March 19, 2024 • 44 mins
Kosta is interested in having his name (and face!) on an F1 car. But how does one even go about that? In this installment, Toni and our experts will explain the crazy business model of F1 and to help us with this is motorsports journalist and novelist, Elizabeth Blackstock. We'll also be briefly introducing a new guest who'll be helping us later on in the season - Matt Bishop, MotorSport columnist, Racing Pride founding ambassador and previously CCO at Aston Martin Cognizant Formula 1 Team.
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Episode Transcript
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Speaker 1 (00:00):
I will be plugging in a back heating pad.
Speaker 2 (00:03):
It's nassy.
Speaker 1 (00:04):
I'm not trying to show off or anything.
Speaker 2 (00:07):
You can't prepare.
Speaker 1 (00:08):
My friend told me this weekend that the lower left
part is where your emotional stress is. So I don't
only feel like I'm like emotionally stress too much. All right,
Tony Michael, I want my name on an F one car. Okay,
And I know you're the person to talk to about this,
and actually, let me rephrase. I want to put my
(00:31):
face and my name because what good is it if
you don't see the face? You know this? How much
would that cost me? How long would it be on there?
Can I just do a race if it's cost effective.
I'm not picky. It doesn't have to be front and
center on the car. It could be on one of
the wheel hubs or the little wing, or even a
decal on the driver's helmet. Doesn't have to be Ferrari,
(00:54):
could even be hass I love that.
Speaker 2 (00:58):
In the same sentence, he said, I'm not picky, but
I just want my face go.
Speaker 1 (01:01):
Yeah, And if we happen to mention my TikTok handle,
Michael Costa underscore that's not gonna hurt anybody. Okay, I'm
not as happy as I can be in my life,
and once this happens, that will fill the void. Help me?
Can you help me with this.
Speaker 2 (01:20):
Theoretically? Yes?
Speaker 1 (01:21):
Great, I'm all about theory for my heart podcast one
on one Studios and Sports Illustrated Studios.
Speaker 3 (01:29):
This is choosing sides one.
Speaker 1 (01:36):
Wow, Tony, what is the business model of F one?
Is it even right to call it a business? If
it's a business, then somebody has to own it. In basketball,
nobody owns the NBA, per se. I mean, I think
it's individual teams are privately owned and a franchise is
(01:56):
collectively owned by all of them. I do remember season one,
Lily told me about this one guy Bernie, former Formula
one boss Bernie Echoson, has been given a seventeen month
suspended jail sentence after pleading guilty to fraud. Who sold
F one? What does that even mean? How can you
sell it in the first place? I can't sell basketball? Right?
Speaker 2 (02:19):
No? Yes, these are some great questions, and I think
this is where we're going to get into a lot
of fun. Let's take these questions one by one, and
today let's dive into Formula ones. Weird and quirky and
at times feeling like a sport that's lost. Maybe it's
moral compass, but we're going to look at the business
model of Formula one and all the different layers into it.
Speaker 1 (02:40):
I should understand that because my moral compass is longer.
The following is disturbing.
Speaker 3 (02:46):
Footage from Michael Costa's comedic archive.
Speaker 1 (02:49):
Someone asked you for a favor, Say it with yes,
with a smile on your face, and then absolutely botch
the favor. Hey can you pick my kids up at daycare?
I would love to do that for you. And then
you just don't ever pick those kids up. They'll never
ask you again.
Speaker 2 (03:05):
There she is, Hello, Hello, lovely, how are you doing?
I am good to help us with some insights into
the business model of F one. I've asked Elizabeth Blackstock
to join us.
Speaker 1 (03:15):
Hi, Elizabeth, how would you describe yourself?
Speaker 2 (03:18):
What's your job? And how does F one fit into
your wonderful world?
Speaker 4 (03:22):
It's such a big question. F one is everything I think.
Speaker 2 (03:28):
I love that.
Speaker 4 (03:28):
The motorsport journalist and a historian.
Speaker 2 (03:31):
She's also the primary American contributor to Planet f one.
She's written books about F one, and she's even starting
her very own podcast, Deadly Passions and Terrible Joys, all
about the weird scandals and dramas and the chronicles of motorsports.
Speaker 1 (03:45):
There's no shortage of those.
Speaker 2 (03:46):
And Elizabeth is a longtime Formula one fan herself.
Speaker 4 (03:49):
When I think back to twenty fourteen, that was the
first ever Formula One race, I went to the US
Grand Prix I was. I was eighteen years old, like
going having I thinking I'm going to get this out
of my system, like I'm gonna watch race cars and
be done. And that did not happen. But I can
remember being at the track on race ding kind of
having the run of the place. It was sparse, it
(04:13):
wasn't super busy, there were no lines for things. There
were certainly no lines for the women's bathrooms. Suddenly it's
just this massive explosion where people are aware of what
this sport is. In the past, i'd like mentioned something
to a professor like Hey, I'm taking a day off,
I'm going to race somewhere, and they would have no
(04:33):
idea what I was talking about. And now, like I
go outside and even in the small town I live
in in Texas, there's people with their red bull hats
on because they're rooting for Sergio Pariz or their Ferrari
get up. It's just become so huge here in such
a very short space of time, Americans are getting it,
which is it's nice.
Speaker 2 (04:54):
How would you explain to a new fan how teams
make money, how spumses make money. It definitely feels when
you look got the sport that there's a lot of
money being thrown at the sport, and there's a lot
of money being invested in the sport. But how does
anyone in this industry actually make money at the end
of the day.
Speaker 4 (05:08):
That is such a good question.
Speaker 2 (05:09):
It's a big question.
Speaker 4 (05:10):
It is it is not easy to make money in
Formula one, no matter how many millions of dollars you're
swimming around in it at all times. I think in
this modern era we've seen a big jump in profitability
for the sport overall as the company itself. In the past,
Formula one was just kind of like a way for
rich drivers to have fun. These were like kind of
(05:31):
noble gentlemen who had the money in the access to
get cars.
Speaker 5 (05:36):
You might have to have a few, Bob, you didn't
have to be super rich.
Speaker 2 (05:40):
This is Matt Bishop, English journalist offer novelist and a
true fixture of theform paddock.
Speaker 5 (05:46):
You could buy a Maserati two fifty if one of
the most beautiful full one cars there's ever been. But
if you were someone like Horace Gould, who wasn't particularly
quick but had a business, wasn't minted, but was just
somebody who did quite well and had a bit of
money and loved motor racing. So he bought a two
fifty f Maza and he went racing in it, not
(06:07):
very well, and he didn't have to do all the races.
He didn't have to take it to Argentina if he
thought that would be too much of a pain in
the bum to do that.
Speaker 4 (06:17):
But that wasn't really enough to sustain a massive growth
of the sport, and especially when smaller manufacturers became interested
in competing kind of you know these backyard teams that
had sprung up, especially in England, it was like, oh,
we can't afford this because we're not independently wealthy. What
do we do now? And now it's currently profitable because
(06:39):
of some very aggressive TV deals that were struck by
Bernie Eckelstown, who is certainly a man.
Speaker 2 (06:48):
We always say like love him. I hate him. He's
definitely changed the sport.
Speaker 5 (06:52):
When I was at school in the seventies, I was
the only one who liked Formula one. I loved football
as well, but my mates only liked football. But they're
like cricket and rugby and other things snooker, believe it
or not, but not Formula one. It was only me
and you couldn't find it written about on the newspapers,
and it wasn't on the telly. And it was Bernie,
Bernie Eclestone who realized that really Formula one could be
(07:16):
taken to the world via two industries now which you
can't really monetize in the same way, tobacco and television.
Speaker 4 (07:24):
I think honestly, most of Eclestone's career was this kind
of slow build that was developing profitability for Formula one.
So he tried his hand at racing when he was young,
realized he wasn't good at it, and then was like,
actually I can wheel and deal pretty well. Let me
do that. I don't know if anyone if you've ever
seen this photo that goes around occasionally in the late
(07:45):
nineteen sixties. It's the Austrian driver yachin rent and the
side of his helmet is the phrase this space for
let That's because he was managed by Bernie Eclestone, who
was one of the very prototypical examples of trying to
seek sponsorship in a sport that previously was just country
colors and national pride and you know, manufacturer dominance. It
(08:08):
wasn't about companies, it wasn't about sponsorship, and that was
the first key that kind of changed the name of
the game. Lotus then took Yok and Rin Don as
a driver, got their first massive sponsorship, changed the.
Speaker 1 (08:21):
Name of the game. I'm curious what was that first
sponsorship deal they got, Like, who is it with?
Speaker 4 (08:27):
Lotus got the Gold Leaf Embassy sponsorship. The tobacco company
really made everyone upset because they thought it was cheapening
the sport by you know, promoting a tobacco brand and
advice on their cars, instead of it being this noble
pursuit that formula one supposedly should have.
Speaker 1 (08:46):
Been remember about.
Speaker 2 (08:50):
Well, well, well the table today one other well we
can't really call this on a fun fact, but it's
actually very sad fact.
Speaker 5 (09:06):
The normal continuum of human events as a beginning and
an end.
Speaker 6 (09:10):
Jochen Rint is dead.
Speaker 2 (09:11):
Soon after securing that first ever F one sponsorship deal.
Johann Hint actually crashed and died in the practice session
in the Monsa Circuit in Italy.
Speaker 1 (09:20):
Jeez.
Speaker 2 (09:21):
His good friend and biggest rival, Sir Jackie Stewart, a
man who we will definitely come back to in several
times during this season, was, as you can imagine, absolutely heartbroken.
Speaker 7 (09:31):
Yochen was perhaps my greatest friend and motor racing I
perhaps feel this sadder at this.
Speaker 6 (09:39):
Moment than either we were done before any race.
Speaker 2 (09:43):
Ryan was actually leading the Driver's Championship when he was killed,
and this was towards the end of the season, so
even though he passed away before the season concluded, he
actually went on to take the championship. So this makes
him not only the first driver to secure a spot,
but also the only driver in Formula One history to
(10:04):
be posthumously awarded the Formula One Drivers Championship.
Speaker 6 (10:08):
He will have won the world championship.
Speaker 3 (10:10):
The manner of his winning it illustrates the randomness of
human experience.
Speaker 1 (10:15):
Okay, dark interlude here back, sorry to do this, but
back to the business model. So Lotus gets that first
sponsorship from a tobacco company. What's next?
Speaker 4 (10:25):
I think the next step. Honestly, Bernie Echostone went bigger.
He bought the Brave and Formula one team, invested so
much into making that a world championship team, but in
the meantime was also establishing something called the Formula One
Constructors Association, which is essentially what the Formula One group became,
(10:45):
and it was through that association that he did battle
with the FIA to establish these incredible forms of revenue
sharing for the teams.
