ÂŁ11 / â‚Ź13 / $15
InnovatIon edition 002
the living archive: bob bondurant Formula e comes to town how Rush Made it to the big Screen the Fastest Men in F1: netapp and the Data Wranglers IWc and Precision engineering Pirelli: the twelfth Man tata and Mercedes get connected F1 Sans Frontieres: the circuit Makers Is there life after F1?
originals. timElEss stYlE.
THE NEW HERITAGE COLLECTION
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Innovation edition 002
christopher Joseph email@example.com Twitter: @chicanef1 art dirEction and dEsign
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adam Parr, Mark gallagher, Simon Fitchett, Mark alexander, Jochen braunwarth, Mike gascoyne, Simon collingwood, charles Pic, nigel geach, liam clogger and Mark abbs.
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“thanks for beating them” bob bondurant at the 1964 le mans 24 hours is embraced by huschke van hanstein, porsche team manager.
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Rush Chicane talks to Rush Producer Andrew Eaton 6 about the future of F1 films
Current thinking on Formula E
The twelfth man Pirelli’s Motorsport Director Paul Hembery on gaining traction in Formula One
IWC and Mercedes A precision engineering partnership built on innovation and technical prowess The business diary Optimal Payments President and CEO, Joel Leonoff 60 seconds with… Jean Claude Biver, Hublot Chairman
Every millisecond counts The relationship between Tata and Mercedes AMG Petronas
A winning formula for Britain Simon Collingwood on UKTI’s mission to promote Britain through Formula One
The IT Men Graham Hackland, Head of IT at Lotus on the team’s partnership with NetApp
The circuit of Wales Is this the future of British motorsport?
Bigger, better, badder, faster JMI Founder and CEO Zak Brown on being acquired by Lord Coe’s CSM Sport & Entertainment
Who’s following Formula One? International breakdown of the sports consumption with Repucom Analyst, Nigel Geach
Fading footprints Edward Carlton, Managing Director of CNI UK Ltd
F1 ON FILM
My season by Charles Pic
Bob Bondurant: the American Chicane meets the American who dreamt of Formula One
Melbourne: F1’s economic impact
Melbourne: What it means to me
Malaysia: Truly Formula One?
Spain: Taking nothing for granted
Singapore: Business after dark
THROUGH THE LOOKING GLASS
F1’s new CEO Experience required
Safety first Geobrugg debris fencing
Life after F1 by Mike Gascoyne
The other half… Dato’ Kamarudin Meranun co-Chairman of the Caterham Group
Women in F1 by Adam Parr
Taxing times UK tax changes
Inside the driver’s mind by Simon Fitchett 68 Formula One in Russia by Mark Alexander 70 Screen one by Liam Clogger
The final word
11/6/13 10:26 AM
More slipstream than mainstream Formula One has always been far more than a sport and much more than a business. It is the spectacular way that these two elements collide on the global stage that provides fertile ground for exploration. In our first Special Edition, Chicane 001, we set out to create a bespoke platform that connected the disparate elements of the industry so that the sharing of knowledge could take place across functional divides. We felt there was a need to create an attractive vehicle for those in Formula One to communicate their objectives and involvement as well as to demonstrate their expertise both within the industry and further afield. The substantial network of businesses that make up the industry represents a meaningful collection of partnerships through which to deliver brand enhancement and to leverage strategic relationships. Formula Oneâ€™s provenance, cultural growth and influence as a business-orientated sport with international relevance needs to be debated, analysed and promoted. We hope that Chicane provides the opportunity for all involved to deliver finely tuned messages and to communicate strategically in a creative way. Innovation, Technology and Sustainability are the three key areas we identified through industry consultation upon which to base Chicane; concepts at the heart of the industry that represent the way forward as Formula One enters yet another exciting new era. Chicane 002, our second Special Edition, hopes to do all of the above and more as we continue to promote fresh ideas, revitalise established networks and generate innovative, energetic partnerships. With this in mind, we have gone through a complete redesign to make Chicane more streamlined and for the first time it will be a carbon neutral publication. We have developed more features, engaged more industry columnists and provided even more analysis to further explore all that Formula One has to offer. Chicane is still being finely tuned so, as ever, we welcome your input and interest as we move the project further to develop new opportunities and meet new challenges.
Christopher Joseph, Editor
11/5/13 4:20 PM
F1 on film
As Rush passes the $15 million mark at the UK Box Office and over $73 million worldwide, Producer Andrew Eaton discusses the challenges faced in getting the project onto the big screen and what the future could hold for Formula One films.
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Source: Exclusive Media US as of October 13, 2013 US Gross
Box Office Figures
“We didn’t try to make any philosophical points, we explored rivalry and life choices; whether you’re the party guy or the obsessive guy. At the end of it, I hope people just feel that it was great fun.”
International $47,500,000 Total $73,651,009 Production Budget:
International Breakdown by territory Australia
Iceland Italy Lebanon Mexico
$51,549 $8,694,638 $69,015 $2,235,270
Philippines Portugal Russia - CIS Serbia & Montenegro Singapore
$22,858 $399,798 $3,066,904 $25,661 $488,008
South Africa (Entire Region)
South Korea Spain
United Arab Emirates
United Kingdom Venezuela
Senna was a groundbreaking film in many ways, not just in terms of persuading Formula One that it was a good idea, but also in terms of persuading audiences who might not be familiar with Formula One that it was an interesting story about truly interesting, exceptional personalities. Senna opened the door to a myriad of possibilities and Rush walked through where many had tried and failed. Eaton explains: “Two years ago, we went to Silverstone and Ron (Howard) met with Bernie and I could tell at the time that he wasn’t very impressed. His attitude was a bit jaded, as in somebody’s been coming to me once a year for the last decade saying they’re making a Formula One film, and it never happens. Rightly so, I think he was quite cynical, but as we were walking through the paddock, everybody knew why we were there and they knew the film was a reality. I am sure that it has persuaded everyone that it is a good area for stories.” Eaton continues: “Rush will definitely affect the opportunities for Formula One films as nobody is going to say that the ‘Formula One film’ has been done. Ours is a period picture and there are lots of other stories before or since that are just as good. If anything, I think people might go back further to Fangio, Jim Clark or Stirling Moss; people talk about Mike Hawthorn as a great story. I do know of a script about a series of Ferrari drivers who all died, and their relationship with the team. The Ferrari story in itself is fertile ground for cinema.” There are great benefits to be had in Formula One exploring the possibilities in film and television to connect with and develop the fan base, but unlike other racing series such as NASCAR that have dedicated studio liaison departments, Formula One has been slow to go down this avenue. “Ron Howard and I were talking about this the other day and he doesn’t feel as if Formula One is active enough in promoting itself to the studios and needs to do more,” Eaton explains. “There is a great technology and glamour factor to the sport which is not really communicated in the US
and I think films can play a great role in promoting this and helping to reach new fans. Some would say that NASCAR fans are not interested in Formula One, but actually they are, and films can help in reaching them.” The success of Rush has proved many things to Formula One in terms of connecting with fans and developing audiences, and its success at the box office has proved a lot to the film industry. It has also proved a lot to Eaton on a personal level which he is keen to point out. “It feels like everything I’ve learnt about making films up to this point has come to a perfect storm with Rush,” he states. “I think it shows that pulling all of the elements together is what we do well in this country in terms of brilliant talent, brilliant crew, brilliant expertise and brilliant writing all coming together with an A-list American director. It shows that we can make films out of the UK effectively at this level of budget that are about our stories, our people and our culture. “The proof is that audiences have gone to see it and connected enough to believe in a story about our history, our recent history, which is something we tend not to tell stories about,” he adds. “Usually, the English guy is the baddie or the comic character, but here, we get to tell a story where the partyloving, crazy, sexy guy is the Englishman, and I think we should be making more stories like that.” Ultimately, Rush’s achievement is that it gives us an opportunity to appreciate the real-life drama of an exceptional period in Formula One’s history that is far removed from the modern day experience; an emotional connection to an extraordinary world. As Eaton concludes: “I was down at Goodwood doing an interview for Sky with Tom Hunt (James’ son) when Stirling Moss came in and introduced us to Emerson Fittipaldi. His face just lit up and he went and hugged Tom and said ‘I loved your father’. Unless you’re in that world and you’re a driver and you’ve been risking your life – in those days much more so than they do today – it must have been an amazing bonding experience to know that you shared the danger with another person.” 7
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Pirelli’s involvement in Formula One? It’s all about the traction, says Paul Hembery, Pirelli Motorsport Director.
Exactly one century ago, Georges Boillot, hurtling at an average speed of 72.141mph along a circuit of public roads in Amiens, Picardy, won the fifth French Grand Prix in his 5.6 litre Peugeot, fitted with Pirelli tyres. So began a long association between Pirelli and the then infant sport of motor racing. Company Director Piero Pirelli enthused back in 1913 that “our company’s first important victory abroad... offers hope for and a promise of new and greater achievements to come.” His inkling was spot on. Since then, the brand has enjoyed over 80 grands prix wins, including six World Drivers’ Championships and, after a 20-year absence, Pirelli has returned to the pinnacle of motorsports as official supplier of Formula One tyres. It’s an association that offers Pirelli continuity as well as evolution of its brand profile – linking its rich sporting heritage with modern high-performance racing. Pirelli has always sought to emotionalise its brand, to elevate it above the rather prosaic truth – that selling tyres is pretty dull, when you think about it. Paul Hembery, Motorsport Director at Pirelli, agrees: “We’re a tyre maker at the end of the day, and people don’t tend to want to talk about tyres. You don’t boast about a tyre purchase; it tends to be a distress purchase. It’s something you just have to do. So to go beyond the commodity of the tyre, you have to create a profile, a feeling for the brand that goes beyond the product. And that’s what we do via Formula One. Formula One retains a level of sophistication, drama and excitement that also translates into what you’re trying to achieve as a brand – to be a little more animated. You want to be exciting, you want to be pushing the limits.” Rubber brand This was as true when the iconic Pirelli logo was designed in 1908, with its distinctive elongated P, as it is today. Pirelli’s advertising has always been modern and aesthetically progressive, seeking out the best commercial designers and photographers of the era. The early days saw the production of stunning art nouveau print ads by artists such as by Marcello Dudovich, Plinio Codognato and Leonetto Cappiello, and later Max Huber, Bruno Munari and Pavel M Engelmann. Pirelli was also
among the pioneers of the cinematic tradition of advertising of the twenties and thirties, producing films and documentaries that developed its brand identity, and that tradition continues to this day. In the nineties it was winning prizes for the arresting image of Carl Lewis preparing to burst off the starting block in red stilettos. The company has always sought out diverse channels of communication. The Pirelli Calendar, a famously limited edition corporate gift/ fashion statement that first appeared in 1964 and has featured artistic nudes by celebrated photographers like Robert Freeman, Norman Parkinson, Terence Donovan and Annie Leibovitz, is another of Pirelli’s extra-curricular activities. Meanwhile, its long-term sponsorship of FC Internazionale Milano allies it with the passionate intensity of Italian football fandom. And more recently, its new fashion line PZero reminds us that it’s as much about Italian style as it is about selling tyres. Pirelli, says Hembery, just wants to be talked about. “These are all elements that create a look and feel for the brand, and it’s been going on for many, many years. Brand management is extremely important for a company in our type of business; otherwise you can become lost in the morass of tyre producers that there are in the world. It takes many years to create such a brand. That’s what we’ve done over the years and we’ve also had to reinvent ourselves; you can’t just rely on past history. While I love looking through the archives, because it’s the sort of thing that interests me, the reality is that, while that helps support who you are, it doesn’t take you forward. You have to look forward. The world is changing rapidly, and, as we know, the way people interact is changing, and that will change the way we interact with the world.” Pirelli’s association with motorsport may go back a century but its re-entry to Formula One after a long hiatus is resolutely forward-looking as the company seeks to engage with emerging markets. If Pirelli’s marketing strategy is to get people talking about the brand, then Formula One, as a truly global sport, is the perfect platform. Pirelli is currently the fifth largest tyre manufacturer in the
“Brand management is extremely important for a company in our type of business; otherwise you can become lost in the morass of tyre producers that there are in the world. It takes many years to create such a brand.”
The Twelfth Man
CHICANE We spoke at the beginning of the season about the paradox of any publicity being good publicity. How do you think the controversy over the tyre test with Mercedes has affected the Pirelli business model and in general your business performance? Paul Hembery: In terms of business performance the results of the business remain very strong and very, very positive. There are limits in saying that any publicity is good publicity and there is some disappointment from our point of view about some comments which have not been as correct as we would like them to be. We want to get back to the racing which is what we all want to be watching Formula One for. 9
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However, 2013 has been a season in which the company has been under intense scrutiny over concerns that the safety of the drivers is being compromised by the way the tyres are degrading; or as we saw at the British Grand Prix at Silverstone, failing completely at high speed, although Hembery is quick to point out that this was due to misuse by the team. Pirelli launched an investigation into the cause of the tyre failures after four drivers had their rear left tyres explode at speeds of over 150mph. It was a tough weekend for Pirelli and, following on from the contentious Barcelona test with Mercedes, one the company would have preferred to have passed without incident. Indeed, the new tyres aren’t the best advertisement for a company that takes sustainability practises seriously, which Pirelli does, from its production processes and transportation methods to the end-of-life project for its tyres as components of the cement-making process. Hembery is clear, however, that the company is uninterested in using Formula One as a platform for promoting its green credentials.
“The whole world’s changing,” says Hembery. “Advertising is much more complex today. Before, you could probably choose one or two prime channels in every country, focus your advertising on television, and hit them. Today, each country has 50 or 60 different channels with different programming going on. Whereas you might have gone for printed material in the past, that’s now diffused through the internet. So now you need to be more focused on what’s happening virally; you need to try to create different content. Content is key. It’s all part of a changing world.” Even the calendar has evolved. In the 2013 incarnation, there isn’t a naked lady with a tyre print on her bottom in sight. Instead, Steve McCurry’s photographs reflect Pirelli’s new preoccupation with global cultures and celebrate emerging markets – Rio street scenes that capture everyday market traders as well as famous models. “I tried to portray Brazil, its landscape, its economy and its culture, along with the human element,” said McCurry at the launch. “You never know when it’s enough,” says
world, behind Bridgestone, Michelin, Goodyear and Continental, and is looking to expand. “We want to be a global player and Formula One is one of the very few platforms that allow you to do that, because it’s a global sport,” says Hembery. “People talk about world championships and Olympics and World Cups, but many such things happen on a four-yearly basis, and even then they’re stuck in one country. People talk a lot about the Premier League and how popular it is in Asia, for example, but that’s still only Asia; it’s not the whole world, whereas Formula One has that unique proposition where it’s a global sport. Of course, in some markets it’s an unknown sport, or a new sport, and so you have to work at growing it – growing it as a product and as a sport that people want to follow. It’s important for Pirelli to increase the growth of Formula One so that we’re inherently linked.” It was a characteristically bold decision for Pirelli to come back to Formula One. It was asked to create a controversial new tyre using a softer
“The way we came into the sport: we didn’t just copy what everybody else had done. We could have easily come in and gone for a one-stop strategy – zero-degradation tyres lasting the whole race, but the sport wanted us to do something different and we were brave enough to take that on.” compound that increased performance and degradation. Ironically, here was a company that sells tyres to the consumer with the promise of durability promoting itself through tyres that are unable to last the distance of the race. Pirelli had no qualms, however; consumers, says Hembery, are smart enough to understand the difference. “I think people are recognising that we took some risks and did something different. Twenty years ago we couldn’t have done this and I say that because the world today is a smaller place and consumers are intelligent and very active in understanding what they’re buying. The reality is that we could make a tyre that could last the whole race – 300km – it really doesn’t make any difference to the proposition for the end consumer; they go on websites and forums and if our product wasn’t as competitive as it needed to be, we’d soon know about it. “The way we came into the sport: we didn’t just copy what everybody else had done. We could have easily come in and gone for a one-stop strategy – zero-degradation tyres lasting the whole race, but the sport wanted us to do something different and we were brave enough to take that on and we’ve been able to contribute to some very exciting racing over the last two seasons.”
“The public believes [sustainability measures] should be a standard and not a sales proposition. We’ve learnt from talking with consumers that they don’t like superficial sustainability – greenwashing. We don’t use Formula One as a big platform to talk about sustainability because it makes people think you’re fraudulent. They really they don’t want to hear it; they just want to watch a race. So there’s probably a balance to be found there. But if you thrust it down people’s throats on a global platform there is a risk of your credibility being questioned because people are into Formula One because they want to be entertained.” Let’s Dance! “We are in the entertainment business,” says Hembery. He’s referring to Pirelli and Formula One collectively, but he could just as easily be talking about Pirelli’s advertising campaigns, which remain as progressive as ever. As the way people consume commercial messages changes, new campaigns focus on producing viral content to be shared around the web. The “Let’s Dance” campaign is still about stylish images but incorporates, for example, flash mob streetdancers in drivers’ masks.
Hembery, when we ask him about the long-term future of Formula One and the Pirelli brand. “We’ve always said that it needs to be mediumterm, which at that level is probably between six and ten years, and after that you can make a decision. You may think, well, we might want to be, like Ferrari, involved in Formula One for 20, 30 years – maybe we want to become the de facto reference brand for Formula One. Some people do that in sport and otzher tyre makers have done it in other categories. You have to look at whether that still matches your objectives as a business – maybe the world has changed dramatically in that time, and you have to review it on a regular basis, but at the moment, it would seem to be the correct strategy going forward. You have to decide what the right thing is to promote your brand. “In the meantime, I think the more pragmatic people within the sport would say we’ve brought something to it, with our enthusiasm and our ideas, and that helps everybody raise their level. We’re learning from the other people in the sport, their responses; the other teams, what they’re doing. In the end, it’s in all our interests to make it work. The more we work together to create a product that creates an appetite with the public – then we’re all doing a good job.”
