lower levels of personal expenditure. In retail parlance, Donington is more of a provincial Morrisons than a city-centre Waitrose. Indeed, those who have historically attended Donington Park prefer the fact that 'the Park' is anything but 'slick' and retains an innate 'pantina' of a yesteryear heyday. To them Donington feels to be 'theirs'.
Yet beyond the sentiment, economic and corporate ambitions effectively demand a 'sweating of assets' and so the idea of business re-modeling has been a constant part – if less than a reality - of Donington's past. The interactive circle of event-type affects crowd demographic and crowd-capacity, a formulae in which hiked consumer expenditure on a per capita basis is reasoned to against multiple revenue streams to provide a new business rationale.
This process has been as much part of Donington history as the wheels that circumnavigate the track. But the reality has been somewhat different, and so the incumbent circuit operator has instead been forced to exploit the differing crowd type's cultural affinities. Thus since the 1980s, “Donington Park” itself became as recognise for hosting 'The Monsters of Rock' concerts, and the latter-dau spin-off 'Ozzfest'; aswell as ad-hoc events for other musical genres. Efforts to host other event types, nominally fairs and conventions, have been less successful relative to the powerful offerings of conventional event halls which have increased in number, ground space, inter-rivallry and so reduced the per metre squared hosting costs to exhibitors (ie Manchester Arena, Birmingham Exhibition Centre, London O2 Arena, Docklands Arena etc).
So although additional service provision to attract other types of customer has been tentatively tried, the improvement in income in recent times was as a default consequence to a social / consumer trend. That of the rise in sports-bike popularity and ownership between 1997 and 2007 amongst the deep-pocket 'mid-life crisis' male from the suburbs. Unfortunately with the economic downturn and re-shifting of social perceptions that crowd has been diminishing of late as disposable expenditure becomes constrained and 'Boys Toys' became unaffordable luxuries.
So for all past hopes and temporary gains, Donington is typically viewed as the 'working (wo)man's' circuit, its populist association perhaps more so with 2-wheels than 4-wheels (even with BTCC & other events). 'The Park' is home to World Championship Superbikes, the British Motorcycle GP and 'Revivalist' Classic machine races. So, in bike terms a combination of both Silverstone & Goodwood's as per cars.
However, that seemingly ever-present ambition to regain the 1930s Grand Prix glory-days – echoing names such as Nuvolari, Rosemeyer and Shuttleworth - has been a long-held draw. Especially so since the circuit, estate & house's 'Laird' Tom Wheatcroft, moved his large collection of GP cars into a specially build exhibition space in 1973.
However it took 34 years, when in 2006 the newly formed company Donington Ventures Leisure Ltd (DVLL), led by Simon Gillett and advised by the Wheatcroft brothers, took up the 'dormant opportunity'. A 150 year lease on the circuit was agreed and an agreement with Bernie Ecclestone's FOM (Formula One Management) to host the British F1 event for 2010 and the following 10 years.
Critically this was subject to the facility's major upgrading.
This as many observers have noted gave Ecclestone - as the effective F1 operations puppet-master - the ability to play Silverstone against Donington (& vice versa) relative to the world-class infrastructure standards required to ensure to maintain and raise the glamourous reputation of F1.
However, progress in developing the Donington circuit by DVLL proved slow and painful; a cost to the company's credibility. The Q109 DVLL debenture flailed, months after it was cited by the Wheatcroft estate as having fallen into rent arrears; thus seeking re-payment or repatriation of the circuit. Though an out of court settlement was reached this negative episode undoubtedly made any additional 3rd party investors sensitive to questioning the innate shape and health of the company. This realised when the company, facing breach of contract with FOM, set out on 14.10.09 to secure a further funding via issue of £135m corporate bonds with Citi acting as the book-runner.
Even though the offer was promising to pay a 15% coupon over 7 years and was presented at a 10% discount investors shied away. Beyond the sizable immediate problems, there is surely a belief within the investment community that
a) the circuit development could not be completed within the given timescale to host the 2010 British GP
b) even if miraculously built would have incurred diminished scope & scale of required facilities,
c) 'skimped' build-quality
d) high potential of full project completion cost over-runs.
All of which blight the investment equation.
Furthermore, to the external observer, it is rational to expect Mr Ecclestone's contunation as a 'utility maximiser', thus to better service FOM's own interests by possibly switching between his effective suppliers (Donington vs Silverstone). FOM could have re-negotiated that claus at an future time with DVLL, both knowing that Silverstone was FOM's fall-back position. Ecclestone would have presented it as only reasonable, to maximise circuit rivalry and so raise the bar of British F1's competence and international standing.
Thus it seems that DVLL, if financially sound, may be forced to simply run Donington 'as is', dispensing of the ambitious future CEO Simon Gillett sought. There is of course the option of selling the 148 year lease it holds – or a portion thereof - to another 3rd party; if indeed one is at all interested. For its marketable value must incur heavy discounting given the present low valuations of commercial property (esp within the leisure industry), the strain put on the FOM relationship and the realistic level of yield and capital growth available from the circuit.