Speaker 2 (10:54):
Back in the day, when we had qualifying session, it
wasn't actually just qualifying to know if you were going
to start P six, P seven, p twenty on the grid.
It was actually to know if you could qualify and
were fast enough to actually go racing on Sunday because
we had a lot more teams and a lot more
drivers because it didn't cost as much as it does today.
And the other thing that you would happen is people
would just be like, I'm not going to show up
(11:15):
on Sunday. I'm good, I've got you know, kids kids'
birthday party, i don't need to come, which you can't
actually make money guaranteeing a race if you can't guarantee
that the teams actually show up and the drivers show up.
So that was the essential idea behind the Concord Agreement
which they've signed again I think till twenty twenty six,
which guarantees that these ten teams that we have on
(11:35):
the grid are going to show up, they have enough
money to keep paying to drive, and that the drivers
are going to show up as well.
Speaker 1 (11:41):
It seems like a no brainer show up to work,
show up to work. But as someone who just lived
through six months of a writer strike, if people don't
get paid they don't show up to work, great, you
know what I mean. You got to show up, and
so there needs to be rules in place to make
sure work happens.
Speaker 2 (11:59):
Exactly, Bernie, there you go. Not something you'll hear often
these things.
Speaker 4 (12:04):
It was a genie's move. I think that was really
the big like kind of trajectory that time period from
the late nineteen sixties into the eighties where we really
kind of started to see this massive influx of cash
and having this standardization and regular income becoming prioritized because
no one was just independently rich anymore. He wanted that
(12:24):
money to actually develop a team.
Speaker 2 (12:27):
Okay, hold on, before we move forward, I think we
need to take a little step back and explain the
trifecta of the sport that I think is really important
to start after the three biggest, most influential bodies the
interplay with each other, which would be the FIA, Liberty Media,
and FOAM, and they each play very separate but equally
(12:51):
important roles within the ecosystem of Formula one. FIA stands fortomobile,
which is think.
Speaker 1 (12:59):
I'll say it, and now let me ask it again.
What does it stand for?
Speaker 2 (13:03):
Federation Inational of Autos as basically.
Speaker 1 (13:08):
Wow, of all the autos of Federation Liberty Media. That
sounds very broad, very general. That sounds like the name
of a media company in a horror film.
Speaker 2 (13:19):
Yeah, if you want to.
Speaker 1 (13:20):
In FOAM, which is fear of missing out, fear of.
Speaker 2 (13:23):
Missing out, that's what standsible. It's Formula one management, so basically.
Speaker 1 (13:29):
A lot of governing bodies.
Speaker 2 (13:31):
So let's start with the FI.
Speaker 4 (13:34):
The FIA is the kind of international nonprofit organization that
sanctions Formula one race is to make sure that they
are all run in the same rule set and to
make sure that every team is operating in the same way.
Speaker 1 (13:49):
You don't hear nonprofit a lot no in f one,
in fact, that seems to violate everything the foundation of
F one. Yes, yeah, interesting.
Speaker 8 (13:58):
I just wanted to pull up this quote I found
online from this official F one document.
Speaker 1 (14:03):
Okay, yep.
Speaker 8 (14:04):
F one mission statement to leave a legacy of positive
change wherever we race, enriching local communities and economies and
supporting the natural environment.
Speaker 1 (14:20):
I think that's lovely inspiring.
Speaker 8 (14:22):
So yeah, this is this is not about money, Michael.
It's about making the world a better place.
Speaker 1 (14:28):
One of my favorite parts of F one is how
profit and capitalistic it all feels. It's okay, like we're branding,
We're going, We're fast. It's not exactly exactly.
Speaker 4 (14:40):
It's an outside source. It doesn't just sanction F one.
It sanctions i think, over four hundred different series around
the world to greater or lesser levels of importance than
F one.
Speaker 2 (14:51):
You will always hear the fans getting really angry with
the FIA because they're constantly changing the rules. The way
they regulate is constantly shifting. The fans are always unhappy
with the fines that they give the drivers.
Speaker 6 (15:04):
Can we get your reaction to the reprimand and the
fine that you received from the stewarts this morning?
Speaker 2 (15:10):
You might have remember hearing Max Verstappen jokingly saying once
he got a fine, Well, I hope the FIA enjoys
a nice dinner and drinks on me.
Speaker 5 (15:19):
Hope they have a nice dinner and a lot of wine.
Speaker 2 (15:24):
So the FI is heavily responsible for drafting, regulating and
enforcing the rules and the regulations. That's why the fans
always get angry on them. But their whole thing is
also safety and security. So when you look at how
the sport has evolved over the years in terms of
safety and security for the drivers, the FIA is at
the pinnacle of pushing for that.
Speaker 1 (15:40):
People can die in the sport. Yes, that changes everything.
Speaker 2 (15:43):
It changes everything. So Jackie Stewart was one of the
drivers that has often pushed for that. He also pushed
for a union of drivers, which is important to note
in the evolution of Formula one. He still remembers the
days when he would travel with the sport and he
would always bring a black Tux with him because you
never knew whose funerals you would attend, which is bleak
(16:03):
and I'm delighted to say that that is no longer
the case these days. It's still a danger.
Speaker 1 (16:08):
Sport also, do you wear tuxedos to a funeral?
Speaker 2 (16:10):
I don't know, Maybe a black suit? Yes, did I
say tuxedo?
Speaker 1 (16:14):
You said tuxedo. But I don't know if it's like
in different countries.
Speaker 2 (16:18):
Maybe you want I think you wear a black suit?
Speaker 1 (16:20):
Yeah?
Speaker 8 (16:25):
Can I ask a bit of a controversial question here?
It is there like an inverse relationship between how safe
it is and how interesting the sport is. It's too dark?
Speaker 1 (16:39):
No, it's not too dark. I think it's an excellent question.
Speaker 2 (16:41):
I don't know. I have a weird thing with this.
So I think as humans we just enjoying people hurting
themselves is just something that I struggle with. But I
think the crashes in Formula one are so for lack
of a better word, explosive and in your face and
shocking that it does draw you in.
Speaker 1 (16:59):
It's an integral part of the sport. Come on, you
can't deny that, Okay. I think this is a good
time to take a short break. Listeners. You can use
this as an opportunity, as companies are pushing their products
on you, to contemplate your own mortality and appreciate the
fleeting miracle that is life. That's what I do typically
during commercial breaks.
Speaker 8 (17:16):
Think you've just summed up F one in a sentence there, Michael,
I'm brilliant.
Speaker 2 (17:23):
Okay, we're back, and now let's talk a little bit
about foam, should we.
Speaker 1 (17:27):
Yeah, because if we don't, I'm going to have foam.
Speaker 9 (17:29):
MO.
Speaker 1 (17:30):
Wasn't sure you guys heard my joke the first time.
Speaker 4 (17:34):
FOM is Formula One Management. Formula One Management is essentially
the company that distributes those marketing and world feed rights
for Formula one. So that's the one that kind of
goes out and sells different aspects of the company to
people and manages all of the media rights.
Speaker 2 (17:52):
They're also the owner of the name and the rights
of Formula One. They own the name for Formula one
and name the right. Their objective is essentially to drive
commercial success.
Speaker 1 (18:03):
They wanted American audiences.
Speaker 2 (18:05):
They got it.
Speaker 1 (18:06):
They wanted it, and they got it. And maybe you
don't just mess with unregulated capitalism because here it comes.
Speaker 2 (18:13):
Here it comes.
Speaker 1 (18:13):
Other countries always think they want to dip their toe
in American capitalism. It is a beast. It is a beast,
and it's coming for you.
Speaker 2 (18:23):
I'll spit you out when it's done with it. And
that's where Liberty Media comes in.
Speaker 4 (18:27):
Liberty Media is the American company that purchased essentially the
FOM and those management rights from Bernie Eclestone, who had
previously been in charge of that company.
Speaker 1 (18:39):
Every one of my companies has used that leverage to
boost up equity returns.
Speaker 2 (18:44):
That is John Malone, chairman and largest shareholder of Liberty Media.
Speaker 1 (18:48):
It doesn't mean that that's obeyed strategy, particularly if you've
been able to lock in long fixed rates. I'd be
a little freaked out if Viacom CBS owned the NHL.
Speaker 8 (19:00):
I mean, I just want to drive this home to
all of the American fans. You've just been played and
manipulated by a corporate American company yet again.
Speaker 2 (19:11):
Yet again.
Speaker 1 (19:13):
You know, YOHI walk outside right now, there's somebody wearing
a fucking Jack Daniel's hat, or a Dilly Dilly T
shirt or a Yankees bag. We were all being played
all the time, understanding you're being played and choosing what
game you're playing in. I'm okay with that, amen.
Speaker 4 (19:32):
Liberty Media did want to tap into the American market.
I think it really understood that Formula one was closed
off in Bernie Eclestone's era. Eclestone had a tight rain
on all of the ways that Formula One was perceived,
which included a lot of things, you know, even banning
the use of social media in the paddock. Liberty Media
(19:53):
came in and saw that these were very restrictive things
that were actively hurting the image of the sport because
drivers couldn't share things, influencers couldn't come to an event
to share things, Journalists were very limited in the things
that they were able to say for fear of losing
their jobs. Liberty Media opened it up to the public
and was the reason why they got Netflix involved to
(20:17):
create Drive to Survive, the series that has essentially changed
the name of the game for Formula One. It opened
up the personalities and the underworkings of the sport a
little bit more for people to see, so that you know,
there's more to connect to than just what happens on
the track. Watching cars going circles is not always the
most compelling for people, but I've found that you can
(20:38):
really get a wider audience involved when you tell them
the stories of the people driving those cars, and that
is what Liberty Media did. It just so happened that
the American audience was ripper and ready to go to
latch onto that during the COVID nineteen pandemic.
Speaker 1 (20:54):
Let me get this straight. An American media company owns
F one, but the FIA and the FOAM are other
governing bodies that really can control things as well.
Speaker 4 (21:09):
Yes, it's a web of wildness all around.
Speaker 1 (21:13):
Why would I expect it to be simple?
Speaker 2 (21:15):
It's not a simple Yeah, no, inform one anyway?
Speaker 1 (21:17):
Yeah, who makes money here? Is it a company? Is
it the driver? Is it the principle? Is that what
they call them? And can you make money an F
one or is it like buying a vineyard? You make
great wine, but you lose a lot of money and
you got something cool they show your friends.
Speaker 2 (21:35):
It's a great question.
Speaker 1 (21:36):
I ask great questions.
Speaker 2 (21:37):
I know you do. That's why that's good questions.
Speaker 4 (21:39):
There's this saying in motorsport that it takes two million
dollars to make a million dollars, So everything you kind
of put in you almost expect that you're going to
lose money. It makes sense for like a Mercedes to
take out a challenge in Formula one to raise their
cars to be really fast. Because Mercedes sells road cars.
