In these convulsive moments that we are having to live with the closure of stadiums, circuits, pavilions, the postponement or direct cancellation of major sporting events such as the MotoGP and F1 World Cup races, or the postponement or possible cancellation of sports leagues, the European Cup or even the Olympic Games, it is time to reflect.
It is precisely in this situation, when one can appreciate in all its harshness (we remember Santa Barbara when it thunders), the immense disaster that the loss of a Formula 1 Grand Prix means for the economy and the improvement of people’s lives, as it has recently happened to the inaugural race of the championship in Australia and to the race in Barcelona that would have been held in just a month and a half.
This virus will dramatically show how fatal the loss of this type of event is, and will highlight the errors in communication that have been made in Formula 1 by the promoter Liberty, the International Automobile Federation, as well as the governments of Barcelona City Council and the Generalitat of Catalonia.
I will try to summarise the main areas where I think the public’s perception would be very different, if they had had a good leadership in the discourse and the narrative of it.
Is a Formula 1 Grand Prix profitable?
Well, like everything else in life, it depends on how you analyze it.
It depends on how the accounts are done and above all on the objectives proposed. An extreme case could be the Bahrain Grand Prix. We are talking about an event that is an absolute economic ruin, if we make an exclusive balance between the expenses that suppose the ‘hosting fee’ to Liberty (promoter of F1) and the costs of construction and maintenance of the circuit, with respect to what is paid for ticket sales and hospitality services.
However, the Bahraini royal family is more than happy with the investment made so far and in fact, they describe it as one of the best and most important decisions made in the history of the small kingdom of the Middle East.
The Formula 1, without a doubt, has been key for the planet to place the word ‘Bahrain’ on the world map, it has been essential to get ahead of other enclaves in the region such as Saudi Arabia, Qatar, Dubai or AbuDhabi and thus, Bahrain is considered an interesting place for foreign investment in front of its powerful neighbors. As a result of the relations woven in the heat of Formula 1, Bahrain’s sovereign fund has also developed an interesting investment task at a global level, standing out among other things for being the majority shareholder of McLaren.
Going to the case at hand, the promoters of Formula 1 in Barcelona have, in my opinion, blatantly failed to communicate to the public the benefits to Catalonia in general and to Barcelona in particular, of being able to host a world-class event such as a Grand Prix in the motor racing field.
It is not a question of issuing a late and bad press release, saying that the Circuit de Barcelona-Catalunya generates an annual impact of 340 million euros and supports 3,000 direct and indirect jobs. It’s no use either, saying when the fire is out that Formula 1 alone generates 163 million euros to both the city and the region. But neither the communication department of Circuit de Barcelona/Catalunya is to blame for this situation, but the governments responsible for the investment needed to have a date in the annual calendar of F1.
If you want peace, prepare for war as Julius Caesar said. It is about making a continuous pedagogy in the public opinion, having a solid presence in the debates in big media, showing not only with great figures, but with intelligent communication techniques, showing to the public opinion that without Formula 1 for example, the annual surplus of around 20 million euros in VAT collection would never be collected, that the public coffers would never smell if the event was not held.
The value of the ‘City/Country Brand
But there is much more. Although this excess VAT alone would make the Spanish Grand Prix profitable, the Barcelona race, for historical reasons as our country, the sixth in the world with the most F1 races held in history, pays a fee of just 25 million euros to have the rights to the event. This may seem a lot at first, but it is really a gift when you see that the last ones to arrive at the club, as is the case of Azerbaijan, Russia or Vietnam, pay a fee of about 70 million euros. And attention, that there are countries like Saudi Arabia that would be willing to pay fees over 100 million euros, but at the moment they can not enter this select club because Bahrain and AbuDhabi already beat them in that part of the world and so far there is no gap.
