Zak Brown: New F1 sponsors are alienated

This AR1.com editorial lays out what is wrong with IndyCar and F1 today – too high costs caused by technology we do not need that takes the 'sport' out of both series and turns them into expensive engineering exercises

Zak Brown, who has been described as "F1's go-to-guy-for-big-time-sponsorship deals" believes F1 is in danger. Brown who is CEO of the world’s largest sports agency -JMI – believes urgent measures are required to revive Formula One’s economic opportunities.

"The overall sponsorship economy… is very much down in Formula One. That's a fact – just look at the cars," Brown tells Reuters. He believes the lack of sponsors on the cars is evidence of this and also in stark contrast with how the cars looked in by gone times.

Even though all JMI's current clients who sponsor F1 have re-signed up to their existing commitments, the trends in F1 are just too negative to attract new sponsors.

“What I’m seeing is…attendance is down, TV ratings are down, car count (the number on the starting grid) is struggling. So your key performance indicators are all on a downward trajectory right now," says Brown.

Further, sponsors come into Formula One for one reason; to obtain access to the sport’s platform for them to advertise their wares in relevant global markets. Brown warns Ecclestone that his financial model that marginalizes traditional European venues is exacerbating the problem.

“Losing Germany; I haven’t had anything other than disappointment from sponsors on that. With Italy there will be the same reaction".

“Some of the new markets, Mexico, are fantastic. Some of the other markets that are new, less so.

“We are adding some good ones," but Brown questions the value of other new venues in the pipeline. “There is speculation of a third race in the Middle East. How can you have three races there and none in Germany?

“I think the two they have are outstanding and contribute a lot to the sport but a third? I don’t think the market can support that."

The F1 business model that sees traditional race promoters being charged ever greater hosting fees as the ‘new’ wealthy venues push up the price is also reducing the numbers of fans attending Grand Prix weekends.

Another feature of the current commercial model for F1, is the extraction of bigger and bigger amounts from the broadcasting companies. This has seen a significant rise in pay-per-view channels being the only live broadcasts of a number of F1 racing weekends.

The core TV audience for F1 is in Europe and there less people are prepared to pay for subscription TV to watch the sport, so naturally eyeballs have been reducing.

This is clearly not what sponsors want.

Interestingly, Zak Brown chooses to attack the current budgets of the top Formula One teams. He argues if they are reduced then the promoters and TV broadcasting fees can be reduced.

This solution sounds like an Ecclestone suggestion, as it would reduce the amount of disbursements made to the teams by FOM. However, it fails to address the problem of the minimum amount of spend forced upon the teams to merely build a car and fund their operations to attend each of the annual events.

Not reported widely in the English media was a call made by FOM non-executive director – Luca di Montezemolo – for CVC to build a management team around Ecclestone and improve Formula One management.

“The owners have to invest, they must set clear priorities, and they need to engage a management team that is fully focused on new objectives." Luca was speaking to German monthly ‘Manager Magazin’ last weekend.

The ex-Ferrari chairman is not calling for Bernie’s head, but says “he needs top people and experts for finance, marketing and the digital world."

Zak Brown was asked last year whether he could see himself succeeding Ecclestone as the chief of F1. He told F1 Racing, “I’ve always been a fan of it – and in the business for most of my working life. So first and foremost I want to be a key influencer in the commercial side of F1 and all of motorsport."

Brown’s comments will not go unnoticed by CVC’s Donald MacKenzie. Bernie claimed in Bahrain he was there to “kick ass," but the days of this being the primary modus operandi by which the sport can be successfully managed, are clearly over.

Ecclestone is failing to get the job done because his commercial strategy has fallen into disrepute with the teams. Engaging individuals to work on the F1 business model who understand marketing like Zak Brown, can only improve the co-operation from the teams to find common objectives with the commercial rights owners to take Formula One forward once again. TheJudge13