Sean Bratches, Formula 1’s commercial managing director, freely admits to not being a hardcore petrolhead. In fact, he almost makes a virtue of the ability to take a helicopter of the view of the sport without clouds of passion hindering his vision.
He is very much a marketing man, one steeped in entertainment marketing, and clearly believes F1 lacked a cohesive marketing strategy under its previous caretakers. In an exclusive interview with RaceFans two years on from Liberty Media’s takeover of the sport, Bratches tells Dieter Rencken how the reality is measuring up with their vision.
So it was entirely fitting that we should sit down at Monza to survey Liberty’s progress so far. Given his marketing background, it seems logical to structure the interview around the Five Ps of marketing: Promotion, people, product, place and price.
Bratches is highly visible at races he attends, so we had already greeted each other during the weekend, so I move straight in to question time: How has Liberty done so far from a promotional perspective?
Despite being in F1 for a little under two years, he well-known for his use of Sean-speak, and doesn’t disappoint: “I look at this as a journey and not a destination. We were starting from a place where there was much opportunity. Liberty acquired Formula 1 for three primary reasons: First, [it’s a] global brand, with over 500 million fans.
“Second, in an era where technology is disintermediating the way consumers ingest content, the thesis is that sports is the last bastion of content that on a predictable basis can aggregate large audiences to be monetised.
“And the third is the belief that it was an undermanaged asset. While Bernie managed this thing famously as an individual, there are no other models in the modern world where a global sport, even a regional sport, is managed by an individual.
“They are managed by an organisation that underpins many of the business lines that propel companies. And so, from a promotional standpoint, I think we are in the process of repositioning this from a motorsport brand to a media and entertainment brand. Or a motorsport company to a media and entertainment brand.
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“We’ve done a body of research on a global basis that is underpinning the direction that we’ve had in that. We still have limited bandwidth. We don’t have the resources – both human or economic – at this point in time to put our shoulder behind our full vision.
“I think that one of the challenges that we’re having as an entity is struggling to keep up with our vision, and prioritise where we deploy people, where we deploy economic resources and our time. As we manage through that, I think we’re putting the fan in the middle of every conversation that we’re having. We’re making a tonne of progress in what we’re doing.”
See what I mean about Sean-speak? But he’s in full flow, so I don’t interrupt…
“We’re re-launching a new non-live app, we’ve done a ‘Daily Fantasy’ platform with Play-on; we’ve launched an Esports series, we’ve launched the first marketing campaign in the 68-year-old history of Formula 1. If you’ve gone down into the transportation hubs of Milan, they’re adorned with Formula 1 iconography.
We did a car run down every night at 9, 10, 11; there’s a laser light show and party going on. We had about 80,000 fans that were there. Ferrari, Sauber came through. I just had a meeting where we outlined what our vision is for our fan festivals for 2019.”
Bratches touches on F1’s “Engineered Insanity” campaigns as proof of further marketing activity before concluding: “I think from a promotional standpoint there’s a lot of work that’s been done, there’s a lot of work to be done, but television ratings are up, attendance is up, digital audiences are up, engagement’s up, the metric we’re looking at in terms of where we’re going to drive the business is starting to move in the right direction.”
What sort of numbers is he, though, saying are ‘up’?
“When you look at qualifying and the grand prix, I think it’s up nine per cent to date over last year, which was up. I don’t know what the roll-up is, but we had Russia ticket sales are 4 X (very American that, rather than the time-consuming ‘times’) to date what they were last year; Japan is 50% up…”
I suggest we’re talking off low bases, though.
“We think there is an opportunity to grow. In terms of how the attendance is, I guess you can bifurcate [Sean-speak for split] it as we look at it. Race promotion fees, which really underpin the economics are one aspect, I would say the race promotion part of Formula 1, and then attendance is very important, but it’s more important for the promoter because they’re selling tickets.”
And, of course, the promoter pays Liberty what are usually eye-watering fees…
Bratches does not flinch at that comment; indeed, makes clear that in future fees could be even higher: “So the critical aspect as we go into renewal cycles, that we can go and tell a strong story about the value that we’re provisioning to the sport that’s going to underpin the promoter’s business, because we can extract more revenue because we’re providing more value.
“So our objective here is to insert more value into the system, that accrues to us directly and indirectly, but ultimately elevates Formula 1’s business, and allows Liberty to continue to invest more into the sport.”
Does that mean F1 will eventually hit 25 races per year? “That’s a high bar,” says Bratches. “I guess one of the benefits that we enjoy here is that there are more locations that want to host a grand prix than we can possibly ever entertain.”
All good and logical, this virtuous circle, but what sort of timeframe are we talking?
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“One of the things we’ve done is, we’ve created a strategic plan for Formula 1. It’s a five-year plan. We do have a 10-year plan, but I think it’s very difficult in any business to with any degree of accuracy predict 10 years. But from a five year standpoint we do have projected metrics for all the businesses that are incumbent, and then the businesses which are myriad that have not been exploited under the auspices of Formula 1.”
Any clues to the five-year numbers?
“Well, we’re a public company and I would be derelict in my responsibilities if I mentioned that…”
Indications, maybe? We banter about the direction of travel, but it’s clear Bratches won’t divulge any numbers for fear of incurring the wrath of NASDAQ. Hence we move onto the product Liberty is selling: the world’s fastest, highest- tech sport.
