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Wednesday, July 25, 2012

Hockenheim only half full - is F1 in freefall?

I was chatting to a friend yesterday who was with me at the British GP two weeks ago and he commented that, when he was watching the German GP the helicopter shots showed the stands and GA areas were half empty, noticing that the GA spots were only 5 deep at best.  In Silverstone the stands and GA's were packed.

Instead of congratulating him on his perceptive eagle eye, I put it down to the format of the British GP, how it caters for the great British motor racing tradition, their appreciation of their automotive history, and their ability to enjoy a family holiday at all locations and in all weathers, even down to that singular British past-time; having a Barbecue in the Rain.

Then, while poring over the F1 websites today to see if there were any tasty morsels that I could rant about, Joe Saward's article about the F1 business model caught my eye, a story written yesterday but ignored by me then as it referenced Hockenheim, while I was busy catching up on the pre-German GP stories that had happened in my holiday absence.

It's an interesting article which talks about the costs of F1 on the fan and the circuits, looks at the NASCAR business model, and in a follow up article today discusses other revenue streams and using animation to indoctrinate pre-school kids into a love of the sport.  I only use the word indoctrinate because that's what Joe is, in effect, proposing:

if you want a new generation who are interested in racing cars, you have to get them young, in the pre-school period when their characters and future interests are still being formed. It is a good idea to let accompanied kid go to races for free because they will learn to appreciate what they are seeing

And do not underestimate the need for Formula 1 to target Mums

The McDonald's/Coke business model - get them young and get their Mum.

Seriously though, the sport is going through a period of profound change, particularly as it relates to providing for the survival of its fanbase.  Tickets are too high and fundamentally this is down to the cost to the circuits from the Formula One Group for the privilege of staging a GP.

This particularly affects a circuit like Silverstone which has no Government backing, but as I've highlighted on any number of occasions the economic bite is being felt at many of the historic circuits in Europe.

Hence the fans are being priced out of the market, gate receipts fall, and prices rise again in an attempt to cover some portion of the loss from ticket sales.  More grandstands go up at GA locations to create more premium price seating and the core GA fanatic is squeezed towards areas with less action and less coverage of the rest of the track.  This then pushes them into buying personal Fanvision sets at exorbitant prices and their overall experience is reduced to watching the race on TV while getting a glimpse of cars entering or exiting corners in the distance.  These guys are less likely to attend due to these increased restrictions and the result is half empty circuits on race day.

Further, pointless, restrictions apply at the circuits on the Saturday.  A case in point being yours truly at Silverstone with my GA ticket.  On the Saturday all of the uncovered stands were nearly empty and Silverstone had told people not to come to the circuit, fearing a repeat of the Friday traffic fiasco; but still the powers that be would not let any GA ticket holders into the empty stands.  From a single person (me) to a family of 5, the response was that the supervisors would not allow stand entry, even where these stands had only a handful of people in them.

Such a restriction is pointless in the particular circumstances which had arisen on the day. The easing of this restriction would have cost the circuit nothing and would have provided TV footage of full stands around the circuit which is, on a torrential day like the Saturday, publicity the circuit can't buy.

I'm with Joe. Enhance the fans experience, get them young, give families priority and get the circuits full with reasonably priced tickets.

The F1 group might have to take a hit on their enormous profits for two or three years until they work out a better business model but the business of live sport would thrive.

Sky taking over the F1 TV show is also not helping the future of the Sport in Britain and I presume that this will hold true wherever Free-to-Air becomes Pay-per-View.

A look at the TV Viewing figures shows a marked decline in numbers watching the races live (myself included) by conventional TV means.  Except where BBC show the race live I am finding alternative methods of viewing the race.  Numbers are well down but the viewing public are not an issue for Cable/Satellite TV who are paid both by advertisers and by subscribers.  Therefore they do not need the same audience numbers as the Free-to-Air in order to justify their costs.

Over the course of the first 10 races Sky viewing numbers have averaged out at just over 21% of last years BBC average TV audience with the 2011 BBC figures averaging at 5.012 million viewers per live race and Sky averaging at 1.068 Million per race in 2012.

If this is going to form part of a long-term strategy which will see Satellite and Cable taking over all broadcast rights to races can we assume that the fanbase will fall correspondingly?  If you can't afford to look at it on TV would you be bothered going to a Race? Will you buy the branded clothes? Will Sponsors be willing to pay current prices for on-car/at-circuit branding?

Rant over I think the point has been made.  The worst of it is that I'm preaching to the converted on this one.