Will EU cause mfg pull out?

[Hondo]

Apparently the French and other countries are looking to the EU for economic assistance for auto makers. Will the EU make a withdrawl from F1 and racing in general a condition of assistance?

[PolePosition_1]

Apparently the French and other countries are looking to the EU for economic assistance for auto makers. Will the EU make a withdrawl from F1 and racing in general a condition of assistance?

Where does that thinking stem from?

[BDunnell]

Where does that thinking stem from?

I should imagine the idea that if these companies are so short of cash, how can they afford to be in F1? It's actually a very reasonable question.

[ioan]

I should imagine the idea that if these companies are so short of cash, how can they afford to be in F1? It's actually a very reasonable question.

Yep, you are right!

Renault, BMW better prove that their F1 activities are fully paid for by their sponsors.

Mercedes might say that McLaren is supporting the costs and Ferrari are not in a situation to ask for tax payer's money.

[Hondo]

Sorry, I forgot the link.

http://www.breitbart.com/article.php?id=D95NIIP80&show_article=1&catnum=0

[Hondo]

Even if they prove that their sponsors cover the cost, the spectacle of wealth while asking for a hand out isn't going to play well with the public.

[BDunnell]

Even if they prove that their sponsors cover the cost, the spectacle of wealth while asking for a hand out isn't going to play well with the public.

Exactly. Some people may decry the notion of corporate social responsibility as being meaningless, but suddenly it seems increasingly relevant.

[Knock-on]

Apparently the French and other countries are looking to the EU for economic assistance for auto makers. Will the EU make a withdrawl from F1 and racing in general a condition of assistance?

I don't think so.

F1 is going through a metamorphosis at the moment and both costs and the structure will be redressed.

I would think that the marketing benefit would be easily justified.

[BDunnell]

I would think that the marketing benefit would be easily justified.

Hmmm. I bet that none of the manufacturers involved could actually justify it in terms of being able to present an actual return on their investment. It is impossible to quantify.

[Hondo]

I understand what you're saying but you've got Germany in F1 and France in F1. Thats 2 countries out of 27. Will 25 countries with non-automotive needs of a similar nature agree to contribute to the needs of 2, whose companies are participating in an expensive racing series?

[Knock-on]

I understand what you're saying but you've got Germany in F1 and France in F1. Thats 2 countries out of 27. Will 25 countries with non-automotive needs of a similar nature agree to contribute to the needs of 2, whose companies are participating in an expensive racing series?

Well, we have strong UK representation in F1 and I would argue Italy have a little team in the sport as well.

F1 generates considerable revenues and jobs in the EU as well.

[BDunnell]

F1 generates considerable revenues and jobs in the EU as well.

But those revenues can never be calculated with much accuracy, and the numbers of jobs are, let's be honest, tiny.

[Hondo]

Well, we have strong UK representation in F1 and I would argue Italy have a little team in the sport as well.

F1 generates considerable revenues and jobs in the EU as well.

You both have strong representations, but not auto manufacturers involved with racing, except Ferrari and they probably still have their market.

[PolePosition_1]

I should imagine the idea that if these companies are so short of cash, how can they afford to be in F1? It's actually a very reasonable question.

Well, its a well known fact that teams see F1 as purely a marketing tool. They're not doing it for the love of the sport.

Surely its just common sense and sensible economics that if the cost of F1 outweighs the profits from being in F1, they'll pull out of their own accord.

Only reason I can see them pulling out is because its well known as marketing is one of the first departments to suffer when cut backs are needed.

If EU does decide to give manufacturers cash, unless it involves nationalisation - and the EU doesn't approve of F1, I can't see if affecting the manufacturers involvement in F1.

But if we look at the UK for example, F1 is a huge economic advantage, with the cluster of F1 teams, and the cluster of businesses which depend on those F1 teams for business.

Rest of the countries may well be against F1, but even then, the likelyhood is that they'd only enforce such a condition if the deal involved some kind of nationalisation.

[ioan]

Hmmm. I bet that none of the manufacturers involved could actually justify it in terms of being able to present an actual return on their investment. It is impossible to quantify.

That's pretty much how I see it. Not to mention that their sales have fallen so dramatically even with F1's alleged world wide exposure.

[BDunnell]

That's pretty much how I see it. Not to mention that their sales have fallen so dramatically even with F1's alleged world wide exposure.

Yes, it's clearly a great publicity tool!

[PolePosition_1]

Yes, it's clearly a great publicity tool!

lol - I don't think anyone is suggesting that F1 is exempt from the global economic downturn.

I sense sarcasm in your post. Are you saying that F1 is not used as a marketing tool?

[BDunnell]

lol - I don't think anyone is suggesting that F1 is exempt from the global economic downturn.