In all probability, the circuit will return to the Wheatcroft estate, either sold-back for a nominal sum or returned by contractual default. Thus, to be managed by a small events team of in-house staff until at future point in time, possibly beyond a decade away, a new business-buzz can be attached to the circuit's future potential, so attracting new lease-holders and their campaigning for infrastructure investment.
In lieu of a new F1 Donington era, the Wheatcroft Estate, may simply have to book the circuit to its long-term assets section of the balance sheet, probably doing so as 'development class land' which though heavily discounted in the present market, should bounce-back in due course proving useful addition in due course to the Wheatcroft capital-base.
The Donington loyalists will be happy at the unchanged state of their home circuit, much of the patina remaining, and the F1 circus will carry on at Silverstone.
In the 'Imaginarium of the F1 Business', the innate complexity, politics and alliances of the machine means that perhaps not everything is as its seems. But, unlike the Dr Parnassus analogy, at least Donington's soul remains intact.
Beyond the more ethereal realm of telecommunications and into the physical, that marriage of a 'global village' and of advanced technology is perhaps best exemplified by Formula One. A now high exposure, highly commercialised 'sports-entertainment complex' which has created its own hyper-reality-world. An alternative reality in which the human psyche sits mid-distance between physical tangibility and the more remote yet powerfully immersive regions of cyber-space and the human imagination. For motor-sport enthusiasts and the public alike it is hyper-reality (see Baudrillard & Eco), engendered by its history, myth and expectation; a background presence that regionally comes alive only once a year with a weekend bonanza, and where dreams become reality.
Without doubt, F1 is the spiritual successor of the traveling circus. With that showmanship in mind, the show much be ever 'bigger and brighter', drawing inspiration from all quarters to for 48 hours present the biggest show on earth.
Presently the century old silver-screen serves-up 'The Imaginarium of Dr Parnassus' at cinemas. On-screen the central character, the good Doctor leader of a famtasy show for the mind, finds himself peddling via horse and cart a show from a bye-gone age that has become evermore ineffectual and irrelevant to the expectations of the modern ausience – even though the esoteric offering is in itself a wonderful delight.
Dr Parnassus is lost between old and new worlds, that is until the new arrival of a 'johnny-cum-lately' with better commercial instincts and new ideas to update the show.
The film's plot serves as an analogy to the 'old-world' vs 'new-world' situation facing the owners of British motor racing circuits – none more so than Donington Park, the poor cousin to Brands Hatch, Silverstone and Goodwood.
In the world of Formula One, the iconic names of Monaco, Spa-Francorchamps, Nurburgring, Silverstone and Suzuka trade on a combination of their international repute and inter-continental accessibility. Whilst the newer global tracks such as Sepang (Malaysia), Shanghai (China), Sakhir (Bahrain), Istanbul (Turkey) and Yas Marina (Abu Dhabi), are able to offer a 21st century experience thanks largely to hefty government funding seeking a recognition and status on the global stage.
Within the UK, the fight for the modern home of motor-sport has been an ongoing process since Brooklands lost its monopolistic lead in the late 1920s with in I933 Donington Park heralding the first sealed-track. As the best of its type at the time it hosted the British round of the World Grand Prix through the 1930s until its WW2 closure and Silverstone's effective over-taking of Donington Park in 1948 and its secured F1 title since 1987.
For decades Donington Park found itself in the same constrained circumstances as Dr Parnassus, an offering – centered on its asset-base - that was initially slowly but now quickly becoming outdated compared to the modern ilk, enjoying only periodic small infrastructure adjustments limited to the those only strictly necessary to maintain basic BRDC club standards.
The motorcycle, car and truck race loyalist crowd maintain a core audience, and so revenue from gate-receipts, restaurant covers and commercial leasee rents provides an income; but it seems this is a low level of revenue compared to its international peers. In truth, given the history and nature of the circuit-loyal crowd, the basic provision service has worked, since those who typically attend for “the machines and the action”, not the odd spectacle and social schmoozing. They generally have lesser disposable incomes and so lower levels of personal expenditure. In retail parlance, Donington is more of a provincial Morrisons than a city-centre Waitrose. Indeed, those who have historically attended Donington Park prefer the fact that 'the Park' is anything but 'slick' and retains an innate 'pantina' of a yesteryear heyday. To them Donington feels to be 'theirs'.
Yet beyond the sentiment, economic and corporate ambitions effectively demand a 'sweating of assets' and so the idea of business re-modeling has been a constant part – if less than a reality - of Donington's past. The interactive circle of event-type affects crowd demographic and crowd-capacity, a formulae in which hiked consumer expenditure on a per capita basis is reasoned to against multiple revenue streams to provide a new business rationale.
