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Volkswagen: F1 costs too much, has too few sponsors and viewers

F1 Fanatic Round-up

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In the round-up: Volkswagen Group director Bernhard Gobmeier explains why the company has not become involved with Formula One.

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Comment of the day

Ferrari’s decision to keep Kimi Raikkonen for another season drew a mixed response at best. Here’s a view from one of Raikkonen’s fans:

I think Raikkonen is not there to bolster the team’s title chances, but rather Vettel’s – he is a number two driver who is just good enough to pick up the scraps when his car doesn’t have issues or he isn’t taken out of the race. He also bolsters Vettel’s happiness driving for Ferrari. Second, he is a placeholder – they can’t take chances with a rookie and end up with a 2016 Vandoorne – Leclerc will get a drive at Sauber for two or three seasons to gain experience, then join in 2020 or 2021.

Added benefits of Raikkonen: He is supposedly a great development driver, and his work aside from the actual race helps improve the car for his teammate and future team modifications. Another interesting thing I would like to mention is how Raikkonen’s performance last year drastically improved after he had signed another contract – Raikkonen might just be worried about his teetering situation at Ferrari, and may see a change in form coming into Spa (which, I might add, is his best and favourite track).

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Keith Collantine
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  • 39 comments on “Volkswagen: F1 costs too much, has too few sponsors and viewers”

    1. I get the COTD point that a clear 1-2 driver setup is helping Vettel. But two top drivers would be taking more points from Mercedes. Rather than Hamilton only having to fight Vettel, he’d be having to fight another top tier driver.

      Mercedes having a very close driver pairing has meant that when Hamilton has lost the plot, Bottas has collected wins and Mercedes have the constructors lead even if they don’t have the drivers championship lead.

      I think Ferrari are wasting the best car they’ve had since 2008 not having a better driver than Raikkonen in it, but realistically there is only Alonso available. I’d assume that’s why they’ve gone with him again, to wait and see who is available in 2019.

      1. @philipgb Ferrari’s problem isn’t Kimi. It is their car. They have the second best car at most circuits and it will hurt them more than Kimi underperforming. As clearly shown in many races, unless one has more than 1.5~2s advantage, it is very difficult to overtake the leading car. Plus there is no power deficit in the Mercedes to catch them on the straights.
        So Ferrari are at an inherent disadvantage as soon as they start behind the Mercs. Not to mention the Mercs being able to run the high power mode for longer duration in the races.

        Also, Kimi does what he is said so because he is ‘so’ behind Vettel in terms of pace/points. If they get another driver who is faster than Kimi, what chance are there that Vettel’s world will collapse at Ferrari? Instead of helping him out in the WDC, he will take points off his own team mate. Not sure he will willingly do a Kimi like in Hungary.

        So if they want better results from Kimi, they have to improve the pace of the car so that they are ahead or closer to Merc than to the RB.

    2. I really hope I don’t witness the end of f1 in my life time.

      The way that it is going, I can’t see manufacturers other than Ferrari remaining long term with the cost, low views in comparison to other top sporting leagues and motogp too.

      It’s time to do away with road relevance and let the engineers come up with something special

      1. @jamiejay995 F1 won’t die unless it fails to change/adapt. I am confident in the new management’s ability to change given what they’ve shown so far.

        1. What F1 must always try ( but rarely manages to do ) is to step outside it’s
          narrow world of intense brand and engineering competition, and by so doing
          attempt to influence as well as reflect current trends in technology and how
          21st century societies work.
          F1 leaders always pay lip service to events in world markets and world politics
          but so often fail utterly to see storms coming until they are swamped by
          huge recessionary pressures which always have and always will roll onwards.
          Time without number international economic crises strike this sport with
          hurricane force and always these brilliant engineers stand in small groups
          shaking their head at the wicked, wicked world which has betrayed them once
          Get real guys ! You are part of a very rapidly evolving technological, economic and
          social world order and you need to at least attempt to see some of these storms
          before they hit you !

