Jerry Priddle has worked in Canadian motorsports for 30 years. He handled PR and marketing for the Toronto and Vancouver Indys during the CART era and the Grand Prix of Canada in the early 1990s. He was part of the senior PR team for the Player’s Racing and Driver Development programs with Jacques Villeneuve and the late Greg Moore, and then managed the Canadian motorsport programs for Bridgestone and Firestone. After a six-year stay with Mosport International Raceway, he now heads up Accelerate Marketing & Communications, a Toronto area agency with Mosport (now called Canadian Tire Motorsport Park), Michelin and BFGoodrich on its motorsport client list. We asked Jerry to show us how the Formula 1 world would look like if he ran it.
With two teams folding last year, and three more apparently in varying degrees of financial crisis, it should be clear to anyone responsible for running Formula 1 that the sport is spending itself out of control.
While the top four or five teams may have the wherewithal to sustain an arms race and fill open grid spots of fallen teams, I believe most fans want to see their sport contested by a large variety of chassis-engine combinations battling it out for race wins and titles.
If I ran Formula 1, I would look to North America’s pro stick and ball leagues for lessons on how they manage competitive balance between large and small markets and help their franchises prosper. For me, the National Football League – a 10-billion-US-dollars-a-year business run by 32 competitive franchise owners – is a shining example of how it can be done.
I believe most fans want to see their sport contested by a large variety of chassis-engine combinations battling it out for race wins and titles.
At the pinnacle of high-end motorsport, legendary giants like Ferrari race against relative financial lightweights. Ferrari can essentially spend as much as they want to design and operate their team, hire as much staff as needed, and they (along with the other major teams) take home a disproportionate share of Formula 1’s commercial revenues. The rich get richer and the outcome is predictable. For example, since launching in 2008, the Sahara Force India team has managed just two podium finishes until the 2015 season, and Ferrari has notched 77 podiums and 20 wins in that time.
By contrast – and using market size as a measure of financial strength – the NFL’s franchises in major metropolitan areas (New York, Chicago and Washington) have not dominated teams based in markets a quarter their size (Pittsburgh, Seattle and Green Bay). Thanks to the Leagues’ business approach, the outcome of games and the final point standings have been anything but predictable.
Take the Green Bay Packers for example. Granted, they’re a bit of an anomaly even among small market NFL teams (their place in the NFL parallels Monaco’s on the Formula 1 schedule), this tiny northern US city with a population of 100,000 has made the post-season playoffs in six of the past eight seasons, winning the league championship in 2010. Washington on the other hand, with its population base of five million, has not made the playoffs once during that same period.
The NFL achieves this parity thanks in large part to three key pillars: cost control, revenue sharing and providing franchises an equal voice at the table.
Let’s take a quick look at each of these and how the NFL’s philosophy of “the whole is greater than the sum of the parts” it might apply to Formula 1 and level the playing field.
The NFL has a team salary cap in place, based on the percentage of revenues. All teams, regardless of market size and franchise value, must adhere to this cap. If league revenues increase, the cap goes up; if it decreases, the cap goes down. This is one of the ways the Green Bays of the League can compete with the New Yorks for talent.
I came into this writing assignment thinking a team budget cap was the most important and obvious solution to Formula 1’s financial inequities. However, the more I read about the sports’ money woes that made headlines during last November’s small-team boycott threats, the more I’ve come to believe that a cap would be next to impossible for the sport to enforce, especially for teams with auto manufacturer ties, where the lines between race and consumer auto operations could be fuzzy.
A more realistic approach for Formula 1 is to do a much better job of reigning in the costs to develop and operate a two-car team through a mix of rules changes and budget restrictions. If that doesn’t narrow the gap over a few years, then some form of a budget cap will have to be considered, warts and all.
The 32 NFL franchises share equally in designated league revenues (national media rights, ticket sales and licensing to name a few). There are certain revenue streams pocketed by the teams, such as their hospitality suite sales, so financial incentives for individual teams to succeed in sales and marketing still exist.
As I understand it, the larger, more successful Formula 1 teams reap the lion’s share of the commercial revenue pool made available to teams. This simply has to change.
If we agree that it’s unrealistic to implement a budget cap, then sharing F1-generated commercial revenue equally among all the teams is key to bringing some balance and variety to the podium. Teams still have opportunities to generate their own revenue streams like sponsorship and licensing, and presumably the iconic teams would continue to dominate in these areas.
Equal voice at the table
The NFL teams have an equal say in how their League’s business is conducted. Like any board of directors, strong personalities can emerge and alliances can form, but votes on most major League matters require a three-quarters majority. The League is led by a commissioner, appointed by the owners. Although he serves at their pleasure, many of the NFL’s commissioners have been strong politicians, who do a good job of building consensus among the owners and steering the ship through the sometimes-choppy waters.
While I don’t know the ins and outs of the Concorde Agreement or what other contractual roadblocks might stand in the way of all teams having an equal vote, I do know that whoever ends up running Formula 1 will have to do everything to ensure the teams work together, in a balanced approach, for the sake of the whole industry.
Then perhaps, like their small market brethren the Green Bay Packers, we’ll be raising a toast in the not too distant future to Force India’s Formula 1 world championship.