11/6/13 12:02 AM
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Blick Rothenberg is geared to looking at the changing face of F1 and motorsport, and has a team of partners who are dedicated to providing a full service operation. The ﬁrm is also an independent member of BKR International, a leading association of independent accounting ﬁrms with more than 300 locations throughout the world. For more information, please contact: David Barzilay Telephone: +44 (0)20 7544 8980/(0)7860 322 333 Email: email@example.com Formula_October.indd 1
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10/2/2013 4:35:24 PM
â€œThis is a win-win situation for everyone involved. Both our companies attach importance to craftsmanship and innovation and are driven by a pioneering spirit that underpins all we do.â€? Georges Kern, CEO, IWC Schaffhausen 12
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IWC and Mercedes It’s as much about the telling as the selling As far as watch brands are concerned Formula One remains a critical strategic platform on which to build and manage an international profile, but it is very easy to get lost in the crowd. IWC Schaffhausen and Mercedes AMG Petronas F1 look to innovative solutions and technical ingenuity to make the most of their precision engineering partnership. The most important thing in any Formula One partnership is to tell a really interesting story in a really interesting way that resonates through both organisations and the industry as a whole. IWC Schaffhausen and Mercedes AMG Petronas F1 Team hit the ground running in this quest recently with a two-week behind the scenes pop-up exhibition in the Wonder Room of Selfridges in London. Not your average guerrilla retail concept, the IWC exhibition was the first in the UK within a department store that allowed visitors to immerse themselves in the dynamic world of Formula One racing, complete with a simulator show car within a virtual wind tunnel. The exhibition celebrated the IWC 2013 Ingenieur watch collection as well as the new three-year partnership that draws on the synergies that exist between the precision technology of watchmaking and the performance engineering of Formula One racing. Yan Lefort, Department Manager of Partnerships and Sponsorship at IWC Schaffhausen, explains the approach: “We use the partnership with the Mercedes AMG Petronas Formula One Team to tell really interesting stories that resonate throughout our organisation and throughout our target groups. It’s really about the content and the end-experience – ie, the touch and the feel of the brand and the relationship between the two partners. What is most important is bringing our vision to life using the assets that we have. I think this is where we can make a big difference and where we have the expertise to use this platform to differentiate ourselves from our competitors.” Whilst there may be similar approaches to research, development and manufacturing in both industries there are also similarities in terms of the materials used. Innovative materials used in motor racing, such as ceramics, carbon fibre and titanium aluminide, are to be found in the new Ingenieur watch line, which underscores the partnership between the two precision outfits. Watch cases made of carbon fibre matting soaked in resin, baked under pressure and held together by titanium screws with ceramic screw heads are indicative of the expertise and know-how which both parties embody and which are pushing technology and innovation to the forefront of the partnership. Relevance and timing are key in successful Formula One partnerships and the Ingenieur Collection is an iconic family within the IWC product range that calls for a relevant platform to launch the range, rather than to simply support the brand as a whole – ie, a product-specific approach. Lefort continues: “I think IWC is growing into a global brand and as such it calls for a global platform. Quite simply, global brands need global platforms and Formula One is probably the biggest platform out there, and that gave us the opportunity to build on the existing connection we had with the team via Mercedes AMG. “AMG is a friend of the IWC brand, part of the family almost. It was a natural evolution of the partnership with AMG to go into Formula One and moreover, for IWC, Formula One is a perfect fit for our Ingenieur range.
It is also perfect timing for us to be entering the sport knowing that next year it will become more efficient from a regulation point of view. The smaller highly efficient engines with their emphasis on resource recycling fit very well with IWC as a whole. We want to be part of this pioneering approach as such a spirit lies deep within our brand values.” The Telling and the Selling The priorities in Formula One are to tell the story of the brand and in the end to sell the product. This is the business and everybody is in the business for the same reason. You have to sell your brand and sell your product, but at the same time create visibility so that the story of the partnership is interesting and relevant. The association has to be brought to life and in the case of IWC this has to be done without branding on the cars or the drivers. The trick for them is to maximise their rights and assets to ensure the exposure is relevant to the story they wish to tell. Yan Lefort elaborates: “We haven’t based our strategy on the performance of the car and drivers. We don’t have branding on the car but the two drivers are ‘Friends of The Brand’ and carry branding on their gloves. We have the engineers wearing our product and we have branding around the engineering stations in the garage in order to make the association with IWC and what is important for us within the relationship. “What is interesting in our story as Official Engineering Partner of the Mercedes AMG Petronas Formula One Team is the behind-the-scenes: what is going on at the factory, what happens in the garage on a race weekend, the engineers, the know-how, the culture, the manufacturing and the craftsmanship. Therefore, what happens on the track itself is not the purpose of the story but rather the end result.” Being part of Formula One is already exceptional so there is no need to base an entire sponsorship or partnership strategy on winning, as ever so quickly, the investment can become irrelevant. The key is to ensure that the partnership remains relevant yet develops over time. Lefort adds: “There’s always room to grow our activities or to be more efficient, particularly with regards to activation. Even if we have the expertise we are always willing to learn and to develop new ideas. We’ll get better as we go along and we have three years to develop and enhance our programme. So far, it’s a good start.” IWC is not only active in Formula One; it has long-term partnerships with such diverse entities as the Laureus Sport For Good Foundation, The Cousteau Society, The Charles Darwin Foundation and The Antoine de Saint-Exupéry Youth Foundation. As a brand then it is intent on telling many different stories from many different worlds as part of a corporate philosophy that embraces ecological responsibility and social commitment. 13
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The Business Diary: Joel Leonoff CEO and President of Optimal Payments
As a Lotus F1 Team partner, Optimal Payments leverages various Grand Prix events around the world to drive business and extend its reach, presence and reputation in the online and multichannel payments market. President and CEO Joel Leonoff and his team use these events to build relationships with clients, partners and prospects in Europe, North America and Asia. With the company’s North American headquarters based in Montreal, the Canadian Grand Prix also provides a great opportunity for Joel to spend some downtime with Optimal’s management and employees.
Thursday, June 6, 2013 Fly into Montreal from California. We’ve just wrapped up our annual meeting where I reviewed the company’s exceptional growth of 2012 with investors and shareholders. 13:00: Arrive at the office: meetings scheduled all afternoon. Meet with senior sales executives to review progress of market penetration strategies, and with Chief Operating Officer Daznny Chazonoff to review the delivery progress of major new products, including major enhancements to Optimal’s mobile payment services. Leave office to get ready for the Grand Prix du Canada – Grand Evening Gala; the official opening night of the 2013 Grand Prix. This evening is a chance to socialise and develop relationships with key members of the business community from around the world. It is an altruistic event with all proceeds being donated to various charitable organisations. I’m a strong believer in giving back, and the company supports a number of charities, including micro-lender Kiva and Olympic snowboarder Zoe Gillings. 19:30: Following a cocktail hour, we attend a sitdown dinner with key executives. 20:30: Once dinner is over, it’s time to socialise with the Optimal team and other attendees. Here, we have more casual discussions related to business activities – and the upcoming Grand Prix, of course.
Friday, June 7 2013 08:30 am: Next stop, the office. I am scheduled to preside over an employee Town Hall meeting at 10.00am. Here, I will present the company’s review for 2012 and field questions from employees. We work hard at making sure our employees are not only well treated, but also that every contribution is valued. Transparency is key to keeping everyone motivated and working towards a common goal. 11:30 am: Leave to go to the Optimal Payments F1 Elite lodge, where I will be hosting a lunch for several key clients. There are other executives hosting various business partners and so I’ll ensure I meet with each of them individually. Today’s track schedule 14:00 to 15:30: Second Free Practice Session 15:55 to 16:15: Ferrari Challenge Free Practice Session 17:00: Return to hotel to get ready for dinner. 20:00: Dinner with clients
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This year looks like another stellar one for Optimal Payments, a world leader in the development, provision and operation of whitelabel payment processing services across a wide range of industries. With shares that have more than doubled, the company has reaped the benefit of its investment in its software platform as well as a series of high profile client wins in the newly emerging US online gaming industry; and in retail, where it continues to build on an already established
presence. In the US, online gaming is only just opening up and Optimal’s deals with Caesars (Interactive Entertainment) and Bally Technologies position it to take full advantage of the opportunities presented by the legislative changes. Optimal’s last figures showed that revenue for 2012 had grown by 40 per cent to $179.1 million, with EBITDA up 58 per cent to $27.6 million. In addition to pushing into new markets and consolidating its position in its core NETBANX and NETELLER franchises, Optimal is also well positioned for the rapidly growing opportunities in mobile, prepaid and person-to-person payments.
Saturday, June 8 2013
Sunday June 9 2013
11:00: Back at the Circuit Gilles-Villeneuve for lunch and a visit to the Lotus F1 Team motorhome in the paddock. I meet with members of the race team and have discussions about the Optimal-Lotus partnership. We will again be hosting clients, prospective clients and business partners at today’s events.
10:00: Today is a big day, as not only is it the official race day, but it’s also my birthday. I return to the Lotus F1 Team motorhome in the paddock with colleagues for late breakfast and get ready for the race at 14.00. I have invited several major clients and partners to attend the race itself, and I will spend the day entertaining, discussing business and building relationships.
Today’s track schedule 13:00 to 14:00: Formula One Qualifying 14:20 to 14:30: Formula 1600 Grid Access and Formation Lap 14:30 to 15:00: Formula 1600 First Race 15:00: Formula 1600 Podium Presentation 15:20 to 15:30: CTCC Grid Access and Formation Lap 15:30 to 16:00: CTCC First Race 20:00: After returning to the hotel to freshen up and change, I head off to a boxing event at the Montreal Bell Center featuring Chad Dawson vs. Adonis Stevenson. The company maintains a corporate box at the Montreal Bell Center and we often entertain clients for Montreal Canadiens hockey games, the revered local ice hockey team.
Today’s track schedule 10:15: Formula 1600 Podium Presentation 10:20 to 10:30: Porsche GT3 Cup Challenge Grid Access and Formation Lap 10:30 to 11:00: Porsche GT3 Cup Challenge Second Race 11:00: Porsche GT3 Cup Challenge Podium Presentation 11:05 to 11:15: Ferrari Challenge Grid Access and Formation Lap 11:15 to 11:45: Ferrari Challenge Second Race 11:45: Ferrari Challenge Podium Presentation
About Optimal Payments
12:30: Formula One Drivers’ Parade 12:45: Nations’ Presentation 13:30: Formula One Pit Lane Opening 13:45: Formula One Pit Lane Closing 14:00: Formula One Grand Prix du Canada 18:00: Back home to relax with family and have a light dinner.
20:00: Off to the company box at the Bell Center to see the Rolling Stones with clients and employees – and a surprise birthday cake!
Monday, June 10 2013 Back at the office before flying back to the UK. I am running meetings until 14.00 and fly out at 17.00. Running Optimal is not this glamorous on a day-to-day basis, but this annual event gives us all a chance to showcase the company and build long-lasting business relationships that contribute to the success of the company. 15
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60 Seconds with…
Jean-Claude Biver, Chairman of Hublot How did the partnership between Hublot and Ferrari develop following your involvement with Formula One? The link between Ferrari and the sport is arguably the strongest and closest connection in the whole of Formula One. It was a natural step for us to follow up our global partnership of the sport by linking with one of its leading brands. Who was most responsible and what was the process? The idea was to link our brand to another with whom we share a natural synergy. Within Formula One, that brand could only be Ferrari. What are the key differences between your partnerships with Formula One and Ferrari? Formula One is an incredibly powerful, emotional organisation with huge international reach. With Ferrari, we have a 360 degree partnership, 365 days of the year. How would you describe your 360 degree partnership with Ferrari? I’d liken it to the difference between friendship and marriage. You meet friends on a regular basis, but in marriage you live with your partner 365 days a year for the rest of your life. How would you evaluate your first year of collaboration and what are the key objectives you have achieved? The success of our relationship is built on happiness, harmony, synergy, emotion and dreams. The longer we remain in partnership, the more we will each benefit from the relationship.
What are the key elements of a successful event for both partners and what is the format of a typical event? The elements of success are always in the synergies we find between both brands. The more synergies can be exploited, the better the success.
How do you balance brand image and commercial activities in your sponsorship activation? First of all, we are interested in brand building. This is especially so in a period where we cannot deliver enough products and cannot meet demand.
With Ferrari being a prestige brand, the benefit to Hublot is quite obvious, but what is the benefit to Ferrari in partnering with Hublot? In short, Hublot stands for prestige, exclusivity, innovation, creativity, design, technology, culture, tradition and quality. Any brand could benefit from such characteristics.
What would you say are the brand values shared by the two prestige marques and how are these communicated to potential customers? We share the values of exclusivity, prestige, design, innovation, creativity, technology, success, culture, tradition and quality.
How do you think Hublot will be successful as a horological partner when others in the past have failed? Others have failed because they were interested in just making a watch with a Ferrari logo. We are primarily interested in a 360 degree, 365 days a year relationship. The difference between the two approaches is stark.
How have you pooled resources and shared information thus far? We share information and ideas on both design and technology.
Is it a question of avoiding massive publicity and brand dilution? For most brands, the achievement is to create a product with a Ferrari logo. For Hublot, that’s only a small aspect of our relationship. How will the relationship develop in the future? Will we see a greater exchange between the two brands in terms of materials and processes? It’s a five-year relationship which we hope will continue for many more years to come. Each year, the relationship will bring more satisfaction and more synergies to both brands.
What role (and importance) does the creation of limited edition icons such as the MP05 play in the partnership? The watch is the ‘visible part of the iceberg’ and, as such, it plays the role of a flag. It materialises the relationship and enables anyone to be part of it. Watches and Formula One have always gone together, but what will make the Hublot/ Ferrari partnership stand out from the rest? The difference between our watches and all others is the DNA Hublot products share with Ferrari – and not just a logo or a chronograph What is the lasting impression you wish to communicate to Formula One and beyond? That we 100 per cent belong to the Formula One world.
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Australian alpine ski racer Lavinia Chrystal poses during a portrait session on June 17, 2013, Sydney, Australia. 170768780, Cameron Spencer/Getty Images Sport
Lewis Hamilton of Great Britain and Mercedes GP drives during practice for the Singapore Formula One Grand Prix on September 20, 2013 in Singapore. 181291942, Paul Gilham/Getty Images Sport
Andreas Weimann takes the applause after scoring during the Barclays Premier League match between Aston Villa and Manchester City at Villa Park on September 28, 2013. 182107511, Stu Forster/Getty Images Sport
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Current thinking on Formula E
Gil de Ferran, Formula E Ambassador “Electric vehicles are undoubtedly playing an increasing role in the transporation landscape worldwide and as such, electric car racing will provide the perfect platform to help accelerate the development of relevant technologies and showcase the potential in an exciting way.” Philippe Klein, Executive Vice President, Corporate Planning, Product Planning & Programs of Renault Group “Formula E is an exciting opportunity to demonstrate the excellence and the reliability of our EV solutions. We believe that motorsport is an efficient manner to promote the efficiency of new technologies, and we’re eager to use that single-seater in FIA Formula E championship to show our technology is the best.” Patrice Ratti, Managing Director of Renault Sport Technologies at Renault “Renault’s expertise in electric powertrain design and integration acquired both in production EV and in Formula 1 makes Renault Sport a natural partner for Spark in this exciting Formula E project.” Carlos Martinez, President Latin America for FOX International Channels “With a global approach to acquiring knowledge and fast-tracking technology through the world of international racing competition, the FIA Formula E Championship is much more than just another weekend at the track, it makes racing an integral part of solving one of the world’s most daunting challenges.”
With a top speed of 220km/h and 0-100km/h in three seconds, the FIA Formula E Championship hits the streets of Beijing next September where spectators will be able to follow the action and interact with the drivers via mobile devices in the world’s first carbon neutral racing series. Since telling us in Chicane 001 why he chose Formula E we have been chasing CEO Alejandro Agag around the globe as he puts into place the final pieces of the electric racing puzzle. We decided to canvass the “Who’s Who Of Formula E” to find out why they think the series will be a success which gives an interesting insight into what to expect when the lights go out next year.
Lawrence Duffy, Managing Director of Aurora Media Worldwide “Aurora will provide broadcasters with a complete in-depth package – from behind the scenes pre-race build-up to podium celebrations – using fixed, RF and on-board cameras, stunning 3D and 2D graphics, split screen coverage, pit lane and car change action, fan reactions and much, much more.” Peter van Manen, Managing Director of McLaren Electronic Systems “Our electric motor has the highest power-to-weight ratio of any automotive motor in the world. It will respond instantly to the drivers, providing them with an immediate burst of torque and rapid acceleration.” Martin Whitmarsh, CEO McLaren Group & Team Principal of Vodaphone McLaren Mercedes “I’m a passionate believer in the role that motorsport can play in showcasing and spearheading the development of future technologies, and regard the Formula E concept as an exciting innovation for global motorsport.” Luca Pignacca, Chief Designer and Project Manager at Dallara “The greatest challenge was packaging the cells and battery modules, the safety of the monocoque, which will have a radically different rear section, and the electrical system, which will operate at very high voltage.” “At the moment, traditonal, noisy cars drown out the noise of the gearbox so the public has no idea what it sounds like. But this very high-pitched sound will soon be very familiar to every fan.”
Rachel Hughes, MP & Silva “It is an exciting new opportunity to have the media needs built into the Championships from the start and not face the restrictions often faced from an event that is already up and running. The production will bring a completely fresh look to motor racing.” Pascal Couasnon, Michelin Motorsport Director “For the first time in motorsport history, a world championship will feature 18-inch diameter tyres. The new tyres feature a tread pattern offering unprecedented versatility, are designed to race in both dry and wet conditions and are suited to all the circuits that will be visited by the championship. Although they are treaded, they will be genuine racing tyres.” Ken Allen, CEO, DHL Express “Transportation accounts for 15% of the world’s greenhouse gas emissions so our industry has a clear interest in improving our carbon efficiency. The championship gives us a chance to demonstrate how being more efficient can make you greener.” Frédéric Vasseur, President of Spark Racing Technology “The biggest challenge will be the logistical side of the project. It’s complicated for F1 to do one race in Monaco and one in Singapore. Imagine – we will have to do ten races on ten completely new street circuits in ten different cities. It will probably be the most exciting event in motorsport.”
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Hervé Bodinier, CEO and founder of Sponsorship 360 “Now the show is coming to you. the show is in front of your apartment, the show is right next to you. Look around the world – what are the most mythical Grand Prix races? The ones that happen right in the city. People love that because it’s intense. The cities embody the race. With Formula E that would always be the case. There will be amazing venues with great monuments, great perspective, great TV capture.” Yu Liu, Chairman of China Racing Formula E Team “Our experience in racing event management will contribute to a successful Formula E city race in China showcasing electric formula cars with a futuristic sound and zero emissions. This is a good platform for Chinese and global EV companies to do our part to help create a sustainable planet.” John Scurfield, Head of Innovation, MediaCom Sport “Formula E are in a unique position to offer brands a global platform to showcase their products or services while having a positive impact on the environment. The series will create belief and overall awareness in people living a more sustainable lifestyle while ensuring a lasting legacy is left in each of the cities involved.” Alejandro Agag, Chief Executive Officer, FIA Formula E Championship “Racing in the centre of big cities, of big world capitals is where sponsors want to be. We’re finding that is where companies want to have exposure. This is even as important as being fully electric.”