          1. F1’s biggest problem isn’t greed it’s the politics which drive it, courtesy of the FIA, the EU and big name brands like Mercedes. That is F1’s biggest problem. Well, maybe the east’s hold over Europe’s energy interests, ;) Don’t worry, soon enough people won’t be allowed to drive cars because it will suddenly be a threat to humanity as people start hearing about massive road deaths which have always been. And then, who will want to watch F1, really. But before that happens most of the educated world will have realized what a travesty television is to the human psyche.

      2. It’s time to do away with road relevance and let the engineers come up with something special

        Agreed. The road relevance aspect seems so outdated today, where all technology is designed and simulated on computers and doesn’t require giving it a test drive on a race track, let alone in a car so much different than a road car, especially as in the time that it takes to produce and put on track a prototype you will have already developed next dozen iterrations of the concept.

        Formula 1 being a testing ground for producing a more reliable Ford Focus is not nearly as exciting as Formula 1 being a testing ground for creating an even more monstrous Bugatti Veyron.

      3. It’s time to do away with road relevance and let the engineers come up with something special

        Agreed. Great comment 👏🏽

        1. I am not sure the road relevance is harming F1 particularly. The biggest issue is the paywall locking out many potential new fans. I grew up with F1 on free to air and would never have got into it if it had been behind a paywall. The fact that it was on mainstream free to air TV meant that I just watched it because it was on. I then became interested and became a fan. The other issue is having too many races in places that draw almost zero spectators.

          Unless the new owners reverse the paywalls almost immediately then I can see F1 being dead within the next 10 years.

    3. VW, who just spent 10 Billion € in a decade on WEC + LeMans, which is watched by the numbers in thousands at the stands and less than 1 million total yearly TV/streaming has the gall to question cost-per-capita(viewing customer) of F1 ?

      1. I guess blowing boatloads of money on WEC with Audi and Porsche gives them a good insight in how to waste money. I think he is right when he mentions the Ducati MotoGP program and how it brings more value for money to them than those @uneedafinn2win :-)

        Apart from that the article/interview is a bit of a mess. Sure, in the US they control cost, but NASCAR is hugely expensive too, and at the same time has slinking viewership as well. And Indycar might be a lot cheaper, but due to lack of interest from fans they still have trouble making ends meet. And off course all manufacturers entering FormulaE means that cost will skyrocket there too, but the audience is largely non existant apart from the tens of thousands that come to the races either.

        1. @uneedafinn2win, @bascb, also it is real hard to be competitive in F1, no matter how much money you throw at it. That is a big turn off for these absent manufacturers like VG, GM… etc, the commitment required & consequences of failures(e.g. Honda with this engine formula, Toyota in last decade or Mercedes before 2014) is compounded by the fact that F1 is watched by an incredible number of people & enjoys the largest media coverage of any motorsports. And none of these big brands like to admit that publicly…. much easier to pin blame on lack of testing, cost only.

          Porsche, Toyota & Audi spent yearly budgets similar to a midfield F1 outfit, but take them to the F1 grid & very likely they’ll face genuine humiliation. Nissan withdrew from LMP1 with almost all of their prestige intact, had it been F1… it’d be ruthless.

          And before anyone thinks the championship should be made open or inviting with it’s financial, sporting or technical regulations…, there are some downsides to it too. LMP1 was ALL of that and more, look how quickly it collapsed. These manufacturers expect assurance of success before commitment, not assurance of competitiveness. Ferrari/Mclaren in F1 have many reasons to protect their heritage, Porsche/Toyota in WEC don’t.

          1. Good point about the risk of very publicly failing @praxis

      2. FlyingLobster27
        23rd August 2017, 8:16

        Not sure if exaggeration, @uneedafinn2win, or if you need to state sources.

