Financial Markets CommentaryMay 26, 2023
Providing for the Fiduciary Requirements of Special Needs ChildrenMay 31, 2023
An article written by Ian Kilbride
“Monaco is like riding a bicycle around your living room. Yet winning it is worth two of any other grand prix.” This was the characteristically honest assessment of outspoken former Formula One world champion Nelson Piquet. Unlike his fellow Brazilian and six-time king of Monaco, Ayrton Senna, Piquet never won the iconic race, however, which may have coloured his view somewhat. As one of the triple crown of international motorsport (the others being the Le Mans 24-hour and Indianapolis 500), the Monaco grand prix divides opinion, but at least everyone has one. By the way, only one driver, the late great Graham Hill, has ever won the triple crown – along with his five Monaco victories.
After finishing eighth in the 2022 race, seven-time F1 world champion, (and Monaco resident) Lewis Hamilton, railed, “Thank God that’s over, that was the most boring race I’ve ever participated in.” Yet in its 73-year history, Monaco has provided some memorable races. Legendary Argentinian Juan Fangio won twice in the Principality, a feat that was later matched by South Africa’s very own Jody Scheckter in 1977 and 1979. Who could forget Senna making a rare mistake and throwing away the race in 1988? Combining the frustration and excitement of Monaco, Nigel Mansell’s intimidating pursuit of Senna in the 1992 event was more like the keystone cops chasing the robbers, with the moustachioed Brummy doing all but ramming the neatly trimmed Brazilian into the famous Monaco swimming pool. And if its incident you’re looking for, Monaco holds the unenviable record of having the fewest number of cars finishing a grand prix, with just four making it in 1966 and 1996.
But as legendary and iconic as the Monaco grand prix is, rumours persist about an uncertain future after its highly preferential 2025 contract expires. Although lacking anything like the caché and mystique of Monaco, the famed Spa-Francorchamps track in Belgium is set to be dropped after the 2023 season. India and South Korea have both pulled out of hosting a grand prix and even Silverstone, the home of racing, was in the balance a few short years ago.
Few would argue that as a global event on the sporting calendar, Formula One is huge. With a combined international viewership of some 1,5 billion, F1 is third only to that of the Olympics and FIFA world cup. Its commercial big business too. F1’s owners, Liberty Media, reported an increase in revenues to $2,573 billion for the 2022 financial year, with operating income of $173 million from its F1 operations. After recovering from race cancellations due to the Covid pandemic, 2022 saw record track attendance of 5,7 million.
Liberty Media has, in effect, converted F1 from a series of motor racing events into a global entertainment business that has expanded its footprint across highly lucrative markets, particularly in Asia and the Gulf States. The next phase of this burgeoning business model is to host three American grand prix in 2023, with two new races in Austin Texas and Las Vegas joining the regular Miami event. Testament to the vision of Liberty Media, Las Vegas will not have to stump up the usual hosting fees of some $55 million, as the event will in effect be underwritten by the company and naming sponsor, Heineken. Counterintuitively, street circuits are more costly to host grand prix than conventional stadium circuits, so Liberty’s Media’s investment in the Las Vegas street race constitutes a high-stakes gamble.
Although F1 has never been stronger, there are looming issues. While Formula E is light years away from eclipsing the popularity and business model of its petrol-based big brother, inevitably questions are bound to grow regarding the events’ global footprint and the smoke signal this sends to the motor industry more broadly. Despite the prescribed shift from V8 engines to 1600 hybrids, F1 is still to make the technological leap that it inevitably must by going electric. Secondly, as the cancellation of the Russian Sochi grand prix, Shanghai and Bahrain races attest, F1 is not immune to political dynamics and is vulnerable to geopolitical factors and forces that can challenge its global business model. The third area is that of social inclusion and transformation. The richer and more expensive the sport, the more exclusive F1 has become. It is simply almost impossible to secure the drive in a top team without being born into money or family connections, (the Stroll, Norris, Sainz and, Verstappen families come to mind). Lewis Hamilton is the most notable exception to this pattern of dynastic privilege and both F1 and individual teams have much work to do to provide opportunity to local, home-grown talent. To its credit, Red Bull has an excellent driver development programme and no doubt there is much that the precociously talented Max Verstappen can plough back into young driver development if he is so inclined.
So where does all of this leave South Africa and its aspirations to re-join the F1 racing elite? I recently met with SAGP CEO, Warren Scheckter, to discuss South Africa hosting a future F1 grand prix and was impressed by his commitment and sober business savvy. But what became equally clear in our meeting was the enormous and burdensome costs involved in hosting the F1 (particularly a street race if its Cape Town) and the financial challenges of securing not only government and private sector support for the event, but simply stumping up the $55million hosting rights.
Is there a business model that works for South Africa to host a series of F1 events in future? Possibly, but it will require an extraordinary if not unique level of political, business, financial and public commitment to pull it off and to meet the very demanding and competitive requirements laid out by F1 and its Liberty Media owners. But as an inveterate and active petrol head, if there’s a genuine prospect of South Africa hosting an F1 meeting in my lifetime, then count me in!
Meanwhile, let’s see if the wily and wide-elbowed Fernando Alonso can bring back F1 glory to Aston Martin in Monaco on Sunday 28 May. It may just be the boost that the boring procession needs.