Michael Andretti, Andretti Autosport “One of the challenges that auto racing faces in the future is relevancy. We believe that things are moving more towards electric and green initiatives, making this new form of auto racing more relevant in future years.” Jay Penske, Owner and President of Dragon Racing “Formula E symbolises a vision for the future of motorsports and the automotive industry while directly appealing to a new generation of global race fans.”
Anthony Thomson, Vice President of Business Development & Marketing at Qualcomm “It’s distinctively a very, very hot platform for development of technology. Taking technology into a vast, rapid, extreme prototyping situation where – overnight – people can add, mould, refine or tune technology. It will have a big legacy. It’s going to leave behind useful technology for cities when we get to the point where we’re deploying dynamic charging where the cars can pick up charge on the move.”
Alain Prost, e.Dams Formula E Team “Being able to actively participate in the development of this new technology , which is 100% electric is extremely motivating. 2014 will see a move towards more sustainable racing, proving more that ever that motorsport is the benchmark for the future.” Jean-Paul Driot, e.Dams Formula E Team “Being the race enthusiast that I am, I was immediately convinced that it will shape the future of motorsport.” Aguri Suzuki, Executive Chairman of Super Aguri Formula E “Zero emissions racing is a progressive concept for the motorsport industry, and after more than 40 years as both a driver and team owner, I see Formula E as a great stride towards the future.” 19
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Formula E The Calendar
Formula E The Format
Formula E Directory
Round 1 Beijing, China* 20th September 2014
FIA Formula E Championship Formula E Holdings, Ltd. 72 Hammersmith Road London W14 8TH UK
Round 2 Putrajaya, Malaysia 18th October 2014 Round 3 Hong Kong, China 8th November 2014 Round 4 Punta del Este, Uruguay 13th December 2014 Round 5 Buenos Aires, Argentina 10th January 2015 Round 6 Los Angeles, USA 14th February 2015 Round 7 Miami, USA 18th April 2015 Round 8 Monte Carlo, Monaco* 9th May 2015 Round 9 Berlin, Germany 30th May 2015 Round 10 London, UK 27th June 2015 * S ubject to ASN approval All events remain subject to FIA Track Homologation
There will be 10 teams – 20 drivers – 40 cars Each team will include 2 drivers and 4 cars e-Prix will be held in 10 cities across the world Racetracks will be in town: 2.5 to 3 km long Cars will accelerate from 0 to 100Km/h in 3 seconds, with a maximum speed of 220Km/h Noise decibel levels: ordinary car=70dB; Formula E=80dB; bus=90dB The Race Early morning: free practice session, followed by qualifying.
Tom PHILLIPS Press Officer Tel: +44 207 559 9718 Tel: +44 207 559 9713 (PR/Press) Mob: +44 (0) 7812 206260 firstname.lastname@example.org www.fiaformulae.com www.formulaeholdings.com Twitter: @FIAformulaE Facebook: facebook/fiaformulae Youtube: youtube/fiaformulae Alejandro AGAG Chief Executive Officer Alberto LONGO Deputy CEO Jaume SALLARES Chief Marketing Officer
Late morning: qualifying 1 lap time each driver with both cars A and B
Eric BARBAROUX Chief Operating Officer
Afternoon: a 2-hour break to recharge the cars
Gil de FERRAN Formula E Ambassador
Evening: Final race with 3 stints and 2 pit stops
Pierre GOSSELIN Special Advisor to the Chief Executive Officer
Pit stop will involve a change of car: when the battery runs out, the driver will make a pit stop, then will run 100 metres to climb into a recharged car
Carlos NUNES Technical Director & Logistics Alasdair RUSSELL Head of Teams
Sandrine FOIX Logistics and Communication Tel: +33 (0) 3 86 66 49 18 Mob: +33 (0) 6 07 86 50 15 Fax: +33 (0) 3 86 66 09 29 email@example.com firstname.lastname@example.org Renault 13, avenue Paul Langevin 92 359 Le Plessis – Robinson Cedex France Vanessa REFFAY Global Marketing & Communications Director Tel: +33 (0) 1 76 84 86 73 Fax: +33(0) 1 76 89 05 18 email@example.com David MENOCHET Global Marketing Director Tel: +33 (0) 1 76 84 01 72 firstname.lastname@example.org www.renault.com www.renault-ze.com DHL Charles-de-Gaulle-Str. 20 53113 Bonn Germany Daniel MCGRATH DHL Media Relations Tel: +49 (0) 228 182-99 44 email@example.com firstname.lastname@example.org Qualcomm 566 Chiswick High Road London W4 5YE UK
www.fiaformulae.com Spark Racing Tech/ Art Grand Prix ZA La Garenne BP 33 89340 Villeneuve-la-Guyard France
Anthony THOMSON Vice President of Business Development and Marketing Tel: +44 (0) 20 8996 4100 Tina ASMAR Corporate Communications (US) +1 858 845 5959 email@example.com www.qualcomm.com
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Mediacom Sport 124 Theobalds Road London WC1X 8RX, UK John SCURFIELD Head of Innovation Tel: +44 (0) 207 158 5000 DID: +44 (0) 207 158 4413 Mob: +44 (0) 7507 644550 firstname.lastname@example.org Aurora Media Worldwide Palliser House Palliser Road London W14 9EQ, UK Lawrence DUFFY Managing Director Tel: +44 (0) 207 871 0620 www.auroramedia.com Michelin Group 27, cours de l’Ile Seguin 92100 Boulogne-Billancourt France Alessandro BARLOZZI Motorsports PR Manager Tel: +33 (0) 1 78 76 45 20 Mob: +33 (0) 6 42 23 55 93 email@example.com McLaren Electronic Systems Limited McLaren Technology Centre Chertsey Road Woking Surrey GU21 4YH, UK Peter van MANEN Managing Director Tel: +44 (0) 1483 261400 Fax: +44 (0) 1483 261402
TAG Heuer Mariam BOUAZIZ PR Manager Tel: +41 (0) 32 919 81 65 firstname.lastname@example.org Sponsorship360 11 rue Pasteur 92150 Suresnes France Hervé BODINIER Tel: +33 1 47 28 20 34 Mob: +33 6 09 57 70 30 email@example.com www.sponsorship360.fr MP & Silva 30 St George Street London W1S 2FH, UK
Drayson Formula E Team Drayson Racing Technologies LLP Unit 29 – Chancerygate Business Centre Langford Lane Kidlington, Oxfordshire OX5 1FQ, UK Gianpaolo AVIGNONE Partnership Development Director Tel: +44 (0) 1865 841044 Mob: +44 (0) 7967 194169 firstname.lastname@example.org Lord Paul DRAYSON, CEO and Team Principal Gian AVIGNONE, Partnership Development Director
E.Dams Formula E Team DAMS S.A.S. ZA de Bel Air – Rue Claude Chappe, 72230 Ruaudin France Tel : +33 (0)2 43 75 02 39 Fax : +33 (0)2 43 75 37 31
Fast Track Agency Southside, 6th Floor 105 Victoria Street London SW1E 6QT, UK Oliver WALSH Account Director Tel: +44 (0) 20 7593 5200 DDI: +44 (0) 20 7593 5297 Mob: +44 (0) 7825 862104 www.fasttrackagency.com
CEOs & Co-founders: Jean-Paul DRIOT & Alain Prost General Manager: Francois SICARD Management – Technical – Sponsorship Team Manager: Claire MAGNANT Drivers & Managers contacts – Logistics – Marketing – Press
www.draysonracingfe.com Rachel HUGHES Tel: +44 203 214 9900 DDI: +44 20 3214 9905 Mob: +44 79 0952 7785 Fax: +44 203 214 9901 email@example.com www.mpsilva.com FOX Sports Erik Arneson VP Media Relations, Tel: +1 704 501 5795 Mob: +1 704 458 7926 firstname.lastname@example.org Carlos Martinez President Latin America Fox International Channels Williams Advanced Engineering James Francis Corporate Communications Manager Tel: +44 (0)1235 777179 Mob: +44(0)7788 317639 email@example.com China Racing Formula E Team Lina Tel: +86 (0) 10 85288000 Fax: +86 (0) 10 85288345 firstname.lastname@example.org
Andretti Autosport Formula E team Ryann RIGSBY Director of Corporate Communication Tel: +1 317 872 2700 ext. 275 Mob: + 1 610 909 7312 email@example.com Michael ANDRETTI, President, Chairman and CEO
Tel: +33 673 556 419 firstname.lastname@example.org Super Aguri Formula E Team Mark PANGALLO Media & PR Manager email@example.com Aguri SUZUKI, Executive Chairman Mark PRESTON, Team Principal Peter MCCOOL, Technical Director
JF THORMAN, Executive Vice President and Chief Operating Officer John LOPES, Senior Vice President and Chief Marketing Officer Kyle MOYER, Director of Racing Operations www.andrettiautosport.com Dragon Racing Formula E Team Abby HEFFROM Press Officer Tel: +1 310 467 8212 firstname.lastname@example.org Jay PENSKE, Owner and President Paul WOOLNOUGH, Vice President
Ferry SPIJKERMAN, Commercial Director Dallara Via Provinciale, 33 43040 Varano de’ Melegari, Parma, Italy Alberto BASSI Communication Tel: +39 0525 550717 Fax: +39 0525 53478 email@example.com Luca PIGNACCA Chief Designer and Project Manager firstname.lastname@example.org www.dallara.it
Steven LU, CEO www.mclarenelectronics.com
www.dragonracing.com Yu LIU, Chairman www.teamchina-racing.com 21
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Every second counts
Thanks to increasing high-speed connectivity the back-end is the new front line. Chicane looks at Tata Communicationsâ€™ relationship with MERCEDES AMG PETRONAS.
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you are in Australia I can minimise that latency? If there are x-hundred milliseconds happening, I reduce a few tens of milliseconds out of it. That also helps because if you can get it faster, if you can analyse it faster, you are going to make your decision a split second faster.
When we spoke to Tata Communications last year, the Indian Telco giant had recently become Formula One’s official connectivity provider. Here was a company that owned the world’s largest (and only) round-the-world sub-sea cable network – over 20,000 route kilometres of sub-sea and terrestrial network fibre – allowing a data transfer capacity of one terabit per second. Back then, it was clear that Tata Communications was one of the few companies in the world with the technology to cater for and improve upon Formula One’s colossal, split-second connectivity requirements. Mehul Kapadia, Managing Director of Formula One Business at Tata Communications, and his team were looking forward to showcasing their talents on a global platform by providing the infrastructure for Formula One’s connectivity and communications in all 20 race locations and offices worldwide. Melbourne 2012 was Tata Communication’s first race, and it was here, and almost immediately, that Kapadia bumped into former CEO of the Mercedes Team Nick Fry. From that meeting came an agreement that would deepen the company’s involvement in the race: to provide MERCEDES AMG PETRONAS with trackside connectivity, enabling the team to transfer vital real-time data from the Silver Arrow cars at any Grand Prix location to its headquarters in the UK. The relationship with Mercedes puts Tata in the front-line, although, Kapadia explains, thanks to modern high-speed connectivity, the ‘front-line’ can now be several hundred miles from the track. “[On race days] we run a pit crew of about 20 people who from across the globe are actually running the operation,” he says. “It’s quite a task, but it’s about practicing what you preach. So if we are telling the industry that through Telecom you can save on operational cost by doing stuff backstage rather than having to send people to a lot of places, we also optimise it that way. We send these two people to the races; we don’t send a battery of 30 people out there. “There are specialists working out of London, out of India and also, at times, out of the US, depending on the need. We’d never operated within a level of a sport like Formula One before. It is a place for us to demonstrate our capability in delivering solutions and services across the world in crazy timelines, to modify our processes to suit our customers’ needs, create response teams, which are so much in the backend but still able to deliver at the front-end.” For Mercedes, the data has to come back to Team HQ in Brackley where it’s analysed and then sent back to the racetrack. The goal is to decrease latency – the split-second time delay in transferring data – and, in the pursuit of efficiency and a competitive edge, every millisecond counts. Through its global network, Tata Communications was able to upscale Mercedes’ connectivity to make it three times faster. “The laws of physics mean latency can’t completely go away,” says Kapadia. “There will always be latency. Right now, when I’m talking to you, you can immediately hear me but if you were at a distance, the voice would take more time to travel. It’s sheer physics. How do I ensure that even when
The goal is to decrease latency – the split-second time delay in data communication – and, in the pursuit of efficiency, every millisecond counts. “It seems simplistic, but when you scale it up that much – by three times – imagine the amount of potential you’ve opened for those engineers. Let’s not kid ourselves; we are a telecom player, we are not going to change a particular component on the car. But it can enable the people who are doing that to do their work with more flexibility, and three times faster.” Tata Communications hosts technical workshops with Mercedes during which the company explains the depth of its own services and listens to the needs of its client; although the relationship with Mercedes is that of service provider and customer, as opposed to an in-kind technical partnership or sponsorship. There is, however, a marketing partnership in existence. The opportunity to align itself with the Mercedes brand and its assets is just too attractive, says Kapadia, but he hastens to add that this agreement is independent of the company’s role as a service provider. “This is truly a success, where you can have win-win between partners. It’s not actually about sponsorship, I think. Formula One is way beyond that.” The deal with Mercedes is multi-year contract and while immediate plans are under wraps, Kapadi sees an opportunity for all of the teams to improve their connectivity. “The way I look at it is that this is an opportunity to look at all the teams. Mercedes is definitely the team that we started work with, but all the other teams also need to look at getting into a strong relationship with a strong Telco that has the capability and the commitment to the sport. “I’m sure what people are getting today is good. It’s not about bad becoming good, it’s about how you can better what is already there. Three times capacity is not to say that one times capacity was bad. It is just that three gives you the opportunity to do more. “Our theme for the year is to provide to our customers the speed to lead. This is our way of saying that we truly believe that, with our kind of fibre capability globally, our kind of telecom experience, and our kind of data centre technology, we can help teams to look at telecommunications in a different way.”
Network key facts • Only global tier 1 ISP with a top five position in all continents (Renesys) •
W orld’s largest and only wholly-owned roundthe-world sub-sea cable network
O ver 2 0,000 route km of sub-sea and terrestrial network fibre, allowing a data transfer capacity of one terabit per second, high bandwidth availability and seamless scalability
N etwork accounts for 2 0% of the world’s Internet routes
Service provider key facts •
W orld’s largest international wholesale voice provider carrying more than 53 billion minutes annually 23
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A winning formula for Britain Formula One and the UK have long enjoyed a unique and healthy working relationship, something that the UK government has identified as fertile ground to promote Britain to the world. Simon Collingwood, Associate Director at Counter Context, explains how UK Trade & Investment is engaging the high growth markets on the Formula One calendar.
A special relationship Formula One is unique. Not because of how it pushes the technical performance of mechanical and human objects to the limit. Neither is it unique because of the manifest commercial interests interwoven with the sport. These attributes are shared with basketball, IndyCar and football, amongst many others. For me, Formula One is unique because it sits at the delta of business, sport and innovation; a framework that draws together a sporting instinct to win, a hugely talented, world-leading technology cluster, and a commercial vehicle attuned to developing the value of brand assets. Formula One has a suite of impressive statistics to point to. However, the compelling fact for me is that, no matter how you look at it, this sport is dominated by Britain. Eight out of the 12 Formula One teams on the grid build their cars in Britain; the teams are located in an arc extending north and west of London because of the inherent talent and knowledge within a deep supply chain of some 4,500 British
companies. Historically, British-based teams have been hugely successful, winning well over half the Constructors’ Championships in the 55 years of the sport. Even among non-UK teams, British engineering acumen is abundant. Formula One is a sport at which the UK consistently excels. Formula One: a launch pad to the world The British government is clear that economic growth has to come from an expansion of exports and increased high value inward investment. Greater connection with the high growth markets is a strategic imperative, driven by the government’s GREAT Britain campaign. Given that Formula One is an unrivalled shop window of UK capability, with an expanding calendar of Grands Prix in priority markets, 2014 is a fantastic opportunity to talk confidently and proudly about Britain in the 21st Century. UK Trade & Investment (UKTI) has recognised this winning formula. In the margins of the 2013 US Grand Prix in Austin, Texas, the UKTI is hosting a seminar
about innovation in Formula One teams, and how this is driving technology transfer both within and beyond the automotive and motorsport industries. We will also hear about how the sustainability agenda is taking technology in new directions. More than a hundred central Texas-based technology businesses, entrepreneurs and investors will gain access to the quality of the capability of the UK. This broadens the conversation about Formula One, enables commercial connections and, importantly, enhances the UK’s reputation in innovation. As ever, professional, thoughtfully-designed forums have a valuable, galvanising impact. Looking ahead, I‘m confident we will see more of this promotional initiative. Formula One has an enduring attraction because it draws together that triumvirate of sport, business and innovation. This vitality enables a fantastic international platform to showcase UK capability in all three of these areas in new and engaging ways. It is an opportunity too good to be missed.