“We’re encouraged by the future of this sport, both from an on-track standpoint and also from a business standpoint.,” he says. “Every day is a school day and we all learn, and one of the things I’ve learned is that Formula 1 fans, as you said, they’re about speed, speed, speed…
“One of the things that we’ve found in this global research study we did was that fans’ expectation of racing, of Formula 1, is that these cars go really fast. But what they’re really interested in is racing. And there’s a difference between speed and racing. They want wheel-to-wheel, livery-to-livery racing. And we’ve got one of the greatest architects of racing in the world as my co-pilot in Ross Brawn here, who’s working on that aspect of the business.”
I venture that fans are also into hi-tech, so how is F1 TV Pro, the Over-The-Top streaming service performing? From my own experience and checking with friends and associates in the limited number of countries where it is available, that there are perceptions that F1 TV Pro is a beta product being sold at premium pricing.
Credit where due: Bratches explains the technologies deployed, and, believe me, these are highly complex, oft diverse systems that are reliant upon instantaneous integration with interfaces across the globe to provide a seamless viewer experience. It is all highly impressive, but the burning question on fans’ lips is: “Will it improve soon?”
“We’re looking at this first year to build a platform, candidly to get the platform correct across multiple devices. It’s probably the most comprehensive, complex OTT service of any sports league in the world. So we are going to continue to add elements to it. We are going to materially increase the number of feeds next year, the number of languages.
“A year ago, when I asked what do our contracts permit from a television standpoint, and before last year’s season, we could not have launched Formula 1 Television in one market around the world contractually. And now we’re in 51 markets. So we’ve negotiated agreements that have come out of contract, or we’ve abrogated incumbent agreements to permit the facilitation of the product.
“So it’s iterative, it’s going to get better, and I think it will be better in three weeks than it is today and that process will continue. But you shouldn’t expect a point in time where we flick a switch in Biggin Hill and it just morphs overnight. It’s going to be an iterative process and I think we’re doing a better job serving the fans today than we did last year at this point in time.”
So, the $101m question: How many subscribers does F1 TV Pro have?
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Mmm – NASDAQ? I try another tack: Netflix is also a public company and they’ve got no trouble telling the world they’ve got 101 million subscribers…
“That’s true, but that’s their business, and at some point in time we may decide to reveal these numbers, but it’s our decision not to and we’ll manage through it.”
Okay, but are the numbers on target?
“We’re tracking quite nicely,” nods. “We’re very encouraged, not only from a subscriber standpoint but also from a product standpoint, notwithstanding your friends!”
So, to price – in this case, it’s share price I’m looking at: Is Liberty comfortable with its performance, notwithstanding some peaks and troughs?
“The marketplace is mercurial on a global basis,” he acknowledges, “and I think it’s indicative of the performance of many stocks in this global economy. The stock price is up. I think also that Formula 1 was such a neglected platform for so many years in terms of investment.
“We are in an investment stage to unleash what we think is extraordinary potential for not only our shareholders, but for all the constituents of the Formula 1 community, including the fans.”
Bratches tots up various investment areas: new offices, research and marketing teams, technology. “It’s kind of an anathema to what anyone would logically think or believe.
“In many respects it’s like trying to go from the [US mail order and retail giant, now in decline] Sears and Roebuck catalogue to the internet in light speed. There’s some investment process that goes through that. But we’re encouraged about the future,” he says.
Any idea of the numbers involved? After all, public companies usually trumpet their investments…
“Right, but what they’ll do is say that on an earnings call, or something that goes out to all investors at the same time. We’re investing in human capital, in real estate to house that, we’re investing in research, we’re investing in technology, we’re spending a lot of time in the development of businesses.
“It’s not a binary thing, you’re not going to wake up one morning and decide you’re going to have a global licencing apparel strategy in place. These things take time. The unfortunate thing was when we arrived there was really nothing in the pipe per se.”
So to the bottom line: the reaction of the fans, the people who make up the fifth P How are they reacting to all this?
“Incredibly encouraged. We had this car run, and 80,000 fans turned up on Wednesday in downtown Milan. I walked through the fan festivals; I’m the least known of the triumvirate and people are coming up to me and thanking me for what we’re doing for the sport. So we’re very encouraged about our progress to date.
“The fan reaction has been terrific. We’ve launched a number of initiatives to engage with fans and get their feedback. We have something called F1 Fan Voice, where we talk to fans, ask them questions, ask them their opinions. It’s a big number. So not only are fans responding well, we’re actually engaging with fans and asking their opinion about what we’re doing, how we’re doing, what we should be doing and it’s very constructive feedback.”
If that tallies with your experience of Liberty Media’s tenure in charge of F1, whether at the track or through the race broadcasts, you can let us know in the comments.
Follow Dieter on Twitter: @RacingLines
F1 TV Pro: Still amateur viewing?
We last took a look at F1 TV Pro in June and concluded it was “amateur viewing – for now”. Has it improved since then? @Josh5Holland tested it during the Belgian and Italian Grands Prix:
Unlike Dieter’s experience three months ago, during live sessions I found very few problems. The transition between different feeds was smooth with minimal loading time in between.
There is periodic lag in the stream but it lasts no longer than two to three seconds. One noticeable fault was that on some tracks the signal repeatedly cut out at the same point on every lap, such as La Source at Spa, which became frustrating after a while.
Race replays still have a few problems that disrupt from the overall user experience. The replays are available between thirty minutes to an hour after the session. Sometimes it took several attempts to get the channel to load, though once the feed began it usually played smoothly with limited buffering.
The mobile app introduced prior to the Italian Grand Prix gives users the ability to view two driver onboards side by side with sector times displayed to the right. The mobile app offers more seamless replay footage until you try to watch two onboards at once. The app struggles to match the time of the feeds and you end up watching two different points of the race most of the time.
It’s clear FOM have made some progress with F1 TV but fixes are still needed for some of its basic functionality and its new features don’t work flawlessly either.
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