(22:01):
It looks great for them to have, you know, successful cars,
it looks great for that. It looks great for them
to have technology that they can say was developed in
Formula one. With Red Bull, it makes sense that this
high octane company that loves adrenaline has something huge in
the you know, one of the craziest, fastest sports that
(22:22):
there is. You're not really making a ton of money.
You're mostly just kind of trying to stay alive and
hope it all works out for the best. But it
you know, if you've noticed, it can be really you
can if you have a team like say Williams, a
former world champion that slips down the rankings one year,
(22:43):
they really struggle to claw their way back up because
they don't have enough money to continue developing their cars.
It's like it is just kind of it's a passion
project for a lot of people. When people ask me
what I wanted to do with my English degree from college,
it was a very similar answer. It was like, I
will find a thing that makes sense to me and
that matters to me, and I will do that like wholeheartedly.
(23:06):
And it's very similar with Formula one.
Speaker 2 (23:08):
So as an American Michael, you might have heard about
Andretti as a name. Yeah, So Andretti are one of
those teams that has been really interested in joining the GRIT.
So there's an opportunity in twenty twenty six to add
more teams to Formula one. Now the FIA says that
you can have up to thirteen teams in Formula one,
(23:28):
which means twenty six drivers on the GRIT. The reason
why we haven't had more than ten teams up until
now is a. As we've been talking about, it's really expensive.
B it's also technically very complicated to build the types
of engines that you need in Formula one these days,
and the latest regulations of twenty twenty two are trying
to change that. They're trying to lower the barity entry.
We'll talk about the cost cap. They're also trying to
(23:49):
make the power units that much more simple so ensure
that more people can join the GRIT. So Andretti are
one of the few teams that put a bid forward.
But here's where the problem it. First of all, we've
seen in the news the FA pushing for a desire
to have an eleventh team. Mohammed bin Sulaam, which is
the president of the FIA, has been very vocal about this,
(24:10):
But the problem is he doesn't actually have that much
of a say. And then you've got the teams on
the other hand, who've been pretty negative and averse to
adding an eleventh team.
Speaker 3 (24:18):
Business is on fire. The sport's never been in a
better place, and I believe if it ain't broken, on
need to fix it. So I'm a strong believer that
it's working really well with ten teams right now and
believe that's the way it should stay.
Speaker 4 (24:30):
There's just a concern from the teams that an eleventh
team will cut into their profits because price money is
distributed from a pot, so everyone takes out of this
pot based on their performance. If you have an eleventh
team that starts scoring points, that's per You know the
teams are seeing it is they've taken points away from us.
(24:51):
So now all these teams are saying, hey, I don't
I don't want to have anyone in here. It's bad
for the bottom line.
Speaker 1 (24:57):
Yeah, and there's more people on the.
Speaker 2 (24:59):
Track, more people on the track.
Speaker 1 (25:00):
What's unique about this sport is there's literally only so
much space on the track to add another car, another
person to crash into. If you can add another team
to the NHL that doesn't mean there's ten more people
on the ice.
Speaker 2 (25:12):
That's actually I again, yeah, that's what I'm.
Speaker 1 (25:14):
Here for, these fucking and brilliant statements, but that I
would not want if I'm driving, I don't want more
people on the street that I'm working on. Yeah, exactly.
Speaker 2 (25:23):
So that's the tension that we're in right now, is
it's good for the sport to be seen adding more teams.
It's good for it to showcase that, hey, this sport
doesn't cost that much money, it's not that complicated. You
can actually join the party quote unquote. But at the
same time you've got attention from the teams, and so
there's things that have been shifting constantly. Of wall, how
much does it cost to be a part of these teams,
(25:44):
And they're now asking essentially the teams to prove that
they have one billion in their bank account to ensure
that they can keep paying to be a Formula one team.
Speaker 1 (25:53):
Jeez, you gonna have a billion? Yeah, here comes to
the South East.
Speaker 2 (26:00):
So, Michael, this is Tony of the Future interjecting in
here because oh, because we just got an update that
the Indretti bid was in fact dumtum dum.
Speaker 9 (26:13):
They are not deemed fit to join the grid in
commercial terms by the sports commercial rights holder rejected. We
do not believe that the applicant would be a competitive participant.
Speaker 2 (26:26):
They will not be a part of the F one
grid until at least twenty twenty eight.
Speaker 1 (26:31):
Oh wow, that's a long way away.
Speaker 6 (26:33):
This does put the FIA absolutely the regulator is absolutely
head to head with Formula one Management and Liberty Media,
the financial rights holders. Because FIA said yes, one.
Speaker 2 (26:46):
Have said no, Okay, you can go back to the
present now.
Speaker 1 (26:50):
Tony of the future. So how do these teams make money?
Speaker 2 (26:56):
So, as we've discussed, it's the F one prize money,
it's also the sponsorship, and i'd say that sponsorship it's
give and take. It depends on different teams, but probably
accounts for about fifty percent of the money that they make.
And then if you're also a car manufacturer, you will
also make money from selling your engines to other teams.
But also maybe the applied science is what teams are
(27:18):
able to create and innovate behind closed doors they can
then sell.
Speaker 1 (27:25):
So they're coming up with ideas and solutions and selling
them to their competitors.
Speaker 2 (27:29):
Yes, so, for example, Ferrari is a works team that
sells their engine, also to Alpha Romeo. Mercedes is a
works team that develop an engine and a power unit
and sell it to Williams. And then you've got teams
also like Alpine whose engine is a Honel engine, but
they're not selling it to anyone else, so no one
wants to buy their engine, which we can go back
(27:50):
to Andretti Andretti's and talks of potentially buying their engine,
which they would love because it's another revenue stream for them.
Speaker 1 (27:56):
I see, interesting, makes sense their side hustle, it's selling them, it's.
Speaker 2 (28:00):
Side us, yes, Michael. So the other way to look
at it is if you look at the ten teams
we have on the grid, there's maybe different buckets. There's
the buckets of teams who are Calm manufacturers as well,
so McLaren Mercedes, Ferrari and you can kind of wrap
your head around why they would want to be informal one.
Obviously a Ferrari in the championship do very well. There's
(28:22):
a fair pretty straightforward line that says that they're probably
going to sell more Ferraris of their sports cards. That's
one bucket. There's the second bucket, which some would put
in the bucket of Oh, you've just got so much
money you don't know what to do with it, and
this seems like a great venture. You can think of
Aston Martin with Lawrence Stroll. We can also talk about
(28:43):
the fact that his son is one of the drivers
on that team. It's just like I've got some spare
cash in my back pocket. Let me have a former
one Telts and the Glamor Formal one looks good. And
then you've got a third bucket, which again goes a
little bit back to the history of Formula one. The
teams who've been there since they get go. You think
of the legas someone like Williams, someone like Ferrari who
you know, as I said, I think they've been there
(29:04):
since day one. Fun fact, both of those teams still
get a pot of money at the start of every
year to help them ensure that they never leave the sports.
Speaker 1 (29:15):
Interesting.
Speaker 2 (29:15):
It's like a little bit of a bonus bonus for
being there since day one. And I say a little
bit of bonus, it's something like, you know, ten to
twenty million that they get at the start of the.
Speaker 5 (29:23):
Right there is only really one brand that transcends Formula
one is and is in this sense, perhaps you could
argue as big as or bigger than Formula one, and
that therefore it's removal from Formula one would cause a
seismic problem, a very serious problem. I mean other teams
(29:45):
having departed from the sport, such as Lotus, great pity, Brabham,
great pity, br In, great pity, Maserati, great pity. But
Ferrari is Ferrari. Ferrari is special.
Speaker 1 (29:57):
I mean in tennis, you know, the top players get
appearance fees, whereas me and you wouldn't. I shouldn't speak
on your behalf. You might be an excellentennis but you
might deserve it an appearance fee. But you know, it's
kind of like, hey, Ferrari and Williams, you've been here
and there are huge names in the sports. So here's
a couple bucks, here's a couple It would piss me
off if I was a competitor, because of course that
(30:17):
money goes to helping you.
Speaker 2 (30:18):
But that's interesting you bring that up, Michael, because essentially
all the teams are doing exactly that. With Hundrettick, which
we've been here for the last thirty forty years. You
don't get to just come in and take part of
the prize money. So it's interesting because it's that same
mentality that's still there because again there's so much money
that's being poured into it. There's a fourth bucket, which.
Speaker 1 (30:34):
I think is you could a bucket.
Speaker 2 (30:35):
There's so many buckets, but it's the last one, I promise,
which is more of like a marketing marketing stunt, though
stunt doesn't feel big enough. But you think of someone
like Red Bull and you go, why does a fizzy
drinks company pour a lot of their marketing budget into
this Formula one.
Speaker 4 (30:50):
Team delivering their livery for the US Grand Prix this
year via helicopter? Who else is doing that? Who else
is thinking of like depositing their car into the middle
of Austin via helicopter just because it's cool? Red Bull
is because Red Bull's genius at marketing.
Speaker 2 (31:08):
I don't know if you've seen these, Michael, these vox
pops of people in the street showing the ten logos
of the ten F one teams. The one that everyone
always recognizes is Red Bull. They're just like, oh, I
know what that is. And it's so funny that it's
not one of the Formula one teams, but the red
Bull brand is so strong outside of the sport that
it actually has helped them a fair amount.
Speaker 4 (31:26):
Red Bull is going to sell you drinks because you're
going to look at that and be like, oh my god,
that's insane.
Speaker 1 (31:33):
So Red Bull is selling enough little energy drinks to
make a rocket ship with wheels on it that keeps winning.
Speaker 8 (31:41):
Just crunching the numbers here a little bit for you guys.
So the budget for running the team is one hundred
and fifty million, which maybe, yeah, maybe Tony can explain
has to do with the budget cap, the cost cap.
So you can buy about seventy five million Red Bull
cans with that, and last year they sold somewhere in
(32:01):
the area of eleven point five billion cans.
Speaker 1 (32:04):
I mean, isn't anything. This just says that as a civilization,
we're very tired. We're just drinking such crap. I swear
to god, if people just drank more water, we would
be such a better place. Yeah, happier skin would be better,
stronger tea.
Speaker 2 (32:23):
You've got a kind of red Ball in my bag.
I bought it so much that the team at red Bull.
Fun fact, now give me a crate. I love it,
which great, Just keep mine I don't drink coffee, so
I do drink red Bull and have since I was thirteen, bizarrely,
which was a fluke from my dad. He thought it
was fizzy water.
Speaker 1 (32:44):
Well, you're dad, let's not let's not get in him, let's.
Speaker 2 (32:47):
Not bring him into that. No, but the thing I
didn't want to say about the market.
