Explain to me the F1 business model

Really? I thought it was about:

prohibiting agreements or practices that restrict free trading and competition between business. This includes in particular the repression of free trade caused by cartels.
banning abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others.

So in F-1 business there is no competiton its all owned by F-1 Limited, and its family of companies inclusive of Allsport SA. There is only one way and that is Bernies way. no other TV pkg - he will refuse to play, no way of earning any other income for a promoter - or he will refuse to play...

So I was being somewhat ironic, but really F-1 is a monopoly.

 

It's ok to be a monopoly. It's not ok to be a monopoly via unfair business practices. Bernie is not twisting anyone's arm nor is he preventing other race series from running.

Controlling the contracts with your vendors is not related to anti-trust unless you are giving them sweetheart deals, and this is important, in order to shut out your competition. Bernie is absolutely not giving anyone sweetheart deals or locking them in unfairly.

 

I respectfully disagree. So it's ok to be a monopoly if you dont prevent any other race series from running, like back in the 80's and early 90's when he shut out WSC - Group C sports cars? he would not bring the F-1 circus to your track if you did a Group -C deal, he squeezed all the TV rights and basically drove the series out of existence. (Only to be rescued by Le Mans and the AOC ).


Bernie controlls everything with F-1 and leave nobody else other than himself and the teams a way to make any money. The promoters - usually local govt. sponsors, make no money, the individual concession vendors are only alowed to make what bernie think's is right, he takes what ever he wants. you typically have to sign a long term deal, so that locks out any local competition.

You cant even publish a photo of a F-1 car with out copyright infringemnt - even if you are the person who took the photo... As for contracts with his vendors, he absolutely is getting / giving sweetheart deals,( TV money - travel money) that is the only way he does busienss. In my opinion he is on the edge of legality, and I would suspect out side the EU he is way over the edge.

 

That's a good point, and in addition to the wealth his sport provides, think of all the headaches--logistics, contracts, BS, you name it--team principals don't have to worry about. As long as the Bernie-Balance remains 51/49 in their favor, you won't hear griping about what he does. As soon as he impedes their ability to make money, they'll give him the old witch's trial.

 

First let me clarify, when I say it's ok to be a monopoly, I mean legally. Whether it's ok morally/ethically we are not going to be able to answer here.

That is probably illegal, certainly it is at least questionable. I don't think that practice continues today?

So what? That's not a monopolistic practice. That's just good business on Bernie's part. He knows he has a highly desirable product. The race calendar has probably more races than many teams even want. There are teams not just competing but struggling to get in as the last backmarker (note: non-paying) team.

That's not true. If you took the picture you can publish it. Just like a concert performance, taking a picture of race action falls into a murky area but that's a legal problem in general. Nothing to do with trusts anyway.

And there's a difference between being challenged (DMCA, or whatever) on copyright infringment and actually infringing copyright.

It's only illegal if it shuts out his competition -- not competition amongst vendors, competition amongst race series. But I don't understand these deals you're talking about.

The fact that the FOTA breakaway threat last year was even feasible (from a race series perspective, not from "something that would work to the teams' favor" perspective) should be ample evidence that F1 is not an illegal monopoly.

 

Sports leagues are generally considered exempt from anti-trust laws in the U.S.
As I remember the issue was decided as part of the Curt Flood/Free Agent litigation in Major League Baseball.

 

Cha ching.
This is where the real cash is in F1 and what really is amazing, at least to me, is that CVC really contributes little to nothing to the sport.
They essentially are the parasites that bleed off the profits yet do nothing other than being a controlling middle man.

 

Some interesting stuff :

With his second giant-beating performance in a row, Kamui Kobayashi was the best value-for-money driver at Silverstone, costing his Sauber team just US$3,300 per point he scored in the race.

The figure is calculated by the Formula Money ROI Review, based on Kobayashi's estimated salary of US$500,000 for the whole season and the eight points he scored from his sixth place finish ahead of big names such as Sebastian Vettel, Michael Schumacher and Fernando Alonso. In the value rankings he edged out Force India's Adrian Sutil, who cost his team US$6,600 per point he scored.

Kobayashi's Sauber team also performed well. The team spent an estimated US$470,000 overall for each point it scored at the British Grand Prix, making it the third best-value team of the race. However, it couldn't match the performance of closely-matched Red Bull Racing and McLaren, who respectively spent an estimated $350,000 and $370,000 per point they scored. Regardless, it was a very good result for a team which for the early part of the season had gone home empty-handed.

The data in this report is from the Formula Money ROI Review, a PDF report produced after each Grand Prix detailing the business implications of the race. Data in the ROI Review includes team and driver value for money calculations, sponsorship exposure values and print media coverage totals.

Driver value for money: 2010 British Grand Prix

Driver Estimated cost per point
1 GBR Kamui Kobayashi $3,300
2 GBR Adrian Sutil $6,600
3 AUT Nico Rosberg $10,500
4 GBR Mark Webber $12,600
5 BEL Rubens Barrichello $15,800
6 RUS Nico Hukenberg $26,300
7 RUS Jenson Button $43,900
8 RUS Lewis Hamilton $58,500
9 RUS Sebastian Vettel $70,200
10 RUS Michael Schumacher $263,200

Team value for money: 2010 British Grand Prix

Team Estimated resources per point
1 GBR Red Bull $350,000
2 GBR McLaren $370,000
3 GBR Sauber $470,000
4 GBR Williams $620,000
5 GBR Mercedes $870,000
6 GBR Force India $1.57m

 

interesting. of course it assumes points have some value, which is only true if the team finishes high enough to participate in the FOM payout.

 

Thanks Tom for that concise explanation. It is still a rather ethereal concept to me, when
trying to put it into "real terms" of "cash in cash out".... but that's the best explanation I've
seen yet.


Jedi

 

Interesting indeed - Is it possible to post the entire PDF? I'd like to have a read of that.

I also believe that everyone gets at least some start money, and then more $ based on positions at 25/50/75% of race distance in addition to $ for points at the end of the race. Then there's more $ based on the teams position in the WCC at a couple of stages during the season (half way and the end?) - Apparently, this is all detailed in the Concorde Agreement, and the (old) version that I saw once had all those details redacted....

My understanding (could be wrong!) is that even the noob's get some $ - That, plus whatever the jockeys bring is all that's keeping HRT going right now it seems....

Cheers,
Ian

 

I've asked this before in other threads and never received an answer:

Does the winner of the WDC title receive a cash prize from F1? Or is his only bonus for winning the title have to be written into his teams contract?

I've never heard of a pay out like in other series.

 

Good question.

 

I believe that the pie is divided up to the teams exclusively - As I've said, based on start money, race positions at various distances and then points scored and WCC standings during the season - By the team - The FIA (EDIT: More correctly, FOM) doesn't have any dealings with the jockeys. It's WCC points that = $. [Another reason you want two strong drivers of course.]

What the teams then do with said $ is between them and their drivers.

IIRC, the old Concorde had the teams getting ~40% of "Bernie income" (the pie) - The FOTA thing I believe got that to ~50-60% (?)

Cheers,
Ian