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Editorial

Mom, apple pie, CART and...Formula One?

 by Commando Cody
October 18, 2002

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Shhh, don't let the cat out yet
Photo by Getty Images

There has been a lot of speculation both here and abroad about the recent series of meetings between Championship Auto Racing Team CEO Chris Pook and Formula One supremo Bernie Ecclestone. The speculation ranges from the sublime to the ridiculous, from a partnership between the two open-wheel road-racing series to Bernie buying CART lock, stock and lug nut.

If one steps back from the politics surrounding the situation, I think the answer may be, as Sherlock Holmes once observed, "hiding in plain sight."

Major league open-wheel racing, worldwide, is in trouble.

Formula One, CART, Formula 3000, the IRL -- wherever one looks race attendance and television ratings are not what they once were and leave a lot to be desired.

With Bernie being the de facto head of two of the aforementioned series and Chris being the head of another, it is actually pretty obvious what the meetings were about: what can be done to make things better.

For Bernie's Formula One and F3000, the United States has proved to be a tough market to crack. United States Grands Prix have ranged from as many as three in 1982 to as few as zero. The Formula 1 circus has tried racing at Sebring, FL; Riverside, CA; Watkins Glen, NY; Long Beach, CA; Las Vegas, NV; Detroit, MI; Dallas, TX; Phoenix, AZ; and Indianapolis, IN. All without appreciable long-term results. Formula 1 has even tried surrounding the States with North American Grands Prix in Canada and Mexico.

Somewhere along the line, probably after Long Beach, Bernie must have more or less given up. The rumor was that if one came up with the requisite sanctioning fee, Ecclestone would let one hold a Grand Prix in a Ralph's supermarket parking lot.

Whether or not that's the mood he was in when Tony George came waltzing through the door with a reported $15-million annual sanctioning fee (+ television revenues) and a willingness to bulldoze the Indianapolis Motor Speedway to the tune of a rumored $75 million, is anybody's guess?

The bottom line stayed the same: it didn't work.

One George apologist remarked defensively, "While the return of the U.S. Grand Prix, now based at the historic Indianapolis Motor Speedway, has been well-attended, it has thus far failed to spark a wholesale revival of widespread interest in Formula One racing in America."

The publicist failed to add some footnotes: "well-attended" is a relative term and doesn't necessary mean growing attendance, which is good, because it isn't. Only George knows for sure but even he was optimistically talking about a US GP crowd of 120K for 2002, down from the inaugural count two years ago of 200K. It looked like a lot less than 120K. George has a habit of counting tickets "sold" as equaling attendance. Theoretically, he could "sell" 100K tickets to the Girl Scouts of America for a penny each for charity door-to-door sales and boost the "attendance" quite a lot.

The other footnote would have to be about that supposed "widespread interest in Formula One racing in America." It's never been what could be called exactly "stellar" (except when Mario Andretti was chasing the F1 championship).

In the past, Bernie and his "former" lawyer, Max Mosley of the FIA, could turn their back on such failure and shrug. It's hard to ignore a potential gold mine of nearly 300 million consumers, but it can be done. China has over two BILLION "consumers" and Bernie's only looking into it now. But, there's a difference. China's market could probably best be described as a salt mine on a good day (with a per capita daily income a tad over a buck). Plus, there's the Hollywood factor. America is to international media as Bernie is to Formula One. Make it there (Hollywood) and one simultaneously makes it everywhere.

So, Bernie was probably hoping for a little more from his minor partnership with George than was delivered.

Situations, as they say, change. In the three years that Bernie's circus has been camped out in Indiana, they've changed a lot and not for the better. The world's economy has gone south and so has Formula 1's television ratings. The US market that was so easy to ignore just might prove to be the edge that saves Bernie's bacon. It would go a long way toward mollifying skittish Formula One sponsors if one could open up some new market exposure in the NAFTA countries, especially the US.

That's the split in the road where Ecclestone takes a path different from George. Tony is first, most, and always a track owner and he thinks like one. What's important to him is attendance. That's where the ticket and concession income is and it's his filled stands, to his mind, which attracts television money. That's because in his grandfather's case the one came before the other. Bernie can think like that also because he's promoted a few races in his time, but that's not how he built Big Formula One. He did the reverse. He built the television first and IT attracted the fans. Once he had a lot of both, television coverage and fans, then Ecclestone concentrated on ticket and concession sales. Plus, Bernie's had an experience completely alien to George: collecting fat sanctioning fees for deigning to bring his circus to town.

