During a normal year Formula 1 Group posts revenues of around $1.9bn (£1.43bn), of which 80% can be attributed directly to F1, with the balance generated by support series and miscellaneous activities. Thus approximately $1.5bn is derived from F1’s three primary income streams: race promotion fees and TV income – each constituting around 40% – and the remainder from hospitality, trackside advertising, licensing and merchandising.
Based on these numbers race promotion accounts for an estimated $600m in fees, or around $26.5m per race assuming a 22-round calendar (as was planned for this year). However each additional race increases the overall package value to teams, advertisers and broadcasters given that extra races provide further platforms and locations upon and at which to strut their stuff, thereby generating further income for the sport and the teams.
Optimising the F1 calendar is therefore absolutely crucial to FOG’s profitability and, by extension, that of teams. Back when F1 had more applications than available dates it was a relatively easy process. Deals were extended as and when they expired or replaced if continuation talks failed. That was, though, when calendars listed around 16 races. The 2021 F1 calendar is due to feature 23 – an almost 50% increase.
It is no secret that F1 commercial rights holder Liberty Media plans on expanding to 24 rounds. The incoming Concorde Agreement permits that number without the need for “unanimous team consent”. Growing calendars even further without diluting the allure of the sport while ensuring world-class venues will prove no easy task.
Consider then the effect of Covid-19 on F1’s calendars. Within weeks of a positive case in Melbourne almost every race on the 2020 calendar was postponed or cancelled. All 2020 race contracts were renegotiated – either to host races on revised dates (save a handful which retained their original dates), or some other time, or not at all.
Complicating matters further is that every race that made the eventual 2020 cut had unique clauses – particularly those that had not originally featured. Some are said to have held their races on a revenue share basis, another at straight cost provided a year was added to the contract, while others demanded race hosting fees. Negotiating such clauses in hurry is a daunting task at the best of times, let alone under lockdown conditions.
Leading these activities is Chloe Targett-Adams, F1’s global director of race promotion, who joined F1 in 2009 from Harbottle & Lewis LLP, a law firm specialising in media and entertainment. During a varied career she has gained experience in international business development, major and live event delivery, rights acquisition and development, government relations and stakeholder management.
In short, she possesses the perfect CV for the task.
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One of F1’s most influential yet low-profile figures, Targett-Adams seldom grants interviews simply as the details of most of her activities are commercially sensitive. However, in view of the unique set of circumstances F1 currently finds itself in due to the pandemic she agreed to talk to RaceFans about the current season, and the shaping of future calendars.
There are no doubts Targett-Adams and her team of six rose magnificently to the challenges of cramming a 17-round calendar – including five races not on the original, two of which newcomers – into 23 weeks at extremely short notice. Significantly, shortly before the calendar was announced her ex-boss Bernie Ecclestone (and his mate, former FIA president Max Mosley) suggested the entire season should be scrapped!
“It’s phenomenal to think what the Formula 1 community have achieved over the last few months,” she states. “I mean, we’ve only been racing since July and, obviously, a lot of planning went into that.
“But so far we’ve done 14 races in 10 countries in this incredibly unique environment. Formula 1 was the first international sporting competition to restart safely. It was key for us, working with promoters, local governments, the FIA – obviously a key part – and all teams to ensure we could safely return.
“But we haven’t completed the 17 races yet. I think the celebrations will start at that point in Abu Dhabi, our final race.”
Her point is well made, particularly given that all 14 events scheduled to date have been staged despite the moving target that is Covid-19. When I suggest that logistics for 12 of the 17 races were comparatively ‘easy’ as these were hosted within Europe, whereas five rounds presented additional challenges by being flyway, Targett-Adams points out the quintet either had no support races or limited programmes, thus reducing logistics and personnel footprints.
Plus, she notes, while Europe’s borders were also largely sealed in some instances, F1 was able to cross them legally.
“A large part of it was working with governments and local police in each country. Plus, we managed to get elite sport exemptions [for UK-based teams]. We also have teams based in other countries – obviously, Italy, France, Switzerland – and having personnel as well in the supply chain working in different countries [was a challenge].
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“We reduced the personnel footprint down to around 3,000 people with F1, F2, F3 and Porsche sport races, but that’s still a huge amount of people and logistics to move across borders. I think longer distances are more difficult, but in Formula 1, all hands on deck and we get it done.”
Has the sport learned anything that can be gainfully applied for future calendars, I wonder?
“I think it’s enabled so many lessons to be learned,” she says, “and one [of these] is to just really re-evaluate what efficiencies can be gained, to question the way you do things. ‘Is that the right way? Can we do things differently?’
“Look at our remote [television] operations. That was a plan we had been wanting to be put into motion over the next two or three years; it was achieved in eight weeks. You know, F1 provides incredible entertainment content for fans, but it’s also the livelihood for many people and makes major contributions to the economies in which we operate.”
I suggest that the biggest head- and heartaches must have been advising venues that they hadn’t made the cut for whatever reason. How did Targett-Adams go about that?
“Our race promoters have been extremely supportive, and I would hope they think we’ve been very supportive partners to them, [that] we’ve all found a way where we could either race with them this year, whether with closed door racing or with more limited fan events and certain occasions, or where it just was not feasible to go ahead.