Speaker 8 (32:52):
Right, Actually, maybe we could posia for a second. So
you've been drinking red Bull.
Speaker 2 (32:57):
He's worried about my health. Yes, yeah today.
Speaker 8 (33:02):
I mean we haven't gone there yet, but I'm starting
to understand why you're a MAX for Stappen fan.
Speaker 2 (33:06):
But I'm not a Max with Stappen fan.
Speaker 1 (33:08):
You were saying good things are more of a defender
of him, exactly. I think red Bull found a market
share that didn't exist, breaking ground. The next one is
liquid death. It's water, but it's marketed water, and that's
that might be the next one. For years, a bunch
(33:28):
of marketing fuck boys have tricked you into thinking that
water is just some girly.
Speaker 2 (33:32):
Tricks for yoga ooms.
Speaker 1 (33:35):
Just look at all the cute brand names and thank
you bottles.
Speaker 2 (33:39):
Well, can we get here?
Speaker 1 (33:44):
What's this cost capting you keep bringing up? Is that
like salary cap.
Speaker 2 (33:48):
No, but that has been a conversation. Should you cap
the driver's salary, which I am fervently against.
Speaker 4 (33:54):
Okay, the Formula one cost cap is an artificial limit
on how much every form Milue one team is allowed
to spend on certain things like the development of their
car and the salaries of some personnel. Previously, Mercedes was
spending over four hundred million dollars to win the World Championship,
while you had a team like Williams that was like
(34:15):
maybe ten million dollars. You know, they just didn't have
the funding to be able to match that. Limiting the
expenditure of the teams to about one hundred and fifty
million dollars every year in theory, should help level the
playing field because something like you know, Red Bull can't
go out and spend all of this extra money.
Speaker 7 (34:37):
However, you know, certainly not aware of any see the
accounts or submitted way back in March. So it's been
a long process with the FIA.
Speaker 4 (34:47):
You can. We saw that with Red Bull they were
accused of exceeding the cost cap.
Speaker 7 (34:53):
That's complete rubbish. I mean we heard from the FIA
ten days ago asking some questions for clarifications as you
would do in a standard All.
Speaker 4 (35:00):
They claimed it was through catering.
Speaker 1 (35:02):
So it's just some really fancy sandwiches.
Speaker 4 (35:04):
Yeah, just really really expensive little finger sandwiches.
Speaker 2 (35:07):
That's it.
Speaker 1 (35:08):
Who's checking all this.
Speaker 4 (35:09):
The FIA is looking into all of those finances to
make sure that everything is kosher. But you don't go like,
you don't get in a Formula one team if you
don't find loopholes in everything that you do. And so
you know, we had teams like Red Bull that perhaps
spent a little bit more money than they were supposed to,
(35:30):
got away with it with nothing more than a slap
on the wrists and having to pay a certain large
fine for the pleasure. Because spending money is obviously the
answer to spending money.
Speaker 1 (35:42):
Think about rich people with taxes. Think about I mean
is they're experts at cheating.
Speaker 4 (35:47):
If you want to be in Formula one, you probably
want to cheat a little bit. Fudge the rules, find
the loopholes.
Speaker 1 (35:53):
One thing is certain, Unlimited budgets does not guarantee victory.
We look at the New York Yankees like, yeah, they
buy everybody.
Speaker 3 (36:01):
But.
Speaker 1 (36:03):
Huge budgets definitely put you in a better chance for success.
So I like this cost cap a lot. Just think, Tony,
what about my original question, which was sponsorships in particular,
how can I get my face on the has or
Alpine car?
Speaker 2 (36:17):
Don't you worry. I haven't forgotten. We are going to
get into this very important topic. But just after a
short break we better.
Speaker 1 (36:28):
So what about sponsorships? You know, how much is it
going to set me back to put my face on
the Alpine car or the Hoss car or the Mercedes car.
Speaker 4 (36:36):
Well, if you wanted to put your name in your
face on a Formula One car, I would recommend starting
the bottom of the grid and working your way up
because your numbers will get larger as you move up
to the more expensive and better performing teams. So if
you were to bring yourself to Williams and say I
would love my name and face on the car, what
(36:57):
can we work out? You were probably looking at somewhere
fifteen million a year and up fifteen million is of
probably a small little bit of you know, a little sticker.
You're not going to be a title sponsor, you are
not going to be a title partner. You're probably not
even gonna make your face on their overalls. But you're
(37:19):
on the car in a little spot looks cool if
you are looking for like a Mercedes or something, those
deals start getting into the hundreds of millions of dollars
just because they are so high profile. They know that
they're going to be out there competing at the front
of the field, so you better be able to.
Speaker 2 (37:36):
Pay up for that. So there's two things here. There's
name title sponsors, so it's in the name. So for example,
it's Aston Martin, Ramco, Cognisant Formula one. That's the that's
a mouthful, that's the full length of their actual name.
So as a title sponsor, they have Cognisant and a Ramco.
Speaker 1 (37:53):
That's why they're not winning. All those letters are weighing
them down.
Speaker 2 (37:56):
It's funny you bring that up because, and I'm just
going to weave this in here, one of the tensions
between the marketing team and the development team in and
Formula one car is the marketing team has promised and
sold all of this sponsorship, which we'll get back to
in a second, and they now have to slap all
of these logos on the car, and the mechanics are saying, WHOA,
WHOA hold them minute. That's weighing us down. So can
(38:17):
we scrapp all of this paint off. So again it's
another one of.
Speaker 1 (38:20):
Those use a fourteen fon just like we gotta use
a six five.
Speaker 2 (38:25):
Every little ounce of page matters. So that's the first
thing to know about title sponsors. So the title sponsors
pay an absolute fortune. That's how the team. And you
look at some teams like there's a team like McClaren
that I think have over forty partners and sponsors.
Speaker 1 (38:38):
Who is sponsoring? Who are these companies? Anybody? What about
the bodega down there, which I do not recommend.
Speaker 2 (38:45):
Okay, good to know almost anyone can sponsor a Formula
one team or a Formula one carney. Money that's the
big thing. And we've had wild stories of quite literally
Nigerian princes coming in slapping their name on the We've
had you heard the story of Rich Energy last year.
(39:06):
We've had people with products that don't exist in the
sports that have promised money. Whether the money is there
or not, there is a whole thing. There's a couple
I think of categories that are banned. Big tobacco is
one of them. So if one was obviously high highly
highly sponsored by Big Tobacco back in the day, then
it went into alcohol, then it went into big tech,
(39:27):
and now it's gone into a little bit of crypto.
I think lasting nine out of the ten teams had
a crypto sponsor. Have you ever heard, Michael of the
barcode livery saga? Tobacco advertising was banned in almost all
sports from a European directive in two thousand and six
Ferrari at the time. You remember the big Marlblo logo
(39:48):
that they had on the side of their car. They
thought it would be genius to redesign the livery with
just basically like a barcode that looked on the side,
But when that car is driving paw you at high speed,
you get the Marlbo chevron and it's basically the Marlbo genius.
I will give credit where credit is due, and it's
only when the promoters realize the car going by really
(40:09):
fast and they were like old on a second, and
they're not the only ones. But just to say big
tobacco is still in some way, shape or form involved
in Formula one. I think obviously things like arms and
weapons like that's another market that they just wouldn't take.
But other than that, I think the teams on the
sport will take money from just about but.
Speaker 1 (40:30):
It's never it's never like super healthy stuff, you know,
it's never like carrots. You know, it's always something nefarious.
But I guess that says more about our culture and
what we spend money on. I mean, wouldn't it be
cool though, if alfa Romeo had like a bunch of
carrots on its side.
Speaker 4 (40:48):
So let's get started for this absolutely delicious salad.
Speaker 1 (40:52):
I wouldn't put it past them, you know, or has
We're missing a whole avocado thing. Yeah, the best two
vegetables avocado and hero right, the haas avocado.
Speaker 2 (41:03):
So what I'm hearing from you, Michael, is you just
want to sally Now. I always recommend has avocados, but
you can go ahead.
Speaker 1 (41:10):
I'm thinking maybe my face now that we're talking this out,
chewing a carrot on an Alpha Romeo on the nose.
That could be tricky because the carrot. But anyways, I'll
check with my branding committee, my social media team, and
we'll get back to you on that. I like him, great,
I'm fucking starving.
Speaker 2 (41:30):
That was a lot.
Speaker 1 (41:30):
There's a lot. There's a lot in this episode on
how to make money.
Speaker 2 (41:34):
So worth saying that we just this was the tip
of the iceberg, and there's probably a lot of things
that we've missed, and there's probably a lot more detail
that we can go into. But I'm curious after listening
to all of this and getting most, hopefully most of
your questions answered, do you think the business side of
Formula one is exciting? Do you think you could get
into it more?
Speaker 4 (41:51):
Yeah?
Speaker 1 (41:52):
I do. I mean what I love about the competitive
arena is that people are driven to six seed and
our creative, aggressive, persistent, and that definitely is being showcased
here from even just the way they manipulate the logo
(42:12):
or change it because they need the money to selling
power units to competitors. That's fascinating to me. So they're
willing to do whatever is needed to make money and
that definitely goes in line with my American capitalism upbringing.
And it doesn't surprise me that this is how Formula
one operates because it just feels like such a competitive,
(42:35):
high stakes arena where everything is on the table for
potential profit. I find it interesting. Yes, I could potentially
be a business fan of Formula one.
Speaker 2 (42:44):
I like that.
Speaker 8 (42:56):
This has been choosing sides, fection of Sports Illustrated Studios,
iHeart podcast and one oh one Studio Podcasts. The show
is hosted by Michael Costa and Tony Cowan Brown. This
episode was edited, scored, and sound designed by Senior producer
(43:16):
Jojai may Thadle. Scott Stone is the executive producer and
head of Audio, and Daniel Wexman is Director of Podcast
Development and production Manager at one O one Studios. At
iHeart Podcasts, Sean Titne is our executive producer and a
special thank you to Michelle Newman, David Glasser, and David
(43:38):
Hootkin from one O one Studios. For more shows from
iHeart Podcasts, go visit the iHeartRadio app, Apple Podcasts or
wherever you get your podcasts, and whatever you do, don't
forget to rate us and tell your friends. It really
does be a lot.
Speaker 2 (44:02):
So you might think that Formula one is a race
and it's all about the speed and the money, but
the reality is Formula one is a lot like a
game of chess. So next week we're going in a
completely different direction and we're going to talk all things
game theory and strategy and explain why before the race,
each team comes up with a plan a b C D.
Speaker 4 (44:21):
E.
Speaker 2 (44:22):
In case you are wondering, Michael, Plan E apparently stood
for engine failure. A few laps after the team radio,
Carlo signs engine burst into flames.
