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