Historically, British-based teams have been hugely successful, winning well over half the Constructors’ Championships in the 55 years of the sport. 24
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The Team Perspective Graham Hackland, Head of IT, Lotus F1 Team
Graham Hackland of Lotus Formula One Team explains the role of data during the race weekend: “All of the teams arrive at the circuit with a base configuration for the car that they’ve done in simulation back at the factory, or from their experience of their previous years at the track, and very quickly on the Friday they have to get as close as they can to the set-up for the car that they think they’re going to qualify with. Getting the data up to speed so it can be fed back into the car and analysed in order to get the most out of the set-up is absolutely paramount. “There is a large team back in the factory working on the real-time data that’s coming off the car so that, by Saturday, it becomes even more critical that the performance of your data and the applications that we develop are spot on. Being able to access the right data at the right time means that engineers can be faster in getting new and effective ideas into the car and onto the track, and therein lies the competitive edge. “By the time of the Grand Prix on Sunday, they have a strategy system that, at the press of a button and within three minutes, can run 10,000 race
Data is key to the modern Formula One team and with the difference between winning and losing being so small the handling of data represents an opportunity to gain those vital fractions of a second. Chicane looks at both sides of the data equation within the unique relationship between Lotus Formula One Team and NetApp.
simulations based on the current situation – eg, it’s started raining, there is a crash, track temperature, your competitors, the tyres you’ve got, the tyres your competitors have got. All of that data collected from the sensors on the car is factored in. This can be done continually at the push of a button, based on current real-time data.” The data wranglers in Formula One may very well be the fastest men in the sport as they collect, process and disseminate vast amounts of crucial information at unheard of speeds. According to Hackland: “In less than a second (absolute real-time terms) we’re getting the data, processing it and delivering it to the team sitting on the pit wall. Lap by lap, corner by corner, sector by sector, they are getting the data they need in real-time, as it’s happening on the car; it’s on the pit wall or at the mobile data centre in the back of the garage.” At any point in time up to 30 engineers may be accessing a single filer from either of the two live or the two back-up storage clusters. While the Race Team at the track are analysing the data to improve
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Keeping Track – by the Numbers Per-lap data (speed, movements, G-forces, pressures, temperatures, engine data, etc.): 4MB per lap from TECHNOLOGY
race car to pit systems via real-time radio transmission 20MB to 30MB downloaded from the car when it arrives back in the pit after each run Telemetry data collected per threeday race weekend: 25GB. Data transmitted to Enstone during one hour of free practice: 600MB
performance in miniscule increments there is an even bigger team back at the at the factory hard at work on larger sets of data to analyse performance in terms of the bigger, long-term picture. Speed, capacity and availability are the key indicators, but these are nothing without reliability. Teams will expect 100 per cent reliability from the car and they expect the same from the IT as well. For the past seven seasons, Lotus has run NetApp at the track with zero downtime – ie, a 100 per cent record for seven consecutive seasons for five days at a time, Wednesday to Sunday. At the end of the five days, the whole system is shut down and either flown or trucked back to the factory. The system has to maintain reliability and performance despite the rugged trackside and transport environments. There are many in Formula One who talk about how important data is to the sport and to the business, and even some who believe that no racing could take place without it. Hackland is quick to provide some perspective. “Sometimes, we IT people think they can’t do anything without what we provide, and the reason is that the engineers absolutely need IT for the running of their jobs. The reality is that we should just be in the background providing the race team with the services they need to engineer the car. At the end of each race weekend, my hope is that they don’t mention IT at all, then I know we have done our job.” The Supplier Perspective Laurence James, Alliances and Solutions Manager, NetApp These days, Formula One teams are looking for much more agility in terms of the way they handle data; they need to provide the capability to consume the resources at business level rather than having to refer to IT. Laurence James explains: “What we do for Formula One is simple: the ability to provision, expand and scale seamlessly. For instance, they’ve got elastic demand coming through where they need to provision more capacity, and they can do that really quickly. And it’s the guys that actually need that capacity who can instigate the commands rather than having to go through IT all of the time. It’s automated and self-provisioning, which is key for agility.” He continues: “What is expected these days is that the business and IT are working as a unit and the IT is enabling the business. IT is used in
Formula One to effectively enable their engineers, both trackside and back at the factory, so that when they need capacity trackside or when they need to get data back to HQ quickly, they can do that. They can provision it themselves in a future-proof, self-sufficient way.” NetApp, in its partnership with Lotus, has moved away from storage islands towards a converged infrastructure so that, rather than being a modular approach, it is integrated both to networking and storage so that the two levels work in tandem with each other effectively, virtualising each layer. James poses the question: “So how do you retire the old, introduce the new, but make it totally transparent to the applications that are running? Our agile data infrastructure does just that; it collapses all of those layers, it virtualises those layers. When I want to retire an old piece of storage I can transparently migrate all the data. The application doesn’t see anything and isn’t disrupted. I can bring in the new. I can rebalance. I can replicate to protect the data as well but totally transparently to the server layer and to the application layer.” Agile data is crucial in Formula One. The need to restore data from a few days ago (or even earlier in the season) so that it can be analysed again and again is vital in the search for any performance advantage. “NetApp intelligently manages Lotus’ data by protecting it very efficiently,” says James. “They use a lot of our ability to copy data in the form of snapshots, but with a difference in that the snapshots are created locally but don’t consume any more physical storage. We provide the ability to grab data and to grow it efficiently by the use of ‘snap mirror’; ie, replicating from A to B and ‘snapshotting’ at A or B to create point-in-time copies which are spatially efficient. So, in other words, they are not consuming two, three or four times the capacity with every copy that they make.” Formula One provides NetApp with an opportunity to demonstrate what it does and the capability of the company’s gear in a number of different environments, from business applications to fluid dynamics through to the race situation. As James adds: “let’s face it; it’s a great talking point. It’s very positive in terms of talking about it in front of our customers. This technology would work wherever you put it. It’s proved itself. There are no excuses for it – it’s been there, it’s done the job. It’s been taken from one side of the world to the other. It never fails.” 27
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Is this the future for motorsport in the UK? Much more than just a race circuit, the £280m Circuit of Wales is an ambitious infrastructure and regeneration project that seeks to address the economic woes of a unique region. With planning permission recently granted and construction due to begin early in 2014, Chicane examines the distinctive business model that hopes to deliver a world-class automotive and hightech cluster while setting new standards for the modern motorsport facility.
The Circuit of Wales development on the edge of the Brecon Beacons National Park in South Wales is perhaps one of the most challenging and exciting projects in motorsports today, seeking to achieve a host of economic, social, regenerative and environmental objectives. It may be a purely commercial investment, but it has wide-ranging implications for a region decimated by the collapse of the coal and steel industries and for a nation looking to position itself in the supply chain relative to the rest of the UK as well as the rest of Europe. As a development, it also showcases a different model of private-public partnership that takes the best from project and infrastructure developments in the UK to provide an industry-led solution in a challenging economic environment. The new facility in Ebbw Vale, Blaenau Gwent will form part of an automotive and high-tech industry hub and is to be delivered by the Heads of the Valleys Development Company (HVDC). Michael Carrick, CEO of HVDC, explains the origins of the project: “When we first started out, we had a very clear vision that we wanted to improve the quality and capacity of UK motorsport infrastructure and to provide a very modern and exhilarating experience in a state-of-the-art facility for an expanded demographic. Yes, it is venue-driven and a leisure experience, but this economic activity is designed to act as an anchor that attracts other industrial activity to create a cluster of businesses.” But of all the regeneration projects HVDC could have chosen, why motorsport and why Wales? “Underneath the dark economic clouds that existed in 2009, we felt, as infrastructure professionals, that the actual model for infrastructure 29
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development had to change in the UK and that the emphasis had to shift from the public to the private sector in order to capture institutional support,” Carrick explains. “We recognised a thematic change in investors towards a more social impact. There are a number of industries we could have chosen, but it was motorsport infrastructure that we identified as being old, tired and not fit for purpose. There was also the opportunity to link motorsport more closely with the automotive sector, as in not simply a motorsports circuit but a motorsports complex that was linked to industrial activity.” He continues: “When you look at the rainbow of automotive activity in the UK, it begins with Lotus in Norfolk, continues right through Motorsport Valley in Northamptonshire into the OEMs of the West Midlands and onto Wales with its series of dotted supply chains which ends with the Toyota engine plant on Deeside. This project joins those dots and connects the region to this rainbow. We wanted to capture the attention of industry in a way that would also grab the focus of government to allow banks and institutions to invest in one of the poorest parts of the UK to create sustainable economic change.” HVDC has spent the last four years buying the site, securing planning conditions and negotiating a series of contractual documentations to manage risk that includes a series of support packages for debt and for equity. Instilling confidence in the business plan is paramount, and extensive work has been done to exploit the commercial real estate by attracting some performance and precision engineering firms to the project, as well as diversifying into festivals and other leisure-based entertainment.
This is a massive scheme, and one of the largest infrastructure projects in the country, but the economic viability of the project cannot just be decided on motorsport-centric activity but has to include the cluster of R&D firms and precision engineering companies that are to be attracted to the economic activity zone. However, it will be the marquee events that will capture the imagination of the public and the attention of industry, so the circuit has been designed with MotoGP and World Superbikes in mind. “It’s a bike track that has been designed with input from some of the world’s leading motorsport riders, and it has a rhythm that will produce some very exciting racing that takes advantage of the natural elevation changes, not to mention the great views for spectators” he points out. “MotoGP has been to Wales, seen the site and met with ministers. It has expressed strong public support for our project and the concept of a dedicated bike track.” There are many lofty ideals that are associated with the Circuit of Wales development but HVDC and its extensive network of consultants and partners has applied diligence and rigour thus far in the project, as well as innovation in approach and concept. There is no reason why Wales should not have a world-class facility, but the true challenge lies in attracting investors to the development, industry to the hub and spectators to the circuit so that the very people the project is meant to benefit – the young people of the region – can think differently about themselves and their futures.
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to be invested by a public-private partnership of which:
The Heads of the Valleys
Company Board Members
per annum post-operational revenue forecast
Development Company has been
Paul Woodbury (Chair), former
per year will be generated for the UK economy
established to design, build, finance
Chairman of Laing and Global Head
£500,000 over ten years to combat local fuel poverty
and operate the Circuit of Wales
of Infrastructure at AMP
£750,000 over ten years for local community projects
in partnership with the Welsh
Tim Murnane, Director of McLaren,
such as new business development
government, local authorities,
Seamus Kealey, Founder of Avia
to establish a community art fund
universities and industry partners.
expected investor returns over ten years
The vision and strategic direction of
Annabelle Lloyd-Carrick, former
750,000 visitors a year are estimated to be attracted to the facility
the project has been established by
Commercial Director of Automotive
1,650 training places created in construction
Michael Carrick, Peter Thomas and
and service-based industries for local people
Robert Porter, Finance Director
new jobs created during the construction phase
Michael Carrick is the CEO of the
of Aventa Capital.
new jobs once the development is completed
company. The founder of Aventa
The company has engaged over 25
years since the last bespoke motorsport facility was built in the UK
Capital Partners and the former
experienced external consultancy
high-tech low-carbon motor racing facility in the UK
global head of infrastructure
firms including: Apex, Arup, Crunch
investments at Merrill Lynch. He has
Communications, Davis Langdon,
training surfaces along with a hotel, business centre, leisure
been involved in major infrastructure
Good Relations Regional, I3 , GGAT,
complex, technology park and motorsport academy
developments around the world.
Ridge, Santander, Staziker Jones,
Peter Thomas is the CEO of Insight in
Soltys Brewster, Stephenson Harwood,
a commitment to improve 200 acres (80 hectares) of habitat to
Infrastructure and is a former head of
The Urbanists, Tew and Smith, Cardiff
IT audit at AON.
University, ACU Bikesport, MSA, FIA
2015 Q3 opening event
Chris Herring, a veteran of the
Institute, PBA Peter Brett, Populous and
2016 Q2 first international event
motorsports industry, is the manager
of a number of world champion
In Chicane 003 we talk with John
motorcycle riders and the former
Rhodes of Populous, the project
communications director of Honda
architects, about ‘circuit design
3.5 mile (5.6km) International Track, plus Motocross, 4x4, Karting and
2014 Q1 construction set to begin on the 830 acre (335 hectare) site with
* all figures are correct at the time of going to press but are subject to confirmatory due diligence and final approvals
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My season by Charles Pic After first impressing with Marussia in 2012 and now with Caterham in 2013, Charles Pic has established himself as one of Formula One’s most accomplished young drivers. This issue, Chicane invited Pic, Olivier Panis’ protégé, to reflect on his year in the Caterham hot seat. It’s hard to believe I’ve now completed two full seasons in Formula One. The sport moves so quickly and there’s very little time to stop and appreciate this amazing worldwide show we’re involved in. Switching to Caterham this season has been great and I’ve really enjoyed working with the team and the guys from Renault. We’re one of the smaller outfits, but we’ve pulled together and pushed extremely hard; and I’d like to think that on a few occasions, we’ve punched above our weight. It’s also been good working with Giedo (van der Garde) again. We were team-mates in GP2 a few seasons ago so I knew we’d have a healthy relationship from day one. Back then, we were fighting for race victories and helping Addax to win the teams’ title, but 2013 would be a very different challenge. On-track, Caterham has made definite progress throughout the season, though we’ve kept one eye on 2014 when there will be a big shake up in the technical regulations. While we perhaps began a little behind Marussia, we quickly caught up and, since the European season began in Spain, we have definitely been ahead on pace, thanks largely to the incredible efforts of the team and the developments they’ve made to our car. Overall, I think it’s fair to say that we’re not totally satisfied with the progress we made in 2013 as we haven’t achieved our main goal of catching the midfield. However, I feel I’ve matured and learnt a lot during my second season and am looking forward to putting this to use in 2014. I’ve had a lot of good experiences away from the circuit as well. During the German Grand Prix build-up, I drove the incredible Nürburgring Nordschleife, while I also had a great time at the Goodwood Festival of Speed where I demonstrated my Formula One car and the new Caterham 7 620R. And then there are all the little things we do during a Grand Prix weekend that people don’t generally hear about: racing radio-controlled cars in Korea, testing Renault’s new road-going electric vehicle, the Twizy Way, and taking on a PS3 champion in Singapore. I’ve definitely been busy. Amidst all that, I also found time to attend a few World Series by Renault events, which allowed me to catch my younger brother Arthur in action and meet up with a few friends from my junior racing days. And I was honoured to be able to do my bit for the Make A Wish Foundation and Great Ormond Street Hospital during the British Grand Prix weekend. Helping great causes like these is the least I can do. Now we’re into the winter break – which seems to get shorter every year – and I’ll be taking some time to recharge my batteries before gearing up for pre-season testing and the 2014 campaign. If it’s anything like my first two in Formula One, it’ll be over before I know it. 32
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Bob Bondurant recovered from a horrific near-death crash in 1967 to become a driving instructor for Hollywood actors like Paul Newman and Tom Cruise. Today, his high-performance driving school has graduated nearly half a million people. Chicane meets the American who dreamt of Formula One.
Bob at The Nurburgring 1965 where he set a lap record driving a Daytona Coupe in the 1000km Race.
“I went as high as the treetops,” recalls Bob Bondurant incredulously. “I remember looking down at the embankment from the air and thinking, Uh oh, this is going to be a bad one! And that’s the last thing I remember.” It was June 27th, 1967, the United States Road Racing Championship, and Bondurant’s McLaren MK 1C had just careered around the 150mph corner when disaster struck. As he neared 200mph, the front steering arm broke and he slammed into the embankment. It was one of the most shocking crashes in the history of motor racing. Somehow, in a split-second, Bondurant was able to switch the engine off, take a deep breath, relax the muscles in his neck, shoulders, hands and wrists and pray for the best. He should have been killed that day. The car flipped eight times. All that was left of it was the rear suspension. Bondurant woke up in hospital in casts. “How soon am I getting out?” he asked anxiously. “Well, young man,” said the doctor severely, “I saw your accident and it’s the worst I’ve ever seen. Do you want the good news or the bad news?” “The good news,” Bondurant suggested. “You have a mild concussion and three broken ribs and two broken legs below the knees, but they will heal. The bad news is I cannot allow you to sit up because the lower vertebrae in your back are damaged and if you sit up there’s a risk you could become paralysed. So don’t sit up.” “OK,” he agreed. “And you broke nearly every bone in your feet and ankles and you’ll never walk again.” “Are you sure?” asked Bob Bondurant.
BOB BONDURANT “The American The Bob Bondurant School of High Performance Driving sprawls across 450 acres of scorched earth in Arizona’s Sonoran Desert, 11 miles from Phoenix, on land leased from the Gila River Indian community. The 15-turn road course covers 1.6 miles and was designed by Bondurant himself, serving wannabe racers, the odd Hollywood film star, the occasional Black Ops team needing a crash course in covert, high-speed manoeuvres, as well as everyday drivers looking to upgrade their road safety skills. There’s also a four-day Grand Prix course ($4,999 if you’re interested). Chicane met Bondurant at the school in April as he coolly prepared to celebrate his 80th birthday, still very much walking and, of course, racing. He’s a sprightly 80, although the hearing in one ear has been damaged from racing cars in the 1950s, in an era before health and safety, when the engine was mounted directly under the driver’s ear. On most days, alongside his crack team of driving instructors – which includes Andy Lee, World Challenge Rookie of the Year in the 2012 GTS Championship – America’s uncrowned world driving champion takes to the track at 180mph, often with gleeful passengers who pay him for the pleasure. It’s how he stays in shape, he says. “When I put my helmet on,” says Bondurant, “I’m like a different man.” Bondurant has fond memories of his time in Europe, racing Formula One, when his colleagues were the likes of Jochen Rindt and Sir Jackie Stewart, and he remains a very proud member of the hallowed Club International des Anciens Pilotes de Grand Prix F1 (aka CIAPGPF1 Grand Prix Drivers Club). For a kid with the heart of a racer, the arrival of Formula One on the world motorsport scene when he was 17 made a huge impression on the young Bondurant. At the time, he was cutting his teeth on an Indian Scout motorcycle near his family home in Los Angeles. At 23, he was racing sports cars and winning races as well as accolades. But it was the Cobras that defined Bob Bondurant’s career. In 1963, he joined Caroll Shelby’s Cobra team and began chalking up an impressive amount of wins, taking Europe by storm and securing a permanent place on the team. In 1964, he won the GT class at Le Mans 24 Hours. In 1965,
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Sir Jackie Stewart on “The American” Bob really did want to race in Europe. The problem is that very few American drivers come here to race. Americans are very domestic – only 11% of the population have a passport. And they’re very spoilt; it’s difficult to come over here and rough it if you’ve been living in America. So I think there’s been a shortage of good American drivers in Formula One. And so we need more. It would be great to have a top line American driver. Bob was a great competitor, but he was perhaps never right at the top end in Formula One. He was a good friend, though, and it was nice to have someone from America representing the Stars and Stripes. And, of course, without Bobby and Graham Hill I don’t know how I’d have got out of the car after the crash at SpaFrancorchamps in 1966. I was injured, there were no marshals there and Graham and Bobby somehow got me out of the car.