“It’s [been] very painful for some people as well in terms of how [the pandemic] has been managed, because [F1] is peoples’ livelihoods in business as well, and other people relying on [races] within the local supply chain [suffered]. So it definitely wasn’t easy.
“But I think it ultimately it brings everyone together and reminds of the value of Formula 1 and why we do what we do.”
As outlined previously, virtually every F1 contract is unique, and this protocol continued with contracts for the ‘Covid GPs’. How did Targett-Adams (re)negotiate these contracts?
“There was a different objective, a different model for each location. It means we had to be flexible and adaptive. In negotiation, you know, there’s a toolbox of items we can work with, and but it also requires creativity, to be able to flex. There isn’t a one-size-fits-all model.
“Because there’s ultimately costs of getting to different locations, there’s different objectives [for each]. So, we just worked out the most optimal model for each race promoter, and for government stakeholders.”
One of many races to drop off the calendar was Vietnam, which was due to hold its inaugural round in April. The Hanoi street race has not been confirmed for 2021. What is the status with what had been the first totally new event to be added to the calendar since Liberty acquired F1’s commercial rights almost four years ago?
Targett-Adams moves into diplomatic mode: “We will race at an alternative location if we have to, but obviously conversations with Vietnam remain ongoing. We have some options because we’ve gone through that process this year. We’ll kind of keep everyone updated, hopefully by the end of this year.”
As things now stand the only all-new race Liberty Media has added is Saudi Arabia – Paul Ricard and Zandvoort are returnees – which is an event that has attracted much criticism. The flipside is, of course, is that F1 is a world championship and as such thrives on diversity. If the race does result in the reformations that have been promised then its inclusion will have been amply justified.
Talking 2021, various races had come up for renewal this year – now moot – with an even greater number of contracts expiring next year. These include Bahrain, Belgium, Brazil, Japan, Monaco and Singapore. Will these be renewed and on what basis?
“Brazil is an incredibly important market for us, with millions of fans and the legendary Ayrton Senna [following]. An opportunity to renew in Sao Paolo presented itself, so it is on the calendar and subject to [an extended] multi-year contract. That’s where we’re going to be racing next year.” Clearly not a done deal yet, but close to signature.
Discussions with Monaco remain ongoing, Targett-Adams says, while indirectly confirms our understanding that the principality doe pay a fee. “We’re fortunate that all of our commercial arrangements do include a race fee, and that’s obviously a key part of our business model and includes Monaco.”
She will, though, not be drawn on the annual fee, which we believe to be on the low side at $15m (£11.29m), derived from taxes levied on yacht movements and apartment rentals during the weekend.
What criteria are applied when contracting a race – is it purely down to the fee, or do old-fashioned values such as tradition and the overall spectacle come into play?
“There are three key elements,” she says before explaining the ‘distilling process’. “First is racing, we’ve got to go somewhere where we’re going to have spectacular racing, that it’s going to work well in terms of being able to get that competition element that works – that the teams work for, for the TV product, for the digital product that is put out.
“Revenue is [also] key; it’s got to commercially work, not just for the race [television] feed side, but across the ecosystem and the various commercial opportunities that might arise from that location.
“Thirdly, and almost more importantly, is reach. We’ve made no secret of the fact that we want to grow our fan base. We’re incredibly fortunate to have half a billion fans globally, but we want to grow that, and we want to grow it globally.
“So, we’ve got to find locations, we have found [such] locations [in the past], but we continue to race in locations which are our most historic, elements of our 70-year history, like Silverstone, that attract fans that enable us to grow our fan base and get the widest possible reach.”
In order to achieve its objectives F1 is obviously eyeing races in further regions, including adding events in existing territories such as the USA, China and South America, while (South) Africa remains very much on the wish list – likely Kyalami. However, the continent is enormous and remains the only current continental exclusion from the calendar save Antarctica, so a grand prix at the historic venue is not a given.
As director of global race promotions Targett-Adams is obviously aware that fan experiences vary enormously across events. While cultural, societal and culinary differences are to be expected – and welcomed – the race experience itself can leave a lot to be desired, which is unacceptable with a premium product.
“That is something we’re very cognizant of and looking at it,” she acknowledges. It’s key for us that the fan experience is high value, is high quality and that there’s confidence to come to our events, particularly under Covid.
“What’s key in that is more uniformity of standards of event and venue facilities without losing the localization. It’s something that’s very much on our radar, we work with all parameters on it. And it’s something that is really important to us.”
This is also bound up in the question of whether F1 will move to hosting more two-day race weekends in the future – as experimented with at Imola this year. Targett-Adams believes fans will accept the idea of F1 being a ‘headline’ event within a wider weekend of other motorsport and entertainment.
Jeddah’s race will also be the latest addition to the calendar to take place at night. Can more such events be expected?
“It’s looking at what’s relevant to the local market,” Targett-Adams believes. “When working with our Saudi Arabian promoter and their stakeholders it was key that for Jeddah, that would be the most conducive to marketing the event for TV.
“Were we looking at say, an event in Turkey, that wouldn’t necessarily work in that environment. There’s no such set strategy from our side that we have to have more night races. It’s about looking at the race and the objectives in that particular location.
“I think it’s something that we constantly assess and evaluate. I think that the key factor for us is to really try to look at what’s possible. That is what Covid showed us: To see what delivers the optimal outcomes for Formula 1 and the sport as a whole.”
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