So, it's not so much of a surprise that Bernie is talking to Chris Pook, one promoter to another, about what can be done to fix the current state of affairs. Ecclestone knows that Pook knows that one race does not equal market penetration, no matter how big (or small) it is. Bernie's problem extends well beyond the success or failure of the US GP. His Formula One has a schedule of 17 races worldwide. For his series to have any marketing impact in America, he needs a considerable number of its auto racing fans to be following all 17 of his races; kind of like they follow the 36 NASCAR races.

Ecclestone has already tried the "put on a race and they will come" approach until he's blue in the face--with negligible results. What he really needs is a Formula One based in the U.S.

Why? Because the only motorsports market in the U.S. that is completely saturated is the one for All-American oval racing. Anyone attempting to compete in that market will have to be content with NASCAR's leavings. Anyone else is going to have to find a new market or revive an old one or, most likely, a bit of both. And one can't do that from London with one measly remote-controlled race.


Bernie: If I have to watch another oval race I'll poke my eye out
Photo by Getty Images

All the conventional wisdom about the American motorsports market has been exhausted: Americans mostly want to see American drivers--check, NASCAR has it covered. American fans love racecars running in packs with photo finishes--check, NASCAR has it covered. American race fans are in love with oval speedways and want nothing else--check, NASCAR has it covered. All the way down the conventional wisdom clipboard--check, NASCAR has it covered.

Try to get a new motorsports series off the ground in the US--check, NASCAR *had* it covered but it was shot dead while trying to escape.

Formula One didn't have the instant recognition and tremendous global popularity it enjoys today when Bernie took its helm. Ecclestone developed it, almost from scratch. Bernie created the convention wisdom where Formula 1 is concerned, he had none to go by himself.

So, he knows a thing or two about creating a new market where the interest is dormant or only partially realized. His goals for the American market, were he to accept the mission, would be to revive widespread interest in road racing (particularly the open-wheel variety)--of which there was plenty--and increase it, while branding it (somehow) with an identification with Formula One. In other words, go for the American motorsports audience that the conventional wisdom has overlooked or ignored. Given that task alone, even now, Bernie could pull it off.

But Ecclestone has bigger fish to fry, lots of them. Therefore, one solution to his problem would be to find a surrogate for himself and a surrogate for Formula One in the United States. For such a solution to work, the guy would have to be balsy and smart and the open-wheel series would have to be clearly labeled "Formula 1" to provide a bridge to the real thing.

Bernie has already talked with Tony George and kicked the tires of the IRL. Now, he is talking with Pook and walking around the CART paddock.

Ironically, one of Ecclestone's biggest impediments is the popularity of his own showcase series. There is more demand for Grands Prix worldwide than Bernie can accommodate. He's making preparations to add a Grand Prix in Bahrain and he's made it clear that means one of the traditional GPs is going to have to go. Seventeen races and no more. Thus, the days of staging three US GPs in a season, even if it would work, are over.

Clearly, the only thing that would work is a US-based major league open-wheel road-racing series with "Formula One" written all over it. With major teams in both series and drivers coming and going, the mounting success of the American series would be carried over to Formula 1 and its full season. If the American series had, say, 20 races, added to Formula One's 17, that would provide the fan of the combined series 37 races to enjoy--one more than NASCAR.

Plus, Bernie would then be the position of having "expansion" Grands Prix. He couldn't dilute the American series' venues too much, but he'd have a least two or three new "Grands Prix" to barter elsewhere in the world; say the Pacific Rim. Also, the new series could be expanded to as many as 24 races.

With careful scheduling at least half the new American series' races or more could be held on weekends between Grands Prix. Thus, both series would get the required "down time" necessary to prepare for the next race yet be able to provide nearly weekly races. The combined series could maintain NASCAR's grueling schedule but at a comparatively relaxed pace. Over the long haul this would give open-wheel road-racing an edge.

Everyone tries to think like Bernie, but only Bernie thinks like Bernie. Having said this, if I were Bernie, here's what I'd be thinking:

(1) I need a Formula One 'Lite' based in the United States. It can't be perceived as being TOO close to Formula 1 to be real competition, but it must be close enough so that the fans of it will be more than eager to watch the "big show" (i.e. Formula 1). Size and performance of the cars aren't really a threat as long as the series is a "spec" series and Formula 1 is not. So, Formula 1 Lite cars must have enough power and size to get respect and put on a great show. The two series, though, should never run on the same track.

(2) Besides the obvious correlations (i.e. big, open-wheel formula cars) the American series must be literally branded with Formula One, so the series needs to officially be "Formula 1's support series".