        Le Mans is attended by a quarter of a million fans each year, comparable to a very good GP (Silverstone has a 150,000 capacity). The viewing figures are without doubt lower than F1, but the races are much longer, TV channels don’t show races in full, so it’s harder to quantify. Where you get the number 1M/yr max from I have no idea. Le Mans alone unquestionably has to exceed that – there are reports of 500,000+ viewers at the end of the race in the UK alone this year (source, and the article links to previous ratings, including the infamous 2016 LM-Baku clash).
        10 billion euros in nearly 2 decades…? That might be close to reality, but I wouldn’t be surprised if it wasn’t. I’d be interested in a source for that, if you have one. P1 has become notoriously expensive in the last 8 years, with the introduction of a World Championship and hybrid technology. Reports put the current annual budget of a factory P1 team at around 200M€. But until 2011, budgets were low enough for privateers to be able to use Audi prototypes (the R8 was run by privateers from 2001 to 2005, and Kolles had the R10s when the factory moved on to the R15). It’s in the billions in total, granted, but closer to 2-3 or 10, I’m not sure.

        There’s a major thing that you’re forgetting though, and that’s that VW has a multi-billion dollar hole in its budget due to its emissions fraud. Right now, any factory motor racing project is difficult to justify financially. They pulled out of the WRC straight away, with the Polos disappearing completely, they’re finishing their WEC pull-out at the end of this season to concentrate on customer GT programmes, Audi is staying in the DTM for now because they haven’t had to develop a new engine yet, and the only advance they’ve made is to have a second brand in Formula E (because it’s cheaper for Porsche to do FE than P1).
        You may think their justification is silly, but that’s because, from a PR standpoint, they can’t just say “we’re still paying for Dieselgate”.

      3. 18 September 2015 – the United States Environmental Protection Agency issued a notice of violation of the Clean Air Act to German automaker Volkswagen Group. The agency had found that Volkswagen had intentionally programmed turbocharged direct injection (TDI) diesel engines to activate some emissions controls only during laboratory emissions testing. The programming caused the vehicles’ NOx output to meet US standards during regulatory testing but emit up to 40 times more NOx in real-world driving.[15] Volkswagen deployed this programming in about eleven million cars worldwide, and 500,000 in the United States, during model years 2009 through 2015

        This was much smarter than investing in F1.

    4. Cost of F1 is and always will be high. If it wasn’t, then it’s not F1. Everything is relative. In an era where football players cost upwards of 200 million, is really far fetched that F1 costs are astronomical?

      I for one, would like the sports revenue to be shared in a more equal sense, like the Premier League. Even if that is achieved, you are still going to get the haves and have nots.

      The likes of Red Bull, Merc, Ferrari will continue to lean on the parent companies for additional funding, so status quo will remain. Isn’t it the same story in the Premier League?

      They all get a equitable share of the purse, but Manchester City will always have a squad that costs more than the 4 of the bottom clubs put together…that’s life unfortunately. Unless the model is changed to a franchise , these issues are going to persist.

      1. Cost of F1 is and always will be high. If it wasn’t, then it’s not F1.

        It’s only not F1 as we know it today. Also, nobody is talking about a low cost F1, come on. There is much room for lowering cost and still being the most expensive motorsport (as you like it to be).
        Everything ends. You either adapt to the new environment or you die.

    5. I guess it is good to see that Honda changes their approach to development, though off course it is such a sad view for the sport that they did not change this earlier! We can only hope that they now continue to develop this engine into something that works and is not miles off the pace anymore.

    6. Honda are only just now realising running a single cylinder on a dyno isn’t useful enough to evaluate a V6 engine’s reliability and performance.

      Where’s that Picard facepalm gif…

    7. Well, if I come down with insomnia it’s good to see Jensen Button is offering a cure.
      I can’t imagine anything more dull than a racing biography of an F1 driver in this corporate Motorsport era.
      I’m presently reading: Villeneuve, The Life of the Legendary Racing Driver. It is simply fantastic.

    8. The number of sponsors is going down and so are the spectator numbers.

      This is the current F1 financial model. It was obvious and predictable. F1 has shortsightedly sold the TV rights in many countries to companies who effectively fine viewers who want to watch the races. Consequently fans, unable to afford the amount required or annoyed at being stung for their dedication to the Premier Open Wheel racing series, migrate to watching racing series’ that value those fans. Reduced viewers = sponsors want to pay less. Less sponsor derived income = slower cars.
      The good news is Liberty Media now accept there is a need to equalise the TV rights payouts, but how do they expect Ferrari to agree to that?

