Formula One shake-up to challenge dominance of Hamilton era

Lewis Hamilton’s win at the Turkish Grand Prix last week secured him a place in history with a record-equalling seventh world championship.

Such predictable dominance is one aspect of the sport new F1 chief executive, Stefano Domenicali, wants to challenge with sweeping changes to stimulate fiercer rivalries on the track — and attract a new, younger audience.

The Lamborghini chief executive and former Ferrari team boss takes charge from January, after the conclusion of the current season.

He will need to lead a financial recovery, following huge losses suffered during the pandemic, but also faces challenges that precede coronavirus.

Formula One driver German Sebastian Vettel (L), from team Ferrari, and former Formula One boss Bernie Ecclestone © Sebastiao Moreira/EPA/Shutterstock
Stefano Domenicali, new F1 chief executive © Krisztian Bocsi/Bloomberg

Industry executives, team owners, managers, and drivers say that, under Mr Domenicali, F1 must reach new television viewers — and sponsors — by becoming more exciting, more digital, more environmentally friendly, and bigger in the US.

Bernie Ecclestone, who led F1 for decades before being ousted by Liberty Media after its takeover, said the new chief executive must be allowed to act without interference from the owners.

“It won’t be easy for him at all but it’ll be easier than if he needs to get permission from someone,” he said. “When I ran the business if I saw something that needed doing I didn’t talk to my grandmother . . . I got on with it.”

Mr Domenicali faces a difficult economic environment that is putting pressure on broadcast and sponsorship budgets.

He also should not expect an easy ride from those at the top of the grid, such as Mercedes, which has no intention of relinquishing its grip over the sport.

“The biggest challenges are to create a spectacle with more variability and more unpredictability,” said Toto Wolff, team principal and minority shareholder in the Mercedes team. “We will do everything to counter that.”

Liberty Media, the group controlled by US billionaire, John Malone, which acquired F1 for $8bn four years ago, has struggled to grow its revenues.

Chase Carey, a Fox Corporation board member and confidant of Rupert Murdoch, who was appointed F1 chief executive in 2017, has repeatedly acknowledged that the sponsorship market has proven tougher to crack than expected. F1 made 15 per cent of revenues from sponsorship last year. Total revenues were $2bn, slightly up from roughly $1.8bn in each of the prior two years.

In the first two quarters of 2020, revenues were just 7 per cent of the $866m generated in the same period a year earlier, due to a four-month delay to the start of the season.

Mr Carey, who will remain chairman, managed to protect vital broadcast income by staging a season, albeit mostly in Europe, set to hold 17 Grands Prix this year.

But despite a rebound in the third quarter, the series incurred operating losses of $363m in the first nine months, because of lower fees from race promoters and a hit to corporate hospitality without fans in attendance. In April, Liberty Media was forced to inject $1.4bn of cash into F1, which furloughed half its workforce and agreed salary cuts with executives to weather the pandemic.

Mr Carey’s reign was consumed by the urgent need to secure commitments from all 10 F1 teams to make the sport more competitive. This year he convinced constructors, including the big three of Ferrari, Mercedes and Red Bull, to sign up to a new “Concorde Agreement”, a deal that governs how money is split.

The revised agreement will divide F1’s revenues more evenly among the teams, while also including a $145m cost cap next season. These measures are designed to reduce the advantages enjoyed by the big three teams, which tend to dominate the podium at the expense of smaller rivals such as Williams.

“A big rule change will dissipate the field,” said Christian Horner, team principal at Red Bull Racing, the last team other than Mercedes to win the championship. “We just hope we’re on the right side of the curve.”

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Under Liberty Media’s ownership, F1 has reached new audiences through the Netflix series, Drive to Survive, which showcased teams and drivers, and spin-off “esports” video gaming events. But the average age of F1 fans remains 40.

Another missing component is the sport’s relatively weak profile in the US, where its only Grand Prix is in Texas. Mr Carey confirmed this month that long-running talks about staging a race in Miami, Florida had been pushed back because of the pandemic.

It would only take one or two additional races to make a “big difference” in the US, according to Zak Brown, chief executive of McLaren Racing, a UK-based team.

“A successful US driver is what’s key,” said Mr Brown. “The best thing [F1] can do is try and get a second event there.”

But Mehul Kapadia, chief operating officer of the Motorsport Network, a digital media group, said: “It is an uphill battle to create the same kind of attraction there [the US] as in Europe.”

Formula One Group CEO Chase Carey (L) and Red Bull Racing Team Chief Christian Horner © Valdrin Xhemaj/EPA/Shutterstock
Racing Point’s Canadian driver Lance Stroll © Murad Sezer/AFP/Getty

F1 is planning a record 23-race calendar in 2021, including a new Grand Prix in Saudi Arabia, building on a global sponsorship partnership with state oil company Aramco.

This move threatens further controversy, with Amnesty International accusing Saudi Arabia of “sportswashing” to distract from its record on human rights.

Mr Hamilton, who has been a vocal supporter of the Black Lives Matter campaign, said F1 “cannot ignore the human rights issues” in countries on the circuit.

Sustainability is another key issue for Mr Hamilton. He intends to enter a team into Extreme E, the off-road racing championship for electric SUVs, in its debut season next year. Alejandro Agag, the Spanish businessman who founded Extreme E, also set up Formula E, an electric car racing alternative to F1, has already used its green credentials to woo sponsors.

The pressure is on F1 to act. Honda has decided to quit F1 at the end of next season, partly because it wishes to focus on building electric cars. This leaves three engine manufacturers to supply the 10 teams, another limit to strong competition.

A year ago, F1 pledged to become carbon neutral by 2030 and is looking to build on its shift to V6 hybrid turbo engines from the old gas-guzzling 2.4-litre V8s in 2014.

But Nico Rosberg, the former world champion driver, who was an early investor in Formula E, said F1 had not done enough to communicate the efficiency merits of its hybrid engines.

“As a sport they still have to do a lot more and they’re on course to doing that,” said Mr Rosberg. “Exits like with Honda are a reminder to how quickly F1 needs to move.”