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The Economy’s of Attraction

November 28, 2009
Economies do strange things to motor racing.
During the boom times, you will no doubt see manufacturers throw hundreds of million of Pounds/Euro/Dollars at a team in a bid for success and during the crashes, you often witness the large companies run for cover as plucky privateers with bigger ideas than budgets make the best with what they have. It is the yo-yo effect that the economies of most capitalist cultures live by and right now the spindle is turning very close to the ground.

It is very sad when teams depart; whether they be large behemoths or small outfits, but the truth is they will not be missed – instead their identities will etched into the sports history books and confined to comments along the lines of “do you remember when..?”

Although Grand Prix racing has existed since 1906, Formula 1 was born into a post-World War 2 in 1947 and commenced in 1950 with such exotic marquees as Alfa Romeo, Ferrari, Maseratti and Talbot. All but Ferrari disappeared by the likes of BRM, Cooper and ERA emerged and when the small teams left, a different set of manufacturers descended upon the sport.
It is a cycle that has repeated a couple of times since then and is happening once more. While this decade has removed Ford (in the guise of Jaguar), Honda (again) and this year alone BMW and Toyota, with Renault teetering (also again); it has also borne witness to the birth of USGPE, Manor and Campos-Meta. Lotus returns also, but it is arguable as to whether that is just a name disguising the entry.

Away from the cars themselves, hosting countries are also having problems with the economics of Formula 1 – mainly due to a couple of insane deals signed away during the boom times by the mysterious CVC; like a large number of mortgage arrangements from the last five years, when they are examined with revised attitude to economics, they simply don’t make sense.
Given the current climate, the traditional circuits do not seem to be able to able to afford the races, with a number of promoters seeking public reimbursement – thus pressures rise, arguments start and negative feelings take hold and germinate, spreading into the public consciousness. Let it be known now that I do not wish Silverstone to look like the Abu Dhabi circuit – ever!!

However, the saving grace for a number of Grand Prix is the return on investment for many of the minor local economics; whereas some of the promoters are left counting their losses, many of the nearby towns and cities are reaping the benefits – with that in mind, there is a drive to get local governments and communities to invest in these events, if only to help boost local businesses.
It would appear that it is something the has been soaked up by the city of Montreal. There have been quotes that minus the Grand Prix, Montreal has apparently reported a shortfall of something in the range of $85 million Canadian Dollars and in tough economic times, it’s a large sum of money to not have in the banks. The old adage “you need to spend money to make money” reared its head once again and as of yesterday, the Canadian Grand Prix has returned for 2010, but this is only the first step.

Long before they withdrew from the sport, the manufacturers – and in particular BMW – were making rather loud noises about the lack of an American Grand Prix and they have a point. Whereas the likes of Williams, Force India and other new teams are there mainly for the racing aspect of the sport, the manufacturers are there to sell their cars and sell their brands and for them to be absent from one of the largest free markets in the world bordered on absurdity; but where in the US can Formula 1 go to?
Apart from Indianapolis, there’s pretty much no circuits in the US that possess a high enough licence to hold a Grand Prix and there is supposedly a large amount of ill-feeling between the Hulman family and the FOM; which only really leaves the city streets to speed around on. When F1 left Watkins Glen in 1980, the series wandered the US looking for a new home and for the following decade, it travelled from city to city to city to find a permanent locale, but it was in vain. After a couple of years racing on the streets of Phoenix, F1 left the United States in 1991. One wonders if the series may once again confined to the travelling circus act of the past.

There is little doubt though that beginning of the USGPE team may reinvigorate Formula 1 as a popular form of motor racing in the US, but is hiring the Argentine driver Jose-Maria Lopez the way that the American squad need to go? While there is little doubt that every team needs (a lot of) money to racing, the advent of pay drivers in top level motorsports has often created a catch-22 situation for many outfits and while the large sums of money and sponsorship are welcomed with open arms, they are regularly partnered with technical incompetence and an inability to match speed with consistency. Without a driver to truly lead a team, they will no doubt fall backwards before hitting the wall hard – sponsors don’t like it when their chosen cars are coming last.
This is not a slur against Lopez, but the rather an acknowledgement of what pay drivers achieve compared to what the top drivers can do. It is long since realised that during economic boom times, teams are much more able to field higher quality drivers, yet during recessions, sponsors and backers will run for the hills just as ride buyers decide to invite themselves in.
From here, the spindle can only go upwards – we hope.

From → F1

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