Speaker 9 (44:33):
No no, no no.
Speaker 2 (44:37):
So now we know what plan E stands for. Let's
talk about what all the other plans mean for next week, Darling.
Speaker 1 (44:42):
We'll see
I will be plugging in a back heating pad.
Speaker 2 (00:03):
It's nassy.
Speaker 1 (00:04):
I'm not trying to show off or anything.
Speaker 2 (00:07):
You can't prepare.
Speaker 1 (00:08):
My friend told me this weekend that the lower left
part is where your emotional stress is. So I don't
only feel like I'm like emotionally stress too much. All right,
Tony Michael, I want my name on an F one car. Okay,
And I know you're the person to talk to about this,
and actually, let me rephrase. I want to put my
(00:31):
face and my name because what good is it if
you don't see the face? You know this? How much
would that cost me? How long would it be on there?
Can I just do a race if it's cost effective.
I'm not picky. It doesn't have to be front and
center on the car. It could be on one of
the wheel hubs or the little wing, or even a
decal on the driver's helmet. Doesn't have to be Ferrari,
(00:54):
could even be hass I love that.
Speaker 2 (00:58):
In the same sentence, he said, I'm not picky, but
I just want my face go.
Speaker 1 (01:01):
Yeah, And if we happen to mention my TikTok handle,
Michael Costa underscore that's not gonna hurt anybody. Okay, I'm
not as happy as I can be in my life,
and once this happens, that will fill the void. Help me?
Can you help me with this.
Speaker 2 (01:20):
Theoretically? Yes?
Speaker 1 (01:21):
Great, I'm all about theory for my heart podcast one
on one Studios and Sports Illustrated Studios.
Speaker 3 (01:29):
This is choosing sides one.
Speaker 1 (01:36):
Wow, Tony, what is the business model of F one?
Is it even right to call it a business? If
it's a business, then somebody has to own it. In basketball,
nobody owns the NBA, per se. I mean, I think
it's individual teams are privately owned and a franchise is
(01:56):
collectively owned by all of them. I do remember season one,
Lily told me about this one guy Bernie, former Formula
one boss Bernie Echoson, has been given a seventeen month
suspended jail sentence after pleading guilty to fraud. Who sold
F one? What does that even mean? How can you
sell it in the first place? I can't sell basketball? Right?
Speaker 2 (02:19):
No? Yes, these are some great questions, and I think
this is where we're going to get into a lot
of fun. Let's take these questions one by one, and
today let's dive into Formula ones. Weird and quirky and
at times feeling like a sport that's lost. Maybe it's
moral compass, but we're going to look at the business
model of Formula one and all the different layers into it.
Speaker 1 (02:40):
I should understand that because my moral compass is longer.
The following is disturbing.
Speaker 3 (02:46):
Footage from Michael Costa's comedic archive.
Speaker 1 (02:49):
Someone asked you for a favor, Say it with yes,
with a smile on your face, and then absolutely botch
the favor. Hey can you pick my kids up at daycare?
I would love to do that for you. And then
you just don't ever pick those kids up. They'll never
ask you again.
Speaker 2 (03:05):
There she is, Hello, Hello, lovely, how are you doing?
I am good to help us with some insights into
the business model of F one. I've asked Elizabeth Blackstock
to join us.
Speaker 1 (03:15):
Hi, Elizabeth, how would you describe yourself?
Speaker 2 (03:18):
What's your job? And how does F one fit into
your wonderful world?
Speaker 4 (03:22):
It's such a big question. F one is everything I think.
Speaker 2 (03:28):
I love that.
Speaker 4 (03:28):
The motorsport journalist and a historian.
Speaker 2 (03:31):
She's also the primary American contributor to Planet f one.
She's written books about F one, and she's even starting
her very own podcast, Deadly Passions and Terrible Joys, all
about the weird scandals and dramas and the chronicles of motorsports.
Speaker 1 (03:45):
There's no shortage of those.
Speaker 2 (03:46):
And Elizabeth is a longtime Formula one fan herself.
Speaker 4 (03:49):
When I think back to twenty fourteen, that was the
first ever Formula One race, I went to the US
Grand Prix I was. I was eighteen years old, like
going having I thinking I'm going to get this out
of my system, like I'm gonna watch race cars and
be done. And that did not happen. But I can
remember being at the track on race ding kind of
having the run of the place. It was sparse, it
(04:13):
wasn't super busy, there were no lines for things. There
were certainly no lines for the women's bathrooms. Suddenly it's
just this massive explosion where people are aware of what
this sport is. In the past, i'd like mentioned something
to a professor like Hey, I'm taking a day off,
I'm going to race somewhere, and they would have no
(04:33):
idea what I was talking about. And now, like I
go outside and even in the small town I live
in in Texas, there's people with their red bull hats
on because they're rooting for Sergio Pariz or their Ferrari
get up. It's just become so huge here in such
a very short space of time, Americans are getting it,
which is it's nice.
Speaker 2 (04:54):
How would you explain to a new fan how teams
make money, how spumses make money. It definitely feels when
you look got the sport that there's a lot of
money being thrown at the sport, and there's a lot
of money being invested in the sport. But how does
anyone in this industry actually make money at the end
of the day.
Speaker 4 (05:08):
That is such a good question.
Speaker 2 (05:09):
It's a big question.
Speaker 4 (05:10):
It is it is not easy to make money in
Formula one, no matter how many millions of dollars you're
swimming around in it at all times. I think in
this modern era we've seen a big jump in profitability
for the sport overall as the company itself. In the past,
Formula one was just kind of like a way for
rich drivers to have fun. These were like kind of
(05:31):
noble gentlemen who had the money in the access to
get cars.
Speaker 5 (05:36):
You might have to have a few, Bob, you didn't
have to be super rich.
Speaker 2 (05:40):
This is Matt Bishop, English journalist offer novelist and a
true fixture of theform paddock.
Speaker 5 (05:46):
You could buy a Maserati two fifty if one of
the most beautiful full one cars there's ever been. But
if you were someone like Horace Gould, who wasn't particularly
quick but had a business, wasn't minted, but was just
somebody who did quite well and had a bit of
money and loved motor racing. So he bought a two
fifty f Maza and he went racing in it, not
(06:07):
very well, and he didn't have to do all the races.
He didn't have to take it to Argentina if he
thought that would be too much of a pain in
the bum to do that.
Speaker 4 (06:17):
But that wasn't really enough to sustain a massive growth
of the sport, and especially when smaller manufacturers became interested
in competing kind of you know these backyard teams that
had sprung up, especially in England, it was like, oh,
we can't afford this because we're not independently wealthy. What
do we do now? And now it's currently profitable because
(06:39):
of some very aggressive TV deals that were struck by
Bernie Eckelstown, who is certainly a man.
Speaker 2 (06:48):
We always say like love him. I hate him. He's
definitely changed the sport.
Speaker 5 (06:52):
When I was at school in the seventies, I was
the only one who liked Formula one. I loved football
as well, but my mates only liked football. But they're
like cricket and rugby and other things snooker, believe it
or not, but not Formula one. It was only me
and you couldn't find it written about on the newspapers,
and it wasn't on the telly. And it was Bernie,
Bernie Eclestone who realized that really Formula one could be
(07:16):
taken to the world via two industries now which you
can't really monetize in the same way, tobacco and television.
Speaker 4 (07:24):
I think honestly, most of Eclestone's career was this kind
of slow build that was developing profitability for Formula one.
So he tried his hand at racing when he was young,
realized he wasn't good at it, and then was like,
actually I can wheel and deal pretty well. Let me
do that. I don't know if anyone if you've ever
seen this photo that goes around occasionally in the late
(07:45):
nineteen sixties. It's the Austrian driver yachin rent and the
side of his helmet is the phrase this space for
let That's because he was managed by Bernie Eclestone, who
was one of the very prototypical examples of trying to
seek sponsorship in a sport that previously was just country
colors and national pride and you know, manufacturer dominance. It
(08:08):
wasn't about companies, it wasn't about sponsorship, and that was
the first key that kind of changed the name of
the game. Lotus then took Yok and Rin Don as
a driver, got their first massive sponsorship, changed the.
Speaker 1 (08:21):
Name of the game. I'm curious what was that first
sponsorship deal they got, Like, who is it with?
Speaker 4 (08:27):
Lotus got the Gold Leaf Embassy sponsorship. The tobacco company
really made everyone upset because they thought it was cheapening
the sport by you know, promoting a tobacco brand and
advice on their cars, instead of it being this noble
pursuit that formula one supposedly should have.
Speaker 1 (08:46):
Been remember about.
Speaker 2 (08:50):
Well, well, well the table today one other well we
can't really call this on a fun fact, but it's
actually very sad fact.
Speaker 5 (09:06):
The normal continuum of human events as a beginning and
an end.
Speaker 6 (09:10):
Jochen Rint is dead.
Speaker 2 (09:11):
Soon after securing that first ever F one sponsorship deal.
Johann Hint actually crashed and died in the practice session
in the Monsa Circuit in Italy.
Speaker 1 (09:20):
Jeez.
Speaker 2 (09:21):
His good friend and biggest rival, Sir Jackie Stewart, a
man who we will definitely come back to in several
times during this season, was, as you can imagine, absolutely heartbroken.
Speaker 7 (09:31):
Yochen was perhaps my greatest friend and motor racing I
perhaps feel this sadder at this.
Speaker 6 (09:39):
Moment than either we were done before any race.
Speaker 2 (09:43):
Ryan was actually leading the Driver's Championship when he was killed,
and this was towards the end of the season, so
even though he passed away before the season concluded, he
actually went on to take the championship. So this makes
him not only the first driver to secure a spot,
but also the only driver in Formula One history to
(10:04):
be posthumously awarded the Formula One Drivers Championship.
Speaker 6 (10:08):
He will have won the world championship.
Speaker 3 (10:10):
The manner of his winning it illustrates the randomness of
human experience.
Speaker 1 (10:15):
Okay, dark interlude here back, sorry to do this, but
back to the business model. So Lotus gets that first
sponsorship from a tobacco company. What's next?
Speaker 4 (10:25):
I think the next step. Honestly, Bernie Echostone went bigger.
He bought the Brave and Formula one team, invested so
much into making that a world championship team, but in
the meantime was also establishing something called the Formula One
Constructors Association, which is essentially what the Formula One group became,
(10:45):
and it was through that association that he did battle
with the FIA to establish these incredible forms of revenue
sharing for the teams.
Speaker 2 (10:54):
Back in the day, when we had qualifying session, it
wasn't actually just qualifying to know if you were going
to start P six, P seven, p twenty on the grid.
It was actually to know if you could qualify and
were fast enough to actually go racing on Sunday because
we had a lot more teams and a lot more
drivers because it didn't cost as much as it does today.