      1. F1 has shortsightedly sold the TV rights in many countries to companies who effectively fine viewers who want to watch the races.

        Yup. The pay-per-view model works for Formula 1 much worse than for, say, football leagues and it’s for very simple reasons.
        If a football league like Bundesliga shifts all of their league matches to PPV, it doesn’t make the league and it’s biggest stars disappear from the public eye, because the fans who don’t buy the PPVs can still go to the games every weekday in a city no further than 50-100km away, the best players play in national competition and are regularly traded to and from other leagues to give them exposure beyond the Bundesliga. Also, the league and its players are talked about in a broader context of the sport as well.

        Whereas when a closed sport like F1 – which isn’t relevant beyond their own tiny little world – goes to PPV, it makes itself invisible and vanishes from the public eye.

        And on top of that, it is much easier to maintain a popularity and social relevance of a sport discipline than to raise it anew or after it had been lost.

    9. I think cost escalation is a big threat that everybody acknowledges but nobody is willing to do much about. F1 could be leading into situation where the only entities who want to be part of it are in F1. This means things can change really quickly for worse if one of the players decides F1 is no longer what they want to do. This could be renault, mclaren, mercedes. Or it could be sauber, force india, haas or toro rosso who are forced to quit because it is too expensive.

      We already lost manor and while I think it is fair to say they were not going to last anyways nor where they meaningful for the sport because they were hopelessly slow with no chance of improving. It is still a bad sign for f1 because nobody has come to take that place. F1 just went from 11 teams to 10.

      F1 could be heading into similar dead what happened with wec. Manufacturer’s pulling out simply because the hybrid engines they themselves wanted made the sport too expensive. Just like in early 90s when the sports prototypes with group c. Too expensive which meant smaller teams which meant that it was pointless for big manufacturers to continue. F1 is on a path to possibly similar destiny. Too expensive power units, failed technical concepts and lack of willing participants coming in. The dominos can fall really quickly if the 2020 engine choice is similar catastrophe as the 2014 engines were. The hybrids are simply too expensive to run even for f1 and wec. If it is too expensive for the manufacturers then how much too expensive it is for the midfield teams?

    10. A very simple rule change regarding sponsorship could see a significant influx of sponsors maney to promote their brand.

      That rule change would be to allow separate sponsors for individual cars in a two car team. Sponsors that baulk at the cost of sponsoring a full 2 car team may well enter if they could sponsor one car and use that car in promotional activity.

      Done in Indycars, Nascar, NHRA, etc.

      The likes of vodafone may well be persuaded that a fully liveried McLaren in vodafone colours could be an affordable marketing proposition. A full 2 car team sponsorship package not so much likely.

      The extra cost of a full team with two car sponsorship may not bring twice the brand exposure.

      So split the team into two separately sponsored entities.

      1. It could also lead to situation where some bigger sponsors drop down to sponsoring only one car which leads small reduction in income which is then replaced by having some new one car sponsors. Net change being zero.

    11. Yeh maybe f1 is tough if you cant artificially alter the results afterwards. Too many people watching, compared to say WEC.
      The courting of manufacturers by f1 is only because its the only game in town. f1 has known for decades that car company’s come and go with the wind and it should never be beholden to them. We are in the middle of this ‘vacuum cleaner’ era precisely because car manufacturers demanded it for quick development of electric hybrids in road cars.

      In the era of big sponsorship, or more precisely tobacco sponsorship, teams could finance themselves without having to woo car company’s. We are now seemingly wanting dull diesel hatchback producing liars to enhance the sport. It wont and the door should be shut in their faces.

      1. Well, it’s the engine manufacturers that have to stay relevant, which these days are linked directly to the car manufacturers which wasn’t always the case 50 years ago. F1 will also need something to power the wheels and that something should be at the peak of current technology. F1 is and should not be karting.

        Comments such as we have to get normally aspirated V12 engines back into F1 are so misguided, because in the past these were also seen as the peak of performance but nowadays it’s just dinosaur technology… and that’s not a good direction for F1.