while racing in Reims, France, where he helped to win the World Manufacturer’s Championship for the US in his now trademark Cobra, the impressive American had his first brush with Formula One. Enzo Ferrari summoned the man the Italians were calling ‘Bondurante Sir Cobra’ to Italy for a meeting. John Surtees did the translating. “Ferrari said, ‘Would you like to live in Italy?’” recalls Bondurant. “And I said, ‘Si, if I’m driving in Formula Uno.’” But Ferrari was not to be rushed. “When will you let me know?” asked Bondurant. “When I decide,” said Ferrari. “One week? Two weeks?” Bondurant persisted. “He looked at me very sternly and he repeated, ‘When I decide.’ So I shut my mouth.” Bondurant returned to digs in England, thinking he’d blown it, that he’d pressed the great man too hard. Three days later, however, the phone rang. It was Luigi Chinetti at Ferrari, requesting Signore Bondurante’s presence in Italy. He was to report to the factory to be fitted for the Ferrari 158V8 that he’d be driving in that October in the US Grand Prix in Watkins Glen, New York. It was his Formula One debut. He began 14th on the grid, got a good start and soon made it up into sixth place. Then the track was beset by wind and rain. Bondurant says: “You race in Europe, you get used to racing in the rain, so you just do it.” But halfway through the race, the elastic on his goggles came unstuck. The rain had stretched the elastic band and they kept blowing down over his eyes. His
first time in a Formula One car, racing for Ferrari, he recalls ruefully, and this happens! What are the odds? Bondurant soldiered on, pulling the goggles back up over his eyes and holding them there, driving onehanded for the rest of the race, sometimes at 170 miles per hour. To shift gears, he was forced to put his knee on the steering wheel to free up his right hand. He finished ninth, but it wasn’t enough to make the grade with Ferrari. While throughout 1966, he continued to race for Ferrari in prototypes, at Sebring, Daytona and Le Mans, at the following Mexican Grand Prix, he drove a Lotus 33 for Reg Parnell, and after that he competed in five Grands Prix for Team Chamaco Collect, finishing fourth at Monaco. As a rainstorm plagued the Belgian GP of 1966, Bondurant worked frantically beside Graham Hill to pry an immobilised Jackie Stewart out of his demolished – and dangerously leaking – car. Stewart was soaked in fuel and trapped in the car for over 30 minutes, his steering column pinned to his leg. The pair were eventually able to free him using spanners from a spectator’s toolkit. This was the incident that provoked Stewart’s one-man crusade to improve driver safety in the sport. About ten years ago, Bondurant received a phone call from a stranger who claimed he’d been at that ill-fated race in 1967. He was 17 at the time, he explained, and had witnessed the crash and captured some of it on camera. Would Bondurant like to see the negatives, he asked. “A lot of drivers never got to see the accidents they
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Above left: A publicity shot from the 1965 European Season taken at Monza. The velocity stacks have been added for effect. Above right: Bob and Paul Newman at Mid-Ohio in 1970 after he had driven Newman’s Lola Can-Am.
were in back then,” says Bondurant. “Blowing up those negatives and looking at those pictures gave me so much closure. To see how badly the car was damaged – and that I survived it.” The photographs are now hanging in the museum at the Bondurant School of High Performance Driving, among Bondurant’s lovingly archived collection of motor racing memorabilia. The crash finished his racing career, but just eight months later, through sheer force of will, he was walking again, albeit painfully. He’d also just opened his first driving school at Orange County International Raceway. “I just never gave up,” he says. “I never give up.” Back in ’66, Bondurant had acted as technical director on the cult film Grand Prix, teaching its star, James Garner, how to race. He’d enjoyed teaching and realised a new vocation. “It’s like the man upstairs said, ‘Before you get maimed or killed I’m going to take you out of racing and help you teach other people.’” says Bondurant. It was the same bloody-minded determination that had enabled him to achieve so much as a racing driver, we suspect, that got him back on his feet and succeeding in business. While still in a cast and wheelchair, he was tirelessly canvassing sponsors for the school – despite, as he admits, not being the greatest of advertisements for a new driving school. Bob opened his school with three Datsuns, a Lola T70 Can-Am car and a Formula V. His first class consisted of just three students. The second week there were two students,
Robert Wagner and Paul Newman, who were training for the film Winning. Bob was a technical advisor, cameracar driver, and actor-instructor in the film. Newman told Bob that he had turned down two better paid films to do Winning, just because he wanted to see if he had the guts to be a racing driver. Bob was impressed by his daredevil attitude and a mutual respect and enduring friendship developed between the two men. Legend has it that there were only three people that Newman would ever call on the telephone, one of whom was Bondurant. A move to Ontario Motor Speedway in California followed – and the addition of a few cars from Porsche – then to Sears Point in Sonoma. The school finally settled in Arizona in 1989 with a Ford partnership, switching to GM and Goodyear in 2005. Along the way, Bondurant had started racing again, and was inducted into the Motorsports Hall of Fame of America. In April last year, he expanded with a satellite school at Pike’s Peak International Raceway (PPIR) in Colorado. Arizona’s summers get too hot to run much of a corporate programme, so the partnership at PPIR takes up the slack. They’ve trained up to 500 people a day in Colorado. “We’ve now graduated nearly 500,000 people,” he says. A further expansion of the Bondurant School out to the Circuit of the Americas Formula One track in Austin is on the cards, too. Brand Bondurant represents an American connection to the tumultuous early days of Formula One – a living archive as, just two states to the east, Formula One finds a home in Austin. 37
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Bob and James Garner with stunt driver on the set of Grand Prix at Monza 1965.
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The Other Half…
Dato’ Kamarudin Meranun
“We can make this sport more accessible and affordable to a vast amount of people… I’m not sure many other teams can do that.”
He is the co-founder of the AirAsia empire, Tune Hotels and co-Chairman of Caterham Group, who has long eschewed the limelight his long-standing business partner, Tony Fernandes, has courted through his forays into Formula One and English top-flight football. Yet, Kamarudin Meranun’s story is fascinating – how one of Malaysia’s most successful tycoons founded AirAsia whilst fleeing from lockdown in Iran. It was 2001. Iran was in lockdown, in the grip of Nowruz, a spring festival that had inconvenienced a want-away Kamarudin Meranun. He was trapped, in need of a way back to Malaysia, and his options were limited. International flights out of Tehran were full; airspace a mere internal relief. He decided on Northern Iran, from where he could chance the Turkish border by road. He knew that for this operation to be a success, he would require assistance from a few names in high places. The border neared and, with it, chaos, panic, the sickening fear of failure at the gates. He approached; questions were fired over and over, “Malaisie, Malaisie”, Kamarudin would insist, to no avail, as Turkish guards muscled relentlessly for his identity. He ventured a new strategy: “Mahatir, Mahatir!”, and got an instant reaction. “Oh, Mahatir! Get in, get in!” the guards would double take, and Kamarudin was through. “The Turkish love (Tun) Mahatir,” he explains, “so I had an easy time using his name.” This was the first friend from a lofty plain that would come to his aid, albeit unknowingly. Dr Mahathir Bin Mohamad was then Prime Minister of Malaysia, and remains the country’s longest serving premier. “I told Tun about it, and he just laughed,” Kamarudin reflects. “He said that a lot of people used his name for various reasons, so I wasn’t the first.” He would use it to his advantage at several checkpoints on the 18-hour journey from the Iran/Turkey border to Istanbul. He would later liken this particular escapade to Mission Impossible. “Not that they’ve seen Mission Impossible over there,” he says. But the mission wasn’t yet complete. Meanwhile, Tony Fernandes had just flown back to Malaysia from New York City. Fernandes was with Warner Music Group
at the time, who had bought Roslan Aziz Production (RAP), a music artist management company, from Kamarudin. The pair had been discussing business propositions since 1990. They wanted to “do something like Net Jet”, explained Kamarudin; private business aviation in Malaysia that would allow small companies to have partial ownership of a corporate jet. Discussions continued well into 1997, when the Asian financial crisis hit Malaysia hard, and put paid to any furtherance of the project. It remained in stasis as Kamarudin breached the Iran/Turkey border, considering his next move in a country that, for a time, at least, would tolerate his false claims to power within Malaysian parliament. “When I got to Turkey I actually called him (Fernandes) because Warner has associates all over the world,” recalls Kamarudin. “I was sure that he could help me out getting a room in Istanbul, and at a Warner corporate rate. I was coming in from Northern Iran, so I was compromised. He agreed, on the premise that it would cost me $20 million! I said to him, ‘I’m only asking for a room in Istanbul, and you want $20 million?’” Unbeknownst to Kamarudin, Fernandes was reinitiating a conversation the pair had not had for four years. “Fernandes said, ‘I need $20 million to start the airline’. I asked if it was the same airline we’d been discussing prior to the economic crash. ‘No, no, no, a budget airline. There’s a new model I want to follow.’ I thought for a while, and then agreed, ‘OK’, I said, ‘you get me a room and I’ll get you $20 million’. And that’s how AirAsia was born. I raised the $20 million through investment and he put in $20 million, and that’s how we started the partnership.” It wasn’t quite as plain sailing as it sounds. After talks broke down with a potential partner in the business, the pair
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approached the government-affiliated company that owned AirAsia and proposed that they acquire the ailing airline for one Malaysian Ringgit. Upon agreeing to split the airline’s 40 million Ringgit debt, a deal was struck , and Asia’s first ever low-cost carrier was launched in January 2002. The partnership today sees them dually at the helm of the Caterham Group, and a Formula One team that, now free of its direct association with Lotus, is striving to break away from the race at the rear of the grid, to join the competitive midfield environment occupied by the likes of Force India, Sauber and Williams. It has been a tough undertaking, in times of economic strife, and in an environment where teams are now forced into a precarious balancing act of remaining competitive while meeting expectations of the sustainability of their presence on the grid. It helps not that the established teams which Caterham are attempting to catch are, arguably, better resourced and better financed for more immediate gains from the sport. But a distinct advantage the team does have over many of its contemporaries lies at the boardroom level. “Our uniqueness stems from the fact we are, first and foremost, businessmen,” Kamarudin offers. “We are also decent men. People may see it differently because we’re involved in Formula One, and we’re involved in football, and they’ve seen how some others have approached investment in these areas, certainly the latter. But we know what we’re doing and we’re in it for the right reasons. “We’re very focused and we’re very passionate about what we’re doing. A lot of people go into these situations, especially Formula One, without being able to see the real ‘direction’. Yes, we are into lifestyle, but we are into
lifestyle in a way that will then be able to serve people who are underserved. Formula One is a good example of this: everybody loves Formula One, but it’s too expensive. “Caterham is a premium brand that makes Formula One affordable to a lot of people,” he continues. “We’ve also sponsored a MotoGP team. What I’m saying is that with the airline and the budget hotels, we can make this sport more accessible and affordable to a vast amount of people, and I’m not sure many other teams would be able to do that.” There are many things that Kamarudin has achieved in his professional life that others would struggle to match – ask any UK citizen to pass for David Cameron at the border of a foreign country and you begin to see why. What both he and Fernandes can achieve at Caterham, and indeed at Queen’s Park Rangers (QPR) Football Club, of which they jointly own the substantial majority stake, will be interesting to observe. Both businesses are operating in a tier below the ‘premier league’, so to speak, and one has to consider the implications of Kamarudin’s statement that he and Fernandes are in it ‘for the right reasons’. For fans of both QPR and Caterham, the right reasons would be to see them back where they belong, rubbing shoulders and front wing endplates with the leaders of the pack. For Fernandes and Kamarudin, however, the ‘right reasons’ may well be the righting of a business that required stability in lean times – creating a sustainable commercial platform for operations that they quite clearly have swathes of affection for. In times when the Formula One paddock has come under intense scrutiny for its relationship with the environment, the future, and real life, Kamarudin Meranun’s story might just be the inspiration the sport needs to intensify its efforts to maintain its relevance for future generations. 41
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There is a slow but inevitable march towards widespread corporate carbon neutrality, believes Edward Carlton, Managing Director of CNI UK Ltd. And Formula One, he suggests, with its global reach and passion for efficiency and progress, is the ideal platform to lead the way to the rest of the world.
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whether it’s B2B, or it’s B2C. You are saying to your clients, to your fan-base, ‘Actually, guys, we are aware this is what you are interested in and we understand what your views are and we are doing this.’ In terms of fan retention and bringing on new sponsors, I think that’s part of the huge work that they can measure in terms of alignment.” It also makes commercial sense, allowing you to build bridges with other companies and attract sponsorship. “It can be as simple as opening yourselves up to green finance, to stakeholders looking for the environmental credentials,” he continues. “Somebody wants to invest, or maybe partner or sponsor – to associate themselves with your company – but they feel they can’t necessarily do that because you haven’t got that checkbox in sustainability. They may feel there could be a backlash from putting their name to a company which maybe isn’t seen to be implementing proactive sustainability policy.”
our partners to undertake a ‘health check’. They survey the building, look at production and look for opportunities where efficiencies and savings can be derived. This may be something like changing the lights, some standard fitting LEDs. It could be as simple as fitting motion sensors so the lights turn only when they’re needed. “At the end of the day – yes, you can just offset but we don’t think that’s a great mentality to have. It shouldn’t be ‘offset and forget’, it should be ‘offset and try to reduce’, or ‘reduce and try to offset’. At the point of offsetting we look at creating an offset portfolio in line with the company’s sustainability and also marketing goals. A key focus for CNI UK is transparency and integrity. Integrity through the certification and verification of the offsets used [CNI UK predominantly use VCS certified carbon credits] and transparency via the registries associated with the certification bodies [CNI UK use APX].
Becoming carbon neutral is not simply about offsetting residual carbon footprint. When CNI UK Limited (CNI UK) began working with Newcastle United to help reduce the club’s environmental impact, the first part of the implementation was to reduce and drive efficiencies. For example, some very simple changes were quickly identified. The running of escalators at non-peak times and nonessential lighting both attribute to direct efficient saving - simple solutions, but the first step towards Newcastle’s revamp as the world’s first carbon positive football club. This story suggests that football has a lot to learn from Formula One, whose mania for efficiency is forever driving the development and implementation of new energy-saving technological solutions. And yet a general perception remains of the sport as the epitome of excess and environmental waste. Today, an increased public awareness of environmental issues means that a company’s CSR has become crucial to brand image, which is perhaps why, in 2011, with the help of CNI UK, McLaren dedicated itself to becoming the first carbon neutral Formula One team. Edward Carlton, Managing Director of CNI UK Limited, sees sustainability and carbon neutrality as an inevitable march of progress across all sectors. His company began working with McLaren to offset the team’s carbon emissions back in 2011, and now works across the whole McLaren group as an official associate partner, assisting them in achieving their sustainability targets. “For a team like McLaren with such high levels of exposure, external pressure from stakeholders is inevitable,” he says. “Public image, and public scrutiny, almost ensure you have to do it. The requirement of ticking that sustainability box and upholding that brand image is paramount.” For some firms, such as those within the bottled water industry, for example, carbon neutrality is merely about maintaining a licence to operate. Many countries have considered banning bottled water because of the environmental impact caused by transporting a commodity that is readily available on tap. In this case, offsetting the carbon footprint is about offsetting risk. But for companies, like McLaren, that enter into the market voluntarily, it’s about setting a precedent, as well as a big PR opportunity. “McLaren as a team, as an entity, as a company, is about legacy,” Carlton explains. “They have been around for decades and they will be around for decades. That’s why I think sustainability is key. You are aligning yourself with your followers,
“For a team like McLaren with such high levels of exposure, external pressure from stakeholders is inevitable. Public image, and public scrutiny, almost ensure you have to do it. The requirement of ticking that sustainability box and upholding that brand image is paramount.” CNI UK will also act as a consultant, commercialising the process and making it viable and realistic for each business. Straight off the bat, for example, the company can work with its partners to re-broker energy contracts; in some cases, saving a company thousands of pounds almost immediately. “Ultimately,” says Carlton, “for CFOs thinking about putting pen to paper to potentially buy carbon offsets, in order to make this a commercial viable option, we endeavour to generate them substantial savings up front so they can pay for the offsets and hopefully other elements of sustainability.” “First thing, you’ve got to know where you start,” he explains. “You get your baseline footprint calculated. Generally, we undertake an audit. We can do that ourselves, but we also like to use one of our strategic partners. You get a third, impartial party to come in and say, ‘This is your starting point, this is your impact on the environment – it provides a quantifiable metric.’ It will include factors such as utilities, logistics, etc. That’s the starting point. Next, we will engage
This allows the clients to see the credits that are purchased, and monitor when they have been retired. Then it’s the marketing and PR, which is the end of it, and which is really key. Once you’ve done something, especially something as emphatic as becoming carbon neutral, shout about it. Educate everyone else.” And Formula One is taking notice. As CNI UK continues its work within the sport Carlton believes other teams will follow suit, a slow but inevitable process towards widespread corporate carbon neutrality. And Formula One, with its passion for efficiency and progress, and reach of millions globally, is the ideal platform to lead the way to the rest of the world. “For me, it’s setting a benchmark for others to set their sights on and to achieve,” Carlton concludes. “In doing so, you are ultimately promoting carbon neutrality and you are educating the rest of the teams. Then, there are the millions of fans watching. It’s happening very slowly, and hopefully, in another ten years’ time, everyone will be getting there.” 43
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Lexicon: Carbon Neutrality
CO2e carbon dioxide equivalent A unit of measurement that expresses the amount of each of the six Kyoto greenhouse gases that would have the same global warming potential as CO2 when measured over a 100-year timescale. For example, one tonne of CH4 has an equivalent global warming potential of 25 tonnes of CO2.
VER Voluntary Emissions Reduction A Carbon Credit equivalent to one tonne of CO2e.
CDM Clean Development Mechanism The CDM allows developed nations and firms to offset their emissions by investing in greenhouse gas reduction projects in the developed world in return for emissions credits: known as CERs.
CER Certified Emission Reduction A credit generated under Kyoto’s CDM. Equivalent to one tonne of CO2e.
EU ETS European Union Emissions Trading Scheme EUA European Union Allowances A one tonne offset traded as part of the EU ETS.
REDD Reducing Emissions from Deforestation and Forest Degradation Born out of the Kyoto Agreement.
CRC Carbon Reduction Commitment Scheme aimed at improving energy efficiency and cutting emissions in large public and private sector organisations. These organisations are responsible for around ten per cent of the UK’s emissions.
Offsetting The practice of retiring carbon credits as a means of compensating for greenhouse gas emissions.
VCS Voluntary Carbon Standard VCS certified offsets are audited according to the rules laid out in the Kyoto protocol and must demonstrate social benefits for local communities but accept a wider range of project types.
GS Gold Standard
Reversibility Concerning forestry and carbon sinks; if a carbon sink such as a forest is cut down before maturity (and not replanted), any emissions reductions are nullified.
Additionality An external emissions reductions project is said to adhere to the concept of additionality if the project would not have taken place in a ‘businessas-usual’ scenario resulting in higher emissions. The required carbon financing (or carbon market) are deemed to be the cause of the project’s implementation.