And the other thing that you would happen is people
would just be like, I'm not going to show up
(11:15):
on Sunday. I'm good, I've got you know, kids kids'
birthday party, i don't need to come, which you can't
actually make money guaranteeing a race if you can't guarantee
that the teams actually show up and the drivers show up.
So that was the essential idea behind the Concord Agreement
which they've signed again I think till twenty twenty six,
which guarantees that these ten teams that we have on
(11:35):
the grid are going to show up, they have enough
money to keep paying to drive, and that the drivers
are going to show up as well.
Speaker 1 (11:41):
It seems like a no brainer show up to work,
show up to work. But as someone who just lived
through six months of a writer strike, if people don't
get paid they don't show up to work, great, you
know what I mean. You got to show up, and
so there needs to be rules in place to make
sure work happens.
Speaker 2 (11:59):
Exactly, Bernie, there you go. Not something you'll hear often
these things.
Speaker 4 (12:04):
It was a genie's move. I think that was really
the big like kind of trajectory that time period from
the late nineteen sixties into the eighties where we really
kind of started to see this massive influx of cash
and having this standardization and regular income becoming prioritized because
no one was just independently rich anymore. He wanted that
(12:24):
money to actually develop a team.
Speaker 2 (12:27):
Okay, hold on, before we move forward, I think we
need to take a little step back and explain the
trifecta of the sport that I think is really important
to start after the three biggest, most influential bodies the
interplay with each other, which would be the FIA, Liberty Media,
and FOAM, and they each play very separate but equally
(12:51):
important roles within the ecosystem of Formula one. FIA stands fortomobile,
which is think.
Speaker 1 (12:59):
I'll say it, and now let me ask it again.
What does it stand for?
Speaker 2 (13:03):
Federation Inational of Autos as basically.
Speaker 1 (13:08):
Wow, of all the autos of Federation Liberty Media. That
sounds very broad, very general. That sounds like the name
of a media company in a horror film.
Speaker 2 (13:19):
Yeah, if you want to.
Speaker 1 (13:20):
In FOAM, which is fear of missing out, fear of.
Speaker 2 (13:23):
Missing out, that's what standsible. It's Formula one management, so basically.
Speaker 1 (13:29):
A lot of governing bodies.
Speaker 2 (13:31):
So let's start with the FI.
Speaker 4 (13:34):
The FIA is the kind of international nonprofit organization that
sanctions Formula one race is to make sure that they
are all run in the same rule set and to
make sure that every team is operating in the same way.
Speaker 1 (13:49):
You don't hear nonprofit a lot no in f one,
in fact, that seems to violate everything the foundation of
F one. Yes, yeah, interesting.
Speaker 8 (13:58):
I just wanted to pull up this quote I found
online from this official F one document.
Speaker 1 (14:03):
Okay, yep.
Speaker 8 (14:04):
F one mission statement to leave a legacy of positive
change wherever we race, enriching local communities and economies and
supporting the natural environment.
Speaker 1 (14:20):
I think that's lovely inspiring.
Speaker 8 (14:22):
So yeah, this is this is not about money, Michael.
It's about making the world a better place.
Speaker 1 (14:28):
One of my favorite parts of F one is how
profit and capitalistic it all feels. It's okay, like we're branding,
We're going, We're fast. It's not exactly exactly.
Speaker 4 (14:40):
It's an outside source. It doesn't just sanction F one.
It sanctions i think, over four hundred different series around
the world to greater or lesser levels of importance than
F one.
Speaker 2 (14:51):
You will always hear the fans getting really angry with
the FIA because they're constantly changing the rules. The way
they regulate is constantly shifting. The fans are always unhappy
with the fines that they give the drivers.
Speaker 6 (15:04):
Can we get your reaction to the reprimand and the
fine that you received from the stewarts this morning?
Speaker 2 (15:10):
You might have remember hearing Max Verstappen jokingly saying once
he got a fine, Well, I hope the FIA enjoys
a nice dinner and drinks on me.
Speaker 5 (15:19):
Hope they have a nice dinner and a lot of wine.
Speaker 2 (15:24):
So the FI is heavily responsible for drafting, regulating and
enforcing the rules and the regulations. That's why the fans
always get angry on them. But their whole thing is
also safety and security. So when you look at how
the sport has evolved over the years in terms of
safety and security for the drivers, the FIA is at
the pinnacle of pushing for that.
Speaker 1 (15:40):
People can die in the sport. Yes, that changes everything.
Speaker 2 (15:43):
It changes everything. So Jackie Stewart was one of the
drivers that has often pushed for that. He also pushed
for a union of drivers, which is important to note
in the evolution of Formula one. He still remembers the
days when he would travel with the sport and he
would always bring a black Tux with him because you
never knew whose funerals you would attend, which is bleak
(16:03):
and I'm delighted to say that that is no longer
the case these days. It's still a danger.
Speaker 1 (16:08):
Sport also, do you wear tuxedos to a funeral?
Speaker 2 (16:10):
I don't know, Maybe a black suit? Yes, did I
say tuxedo?
Speaker 1 (16:14):
You said tuxedo. But I don't know if it's like
in different countries.
Speaker 2 (16:18):
Maybe you want I think you wear a black suit?
Speaker 1 (16:20):
Yeah?
Speaker 8 (16:25):
Can I ask a bit of a controversial question here?
It is there like an inverse relationship between how safe
it is and how interesting the sport is. It's too dark?
Speaker 1 (16:39):
No, it's not too dark. I think it's an excellent question.
Speaker 2 (16:41):
I don't know. I have a weird thing with this.
So I think as humans we just enjoying people hurting
themselves is just something that I struggle with. But I
think the crashes in Formula one are so for lack
of a better word, explosive and in your face and
shocking that it does draw you in.
Speaker 1 (16:59):
It's an integral part of the sport. Come on, you
can't deny that, Okay. I think this is a good
time to take a short break. Listeners. You can use
this as an opportunity, as companies are pushing their products
on you, to contemplate your own mortality and appreciate the
fleeting miracle that is life. That's what I do typically
during commercial breaks.
Speaker 8 (17:16):
Think you've just summed up F one in a sentence there, Michael,
I'm brilliant.
Speaker 2 (17:23):
Okay, we're back, and now let's talk a little bit
about foam, should we.
Speaker 1 (17:27):
Yeah, because if we don't, I'm going to have foam.
Speaker 9 (17:29):
MO.
Speaker 1 (17:30):
Wasn't sure you guys heard my joke the first time.
Speaker 4 (17:34):
FOM is Formula One Management. Formula One Management is essentially
the company that distributes those marketing and world feed rights
for Formula one. So that's the one that kind of
goes out and sells different aspects of the company to
people and manages all of the media rights.
Speaker 2 (17:52):
They're also the owner of the name and the rights
of Formula One. They own the name for Formula one
and name the right. Their objective is essentially to drive
commercial success.
Speaker 1 (18:03):
They wanted American audiences.
Speaker 2 (18:05):
They got it.
Speaker 1 (18:06):
They wanted it, and they got it. And maybe you
don't just mess with unregulated capitalism because here it comes.
Speaker 2 (18:13):
Here it comes.
Speaker 1 (18:13):
Other countries always think they want to dip their toe
in American capitalism. It is a beast. It is a beast,
and it's coming for you.
Speaker 2 (18:23):
I'll spit you out when it's done with it. And
that's where Liberty Media comes in.
Speaker 4 (18:27):
Liberty Media is the American company that purchased essentially the
FOM and those management rights from Bernie Eclestone, who had
previously been in charge of that company.
Speaker 1 (18:39):
Every one of my companies has used that leverage to
boost up equity returns.
Speaker 2 (18:44):
That is John Malone, chairman and largest shareholder of Liberty Media.
Speaker 1 (18:48):
It doesn't mean that that's obeyed strategy, particularly if you've
been able to lock in long fixed rates. I'd be
a little freaked out if Viacom CBS owned the NHL.
Speaker 8 (19:00):
I mean, I just want to drive this home to
all of the American fans. You've just been played and
manipulated by a corporate American company yet again.
Speaker 2 (19:11):
Yet again.
Speaker 1 (19:13):
You know, YOHI walk outside right now, there's somebody wearing
a fucking Jack Daniel's hat, or a Dilly Dilly T
shirt or a Yankees bag. We were all being played
all the time, understanding you're being played and choosing what
game you're playing in. I'm okay with that, amen.
Speaker 4 (19:32):
Liberty Media did want to tap into the American market.
I think it really understood that Formula one was closed
off in Bernie Eclestone's era. Eclestone had a tight rain
on all of the ways that Formula One was perceived,
which included a lot of things, you know, even banning
the use of social media in the paddock. Liberty Media
(19:53):
came in and saw that these were very restrictive things
that were actively hurting the image of the sport because
drivers couldn't share things, influencers couldn't come to an event
to share things, Journalists were very limited in the things
that they were able to say for fear of losing
their jobs. Liberty Media opened it up to the public
and was the reason why they got Netflix involved to
(20:17):
create Drive to Survive, the series that has essentially changed
the name of the game for Formula One. It opened
up the personalities and the underworkings of the sport a
little bit more for people to see, so that you know,
there's more to connect to than just what happens on
the track. Watching cars going circles is not always the
most compelling for people, but I've found that you can
(20:38):
really get a wider audience involved when you tell them
the stories of the people driving those cars, and that
is what Liberty Media did. It just so happened that
the American audience was ripper and ready to go to
latch onto that during the COVID nineteen pandemic.
Speaker 1 (20:54):
Let me get this straight. An American media company owns
F one, but the FIA and the FOAM are other
governing bodies that really can control things as well.
Speaker 4 (21:09):
Yes, it's a web of wildness all around.
Speaker 1 (21:13):
Why would I expect it to be simple?
Speaker 2 (21:15):
It's not a simple Yeah, no, inform one anyway?
Speaker 1 (21:17):
Yeah, who makes money here? Is it a company? Is
it the driver? Is it the principle? Is that what
they call them? And can you make money an F
one or is it like buying a vineyard? You make
great wine, but you lose a lot of money and
you got something cool they show your friends.
Speaker 2 (21:35):
It's a great question.
Speaker 1 (21:36):
I ask great questions.
Speaker 2 (21:37):
I know you do. That's why that's good questions.
Speaker 4 (21:39):
There's this saying in motorsport that it takes two million
dollars to make a million dollars, So everything you kind
of put in you almost expect that you're going to
lose money. It makes sense for like a Mercedes to
take out a challenge in Formula one to raise their
cars to be really fast. Because Mercedes sells road cars.