Immediately, this has certain ramifications. The series will need to be "spec" for sure, to keep costs low and so that the cash-strapped Formula One teams can afford to run a "junior" team. The payback, though, is potentially enormous. The Formula 1 manufacturers are not only growing Formula 1's international exposure but they get to "double-dip" in the American market: 20-24 extra races in the NAFTA region with Formula 1's sponsors on full-display!

Formula 3000 will somehow have to accommodated. That's not going to be easy unless one is willing to give up one thing: having the cars run in Europe on the same tracks as Formula One. If having the cars run over there is a requirement, things get messy. The costs will skyrocket for the Formula 1 "junior" teams to compete on both continents and the American schedule would have to be pruned to accommodate the European races. Worse, comparisons will naturally be made so the American series cars would have to be degraded in performance relative to Formula 1. That would hurt the "show" and that's something Bernie really doesn't want to do.

Perhaps better would be to modify the current Formula One practice where the progression for a new driver is usually F3000-->team test driver-->F1 seat. Except for familiarity with a few of the tracks and the European ambiance, the driver's skills would not suffer from a season or three spent in the Americas before being brought over for Formula 1 test driver duty. Do this and one gets some potential side benefits, like the American series can run V-10 engines like Formula 1. This will give the Formula 1 up-and-comers a better taste of the "real" thing without risking comparisons with the main attraction. Also, this would help to further brand the American series as "Formula 1 Lite".

As it is Formula 3000 is in dire straits and in need of infusions of cash if it is to survive. One problem is that it is playing to the exact same audience as Formula One. Besides a training ground, what additional benefit would the sponsors of, say, the Williams Formula 1 team receive from a Williams F3000 team? The F3000 team plays to Saturday's audience (usually a reduced amount of Sunday's audience). Replace F3000 with a new American series and the teams are the feature attraction for a whole new Sunday audience.

(3) One doesn't need the hassle and expense of starting from scratch. The CART FedEx Championship, the best candidate, is already up and running with a schedule of 20 races and a loyal fan base numbering many more than the rival open-wheel series. It's also a no-brainer in that one series is a road-racing series like Formula One and the other is an all-oval series based at speedways. With its official status, the new CART series (say "Formula America") would be directly linked to Formula 1 such that there would likely be a transference of interest by the fans of Formula America to Formula 1.

Moreover, CART is basically only in need of a subsidy and a strategic alliance with a partner with some media clout. Add an engine partner like Cosworth (or a badged Judd) and it would likely pay half of its own expenses initially. Within a relatively short period of time it would be self-supporting and returning a profit. The series is now well run and well organized. It's in the unique position that it is capable of being radically transformed in short order with virtually no obstacles, unlike the current attempts to reform Formula One. There are virtually no entrenched special interests left in CART: the engine manufacturers, many of the large sponsors, as well as the powerful team owners have bowed out of the series. The series could be reconfigured in a remarkably short period of time at a reasonable cost and the Formula 1 junior teams would have a level playing field from the first day.

(4) The all-important American television equation could be solved by using Formula One's international media power to get the new series domestic coverage.

First, the marketability of the new American series would skyrocket with the addition of the brand recognition and glamour associated with Formula One and with the participation of teams with names like Ferrari, Williams, McLaren, Sauber, etc. The attendant elevation in prestige would put the series on the map as never before. Plus, the new series could now match the media muscle of the entrenched oval-track conglomerates with that of the international Formula 1 press. In a battle for credibility, there is no way that the parochial view of an Indiana or Daytona Beach-based press could win out against overwhelming global opinion. With NASCAR itself preparing to allow in foreign manufacturers, it lays itself open for the first time to criticism from the international community. It could no longer circle the wagons and take refuge in traditional American isolationism--i.e., an "us vs. them" stance.

With Formula One using its influence to ensure the new American series gets international exposure as the official jumping-off point to the highest level of open-wheel road racing the series would have blanket international media coverage overnight! Just as American movie studios have found they can't ignore the lucrative international market, so too would American television. (Would they rather be in a position of buying the Formula America feed from international media or selling it to them?) Sponsors who have more than regional or national ambitions would have to look seriously at a motor sports series with 80% global reach.

The new American series would be easy to "piggy back" on the traditional Formula One press. Whereas CART does not even have a magazine devoted to it, Formula 1 print media, TV shows, news broadcasts, highlight shows, etc. could add coverage of the new series for very little cost--yet the immediate reach would be enormous. What subscriber ever complained of additional free features?

The television situation has unique benefits for Formula One. Any American audience that results from the popularity of the new series is a net gain for Formula 1 if they transfer over.