Registry A database of external emission reductions cataloguing their existence and transactions. Each credit is assigned a unique identifier. Additionally, credits are retired (cancelled) from the registry upon being sold to offset an equivalent amount of greenhouse gas emissions.
Retire The permanent termination of external emissions reductions from future use in a third-party registry.
GS certified offsets are audited according to the rules laid out in the Kyoto protocol and must demonstrate social benefits for local communities but are more limited in the projects they accept; for example, forestry projects are not allowed due to ‘Reversibility’.
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Bigger Better Badder Faster
JMI’s acquisition by Lord Coe’s CSM Sport & Entertainment (a division of Chime Communications Plc) will provide JMI the leverage it needs to grow and thrive in the motorsports sector, says the company’s Founder and CEO, Zak Brown, who spoke to Chicane just after the deal was finalised on October 25.
Does CSM’s acquisition of JMI afford you the time to one day run IndyCar or Formula One? Put it this way: I’ve moved to England and I’ve no desire to move again. I’m fully and happily committed to CSM for the long-term. This is something that I chose to do, and I don’t think you’ll see me doing anything other than CSM for a long time. In the short-term, it will be business as usual at JMI. What material benefits will this acquisition give to JMI? It means faster growth, for the company and me personally, and that’s why I’m so excited about it. At the end of the day, they acquired us for the sport we play in: motorsports. I don’t want to change that. Our presence in North America, our geographic spread and the quality of our clients were all important factors to them, and they remain core priorities for us; that’s not going to change. Another aspect is our people; our people make our world go round and, from their standpoint, they want to see Just Marketing grow and thrive in what we already do, and we think CSM gives us extra horsepower to do that bigger, better, badder, faster. In terms of your continuing role at JMI, is it a case of you selling CSM motorsports expertise and a US presence, and you attracting their clients to motorsports? Absolutely. In addition to continuing my role as CEO of JMI, which is a full-time job, I’ve got a second full-time 45
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Lord Coe, CSM Sport & Entertainment
Jim Glover, CSM Sport
& Entertainment CEO
“This is the most sizeable acquisition
“J MI’s reputation and performance
CSM Sport & Entertainment has made
are both outstanding and make
to date and signals our strategic entry
the company a natural choice for
into the exciting world of motorsports
CSM Sport & Entertainment as an
and the important US market. This is a
acquisition. As the industry leader
deal that makes sense for CSM Sport &
no one knows global motorsports
Entertainment on multiple levels. It will
marketing like JMI and having Zak
bring value to shareholders, clients
and his talented colleagues on the
and employees alike, as motorsports
team will help build on CSM Sport &
and the US are two untapped areas
Entertainment’s leading position in
for CSM Sport & Entertainment, and
to be truly global we have to be in them. On top of that, Zak’s record and leadership in driving major sponsorship deals will be a significant boost for our overall business.”
job as Global Head of Business Development for CSM. My role, in addition to making sure JMI is successful, is to expose JMI’s clients to other CSM capabilities and activities, and vice versa. It will be part of my role to make sure that all of our collective clients are up to speed and taking advantage of the opportunities that the CSM group provides across the portfolio. What does this mean for Formula One? Primarily that we’ll bring more money into the sport. That’s a good thing for the industry. We should be successful over time in bringing more sponsorship to the Formula One economy. How soon will we see the effect of this acquisition? Our goal is to start seeing it quickly, by next year. I’d like to think we’ll have some new partners on the grid in Melbourne. Does this mean that motorsports are now more integrated into the wider sports world rather than being the ‘noisy gang’ in the corner? Definitely. It’s a mainstream sport. When people consider traditional ‘stick and ball’ sports, as we call it in the States, I think motorsports is part of that portfolio. It used to be baseball, (American) football and basketball, in American terms. And here, it’s football, cricket, and I think motorsports is right in the middle of that. In addition, when you have a company like CSM (Chime) making a substantial investment in a company that is 100 per cent motorsports, I think that tells you the importance with which they regard motorsports. It’s a big acquisition, and there are a lot of resources that you’ll have at your disposal. However, is there a danger of diluting the JMI brand? I don’t think so. We’re exposing it to more relevant people for
ood ork, e as e in d and
ood ork, s an s but hat e the
our target audience: the Fortune 1000 companies. Is this like selling your baby, in a sense? It is, but it still feels like my baby. I sold the majority of it in 2008 and I haven’t felt any different about it. I was very hesitant at the time; it was my baby, and I was in total control. As CEO, as long as you’re doing your job, it is still your baby. Ultimately, CSM is looking for me to run and grow the business, and therefore, it still is my baby; I just don’t have equity in it like I used to. To me, you’re born and bred a certain way, and it’s hard to change how you operate. I don’t work any differently today than when I owned 100 per cent of the company. Much has been written about the ‘fallout’ between WPP (Chime’s biggest shareholder) and Chime over this deal, but something we picked up on was WPP’s statement about organically growing the business, which is something you’ve done at JMI for a long time. What do you think is the positive of that? When you get to a certain size, like a Chime, a WPP or a Unilever, not only do they grow organically, they’re acquiring all the time because they’ve got the resources to do so. They have shareholders that want them to accelerate growth or get into new markets. CSM went from having no presence in motorsports to being the leader in motorsports. To do that organically would take ten years, if you could ever do it. I think it’s quite common for large companies to grow both organically and through acquisition. What were the defining criteria for you in terms of the fit between the companies? We have to look at whether it’s a good fit, culturally; the people, the way they work, and it very much starts with Lord Coe as an athlete. I don’t have Olympic gold medals but I
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used to race, so we have in common that we were once on the field and made the transition into business. I think culture is critical. Can you work together? Do you share complimentary capabilities? Are there opportunities for our clients to go into other parts of the CSM family? And then their client list: do we see in their long list of clients companies that we think we could do business with? Race teams are always trying to get faster. Businesses are always trying to get smarter. Do we think we can learn from them? They’ve got a lot of smart people in there, a lot of experience, and I think the answer to all of that is ‘yes’. They ticked all the boxes. What have you learnt since your TWA days, and where do you think you’re headed in the future? I’ve learnt a lot. One of the biggest things I’ve learnt from the Roger Penskes of the world, one of my business heroes, is to surround yourself with the right people. No matter how much one person can do, you’ve got to surround yourself with the right people, create a good team environment, and then you’ve got to allow your team to grow with you. Now, we’re joining 1,500 other people and we’re all going to grow together. That’s probably the single largest thing I’ve come to learn: the power of the team. You’re going from where you started, with TWA, to being one of 54 companies, five divisions, and as you say, close to 2,000 people. Is there a slight tinge of nostalgia that it used to be just you? No, because I’m always looking forward, not backwards. I’m thinking about all the great things that we can do. I’ve never been so motivated. I don’t have any regrets, I’m quite the opposite. I’m really eager to get to the next phase, the next chapter. 47
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Whoâ€™s watching Formula One?
38% 79% 61% 47%
are early adopters, open to using new, innovative products
agree that sponsoring sport helps companies gain in appeal
would choose a sponsorâ€™s product over a rival brand have consciously made purchases from motor racing sponsors because of their sponsorship
Top product categories Formula One TV audience intends to purchase in the next 12 months: 1. Fashion/clothing 2. Computing 3. Travel/holiday 4. Mobile phones 5. Electronics
How fans experience F1
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Many feel that Formula One needs to embrace new media and engage more easily with its fans, but the extent of the possibilities is rarely presented. The brush between Sebastian Vettel and Mark Webber at the Malaysian Grand Prix earlier this season offered an opportunity for some sophisticated analysis. The graphic below shows the extraordinary number of opinions expressed about the on-track conflict and the staggering amount of Twitter impressions generated - ie, the total number of times tweets were delivered to Twitter streams. From this we can get a sense of the size of the potential audience by location. However, not everyone who receives a tweet will read it, as is the case with many forms of paid advertising, so any understanding of the potential impact has to be complimented by information from engagement metrics.
Who’s talking about Formula One?
The Webber vs Vettel Malaysian Grand Prix controversy generated an astounding 1.6 bn Twitter impressions
96,448 Unique Opinions were recorded, of which 50,901 have identifiable locations GBR ESP AUS IND USA BRA VNZ RSA MEX IDN 10,766 4,732 4,391 2,478 2,398 2,249 1,952 1,887 1,802 1,783
All figures courtesy of Nigel Geach, “The Analyst” at Repucom. 49
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The Hon Louise Asher MP, as Minister for Tourism and Major Events for the State of Victoria, is in charge of the Australian Grand Prix at Melbourne’s Albert Park. Chicane asks why, despite quantifiable economic benefits, the race still receives such negative domestic press.
Tell us about your role. When you’re a minister in the Victorian government, you have administrative responsibilities and legislative responsibilities, and I am responsible for the Grand Prix Act of Parliament that denotes this Grand Prix to be held at this circuit. I administer the Act, and the Grand Prix organisation, while it has an independent board, reports to me. I’m probably the most unlikely minister to be in charge of a Grand Prix. I was appointed Minister for Tourism in 1996, and we lost government in 1999. Then I was reappointed when we won office in 2010. So, in 1997, which was the first Grand Prix that I ran myself, you would not have got anyone more unlikely to be minister, because I had never even been to a Grand Prix before. I love the fact that this is a major event, and Melbourne is such a major events city, but I genuinely love the sport too. Now, I’m not the most knowledgeable person on all the drivers, and who was in McLaren and who’s in now, but I like the event straight up, and in those days, of course, the politics of it was very, very different, because the amount of taxpayer subsidy was much, much less. Is it your responsibility to negotiate the renewal of the contract? In this instance, it will be Ron Walker, as Chairman of the Australian Grand Prix Association, and Bernie Ecclestone, and what happens then, should I receive a deal that I think is a good deal – one that has value for money for the taxpayer in it – is that I will refer it to a cabinet subcommittee, which will have the Premier and the Treasurer on it, to make the decision. But it will be my recommendation to that committee. We’ve still got it for three more events, so I’ll look at what Ron Walker and Bernie Ecclestone come up with, as and when. What do you consider good value for the taxpayer? The contract under which we’re now operating was negotiated by my political opponents, the Labor Party, and the level of subsidy is far, far higher than the level of subsidy that existed in the Kennett era in the nineties when we previously ran the event. The taxpayer subsidies that I had to defend in that era were tiny. They were a million dollars, two million dollars, depending on the year. Formula One is a vastly different proposition now. Then, it was perhaps slightly niche, and now it’s a major global deal.
“Our economic impact statement showed the Grand Prix is worth $32m to $39m in economic benefit to Melbourne.”
F1’s economic impact Melbourne Australia
That is what I will have to consider, and this event means a great deal to Melbourne. We carried out an economic impact statement using the Auditor General’s preferred methodology. That showed the event was worth about $32m to $39m in economic benefit to Melbourne. The hotels are largely full, the restaurants are largely full, and there are a lot of visitors from interstate and overseas. The benefit for Melbourne is that it’s a branding exercise. It’s getting Melbourne’s name up in lights. There is one economic impact study for the event, and then a second economic impact study, which tries to quantify the value of the branding exercise of Melbourne. I’ve just come back from a trade mission to India, and in the English language newspaper over my coffee in the morning there’s a constant messaging of Melbourne. The name of this very important city is in Indian newspapers on page one because of the Grand Prix. That second study shows me that the branding impact is another $35m. This race goes through to a range of countries. It’s beautifully targeted for the Asian market. As a government, we’re targeting the growth markets of Asia for our business interactions. It’s not just about the economic value of the event. It gives Australia a name but because I’m a state government minister, my focus and my responsibility is marketing the state. Basically, we’ve had a tougher job to market Victoria than other states because we’ve actually had to build up the reputation. And yet, despite these economic impact studies, there’s still so much negative press in the Victorian media. Why do you think this is? Negative press centres on the high level of subsidy paid by the Victorian State Government for the event. The uninformed media commentary in Melbourne is that Bernie Ecclestone is putting the fee in his pocket. It’s uninformed commentary. I hold an annual press conference to say what the level of subsidy is prior to the annual reports being tabled in Parliament. I was asked whether I’d do it, and I said yes, because there are hundreds and hundreds of annual reports that get tabled and everyone pulls out the one for the Grand Prix, writes down what the subsidy is, and that gets on the front page of the paper. I wish the Victorian media would be more positive about Victoria. No one expects a newspaper to support a government – but they could support the concept of the city being great. 51
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What the Brendan Australian Grand McClements, Prix means to me CEO, VMEC “Albert Park was a pretty run-down sort of precinct. It had generations of underinvestment. What the event has delivered to the park is extraordinary. It’s now Victoria’s most-used public park.” In 1990 Melbourne was in the midst of a deep economic slump. The financial crash of 1989 had lead to the sale of the Central Bank of Victoria and a bitter recession followed. That year the city bid to capture the 1996 Olympics, an initiative State Premier Joan Kirner hoped would stimulate growth, but Melbourne lost out to Atlanta, adding to the pervading sense of pessimism. The recession would ultimately oust Kirner from government, but before she went, and as a direct response to that failed Olympic bid, she set up the Victorian Major Events Company (VMEC), which would ultimately secure the Australian Grand Prix for Melbourne. “There was a reflection around the early nineties and onwards that maybe we should be better at going around bidding for things,” recalls Brendan McClements, VMEC’s CEO. Launched under the stewardship of former Lord Mayor of the city Ron Walker, now Chairman of the Australian Grand Prix Corporation, VMEC is a government-funded company devoted to identifying, acquiring and retaining major events for the state of Victoria. Losing the 1996 Olympics hurt Melbourne, and from the get-go the primary directive was think big. “In the early days it was just get big things. We want big things!” says McClements. “And the Grand Prix was obviously one of the biggest things available in the world at that stage. So the most high-profile of VMEC’s early wins was to secure the Grand Prix for Melbourne. It has size and scale. It’s a major event by any definition. So in the competitive landscape you look at the Olympics and FIFA World Cup – they may be the two big contestable events infrastructures around – but it’s unlikely that Australia, let alone Melbourne, will be in a position to really host one of those events probably in the next 30 years or so. There are other people ahead of us
in the queue. So the Grand Prix is the marquee event.” The Australian Grand Prix came to Melbourne in 1996, as VMEC began building, managing and retaining a calendar of events – a series of “small blockbusters”, as McClements puts it, ranging from flagship sporting events, such as the Australian Open, the Melbourne Cup Carnival and the Superbike World Championships, to domestic sporting events, such as the Australian Football League Grand Final, to food festivals and art exhibitions. It’s a non-profit governmental agency but it’s also a company with an entrepreneurial vision whose directors have all the duties and responsibilities of conventional company directors. This allows VMEC to form a bridge between the commercial world and the traditional bureaucratic process. Today, it’s the world’s leading events acquisition group. State level event acquisition is now a vastly competitive field. When VMEC was formed there were only a handful of specialising companies but now competition is bloodthirsty. When McClements attends sport accords today he finds himself vying with a hundred delegates from cities all around the world with budgets that dwarf Victoria’s. These days, he admits, VMEC has to be “smarter, more thoughtful, more insightful, more innovative in the way it goes about things. It has to figure out what it wants, what it doesn’t, and go for value, not price.” The Australian Grand Prix was just one part of a slow structural realignment of Victoria’s economy in the nineties, which under the controversial state premiership of Jeff Kennett saw a large-scale privatisation programme and a slashing of public sector jobs that would curdle George Osborne’s blood. While the Australian Grand Prix is universally adored by race fans, its perceived association with
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fifties. It had generations of underinvestment. The genesis of the current debate is really around a group of people who said, ‘This is going to ruin Albert Park.’ But in fact what the event has delivered to the park is extraordinary. It’s now Victoria’s most-used public park. You wouldn’t be prepared to walk there after 6pm before the Grand Prix came. There was broken glass, garbage – it was a genuinely dire place to be walking around.” In general, however, McClements says that Melbournians embrace the Grand Prix wholeheartedly and with a large dose of “civic pride” – and the race has certainly put the city emphatically on the map, more than Kyle and Jason and Harold and Madge combined. It has defined the city’s image internationally and helped banish a perception of Australia that was never part of Melbourne’s identity – of coral reefs and alligators and Paul Hogan. For McClements the Grand Prix was ultimately part of a process that rebuilt Melbourne’s confidence after that difficult period in the early to mid-nineties. “Australia’s international branding has been around things that Melbourne or Victoria wouldn’t necessarily have,” agrees McClements. “A reef, a rock, a harbour, the bridge – whatever it might be. Everyone understands why someone would gravitate towards promoting Australia internationally that way. But then it’s legitimate for others to say, ‘Well, that doesn’t work for us, so we’ll forge our own path here.’ And that’s what Victoria essentially did, because we didn’t have a big red rock or a harbour. “So that’s partly where the branding around events is coming from – we need to be able to be independent enough to talk about ourselves internationally – to create a different narrative.”
Kennett’s tenure may be the reason why it remains unpopular among some elements of the Melbourne public and media. We put it to McClements that perhaps not enough is done by VMEC to publicise the economic benefits of the Grand Prix. “I’m a Melbourne boy, I grew up here,” he says, “and the late eighties and early nineties were a pretty tough time here in Victoria generally. It required a fairly painful readjustment to a whole series of forces that were happening around the place at that time. “[Opposition to the Grand Prix] is a legitimate view that people express from time to time, and did from the beginning. Not everyone shares the view. It is a contentious and, from time-to-time, passionate debate that people engage in around the Grand Prix. But I suspect it will always be the way it is, because it’s located very close to the city – it’s two kilometres from the city centre There will always be a group of people who have a view about whether that’s a good thing or a bad thing. Debate is a healthy thing. But what we do know is that 91% of Victorians say they want a calendar of major events. That’s what it means to be in Melbourne – to be able to go to things. People have a perspective on all our events and the Grand Prix is probably the one for which there is the most organised and passionate view that we shouldn’t continue it. By any stretch of the imagination, it’s a lot of money that it used to support it, and that’s legitimate. “But what you do see at the Grand Prix is a whole group – a whole young generation of people – getting their first job and learning a work ethic and learning what it means to get up early and what it means to carry things around. And for me, who lived in that area before the Grand Prix was there, Albert Park was a pretty run-down sort of precinct. The last thing that had been there was the Grand Prix back in the
“I’m a Melbourne boy, I grew up here, and the late eighties and early nineties were a pretty tough time here in Victoria generally. It required a fairly painful readjustment to a whole series of forces that were happening around the place at that time.”