As is often the case, things will only be valued when you don’t have them. The fact that for one week the word ‘Barcelona’ is the focus of world attention for 600 million people, as well as many multinational companies, is of extraordinary value. Singapore can well attest to this, which, despite bearing some of the highest organizational costs in the calendar, is gaining points on the global investment map every year against its neighbor and rival Hong Kong,
Just as a sponsorship requires an activation budget to exponentially multiply its return, public investment must be provided with a powerful communication plan, which demonstrates on a daily basis the undoubted benefits of the investment of taxpayers’ money. At the end of the day, that is what it is all about, demonstrating that it is a good investment and not an expendable one. A certain section of public opinion needs to be made to understand that, if money is to be made available for quality public services, economic activity must be allowed to flourish and the revenue generated subsequently to finance those services.
Is Formula 1 a sustainable proposition these days?
Here we see another glaring failure to communicate the benefits of Formula 1, but this time the culprits in my view are the car brands, the organisers and especially the International Automobile Federation (FIA).
The Formula E with electric propulsion cars, today (we will see in the future) is not in any way a more sustainable product than the Formula 1. They use highly toxic batteries, displace material with a carbon footprint comparable to that of Formula 1 and even their batteries are recharged in the back room with diesel generators.
Nothing to object to though. On the contrary, Formula E is a very necessary championship and its creator and director Alejandro Agag, has proved to be a brilliant manager and what is more important, a great communicator when it comes to transmitting the idea that they are the future, that they are more sustainable than Formula 1, that they are definitely the ‘ecological alternative’ to Formula 1.
And although the contrast between the benefits of one model over the other is more than debatable, what is undeniable is that Formula E is leading a battle at the level of communication that Formula One is losing not because it is actually worse, but because of its practical failure to appear in the narrative of the events.
However, the problem of Formula 1 when it comes to communicating the benefits of its R&D at the level of sustainability and contributions to society in terms of safety, is not one of today, but rather one that could be said to be a chronic evil that has suffered from time immemorial.
Formula 1, in fact, is today an absolute technological prodigy. Since 2014, it has managed to overcome the barrier of 50% thermal efficiency with its current hybrid engines. This technological feat forces the 100% electric propulsion, both batteries and hydrogen, to improve their standards and all this technical ‘competition’ outside the circuits, only results in our society having increasingly efficient and therefore more sustainable mobility models.
The contribution, however, is not limited to the spectacular improvement experienced by the internal combustion engine and its subsequent transfer to street cars. The electric cars themselves, which need platforms that are as light as possible to compensate for their great handicap such as weight, also benefit from the R&D of decades of work in Formula 1, in materials such as carbon fibre, titanium and special steels, which allow their use today to be much more common and affordable.
The same is true of F1’s leadership in energy recovery systems through braking and heat production, both key elements in extending the life of batteries or fuel cells in electric cars.
The invisible technological legacy of Formula 1
What can we also say about the advances in simulation and data acquisition technology, where so much has been achieved thanks to the huge investments that the F1 teams have made in this area. Thanks to this effort on the part of these constructors, at present the physical tests of the cars have been reduced in a spectacular proportion and as a consequence, an enormous saving of resources, less waste of expensive materials or displacements of personnel, etc.
And ‘last but not least’, although outside the scope of strict sustainability, the contribution of Formula 1 in the field of safety is without any doubt incomparably greater than that of any other type of sport or show on a global level. Thanks, for example, to R&D in fire and accident protection for drivers, law enforcement agencies and firefighters now have a material at their disposal that not only protects them much better, but also allows them to perform their functions much better, thanks to its lightness. The same is true of the advances in active and passive safety of vehicles that we see on our roads today and that owe so much to motor racing in general and to Formula 1 in particular. For example, advances such as disc brakes, intelligent suspension, abs, the performance of today’s tyres, driving assistance systems and many other innovations that are beneficial to our society, which, as a result of a poor or non-existent message, have gone practically unnoticed by a large part of public opinion.
As the saying goes, it is never too late if the joy is good. Federations, promoters and builders have a very important subject: It is called ‘Communication’.
Pablo de Villota
Head of Sports & Entertainment area at Proa Comunicación