This process has been as much part of Donington history as the wheels that circumnavigate the track. But the reality has been somewhat different, and so the incumbent circuit operator has instead been forced to exploit the differing crowd type's cultural affinities. Thus since the 1980s, “Donington Park” itself became as recognise for hosting 'The Monsters of Rock' concerts, and the latter-dau spin-off 'Ozzfest'; aswell as ad-hoc events for other musical genres. Efforts to host other event types, nominally fairs and conventions, have been less successful relative to the powerful offerings of conventional event halls which have increased in number, ground space, inter-rivallry and so reduced the per metre squared hosting costs to exhibitors (ie Manchester Arena, Birmingham Exhibition Centre, London O2 Arena, Docklands Arena etc).
So although additional service provision to attract other types of customer has been tentatively tried, the improvement in income in recent times was as a default consequence to a social / consumer trend. That of the rise in sports-bike popularity and ownership between 1997 and 2007 amongst the deep-pocket 'mid-life crisis' male from the suburbs. Unfortunately with the economic downturn and re-shifting of social perceptions that crowd has been diminishing of late as disposable expenditure becomes constrained and 'Boys Toys' became unaffordable luxuries.
So for all past hopes and temporary gains, Donington is typically viewed as the 'working (wo)man's' circuit, its populist association perhaps more so with 2-wheels than 4-wheels (even with BTCC & other events). 'The Park' is home to World Championship Superbikes, the British Motorcycle GP and 'Revivalist' Classic machine races. So, in bike terms a combination of both Silverstone & Goodwood's as per cars.
However, that seemingly ever-present ambition to regain the 1930s Grand Prix glory-days – echoing names such as Nuvolari, Rosemeyer and Shuttleworth - has been a long-held draw. Especially so since the circuit, estate & house's 'Laird' Tom Wheatcroft, moved his large collection of GP cars into a specially build exhibition space in 1973.
However it took 34 years, when in 2006 the newly formed company Donington Ventures Leisure Ltd (DVLL), led by Simon Gillett and advised by the Wheatcroft brothers, took up the 'dormant opportunity'. A 150 year lease on the circuit was agreed and an agreement with Bernie Ecclestone's FOM (Formula One Management) to host the British F1 event for 2010 and the following 10 years.
Critically this was subject to the facility's major upgrading.
This as many observers have noted gave Ecclestone - as the effective F1 operations puppet-master - the ability to play Silverstone against Donington (& vice versa) relative to the world-class infrastructure standards required to ensure to maintain and raise the glamourous reputation of F1.
However, progress in developing the Donington circuit by DVLL proved slow and painful; a cost to the company's credibility. The Q109 DVLL debenture flailed, months after it was cited by the Wheatcroft estate as having fallen into rent arrears; thus seeking re-payment or repatriation of the circuit. Though an out of court settlement was reached this negative episode undoubtedly made any additional 3rd party investors sensitive to questioning the innate shape and health of the company. This realised when the company, facing breach of contract with FOM, set out on 14.10.09 to secure a further funding via issue of £135m corporate bonds with Citi acting as the book-runner.
Even though the offer was promising to pay a 15% coupon over 7 years and was presented at a 10% discount investors shied away. Beyond the sizable immediate problems, there is surely a belief within the investment community that
a) the circuit development could not be completed within the given timescale to host the 2010 British GP
b) even if miraculously built would have incurred diminished scope & scale of required facilities,
c) 'skimped' build-quality
d) high potential of full project completion cost over-runs.
All of which blight the investment equation.
Furthermore, to the external observer, it is rational to expect Mr Ecclestone's contunation as a 'utility maximiser', thus to better service FOM's own interests by possibly switching between his effective suppliers (Donington vs Silverstone). FOM could have re-negotiated that claus at an future time with DVLL, both knowing that Silverstone was FOM's fall-back position. Ecclestone would have presented it as only reasonable, to maximise circuit rivalry and so raise the bar of British F1's competence and international standing.
Thus it seems that DVLL, if financially sound, may be forced to simply run Donington 'as is', dispensing of the ambitious future CEO Simon Gillett sought. There is of course the option of selling the 148 year lease it holds – or a portion thereof - to another 3rd party; if indeed one is at all interested. For its marketable value must incur heavy discounting given the present low valuations of commercial property (esp within the leisure industry), the strain put on the FOM relationship and the realistic level of yield and capital growth available from the circuit.
In all probability, the circuit will return to the Wheatcroft estate, either sold-back for a nominal sum or returned by contractual default. Thus, to be managed by a small events team of in-house staff until at future point in time, possibly beyond a decade away, a new business-buzz can be attached to the circuit's future potential, so attracting new lease-holders and their campaigning for infrastructure investment.
In lieu of a new F1 Donington era, the Wheatcroft Estate, may simply have to book the circuit to its long-term assets section of the balance sheet, probably doing so as 'development class land' which though heavily discounted in the present market, should bounce-back in due course proving useful addition in due course to the Wheatcroft capital-base.
The Donington loyalists will be happy at the unchanged state of their home circuit, much of the patina remaining, and the F1 circus will carry on at Silverstone.
In the 'Imaginarium of the F1 Business', the innate complexity, politics and alliances of the machine means that perhaps not everything is as its seems. But, unlike the Dr Parnassus analogy, at least Donington's soul remains intact.
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