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â€œI think it is an incredible event for us because it puts Malaysia on the world map. It shows that Malaysia can organise an international event of this stature. We are pleased with the level of support we get from the local as well as international community. So all in all it has been and is a very positive event for Malaysia.â€? Prime Minister Najib Razak
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Malaysia: truly Formula One? Malaysia’s presence on the Formula One calendar has been pivotal, ploughing a furrow down which other Asian Grands Prix have followed, to varying degrees of success. It has been a success story both for the sport and for the domestic economy. With its Formula One contract up for renewal in 2015, securing a future relationship with the sport is a clear priority for Mokhzani Mahathir, Chairman of the Sepang International Circuit.
“Who would have thought”, marvels Mokhzani Mahathir, “that I would be here, still hosting Formula One with such a strong fan base and witnessing its popularity flourish across the whole of Asia?” It’s been 25 years since Mahathir’s father, the fourth Prime Minister of Malaysia, Dr Mahathir Bin Mohamad, inaugurated the first ever Malaysian Grand Prix at the newly-built Sepang International Circuit, of which Mokhzani is Chairman. Back then, in the wake of the Asian currency crisis, the race was a boost of morale for many Malaysians. “Right from the off, we had the Malaysian government supporting this as a national agenda,” says Mokhzani. “This was one of those events which gave everyone a few good moments. It started recovery in some way, as you got a lot of tourists coming, and of course the currency exchange rate was so favourable for foreign currencies. “Malaysia was seen a very inexpensive destination. We had a lot of people coming in, spending money, and that got everybody going again; the hotels and shops and restaurants benefited from that, and then the stands were filled up. From the first race in 1999 onwards, we just kept building on that. People knew what Malaysia and Kuala Lumpur could offer, and it was cost effective. Even today, I still believe some of the ticket pricing that we have here is the cheapest in any Grand Prix circuit in the world.” Back then, Formula One was represented in this part of the world only by the Australian and Japanese Grands Prix. Since the Malaysian contract, China, Singapore, Abu Dhabi, Korea and India have followed suit and the popularity of the sport in Asia has soared. “If we didn’t start in 1999, I think Formula One would have predominately remained European-based. Besides Australia and Japan, in Asia people were more into rallying. It has created a motorsports culture again. For a long time, we didn’t get much support. We saw lot of kids doing karate, but now we’re seeing kids racing; not just here, but in Europe going into good teams with the aim of becoming a Formula One driver.” The Malaysian Grand Prix is a confident race; well-hosted and boasting world-class facilities. “We make sure we give people a good experience when they come here,” says Mokhzani, “because Formula One is five star, whether it’s hotels, food and beverages, security, transportation – all of that. We have to keep it five star for the guys who are coming via private jets, as well as on the bus. We need to carter for everybody. That’s why you have gala evenings with charity elements to it and you have free, public concerts.”
It also, says Mokhzani, remains lucrative for the stakeholders and the Malaysian economy as a whole. “Formula One is supported by all sorts of companies, from all industries,” he says, “whether it be oil and gas, telecommunications, the financial industry, even food and beverages – you have all sorts, a very wide mix of people coming here. And every way possible, we arrange meetings, whether they are royalty, whether they are CEOs, whether they are just movers and shakers. We have celebrities and we make sure that they mix and interact during this Formula One weekend. “Next year, for instance, Petronas is hosting with the Malaysian Petroleum Resource Corporation and the Offshore Technology Conference Asia. That is going to bring the whole oil and gas industry to Kuala Lumpur three days before the Grand Prix. Right at the end of that conference, we will be at the circuit. “We do a study after each race, and it shows that we gain more than we spend. And beyond that, there is the goodwill you earn, from all of the people coming and having a good experience here in Kuala Lumpur; that goes a long, long way. People know what to expect, they understand that we put on a good show here at the Sepang Circuit.” Mokhzani feels there’s a great synergy between Formula One and Malaysia’s economy, which is based largely on manufacturing and industry: “The car industry is very important to us,” he says, “the composite technology industry is very important and we have things like CPRM, which has been building some parts for the aeronautics industry. You see cars today going more and more into composites. We need to get that R&D into the car industry in Malaysia. What better way than to use Formula One technology? I hope Petronas and Lotus and Caterham really come in and do something in Malaysia as well.” Malaysia’s Formula One contract comes up for renewal in 2015 and the government will seek to extend it, as the presence of Formula One in Malaysia has been a true success story. As Mokhzani summarises: “The underlying theme behind something this big is economics. It has to bring a return, whether it is the goodwill generated, whether it is the image we portray around the world or whether it is business deals that can happen up here at the circuit or down at the Paddock Club. It happens. You need people from all walks of life, all industries and we take that opportunity to just get people talking to each other about business.” 55
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“Formula One is a perfect tool. Barcelona is a very active city that wants to be a benchmark, and we achieve a great economic impact with it. For Catalonia, the Spanish GP has an impact of €120 million, 60 million of which have an effect on Barcelona. We cannot afford to be out of Formula One.” Xavier Trias, Mayor of Barcelona
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Taking nothing for granted “Do you know that this is in the collective interest of the country? Not having the race would be a disaster. We work for the country, we work for the people of our region and we work as a small business that is trying to make the numbers add up at the end of the year.” Salvador Servia, Director General of the Circuit de Barcelona-Catalunya, begins our conversation with a rousing call to arms but continues in a more measured tone: “We’ve been holding the race here for 23 years so it’s better to continue than to stop, that’s for sure. We have the support of all the economic sectors of the community and we continue because everybody wants us to continue.” One year ago, the economic crisis had hit Spain so badly that there were suggestions from on high that Barcelona and Valencia would have to alternate an annual grand prix for financial reasons, but there is no mention of this today. On the contrary it seems that Barcelona is staking a permanent claim, while images of a vandalised and looted Valencia circuit make their way onto the Internet. While they may have had problems selling tickets in Spain, Servia and his team have made concerted efforts to increase sales in the key markets of France, Germany and the UK which have lead to a turnaround in attendance for the first time in five years. After the record high of 140,000 spectators in 2007 at the height of “Alonso-mania”, numbers decreased steadily to only 82,000 last year, but have recovered to a healthier 95,000 this year. “We will try to work hard to get more than 105,000 people by 2016 as this will guarantee our future, and the UK will become a key market for us,” Servia continues. “We are encouraging people to combine a visit to Barcelona or the Catalan Coast with coming to the race.” Up to 80 per cent of the finance for the circuit comes from the government of Catalonia so the future of the race and/or the track is inextricably tied to the future of Catalonia itself. The region contributes nearly 20 per cent of Spain’s total revenues yet receives only just over 11 per cent in return. Currently the Spanish parliament has refused to support a negotiation process to allow Catalan citizens to express their will regarding Catalonia’s future within Spain, and there is much deep political conflict at the heart of Spain’s territorial organisation, particularly in the face of austerity measures. The circuit has signed a sponsorship deal with the city of Barcelona which comes with a much-needed injection
Barcelona is taking the initiative as it looks to cement a permanent place on the F1 calendar beyond 2016, while further south, in Valencia, the street circuit slips quietly into disrepair.
of cash and the ability to work with the image of an iconic city which, strategically, is the number one city-break destination for UK visitors. Most importantly, it comes with a political will to safeguard the future of the event as a means to economic recovery. As Xavier Trias, the Mayor of Barcelona, points out: “Some people do not understand the need to support events like this in difficult times, but they are essential, because we need to open ourselves to the world in order to be able to get out of this situation. Formula One is a perfect tool. Barcelona is a very active city that wants to be a benchmark, and we achieve a great economic impact with it. For Catalonia, the Spanish GP has an impact of 120 million euros, 60 million of which have an effect on Barcelona. We cannot afford to be out of Formula One.” To ensure that they stay in Formula One, the race organisers created for the first time in 2013 The “BCN FAN FEST” which links the Grand Prix at the outlying circuit with the city of Barcelona. In conjunction with the Barcelona City Council and brands such as Seat, Santander and McGregor, a leisure village complete with car exhibitions, 3D simulators, toy racetracks, showcars, motorhomes and a podium was created in centre of the city over the race weekend to attract not only the residents of Barcelona but also the 135,000-plus tourists who visit Barcelona each week. Another of the many unique initiatives the circuit has created to stimulate business is the launch of a specialist Gold Members Club for female entrepreneurs and those women in management positions of leading large companies. With the aim of adapting to new trends and needs, the circuit has created a specialist setting and service for women in business to make new contacts and strengthen existing networks using the occasion of the Spanish Grand Prix as a stimulating backdrop. Even though Spain and the region may be suffering heavily in the economic crisis, it is evident that Salvador Servia and his team are determined to carry on in innovative ways to promote the Spanish Grand Prix, knowing that the continued survival of the race is crucial to economic recovery in the region. This year’s turnaround in ticket sales could be the first significant step towards securing another two decades of Formula One at The Circuit de Barcelona-Catalunya, but it is likely that any threat to the traditional races of Europe will come not from within but rather from the deep coffers of those further afield. 57
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Business after dark As the Singapore GP races into the night for five more years, we ask Jonathan Hallett, Director, Singapore GP Pte Ltd how meticulous preparation has made Singapore a leading corporate networking destination.
How would you describe the average corporate race weekend?
What types of companies are using the SGP to leverage their corporate contacts? Our clients cover a broad range of industries from major financial players to oil and gas, shipping, pharmaceutical and automotive, as well as small, medium and emerging enterprises. They view the Singapore Grand Prix as a valuable platform to network with key decision-makers, reward customers and staff, seize new business opportunities, and conclude deals.
One of the great things about having the race at night is that it allows for plenty of networking opportunities in the day – guests can conduct lunch meetings and then convene at the GP in the evening. As part of the package, Paddock Club and hospitality suite guests enjoy deluxe meal services, free-flow of wines, dedicated service by our Suite Ambassadors – all these on top of the spectacular views of the race action from our air-conditioned trackside suites. In addition, they get to enjoy full-scale mega concerts by Rihanna, The Killers, Tom Jones and Bob Geldof – all within the Circuit Park.
What makes SGP a key “business or corporate” GP?
What are some of the lesser known attractions/activities for corporate clients at the SGP?
Singapore’s status as a major financial and commercial hub, with many multinational corporations headquartered here, makes it an ideal venue for business networking. We have one of the best airports in the world, which is served by many leading airlines, as well as numerous five-star hotels, malls and restaurants, all within walking distance of the Circuit Park. Having the race at night also means executives can make full use of the day to conduct their business activities before convening at the Singapore Grand Prix in the evening to wine, dine and continue networking. Many of them plan their company’s key activities during the GP week, leveraging the appeal of the night race to reward loyal customers and forge stronger business relationships.
Hospitality suite patrons have access to all four zones, which means they can choose from the wide spectrum of entertainment and F&B offerings within the Circuit Park. In addition, they can enjoy complimentary rides on the Singapore Flyer – the world’s tallest observation wheel – which offers spectacular views of the track. There is also a spa facility at selected locations where suite guests can enjoy a head-to-toe pampering experience. The location of the Marina Bay Street Circuit in downtown Singapore makes it convenient for patrons to walk to nearby entertainment hubs, hotels, restaurants, and retailers – and make it back in time to catch the race and concerts.
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Corporate hospitality accounts for a significant portion of the Singapore GP business. We are one of the largest corporate entertaining events in Asia with over 10,000 corporate guests attending the race per day.
What are the dos and don’ts when organising corporate hospitality at the SGP? Everything has been well thought out for our guests, who are seasoned travellers, accustomed to first-class service. We offer a full package from start to finish. For example, there are shuttle vehicles to ferry guests from their hotel to the event and dedicated corporate boat jetties to facilitate their commute to and from the Circuit Park. We have award-winning Suite Ambassadors – many of them were former cabin crew – to serve the guests, as well as an excellent menu catered by five-star hotels. All you need to do is show up on that day and everything is complete. We offer clients a great deal of customisation options and the flexibility to organise their own activities, such as VIP appearances and entertainment within the privacy of their own suite. Some of them have completely customised the interiors of their suite to incorporate their own branding or requested an entirely different menu. The only “don’t” is don’t be limited by your own imagination!
From a business point of view sales are very successful but how do you keep things fresh and developing?
How important is corporate hospitality to the race organisers, the businesses of Singapore and to the region as a whole? Obviously, corporate hospitality accounts for a significant portion of the Singapore GP business. We are one of the largest corporate entertaining events in Asia with over 10,000 corporate guests attending the race per day. From a macro perspective, the night race has boosted Singapore’s tourism industry, contributing over S$560 million in incremental tourism receipts and reaching out to a global audience of more than 360 million viewers since 2008. Stakeholders within the Marina Bay Precinct – the hotels, nightspots, retailers and food and beverage outlets – have also benefited from the race. More than 80% of Singapore GP’s race organisation works are sub-contracted to local small and medium enterprises.
At the end of every race, we conduct a very thorough debriefing with our client, and with the feedback collated we go back to the drawing board to implement the enhancements for the following year. Whether they prefer a specific décor within the suite, a new wine or menu selections, or have an entertainment wish-list, we listen very closely to our clients’ suggestions, and try to fulfill their requests where possible. For example, this year, the Singapore Formula One Paddock Club comes in a super-sized option, while the Sky Suite and Club Suite have been completely revamped to offer a more indulgent dining experience and flexible seating options. Every year, we’ve changed or added something to ensure that no two years are the same. There is always a new feature, such as world-class entertainment, better ticket offerings, and new interactive activities within the Circuit Park.
How does SGP compare with other key corporate races? I’m not able to comment on other Grand Prix races. For Singapore GP, one of our key differences is that we decided very early on not to offer just one type of hospitality product. As every company has different objectives, we developed five distinct hospitality packages from an executive grandstand to The Green Room, Club Suite, Sky Suite and the Paddock Club – with different pricing points and benefits – to cater to different corporate markets and budgets. Singapore GP marries a multitude of factors, such as accessibility, nonstop entertainment, and proximity to five-star hotels, retailers, and restaurants. The broad range of companies based in Singapore allows for plenty of networking opportunities and business collaborations over the race week. This is a unique mix that has made the night race so successful. 59
11/6/13 12:04 AM
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Bernie Ecclestone’s indictment by German prosecutors in relation to allegations of bribery produced the usual round of sensational stories, writes Mark Gallagher, including the identity of who might one day replace him.
A new CEO may find himself running a business with a chunk of shares in public ownership, with all the pros and cons that brings.
It’s not the first time we have witnessed proclamations that this will be Bernie Ecclestone’s final season controlling a sport he has almost single-handedly developed from a ragtag of rich men and enthusiasts into a multi-billion dollar business. Undoubtedly, it won’t be the last. Inevitably, however, the passing of time will one day cause a transition of power, and when this does happen, Formula One will find itself with a new CEO; one of the most powerful, yet challenging, jobs in world sport. So, what will the new boss be taking on? One of the unknowns is whether Formula One will have successfully floated in Singapore by the time Ecclestone hands over the reins to a successor. A new CEO may find himself running a business with a chunk of shares in public ownership, with all the pros and cons that brings in terms of transparency, corporate governance and driving value to shareholders, both large and small. Whatever the case, the shareholders will want to see the business flourish and profits grow; a hard act to follow after decades of success under Ecclestone. Aside from overseeing the continued commercial success of the sport, any new CEO will have to possess immensely strong leadership skills and have the capability to handle the nuanced politics across Formula One’s stakeholders. Ensuring that the relationship with the FIA remains positive is key among this. Having an independent regulatory authority covering technical and sporting matters is enormously beneficial to Formula One’s credibility (in any case, the sport is effectively leased from the FIA). The new CEO will also have to find new ways to ensure that the FIA’s decisions are in-sync with the commercial imperatives of the sport; witness the advent of the new and expensive 2014 engine regulations which neither Ecclestone nor the majority of teams really wanted. Controlling the teams, some of which feel that they are Formula One, will, perhaps, be the most thorny challenge for Ecclestone’s successor. His style has been autocratic, some would say dictatorial, and although this has drawn criticism the reality is that trying to manage the disparate requirements of those who own and run the teams is nigh on impossible. Like a school teacher taking control of unruly children in the playground, Ecclestone’s ability to blow the financial whistle
and make them all fall into line will take some matching. An iron hand in a velvet glove may come in useful. Key revenue streams from broadcasting rights, promoters’ fees, circuit advertising and sponsorship will all be expected to grow. While not without their challenges in each case, there is every reason why a new CEO can make the most of the foundations built by Ecclestone over the last four decades. Broadcasting rights have traditionally been sold based on the television set being the primary screen in each household. This is no longer the case in many countries as audiences opt to watch coverage on their tablets and mobiles, editing streams according to taste. The opportunities to sell broadcasting rights far beyond the traditional television broadcasters will grow. Not so long ago, the advent of digital media seemed to pose a potential threat to Formula One’s TV addiction, but a new CEO will have the opportunity to further reconfigure broadcasting rights to terrestrial, cable, satellite and internet companies eager to seize the significant global audiences that the sport continues to guarantee. Ecclestone has already started the ball rolling by packaging split-broadcasting deals in key markets such as the UK. Growth in promoters’ fees will come from the renewal of existing agreements, but the big opportunity will be to take the 20 or so events that Ecclestone has already pulled together and expand that to 24 or 26. The challenge here will be to match Ecclestone’s ability to negotiate at government level around the world; an ability which comes from being the owner-boss of the sport – the aura an employee-CEO will have to work hard to emulate. The principal opposition to an extended calendar will come from the teams and their hard-pressed travelling personnel. A reduction in the race weekend schedule from three to two days could alleviate this and address the fact that Friday practice is something of a non-event for spectators, media and sponsors. It will also help repackage the weekend into a much more intense spectacle. Direct sponsorship of the sport, as opposed to its constituent teams, has grown in recent years with companies such as DHL, UBS and Rolex benefitting from headline coverage. A new CEO could readily grow this revenue stream, for although some teams see this as driving sponsorship away from them, the reality is that many multinationals simply don’t want to nail their flag to the mast of one team. Potentially, a new CEO could formalise a FIFA or IOC-style portfolio of tiered official sponsorships, attracting some of the global FMCG brands that have avoided Formula One because of their policy of not supporting individual teams. With a broad range of political and leadership challenges in front of them, and the requirement to oversee sustained commercial success for the sport at a time of revolution across all forms of digital media, the role of Formula One CEO won’t suit many. What will be needed is most certainly the support provided by a strong Board and very likely a larger commercial organisation, for it is impossible that any individual could run Formula One in the manner Ecclestone has. When the time comes, the transition of power will certainly herald a completely new era for the sport.