(22:01):
It looks great for them to have, you know, successful cars,
it looks great for that. It looks great for them
to have technology that they can say was developed in
Formula one. With Red Bull, it makes sense that this
high octane company that loves adrenaline has something huge in
the you know, one of the craziest, fastest sports that
(22:22):
there is. You're not really making a ton of money.
You're mostly just kind of trying to stay alive and
hope it all works out for the best. But it
you know, if you've noticed, it can be really you
can if you have a team like say Williams, a
former world champion that slips down the rankings one year,
(22:43):
they really struggle to claw their way back up because
they don't have enough money to continue developing their cars.
It's like it is just kind of it's a passion
project for a lot of people. When people ask me
what I wanted to do with my English degree from college,
it was a very similar answer. It was like, I
will find a thing that makes sense to me and
that matters to me, and I will do that like wholeheartedly.
(23:06):
And it's very similar with Formula one.
Speaker 2 (23:08):
So as an American Michael, you might have heard about
Andretti as a name. Yeah, So Andretti are one of
those teams that has been really interested in joining the GRIT.
So there's an opportunity in twenty twenty six to add
more teams to Formula one. Now the FIA says that
you can have up to thirteen teams in Formula one,
(23:28):
which means twenty six drivers on the GRIT. The reason
why we haven't had more than ten teams up until
now is a. As we've been talking about, it's really expensive.
B it's also technically very complicated to build the types
of engines that you need in Formula one these days,
and the latest regulations of twenty twenty two are trying
to change that. They're trying to lower the barity entry.
We'll talk about the cost cap. They're also trying to
(23:49):
make the power units that much more simple so ensure
that more people can join the GRIT. So Andretti are
one of the few teams that put a bid forward.
But here's where the problem it. First of all, we've
seen in the news the FA pushing for a desire
to have an eleventh team. Mohammed bin Sulaam, which is
the president of the FIA, has been very vocal about this,
(24:10):
But the problem is he doesn't actually have that much
of a say. And then you've got the teams on
the other hand, who've been pretty negative and averse to
adding an eleventh team.
Speaker 3 (24:18):
Business is on fire. The sport's never been in a
better place, and I believe if it ain't broken, on
need to fix it. So I'm a strong believer that
it's working really well with ten teams right now and
believe that's the way it should stay.
Speaker 4 (24:30):
There's just a concern from the teams that an eleventh
team will cut into their profits because price money is
distributed from a pot, so everyone takes out of this
pot based on their performance. If you have an eleventh
team that starts scoring points, that's per You know the
teams are seeing it is they've taken points away from us.
(24:51):
So now all these teams are saying, hey, I don't
I don't want to have anyone in here. It's bad
for the bottom line.
Speaker 1 (24:57):
Yeah, and there's more people on the.
Speaker 2 (24:59):
Track, more people on the track.
Speaker 1 (25:00):
What's unique about this sport is there's literally only so
much space on the track to add another car, another
person to crash into. If you can add another team
to the NHL that doesn't mean there's ten more people
on the ice.
Speaker 2 (25:12):
That's actually I again, yeah, that's what I'm.
Speaker 1 (25:14):
Here for, these fucking and brilliant statements, but that I
would not want if I'm driving, I don't want more
people on the street that I'm working on. Yeah, exactly.
Speaker 2 (25:23):
So that's the tension that we're in right now, is
it's good for the sport to be seen adding more teams.
It's good for it to showcase that, hey, this sport
doesn't cost that much money, it's not that complicated. You
can actually join the party quote unquote. But at the
same time you've got attention from the teams, and so
there's things that have been shifting constantly. Of wall, how
much does it cost to be a part of these teams,
(25:44):
And they're now asking essentially the teams to prove that
they have one billion in their bank account to ensure
that they can keep paying to be a Formula one team.
Speaker 1 (25:53):
Jeez, you gonna have a billion? Yeah, here comes to
the South East.
Speaker 2 (26:00):
So, Michael, this is Tony of the Future interjecting in
here because oh, because we just got an update that
the Indretti bid was in fact dumtum dum.
Speaker 9 (26:13):
They are not deemed fit to join the grid in
commercial terms by the sports commercial rights holder rejected. We
do not believe that the applicant would be a competitive participant.
Speaker 2 (26:26):
They will not be a part of the F one
grid until at least twenty twenty eight.
Speaker 1 (26:31):
Oh wow, that's a long way away.
Speaker 6 (26:33):
This does put the FIA absolutely the regulator is absolutely
head to head with Formula one Management and Liberty Media,
the financial rights holders. Because FIA said yes, one.
Speaker 2 (26:46):
Have said no, Okay, you can go back to the
present now.
Speaker 1 (26:50):
Tony of the future. So how do these teams make money?
Speaker 2 (26:56):
So, as we've discussed, it's the F one prize money,
it's also the sponsorship, and i'd say that sponsorship it's
give and take. It depends on different teams, but probably
accounts for about fifty percent of the money that they make.
And then if you're also a car manufacturer, you will
also make money from selling your engines to other teams.
But also maybe the applied science is what teams are
(27:18):
able to create and innovate behind closed doors they can
then sell.
Speaker 1 (27:25):
So they're coming up with ideas and solutions and selling
them to their competitors.
Speaker 2 (27:29):
Yes, so, for example, Ferrari is a works team that
sells their engine, also to Alpha Romeo. Mercedes is a
works team that develop an engine and a power unit
and sell it to Williams. And then you've got teams
also like Alpine whose engine is a Honel engine, but
they're not selling it to anyone else, so no one
wants to buy their engine, which we can go back
(27:50):
to Andretti Andretti's and talks of potentially buying their engine,
which they would love because it's another revenue stream for them.
Speaker 1 (27:56):
I see, interesting, makes sense their side hustle, it's selling them, it's.
Speaker 2 (28:00):
Side us, yes, Michael. So the other way to look
at it is if you look at the ten teams
we have on the grid, there's maybe different buckets. There's
the buckets of teams who are Calm manufacturers as well,
so McLaren Mercedes, Ferrari and you can kind of wrap
your head around why they would want to be informal one.
Obviously a Ferrari in the championship do very well. There's
(28:22):
a fair pretty straightforward line that says that they're probably
going to sell more Ferraris of their sports cards. That's
one bucket. There's the second bucket, which some would put
in the bucket of Oh, you've just got so much
money you don't know what to do with it, and
this seems like a great venture. You can think of
Aston Martin with Lawrence Stroll. We can also talk about
(28:43):
the fact that his son is one of the drivers
on that team. It's just like I've got some spare
cash in my back pocket. Let me have a former
one Telts and the Glamor Formal one looks good. And
then you've got a third bucket, which again goes a
little bit back to the history of Formula one. The
teams who've been there since they get go. You think
of the legas someone like Williams, someone like Ferrari who
you know, as I said, I think they've been there
(29:04):
since day one. Fun fact, both of those teams still
get a pot of money at the start of every
year to help them ensure that they never leave the sports.
Speaker 1 (29:15):
Interesting.
Speaker 2 (29:15):
It's like a little bit of a bonus bonus for
being there since day one. And I say a little
bit of bonus, it's something like, you know, ten to
twenty million that they get at the start of the.
Speaker 5 (29:23):
Right there is only really one brand that transcends Formula
one is and is in this sense, perhaps you could
argue as big as or bigger than Formula one, and
that therefore it's removal from Formula one would cause a
seismic problem, a very serious problem. I mean other teams
(29:45):
having departed from the sport, such as Lotus, great pity, Brabham,
great pity, br In, great pity, Maserati, great pity. But
Ferrari is Ferrari. Ferrari is special.
Speaker 1 (29:57):
I mean in tennis, you know, the top players get
appearance fees, whereas me and you wouldn't. I shouldn't speak
on your behalf. You might be an excellentennis but you
might deserve it an appearance fee. But you know, it's
kind of like, hey, Ferrari and Williams, you've been here
and there are huge names in the sports. So here's
a couple bucks, here's a couple It would piss me
off if I was a competitor, because of course that
(30:17):
money goes to helping you.
Speaker 2 (30:18):
But that's interesting you bring that up, Michael, because essentially
all the teams are doing exactly that. With Hundrettick, which
we've been here for the last thirty forty years. You
don't get to just come in and take part of
the prize money. So it's interesting because it's that same
mentality that's still there because again there's so much money
that's being poured into it. There's a fourth bucket, which.
Speaker 1 (30:34):
I think is you could a bucket.
Speaker 2 (30:35):
There's so many buckets, but it's the last one, I promise,
which is more of like a marketing marketing stunt, though
stunt doesn't feel big enough. But you think of someone
like Red Bull and you go, why does a fizzy
drinks company pour a lot of their marketing budget into
this Formula one.
Speaker 4 (30:50):
Team delivering their livery for the US Grand Prix this
year via helicopter? Who else is doing that? Who else
is thinking of like depositing their car into the middle
of Austin via helicopter just because it's cool? Red Bull
is because Red Bull's genius at marketing.
Speaker 2 (31:08):
I don't know if you've seen these, Michael, these vox
pops of people in the street showing the ten logos
of the ten F one teams. The one that everyone
always recognizes is Red Bull. They're just like, oh, I
know what that is. And it's so funny that it's
not one of the Formula one teams, but the red
Bull brand is so strong outside of the sport that
it actually has helped them a fair amount.
Speaker 4 (31:26):
Red Bull is going to sell you drinks because you're
going to look at that and be like, oh my god,
that's insane.
Speaker 1 (31:33):
So Red Bull is selling enough little energy drinks to
make a rocket ship with wheels on it that keeps winning.
Speaker 8 (31:41):
Just crunching the numbers here a little bit for you guys.
So the budget for running the team is one hundred
and fifty million, which maybe, yeah, maybe Tony can explain
has to do with the budget cap, the cost cap.
So you can buy about seventy five million Red Bull
cans with that, and last year they sold somewhere in
(32:01):
the area of eleven point five billion cans.
Speaker 1 (32:04):
I mean, isn't anything. This just says that as a civilization,
we're very tired. We're just drinking such crap. I swear
to god, if people just drank more water, we would
be such a better place. Yeah, happier skin would be better,
stronger tea.
Speaker 2 (32:23):
You've got a kind of red Ball in my bag.
I bought it so much that the team at red Bull.
Fun fact, now give me a crate. I love it,
which great, Just keep mine I don't drink coffee, so
I do drink red Bull and have since I was thirteen, bizarrely,
which was a fluke from my dad. He thought it
was fizzy water.
Speaker 1 (32:44):
Well, you're dad, let's not let's not get in him, let's.
Speaker 2 (32:47):
Not bring him into that. No, but the thing I
didn't want to say about the market.
Speaker 8 (32:52):
Right, Actually, maybe we could posia for a second. So
you've been drinking red Bull.
Speaker 2 (32:57):
He's worried about my health. Yes, yeah today.