Most Formula One races take place in time zones that are inconvenient for the American fans to watch. While this difficulty can be partially off-set by taped-delay broadcasts on cable systems in the U.S., it does nothing to address the lucrative free-to-air media market and does nothing to increase the general popularity of Formula 1 in the U.S. Without increased popularity, both free-to-air and cable broadcasters in the U.S. are reluctant to show re-broadcasts of Formula 1 races. In this regard, in the American media market, Formula 1 is little better off than CART.

CART, on the other hand, has nearly all its races taking place in time zones and at venues that allow convenient viewing and/or race attendance by its American fans. It is the better vehicle to "sell" Formula One's open-wheel road-racing message.

As the new American series' popularity increases so, likely, will Formula One's. Thus, Formula 1 will be able to negotiate increasingly better US media packages. Or the two series could be combined for added muscle in contract talks.

For Formula One the new series has the wonderful media affect that it adds to Formula 1's audience without diminishing it one bit. Since, in a way, the new series is the "flip-side" of Formula 1, the new series has the same disadvantages with international audiences as Formula 1 has with American. It's races will take place in time zones and dates inconvenient for casual international viewing so it will probably have to be tape-delay broadcast and might even become, in some areas, the equivalent of America's "Monday Night Football." This means Formula 1 gets the benefits of any new American audience that is created yet retains its traditional audience who plans their weekends around Grands Prix.

(5) Both Formula One and CART share the "American driver" problem. It is a widely held belief that no motorsports series in the United States can gain popularity without the presence of both American teams and drivers. To a very limited extent this is true. However, the vast majority of drivers in NASCAR are American. As the most popular form of motor sport in the US one could never hope to compete with NASCAR for popularity primarily on the basis of the presence of American drivers. While some American presence is obviously necessary, what is really lacking is a familiarity and identification with the drivers already in CART and Formula 1.

Hollywood can be used as an example. Such is its media and cultural reach that American and Canadian actors become major international stars; but few foreign actors attain that status unless they come to and are accepted in Hollywood.

In American motorsports at the present time there is little crossover because there is no acknowledged "center" of the sport (like Hollywood is to movies). American driving stars, primarily NASCAR, stay American stars almost exclusively; while international Formula One stars, with rare exception, stay stars primarily outside the US. For a variety of reasons, CART has recently experienced the loss of many of its well-known drivers to other series, including Formula 1. As Formula 1 is almost a non-presence in the United States, CART drivers 'graduating' to Formula 1 might as well have disappeared.

The alliance of Formula One and CART offers the first opportunity to use the media to build the celebrity of both series drivers because they are not being "lost" to another series. Fans can follow their favorite drivers from the minor to the major racing league seamlessly, much like baseball. This will expand the marketing opportunities for everyone concerned: sponsors, teams, and drivers.

(6) The alliance could provide an answer to the "Ferrari problem" which would not require the extensive reordering of Formula One. The very lowest budget for a team in Formula 1 is reported to be around $50 million. The budget for a Champ car in the upcoming 2003 season is estimated to be about a tenth of that, $5 million. With pre-planning and attention to detail the new American "spec" series might conceivable reduce it another third. Theoretically, however, all the cars in the new series would be equally competitive. So, one could expect to see a Jordan or BAR or Minardi out front in the new series as much as a Ferrari or Williams or McLaren. Suddenly, the usual back-marker teams' sponsors are getting a big added return on their investment for a fraction of the Formula 1 budget.

This could not only provide bone fide results for the smaller teams but provide some real drama and excitement to Formula One itself. For example, imagine if Minardi's up-and-comer in the new American series consistently beats Ferrari's up-and-comer. Despite whatever disparity might exist in Formula 1, Minardi fans would probably feel a great sense of anticipation waiting for their "hot" new driver to arrive in the big leagues to duel with Ferrari's ace.

This benefits everybody and will likely double the number of recognized celebrity drivers in both series.

(7) The oval track-owning conglomerates in the U.S., IMS's owners included, do not have Formula One's interests at heart. In fact, they are openly hostile to professional road racing in all its forms (except within their speedways) and consider it competition. If CART is allowed to succumb under pressure from this special interest group, Formula 1 will never again have the opportunity it has now to gain a foothold in the U.S. For Formula 1 it is act now or never.

(8) Finally, CART is cheap. Cheap to buy and inexpensive to run. To the extent that one has confidence in one's ability to build up the series there can be no greater investment. Even a fifth share could eventually reap billions in profit.

The author can be contacted at feedback@autoracing1.com

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