I sense sarcasm in your post. Are you saying that F1 is not used as a marketing tool?

I'm just agreeing with ioan that F1 has clearly done car manufacturers little good of late. You were right to sense the sarcasm.

[Hondo]

I have always disagreed with the need for manufacturers as team owners in F1 for this very reason. Honda got out based upon image more than anything else. I see no problem with manufacturers building engines or other pieces, but team ownership needs to be within the realm of the normally wealthy and foolish individual or partnership.

[Jag_Warrior]

That's pretty much how I see it. Not to mention that their sales have fallen so dramatically even with F1's alleged world wide exposure.

The sales of all automotive OEM's have fallen globally. Being in or not being in F1 would have no affect on that macro event. But there may be a question of how much sales of involved OEM's have fallen versus the sales of noninvolved OEM's? I don't know the answer to that.

[BDunnell]

The sales of all automotive OEM's have fallen globally. Being in or not being in F1 would have no affect on that macro event. But there may be a question of how much sales of involved OEM's have fallen versus the sales of noninvolved OEM's? I don't know the answer to that.

Again, I suspect it could not be measured, because the link between motorsport participation and sales/profits is mostly so tenuous. But I think ioan's point stands - that, put most bluntly, F1 is hardly worthy of a place at the top of most manufacturers' marketing strategies on a pure 'bottom line' basis.

[ioan]

The sales of all automotive OEM's have fallen globally. Being in or not being in F1 would have no affect on that macro event. But there may be a question of how much sales of involved OEM's have fallen versus the sales of noninvolved OEM's? I don't know the answer to that.

As far as I know VW were still profitable lately, something I can't say about the rest of them, and they (VW) are not in F1 and and do not take profit of "F1's world wide exposure". ;)

[Jag_Warrior]

Again, I suspect it could not be measured, because the link between motorsport participation and sales/profits is mostly so tenuous. But I think ioan's point stands - that, put most bluntly, F1 is hardly worthy of a place at the top of most manufacturers' marketing strategies on a pure 'bottom line' basis.

You (and Ioan) are correct, in that there is no way to precisely measure incremental or marginal sales increases (or decreases) based on motorsports participation, or sponsorships in general. What is typically measured (in the U.S.) is "sponsor exposure value" or "comparable exposure value." Based on the number of in focus views or verbal mentions during a broadcast, a dollar figure is calculated based on what comparable, nondiscounted airtime would cost the company for the amount of time its product was in focus or mentioned. Additionally, participation is about image & branding, B2B and whatever engineering benefits might be found, all of which are somewhat subjective.

Is F1 worth what the various manufacturers put in? I don't know. According to Sportspro magazine, in 2007, Honda spent approximately $270 million in F1, Mercedes spent $240 million and Toyota spent $230 million. Nielsen is very good about comparing budgets to sponsor exposure value. I've never found good numbers for F1. I don't know if Mercedes' $240 million translates to $1 billion in sponsor exposure value or $500 million or whatever. But given Honda's poor performance, F1 didn't help Honda with its image, and it clearly wasn't worth it to that company to stay, no matter what the sponsor exposure value or engineering benefits might have been.

But one thing is for certain, whether it's in F1 or magazine and TV ads, automotive companies have to market themselves and their products in order to gain the exposure necessary to be successful. If something else offers a better bang for the buck, I suspect they'll go that route. I'm just not sure the decision should come down to some government wag sitting behind a desk. But once you're on the public teat, that changes things...

[BDunnell]

Excellent post above.

[PolePosition_1]

Excellent post above.

I agree, good post.

And to be fair, I'm not denying thats its not a quantitative figure.

But you've got to look at the manufacturers. They're big companies, with huge resources, and large marketing departments, you'd have to assume that they've done their research, and found that it is worthwhile to be in F1, and the profits do outweigh the costs.

Because these are businesses, they're there for making money, not for the love of F1.

And thats why we should just trust their judgements as to whether or not its profitable. For Honda, it obviously wasn't. But for BMW, you'd have to assume it was.

But you have to remember, it is purely a marketing tool, and in times of cut backs, marketing tends to be the first department to lose out.

Back to another point made by someone else, about manufacturers not being good for F1. I agree, unfortunately F1 is a business, but its also a sport many feel passionate about, and when business is good, its good for all, but when business is bad, its bad for the sport, as those involved have the decision makers who don't actually care long term for the sport. And we get cases of Super Aguri, Honda and so on.

[Knock-on]

As far as I know VW were still profitable lately, something I can't say about the rest of them, and they (VW) are not in F1 and and do not take profit of "F1's world wide exposure". ;)

VW are doing OK. Honda are not.

Does this mean that F1 is the cause of Honda's woes? I suggest not.