Speaker 8 (33:02):
I mean we haven't gone there yet, but I'm starting
to understand why you're a MAX for Stappen fan.
Speaker 2 (33:06):
But I'm not a Max with Stappen fan.
Speaker 1 (33:08):
You were saying good things are more of a defender
of him, exactly. I think red Bull found a market
share that didn't exist, breaking ground. The next one is
liquid death. It's water, but it's marketed water, and that's
that might be the next one. For years, a bunch
(33:28):
of marketing fuck boys have tricked you into thinking that
water is just some girly.
Speaker 2 (33:32):
Tricks for yoga ooms.
Speaker 1 (33:35):
Just look at all the cute brand names and thank
you bottles.
Speaker 2 (33:39):
Well, can we get here?
Speaker 1 (33:44):
What's this cost capting you keep bringing up? Is that
like salary cap.
Speaker 2 (33:48):
No, but that has been a conversation. Should you cap
the driver's salary, which I am fervently against.
Speaker 4 (33:54):
Okay, the Formula one cost cap is an artificial limit
on how much every form Milue one team is allowed
to spend on certain things like the development of their
car and the salaries of some personnel. Previously, Mercedes was
spending over four hundred million dollars to win the World Championship,
while you had a team like Williams that was like
(34:15):
maybe ten million dollars. You know, they just didn't have
the funding to be able to match that. Limiting the
expenditure of the teams to about one hundred and fifty
million dollars every year in theory, should help level the
playing field because something like you know, Red Bull can't
go out and spend all of this extra money.
Speaker 7 (34:37):
However, you know, certainly not aware of any see the
accounts or submitted way back in March. So it's been
a long process with the FIA.
Speaker 4 (34:47):
You can. We saw that with Red Bull they were
accused of exceeding the cost cap.
Speaker 7 (34:53):
That's complete rubbish. I mean we heard from the FIA
ten days ago asking some questions for clarifications as you
would do in a standard All.
Speaker 4 (35:00):
They claimed it was through catering.
Speaker 1 (35:02):
So it's just some really fancy sandwiches.
Speaker 4 (35:04):
Yeah, just really really expensive little finger sandwiches.
Speaker 2 (35:07):
That's it.
Speaker 1 (35:08):
Who's checking all this.
Speaker 4 (35:09):
The FIA is looking into all of those finances to
make sure that everything is kosher. But you don't go like,
you don't get in a Formula one team if you
don't find loopholes in everything that you do. And so
you know, we had teams like Red Bull that perhaps
spent a little bit more money than they were supposed to,
(35:30):
got away with it with nothing more than a slap
on the wrists and having to pay a certain large
fine for the pleasure. Because spending money is obviously the
answer to spending money.
Speaker 1 (35:42):
Think about rich people with taxes. Think about I mean
is they're experts at cheating.
Speaker 4 (35:47):
If you want to be in Formula one, you probably
want to cheat a little bit. Fudge the rules, find
the loopholes.
Speaker 1 (35:53):
One thing is certain, Unlimited budgets does not guarantee victory.
We look at the New York Yankees like, yeah, they
buy everybody.
Speaker 3 (36:01):
But.
Speaker 1 (36:03):
Huge budgets definitely put you in a better chance for success.
So I like this cost cap a lot. Just think, Tony,
what about my original question, which was sponsorships in particular,
how can I get my face on the has or
Alpine car?
Speaker 2 (36:17):
Don't you worry. I haven't forgotten. We are going to
get into this very important topic. But just after a
short break we better.
Speaker 1 (36:28):
So what about sponsorships? You know, how much is it
going to set me back to put my face on
the Alpine car or the Hoss car or the Mercedes car.
Speaker 4 (36:36):
Well, if you wanted to put your name in your
face on a Formula One car, I would recommend starting
the bottom of the grid and working your way up
because your numbers will get larger as you move up
to the more expensive and better performing teams. So if
you were to bring yourself to Williams and say I
would love my name and face on the car, what
(36:57):
can we work out? You were probably looking at somewhere
fifteen million a year and up fifteen million is of
probably a small little bit of you know, a little sticker.
You're not going to be a title sponsor, you are
not going to be a title partner. You're probably not
even gonna make your face on their overalls. But you're
(37:19):
on the car in a little spot looks cool if
you are looking for like a Mercedes or something, those
deals start getting into the hundreds of millions of dollars
just because they are so high profile. They know that
they're going to be out there competing at the front
of the field, so you better be able to.
Speaker 2 (37:36):
Pay up for that. So there's two things here. There's
name title sponsors, so it's in the name. So for example,
it's Aston Martin, Ramco, Cognisant Formula one. That's the that's
a mouthful, that's the full length of their actual name.
So as a title sponsor, they have Cognisant and a Ramco.
Speaker 1 (37:53):
That's why they're not winning. All those letters are weighing
them down.
Speaker 2 (37:56):
It's funny you bring that up because, and I'm just
going to weave this in here, one of the tensions
between the marketing team and the development team in and
Formula one car is the marketing team has promised and
sold all of this sponsorship, which we'll get back to
in a second, and they now have to slap all
of these logos on the car, and the mechanics are saying, WHOA,
WHOA hold them minute. That's weighing us down. So can
(38:17):
we scrapp all of this paint off. So again it's
another one of.
Speaker 1 (38:20):
Those use a fourteen fon just like we gotta use
a six five.
Speaker 2 (38:25):
Every little ounce of page matters. So that's the first
thing to know about title sponsors. So the title sponsors
pay an absolute fortune. That's how the team. And you
look at some teams like there's a team like McClaren
that I think have over forty partners and sponsors.
Speaker 1 (38:38):
Who is sponsoring? Who are these companies? Anybody? What about
the bodega down there, which I do not recommend.
Speaker 2 (38:45):
Okay, good to know almost anyone can sponsor a Formula
one team or a Formula one carney. Money that's the
big thing. And we've had wild stories of quite literally
Nigerian princes coming in slapping their name on the We've
had you heard the story of Rich Energy last year.
(39:06):
We've had people with products that don't exist in the
sports that have promised money. Whether the money is there
or not, there is a whole thing. There's a couple
I think of categories that are banned. Big tobacco is
one of them. So if one was obviously high highly
highly sponsored by Big Tobacco back in the day, then
it went into alcohol, then it went into big tech,
(39:27):
and now it's gone into a little bit of crypto.
I think lasting nine out of the ten teams had
a crypto sponsor. Have you ever heard, Michael of the
barcode livery saga? Tobacco advertising was banned in almost all
sports from a European directive in two thousand and six
Ferrari at the time. You remember the big Marlblo logo
(39:48):
that they had on the side of their car. They
thought it would be genius to redesign the livery with
just basically like a barcode that looked on the side,
But when that car is driving paw you at high speed,
you get the Marlbo chevron and it's basically the Marlbo genius.
I will give credit where credit is due, and it's
only when the promoters realize the car going by really
(40:09):
fast and they were like old on a second, and
they're not the only ones. But just to say big
tobacco is still in some way, shape or form involved
in Formula one. I think obviously things like arms and
weapons like that's another market that they just wouldn't take.
But other than that, I think the teams on the
sport will take money from just about but.
Speaker 1 (40:30):
It's never it's never like super healthy stuff, you know,
it's never like carrots. You know, it's always something nefarious.
But I guess that says more about our culture and
what we spend money on. I mean, wouldn't it be
cool though, if alfa Romeo had like a bunch of
carrots on its side.
Speaker 4 (40:48):
So let's get started for this absolutely delicious salad.
Speaker 1 (40:52):
I wouldn't put it past them, you know, or has
We're missing a whole avocado thing. Yeah, the best two
vegetables avocado and hero right, the haas avocado.
Speaker 2 (41:03):
So what I'm hearing from you, Michael, is you just
want to sally Now. I always recommend has avocados, but
you can go ahead.
Speaker 1 (41:10):
I'm thinking maybe my face now that we're talking this out,
chewing a carrot on an Alpha Romeo on the nose.
That could be tricky because the carrot. But anyways, I'll
check with my branding committee, my social media team, and
we'll get back to you on that. I like him, great,
I'm fucking starving.
Speaker 2 (41:30):
That was a lot.
Speaker 1 (41:30):
There's a lot. There's a lot in this episode on
how to make money.
Speaker 2 (41:34):
So worth saying that we just this was the tip
of the iceberg, and there's probably a lot of things
that we've missed, and there's probably a lot more detail
that we can go into. But I'm curious after listening
to all of this and getting most, hopefully most of
your questions answered, do you think the business side of
Formula one is exciting? Do you think you could get
into it more?
Speaker 4 (41:51):
Yeah?
Speaker 1 (41:52):
I do. I mean what I love about the competitive
arena is that people are driven to six seed and
our creative, aggressive, persistent, and that definitely is being showcased
here from even just the way they manipulate the logo
(42:12):
or change it because they need the money to selling
power units to competitors. That's fascinating to me. So they're
willing to do whatever is needed to make money and
that definitely goes in line with my American capitalism upbringing.
And it doesn't surprise me that this is how Formula
one operates because it just feels like such a competitive,
(42:35):
high stakes arena where everything is on the table for
potential profit. I find it interesting. Yes, I could potentially
be a business fan of Formula one.
Speaker 2 (42:44):
I like that.
Speaker 8 (42:56):
This has been choosing sides, fection of Sports Illustrated Studios,
iHeart podcast and one oh one Studio Podcasts. The show
is hosted by Michael Costa and Tony Cowan Brown. This
episode was edited, scored, and sound designed by Senior producer
(43:16):
Jojai may Thadle. Scott Stone is the executive producer and
head of Audio, and Daniel Wexman is Director of Podcast
Development and production Manager at one O one Studios. At
iHeart Podcasts, Sean Titne is our executive producer and a
special thank you to Michelle Newman, David Glasser, and David
(43:38):
Hootkin from one O one Studios. For more shows from
iHeart Podcasts, go visit the iHeartRadio app, Apple Podcasts or
wherever you get your podcasts, and whatever you do, don't
forget to rate us and tell your friends. It really
does be a lot.
Speaker 2 (44:02):
So you might think that Formula one is a race
and it's all about the speed and the money, but
the reality is Formula one is a lot like a
game of chess. So next week we're going in a
completely different direction and we're going to talk all things
game theory and strategy and explain why before the race,
each team comes up with a plan a b C D.
Speaker 4 (44:21):
E.
Speaker 2 (44:22):
In case you are wondering, Michael, Plan E apparently stood
for engine failure. A few laps after the team radio,
Carlo signs engine burst into flames.
Speaker 9 (44:33):
No no, no no.
Speaker 2 (44:37):
So now we know what plan E stands for. Let's
talk about what all the other plans mean for next week, Darling.
Speaker 1 (44:42):
We'll see
Host
Michael Kosta
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