        Car manufacturers aside, engine wise F1 should be seriously planning to switch to fully electric engines in the next 5+ years in my opinion or else start to lose more market share to Formula E.

        1. The theory that f1 should be the peak of tech is in effect defunct, because it isn’t anyway. All the gizmos were taken off in the 90s as well as launch control, paddock controlled clutches, I could go on for a week at all the new tech that’s been taken out of f1.

          To say we must have engine development and go electric because progress is the over arching principle of f1 is just parroting what the car manufacturers want. If it goes E, f1 goes. Simple as that.

          Oh and electric is not new tech. its 150 years old and is very much old tech. f1 is in effect, trying to make more accurate clockwork watches.

    12. ‘F1 costs too much, has too few sponsors and viewers’ and the emissions scandal has completely shattered our credibility, which is why we have no interest in competing currently and is the real reason we’re pulling out of most motorsports. But if in the future we perform a cost-benefit analysis and Formula 1 makes sense for us and/or our CEO just fancies a crack at it, then we’ll be straight back in singing its praises, just like all manufacturers. :D

      1. Yep that’s about the long & short of it.

        And for VW to start telling f1 it has problems is laughable. They lied and cheated for profit over peoples health. If it wasn’t for the fact thousands would lose their jobs id shut them down now. As it is they should be nationalized.

    13. What F1 needs to do is get rid of some of the massive restrictions and let manufacturers decide what engine technology etc is relevant for them and their future road car direction.

      Set a fuel limit, remove aero restrictions (including ground effects) and let the teams have at it.

      THEN we’ll see proper innovation and competitiveness – imagine what could happen if 1 team went “all electric” vs another running a twin turbo v4 and another running a massively fuel efficient v12. Different wing configurations, differs weights and length could throw up all sorts of combinations.

      The only things that should be regulated are the safety cells and crash structures – leave the rest to the designers.

      AND stick a maximum budget on the whole lot so that a new player can compete with something like Mercedes.

    14. There is an operating cost problem in Formula One, for sure, but the larger problem is a capital structure problem. Why does Formula One require invested capital of $8.0 billion to operate? The answer is that it doesn’t, and the revenue diverted (50%) to FWONK to provide a return on that invested capital does nothing to operate never mind enhance the sport.

    15. when you look at how much teams were spending 10 years ago & adjust those figures to bring them in-line with todays inflation figures & all that you actually find that contrary to popular belief, Cost’s in F1 have actually remained about the same.
      toyota had the biggest budget in 2007 at $445.6m, Thats about $526m in todays money.

      ferrari’s 2016 budget was $386m, No doubt reduced in part thanks to all the cost savings that have been made since 2007 with the testing ban & other restrictions.

      if you go back further to 15-20 years ago you find that teams are actually spending less now than they were then…. Again when you make adjustments for things like inflation.

      In 2002 Ferrari’s budget was $443.8m (Unlimited testing, Various electronic driver aids), Thats $590.4 in todays money.

    16. In line with the Honda article i’m seeing it been reported today that they have been working with Ilmor & that it was this which began the shift in approach & resulted in apparently some fairly significant gains recently.

    17. Evil Homer (@)
      23rd August 2017, 15:32

      Boutsen – What an F1 legend – underrated driver !!!

    18. It’s the engines. Nobody wants to join a sport where there is no development ceiling. The engines cost a fortune and are the most important determinant of performance as demonstrated by Mercedes. Any manufacturer that was to join knows it cannot catch up, so why bother…

      1. @guybrushthreepwood Not as if manufacturer’s were that excited about entering F1 in the V8 era either.

        And it’s often forgot that the only reason the V8’s cost teams as little as they did was because the cost’s were been subsidized by the FIA & FOM.
        The actual price of a yearly supply of V8’s in 2006 was around 15-16m euros, The FIA/FOM subsidizes artificially lowered that to 9m euros & manufacturer’s were actually making losses which is why there was an argument in 2007 or 2008 about how many teams each manufacturer was able to supply (They wanted to be allowed to supply more to make back some of the losses).

    19. Boutsen better than Patrese is the biggest joke I’ve heard in a long time.

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