F1 Business Diary 2015: the Malaysian Grand Prix

30 March 2015 | Posted in Notes & Insights | By David Cushnan | Contact the author

F1 Business Diary 2015: the Malaysian Grand Prix

Ferrari’s first victory for nearly two years on Sunday was swiftly followed by news that the Malaysian Grand Prix will stay on the Formula One calendar until at least 2018.

Even as Sebastian Vettel was wiping his eyes from a combination of sweat and tears on the podium, and a similarly emotional Ferrari team principal Maurizio Arrivabene was bellowing the Italian national anthem below him, a note from the prime minister’s office confirmed that Malaysia will host a Grand Prix until 2018. If the timing of the announcement meant it got a little overshadowed by the immediate aftermath of a frenetic Grand Prix, it was still significant.

The Malaysian government, which funded the construction of the Sepang International Circuit and fund the Grand Prix each year, is known to have carefully examined the pros and cons of extending its deal and whether the cost of Formula One can be justified. While the race, by a distance Malaysia’s largest annual sporting event, serves its purpose as a national brand-builder, Formula One in the country clearly remains a hard sell. Just 44,611 passed through the gates of the 80,000-capacity venue for Sunday’s race.

The current contract expired after yesterday’s Grand Prix, but agreement has been reached on a three-year extension – a shorter duration than most Formula One race contracts. Oil giant Petronas, which has backed the event since its inception in 1999, has renewed as title sponsor for the same period. And while consideration has been given to turning the event into an evening race, it is believed the cost of installing floodlights on such a vast circuit continues to be financially prohibitive.

The right result

Ferrari’s victory in a straight head-to-head fight with Mercedes was a good news story for Formula One and, unusually, greeted with something near relish by Lewis Hamilton, Nico Rosberg and the German manufacturer’s management. “It wasn’t a perfect day for Mercedes but it was a good one for Formula One,” was how Toto Wolff, Mercedes’ head of motorsport, summed things up on Sunday evening. Mercedes are in Formula One to win, of course, but from a pure marketing perspective their eye also has to be on the sport’s global appeal – for a company like Mercedes, for which Formula One is essentially a major marketing project, winning loses at least some of its value if the sport itself is being watched by fewer people and not holding the interest of more casual fans.

After a year of domination, enlivened by a great battle between teammates, Mercedes are as aware as anyone of the need to keep the sport’s central narrative fresh. The runaway one-two in Australia two weeks ago was undeniably impressive, but it also meant the silver cars were barely seen on the global TV broadcast, the cameras pointing elsewhere in search of some entertainment. A genuine challenge, especially from Ferrari, works well for Mercedes, assuming, of course, it is they who take the spoils at season’s end. Technical superiority is one thing, but nothing will enhance Mercedes’ brand more than beating Ferrari in a closely-fought battle.

Renault’s return?

A series of hasty public comments and ill-chosen words emanating from Red Bull and Renault in the aftermath of a disastrous Australian Grand Prix was only ever going to lead to one thing: press conference organisers seating senior figures from each company right next to each other in Friday’s pre-race press conference in Malaysia. Red Bull Racing team principal Christian Horner and Renault chief Cyril Abiteboul, frustrated figures both, kept their composure, but in the end it was Franz Tost, team principal of Red Bull’s junior team Toro Rosso, who made the most eye-catching comment.

Asked about rumours Renault is considering buying a team and setting up its own factory operation once again, Tost, usually a man who toes the Red Bull line at all times, made clear he would like that team to be Toro Rosso. “This would be a fantastic opportunity,” he said, “for Toro Rosso to make the next step forward, because the team wants to be established in the future within the first five in the constructors’ championship and to be part of a manufacturer, to work together with a manufacturer, to be owned by a manufacturer would be exactly this step forward which the team needs to be established in the first five.”

Tyres on track

It’s business as usual, for the moment at least, as far as Formula One is concerned for Pirelli, the sport’s tyre supplier, after China National Chemical acquired the Italian company last week for around US$5.1 billion. “The biggest change will actually be in our industrial truck business where we will be combining both activities to make the most of the synergies in those businesses,” confirmed Paul Hembery, Pirelli’s motorsport director. “They’ve bought into the management team that we have at Pirelli and an integral part of our vision and our work is also Formula One, so from that point of view, no change.”

However, Hembery added that Pirelli, which has a contract in place to be the sport’s tyre supplier until the end of next season and is separately title-sponsoring two Grands Prix this year, will be keen to have as much information as possible about Formula One’s future direction as it ponders whether to take part in the next tender, likely to be held towards the end of this year or early next.

“Assuming we get some of that visibility and it looks good and we do hear some good suggestions coming through, if the sport allows the change to happen and that tends to be the biggest issue – people tend to agree to disagree rather than get a commonality of view and that tends to hinder the introduction of a lot of very sensible and a lot of very good ideas. So if that can change and we can actually get the visibility going forward, then we’re very happy with the sport.”

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