There is a Italian team that does OK and their whole company plan revolves around F1 ;)

[ioan]

VW are doing OK. Honda are not.

Does this mean that F1 is the cause of Honda's woes? I suggest not.

There is a Italian team that does OK and their whole company plan revolves around F1 ;)

It just means that F1 is not as good as a marketing tool as F1 teams would like (us) to believe it is.

PS: You were missing a bit the point I was making about F1 as an efficient marketing tool, and not about F1 as costs to the manufacturer. ;)

[ioan]

Excellent post above.

+1

[Knock-on]

It just means that F1 is not as good as a marketing tool as F1 teams would like (us) to believe it is.

PS: You were missing a bit the point I was making about F1 as an efficient marketing tool, and not about F1 as costs to the manufacturer. ;)

I don't know how efficient F1 is as a marketing tool but some pretty big manufacturers seem to think it's worth while while some others dont.

I think Honda's big problem was not having sponsorship which dramatically reduces the budget.

[PolePosition_1]

It just means that F1 is not as good as a marketing tool as F1 teams would like (us) to believe it is.

PS: You were missing a bit the point I was making about F1 as an efficient marketing tool, and not about F1 as costs to the manufacturer. ;)

Ok, so if F1 is not as good a marketing tool as they suggest it is, what do you think is their explanation for being in F1 in first place? For the love of the sport?

[Ranger]

Ok, so if F1 is not as good a marketing tool as they suggest it is, what do you think is their explanation for being in F1 in first place? For the love of the sport?
For at least three teams, yes.

[PolePosition_1]

For at least three teams, yes.

I'm refering to the manufacturer teams.

[Ranger]

I'm refering to the manufacturer teams.
Ferrari isn't going anywhere (unless Max and Bernie force them out with seemingly poor regulations)

Well... is McLaren a manufacturer team by virtue of Mercedes? Because I think Mercedes is involved for their 'love of motorsport', or at least this is heavily influential. They've only really quit international motorsports at the top after huge PR disasters in 1955 (Sportscars and F1) and 1999 (Le Mans).

BMW..eh. Driven to succeed but IMO would probably leave at the top a la Renault in 1997.

Renault - same. Carlos Ghosn doesn't really inspire confidence for people thinking they'll be around for the next 5 years.

Toyota. I'm surprised they haven't gone already.

and Honda have gone.

So Ferrari and Mercedes, I think, would stay past the hard times even if it was not financially sensible to do so. The rest would probably cut their losses.

[ioan]

Ok, so if F1 is not as good a marketing tool as they suggest it is, what do you think is their explanation for being in F1 in first place? For the love of the sport?

IMO they jumped on the bandwagon in order to play with the big guys.

Lets be honest, how the heck do they expect F1 to help their image when they are there just to finish in the midfield behind 2 Ferraris, McLarens and BMWs?!

Renault even managed to win the constructors and drivers championship still their sales fall like a stone last year.

VW are ATM only directly involved in the Rally Raid competition, no F1 not ALMS no LMS still they had good sale results.

F1 is just a fancy way to advertise yourself with huge costs that hardly pay off especially when people don't have money to buy new cars and banks don't lend money anymore.

[BDunnell]

IMO they jumped on the bandwagon in order to play with the big guys.

Lets be honest, how the heck do they expect F1 to help their image when they are there just to finish in the midfield behind 2 Ferraris, McLarens and BMWs?!

One sees this pattern with manufacturers over time. They simply can't afford to be there if they are always finishing behind their big manufacturer rivals. British Touring Car racing in the 1990s is a classic example; Honda in F1 another.

[Knock-on]

I think Honda have much bigger problems than the cost of F1.

http://news.bbc.co.uk/1/hi/business/7833280.stm

[Hondo]

Ok, so if F1 is not as good a marketing tool as they suggest it is, what do you think is their explanation for being in F1 in first place? For the love of the sport?

Depends on how the current CEO feels about racing. For the ones that love it, yes. Those that don't will be out of it at their first opportunity. Thats one reason they come and go.

There was a time (GT-40) Ford's only reason for living was to beat Ferrari at Le Mans.

[christophulus]

IMO they jumped on the bandwagon in order to play with the big guys.

Lets be honest, how the heck do they expect F1 to help their image when they are there just to finish in the midfield behind 2 Ferraris, McLarens and BMWs?!

True, I think it was partly due to them wanting to keep face in Japan, especially with Toyota coming along. And in fairness, they have won a race (lucky or not), which is something that has so far eluded Toyota.


VW are ATM only directly involved in the Rally Raid competition, no F1 not ALMS no LMS still they had good sale results.

VW are considering a WRC entry (http://www.autosport.com/news/report.php/id/72803) so must be in reasonable shape financially