THROUGH THE LOOKING GLASS
F1’s new CEO: experience required
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Jochen Braunwarth, debris fencing specialist and Head of Business Development International at Geobrugg AG Security Engineering, explores the unique challenges of city circuits, and why continuous fences are better than sectioned fences when it comes to the protection of spectators.
Instead of spectators travelling to purpose-built circuits, event organisers are increasingly taking the action directly to the spectators, on city streets. Events such as City Challenge, Race of the Champions and Formula One street circuits are becoming ever more popular. Following this trend, new city circuits are being developed around the world, the most recent example being the FIA-sanctioned Formula E series that will be staged exclusively on city streets. City circuits provide unique challenges with regard to safety when compared to conventional circuits. The standard protection levels of each circuit include: First line of protection: Guardrail and, if needed, tyre blocks or Tecpro Barriers Second line of protection: Geobrugg Debris Fence Third line of protection: Spectator fence In critical areas, a gravel trap or a tarmac runoff area is added to either slow the car before impacting a barrier, or to give the driver time and space to regain control of the car. City circuits must have the same protection levels, but they need to be adjusted in light of the limited space available on city streets and the short timeframe within which the temporary safety measures must be installed. In order to accommodate these requirements, the first and second lines of protection are combined, and the protection levels are changed to the following: First/Second line of protection: Concrete race elements with mobile Geobrugg Debris Fence on top Third line of protection: Spectator fence
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What would happen if there wasn’t a discontinuity in the fence? The car would slide along without penetrating the fence. In combination with a strong high-tensile wire mesh such as ROMBO G80/4 from Geobrugg, the risk of mesh tearing during the impact would be further reduced. Hence, the ideal solution for any city circuit is variable length concrete elements with a tested and fast connection system topped by a continuous high-tensile debris fence. After the selection of a protection system, the production needs to start. Frequently, the timeframe from the announcement of the race until the race date is quite short. Depending on the time available for production, different methods must be chosen which have an influence on the final cost. During production, the final layout design must be performed. The design must account for the installation procedures, fire fighting regulations and traffic management, requirements of local authorities, as well as other site-specific issues. To be able to properly accommodate the many regulations and various parties that are involved, an experienced consultant or designer should be used. It is also important to remember that a city circuit does not consist of just one single type of protection. The company selected to supply the concrete elements with debris fence on top must also be able to design the final layout of the whole protection system, including the design and supply of the other protection items including the pit wall and any standard debris fence.
THROUGH THE LOOKING GLASS
Combining the first and second lines of protection provides comparable safety while reducing the space required and making for a quicker installation process. Typically, there isn’t enough room to allow for adequate runoff areas, so tyre blocks or Tecpro Barriers are necessary for driver safety. One of the big decisions that event organisers face is how to provide the highest level of safety for spectators while ensuring that the installation process of the first/second line of protection is fast enough to accommodate their construction schedule. There are two different types of systems which are available to protect spectators and marshals at city circuits: • Concrete wall elements with individual debris fence panels on top. • Concrete wall elements in various lengths with a continuous debris fence on top. The general shape of the concrete elements is defined by the FIA requirements for cross section and weight. The areas where there is potential for flexibility in concrete element design are length and connection method. The advantage of using different length elements is that it allows the barrier to accommodate the sharp corners that are typical in street circuits. A mix of long elements for the straight sections and shorter elements for corners allows for both fast installation and the accurate implementation of the designer’s vision for the circuit. The major differentiation between competing concrete element designs is the connection method. There are various methods available, such as: cable loops at each end of the concrete block which are connected with a pin; hooks which interlink with each other; separate profiles which have to be inserted, amongst others. Any connection method that is used must be tested to prove its ability to handle the potential impact loads. The best way to optimise the installation speed, performance, and circuit layout is to choose a concrete barrier design that includes both long and short elements and employs an interlinking hook connection system. The debris fence that is attached to the concrete elements is also a key element of the overall protection system. There have been significant recent developments in the design of these fence systems. Between 2009 and 2011, Geobrugg Security Engineering conducted tests under the supervision of the FIA Institute in Vauffelin, Switzerland. A key finding of the tests was that the reinforcing cables actually guide the vehicle during an angled impact with the fence – the impacting vehicle slides along the cables, and is stopped after the full absorption of the energy. Optimum performance results when the fence deforms as one complete system. Crashes on NASCAR circuits provide real-world confirmation of this phenomenon. A stock car crashing into the catch fence at an angle slides along the fence, deforming the fence until the energy is absorbed and the car comes to a halt. In all occasions, the debris fence with continuous cables acted as one system. At a very recent crash in NASCAR, there was a discontinuity in the catch fence – an emergency door. This break in the catch fence led to an independent reaction of the impacted fence. The impacted section deformed without the adjacent section. A car sliding along the fence will inevitably hit the non-deformed section and will widen the gap in the fence, leaving an area open for flying debris.
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Life after Formula One? After a successful career designing Formula One cars, Mike Gascoyne’s step back from F1 allowed him to expand his horizons, he tells us.
It’s a common saying in Formula One that you’ll never leave the pit lane; that you will always miss the buzz and come back. But when it came time for me to leave Formula One it was an easier decision. Having worked for nearly 25 years for many different teams and attended nearly 400 grands prix, it was certainly time for a change and there were many new challenges ahead that I wanted to tackle. I’d set up what is now the Caterham Formula One team from scratch – a fantastically rewarding project and something I never thought I would achieve in my career – and the shareholders of the expanding Caterham Group asked me to look after other areas of the group, in particular the emerging venture with Renault to design a joint sports car to be sold under the Alpine and Caterham brands. Every Formula One designer would relish the challenge of designing a great sports car. Although it is great to design racing cars, Formula One cars are so specialised that they become redundant at the end of a season, whereas a great sports car could be running on the road in 50 years time – something for the grandchildren to see. Caterham will also be introducing a complete new range of vehicles in less traditional market sectors for the Caterham brand, but all with the same philosophy of lightweight performance, fun and affordability. Moreover, the Caterham Group is expanding to motorbikes and carbon push bikes, as well as specialist composite expertise in the automotive, aviation and marine sectors, so these are exciting and busy times for the group, and for me, as Caterham develops into a ‘lifestyle technology’ group. We also aim to commercialise the resources and knowledge that we put into Formula One. Nowhere is that more the case than in Caterham Composites, of which I am also CEO. We are leading the way in composite finite element analysis techniques, as well as working on several innovative and game-changing products in many fields. On a personal note, I asked the shareholders for some time off to go sailing. Last year I sailed solo across the Atlantic and, from November, I am co-skippering the Caterham Challenge Class 40 racing yacht in the Transat Jacques Varbre race from Le Havre in France to Itajai in southern Brazil, a course of 5,450 miles. So it would be fair to say that since leaving the pit lane the challenges have not stopped – they just got much bigger and more enjoyable.
Every Formula One designer would relish the challenge of designing a great sports car. Formula One cars are so specialised that they become redundant at the end of a season.
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THROUGH THE LOOKING SUPPLIERS GLASS
Women in Formula One Adam Parr, former Chief Executive and Chairman of the Williams F1 Team
Who is Susie Wolff? For one thing, she is the newest test driver for Williams F1 and is the rumoured favourite to become the first female to compete in a Grand Prix since 1976. She has also refuelled the debate on the place of women in Formula One. While across the pond, Danica Patrick is breaking records in NASCAR, taking pole position and leading laps at the Daytona 500 in February 2013, Formula One is starting to speak a little more confidently about the prospect of including more women in the sport. Blowing off the cobwebs on the old preconception (still espoused by prominent figures) that motorcar racing remains a man’s sport, is no mean feat. I will say with only a touch of bias that Williams F1 is leading these efforts. The appointment of Claire Williams as Deputy Team Principal in March, and Louise Evans as Finance Director, makes perfect business sense; women are incrementally making a place for themselves in boardrooms the world over – in 2012, almost one in five Fortune 500 board members were women. Formula One, lest we forget, is a high-cost sport, relying on generous sponsorship and shrewd asset management to drive technological progress, which ensures better safety as well as better performance. This means the sport can only grow on the basis of good business decisions made by savvy business minds, both male and female.
“I do not pretend to want to see Williams become a team defined by its women; rather, I hope that Formula One might stop believing it must define itself by its men.”
A new lease of life. While executive roles are beginning to unlock, engineering is crying out for a new lease of life. Engineers are the lifeblood of the sport, producing faster, lighter, more stable and safer cars. With such demands, in an ideal world, the best men and women engineers would compete for spots in Formula One teams. However, the reality is that Formula One, and the UK engineering industry in general, does not possess the hands it needs. Too few people, male and especially female,
are choosing to study engineering, with only 14 per cent of engineering undergraduates in 2011 being women. Even at school, physics, computing and maths A-levels are overwhelmingly male domains (79 per cent, 92 per cent and 60 per cent respectively). In addition, too few engineering graduates are choosing the profession; with financial firms and others tapping into already scarce reserves, the number of STEM graduates working in engineering is steadily declining. Women engineers are 25 per cent more likely than men to leave the sector, which means that without change, engineering in Formula One is not only likely to remain male-dominated, but it will also be unable to raise the technological bar. Lack of opportunity. We come full circle to drivers. Becoming a Formula One racer is a gruelling endeavour, with only 22 spots worldwide reserved for the very best; the most dedicated, relentless drivers who are, in essence, ‘driving machines’. While a former Formula One driver was recently quoted as saying that women could never be as successful as their male counterparts, there is no evidence that women are intrinsically less capable of dealing with the extreme physical and mental stress of Formula One racing. What is lacking, first and foremost, is opportunity. There have been only five female Formula One drivers to date, and the height of their success amounts to a mere half point (scored by Lella Lombardi in 1975). Michèle Mouton, icon of the rallying world, joined the senior ranks of the FIA in 2010 to investigate why so few women have attempted to follow in her footsteps. One reason may be that she is a tough act to follow; competing in every major rallying circuit, she won the two-litre prototype at the 24 Hours of Le Mans (1975), the Tour de France Automobile (1978), German Rally Championship (1986), and set a record time for her win at Pikes Peak International Hill Climb (1985) in her 12-year career. Motor racing, and Formula One in particular, has moved on tremendously in the last 20 years. This is surely another pit-stop to leave behind. I do not pretend to want to see Williams become a team defined by its women; rather, I hope that Formula One might stop believing it must define itself by its men. May the best team win. 65
11/6/13 12:05 AM
THROUGH THE LOOKING GLASS
Changes in UK tax rules will impact F1 teams UK tax residents are liable for all income worldwide, writes Mark Abbs, international tax partner at Blick Rothenberg LLP.
The new tax rules were passed by the UK parliament in July, but are backdated to the start of the British tax year on April 6th 2013, so may catch out the unwary. The changes were made to make the UK a more competitive place to do business. In principle, therefore, they are good, but in reality, unfortunately, they are far from simple, with over 80 pages of complex definitions and tests. Teams need to be fully aware of their employer obligations and how the changes will impact individual team members who work overseas but whose longerterm base is in the UK.
Many people could be caught out by this, especially if they had previously considered themselves non-resident. Who will pay UK tax under the new rules? A UK tax resident will be taxable on all income worldwide, regardless of where it is paid (There is, a special allowance for certain income earned by individuals who are from overseas and are not domiciled in the UK.) Someone who is not tax resident, however, will only be taxable on income connected to the UK. It is critical, therefore, to know the individual’s tax residence status. The new rules require you to look at a series of tests each year. Whilst some are largely formulaic, including measuring days visiting and working in the UK, some are not, such as the location of the individual’s home and family, and if they had any ‘significant’ breaks from work. Good recordkeeping is critical as people could be asked to provide proof of their whereabouts. The rules changed overnight and could now make someone tax-resident even if their personal circumstances have not changed. Many people could be caught out by this, especially if they had previously considered themselves non-resident.
Finally, a warning to those who are looking to stop being a UK tax resident. For example, if a person is not tax resident anywhere, they could be taxed in every country they work as they will not have the protection of the international tax treaties that the UK has negotiated with different countries. With 22 Formula One races now (provisionally) announced for 2014, that could become a problem. How will the teams be affected? If an individual is a tax resident in the UK, for instance, an employer will have an obligation to withhold Pay-as-you-earn (PAYE) tax from their earnings and report benefits / expenses regardless of whether these are paid in the UK or overseas. Teams should be wary of the ‘host employer’ payroll regulations because even if they are not the legal employer, they may have the same payroll obligations as if they were. But the new residence rules are dependent on many factors, so how will payroll know if an individual is UK tax resident? Will payroll know how much time an individual has visited and worked in the UK during the year, or even where their family or home is when they make a payment? Probably not, and penalties are stiff for non compliance. It is also worth noting that “No Tax” Codes may be in place for some employees which means payroll is not deducting UK tax from earnings. This might seem fine, but if the Code was applied for under the old rules, the new law may now make the Code invalid so teams should review these arrangements.
Mark Abbs is an international tax partner at Blick Rothenberg LLP, a leading London-based firm of chartered accountants which has a long history of advising motor racing teams, drivers and team principals on UK and international tax issues. For more information, please visit: www. blickrothenberg.com or contact Mark directly at email@example.com
What next? Those working in international motor racing spend long periods of time overseas working in different countries. The UK-based teams will have to deal with the added complexities this and the new tax rules bring, so they should understand the impact at both the individual and company level, seeking specialist advice where necessary. With greater focus in the media on companies paying the right amount of tax, it is best to avoid reputational risks and the potential loss of sponsors from not getting this right; and nobody needs reminding that tax audits are unpleasant, and expensive.
11/6/13 12:05 AM
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Inside the driver’s mind Renowned mind performance coach Simon Fitchett explains the psychological challenges of being a McLaren driver, now facing his former charge, Sergio Perez.
Every Formula One team has their own way of doing things. Each has their own tried and tested protocols and will share the same desired outcome: to win races, but there are realistically only three or four teams who will win on a regular basis over the course of a season; McLaren, traditionally, being one of them. The mentality of the McLaren team will be significantly different to what Sergio has previously been used to. Sergio came from a Sauber team full of highly-motivated, professional and very intelligent people, and the McLaren team he has moved to will be no different in that regard. The fundamental difference lies with the team’s mentality and expectations. The team at Sauber invests countless hours of commitment, desire and dedication just to win a race (and were very close last season) and are always over the moon when one of its drivers achieves a podium finish. Finishing third or below at McLaren will be considered unacceptable. If both drivers are not on the front row after qualifying and finish first and second in the race, the team will still not be happy and the pressure on everyone in the team will increase. This will be a pressure and level of expectation that Sergio has not yet experienced.
Despite coming exceptionally close at last season’s Malaysian Grand Prix, Sergio is yet to win a race, and this will have been expected of him pretty quickly at McLaren. Therefore, he will have had to accept this responsibility, apply himself in the right way and focus on the right things. However, the poor performance of this season’s McLaren package will have forced another change of mindset for Sergio, which I will explain later. Another difficult adjustment is that he no longer has the support of the people he has been closest to in Formula One over the last two years, meaning that he has had to form new relationships and trust with others around him. However, recent history has shown that McLaren are accustomed to either bringing in or nurturing young talent and turning them into world-beaters; Lewis Hamilton is proof of that. McLaren are a team of great people and great experience, so I am sure they will be able to get the best out of him. After working with Sergio last year, I have seen enough to know that he has what it takes to exceed the team’s expectations. For his age, he has incredible mental strength, and an example of this was his performance in Monaco last year, considering what
11/6/13 12:03 AM
Knowing Jenson, he hasn’t considered Sergio a ‘lesser rival’ at all. He has been as focused on what he is doing as he always was and he has approached the season no different than if Lewis were still
THROUGH THE LOOKING GLASS
HOW HAS JENSON PERFORMED AGAINST A ‘LESSER’ RIVAL?
alongside him. He respects Sergio just like Sergio respects him, and they will both be fully focused on doing the best job they can individually and for the team. But, as the car was not running at the front as would be expected of a McLaren team, their primary focus will always be to outperform each other.
happened to him there a year earlier. Coming out of that tunnel flat out for the first time approaching the chicane would be a test for anyone who had experienced a crash like he did in 2011. However, nobody is infallible and we all have our weaknesses, and providing we understand, acknowledge and work on them, then this is how we can improve on all levels. If you try to hide or overlook them, then they will only return when triggered by what we call a ‘sensitising event’, so it is important to look out for patterns, which can be anything from a dip in form to a loss of self belief, and continuously work at controlling and overcoming them. Sergio now has the perfect platform from which to build and show what he can do; if he focuses and believes in himself and his obvious ability and can consistently perform at his optimum level, then he will surprise a lot of people. It is in his hands. The psychological implications of an underperforming car on pre-season expectations. McLaren, as we know, have not been anywhere close to where they will have expected to be this season. The team have a car that is currently unable to compete for race victories and this is something
that everyone will be working night and day to change, there is no doubt about that. They have huge resources and will be throwing everything at it to overcome their difficulties. I have spoken to Sergio a few times this season and there is no doubt that he is beyond impressed with the team and how they go about their business, and they will be doing everything they can to provide him with the tools he needs to exceed both his and their expectations. However, with the performance of this year’s car, both he and the team will have had to reluctantly accept that the chances of winning a race this season are pretty slim, but he must always be ready to take advantage should he find himself in a position to win a race. His focus now will be quite simple: drive consistently at his optimum, outperform his team mate and do his best to consistently score points. I know at his best he can do this, and so does he. I am sure his focus for the rest of the season will be exactly this. He won’t be happy with himself so far this season after being in some excellent positions to then end up with nothing, but those instances will only make him stronger and more determined and I am certain that will be his sole focus now for the remainder of the season.
HAS LEWIS FELT BETTER RACING AGAINST HIS MATE? From analysing his character and reading his body language, I honestly don’t think it has made a difference to him. Of course, he and Nico know each other well and respect each other, so they didn’t need the usual time to become familiar. I am certain Lewis isn’t concerned in the slightest about who his teammate is. He will simply focus on what he is doing and do his best to be quicker than his teammate and win races again. Whoever is alongside him in the team, it will not make a difference to him. This is his job: to always drive at his optimum, do the best he can and, as is every driver’s goal, outperform his team mate. The move to Mercedes has certainly given Lewis a new challenge and a fresh start. Indeed, recent performances have offered proof that he has settled in very well at his new team, and has risen to that new challenge. As with Sergio, or any driver moving to a new team, it takes time to settle in, but Lewis is now looking settled and is getting the best out of his car. 69
11/6/13 12:03 AM
Russia and Formula One Timing is everything writes Mark Alexander, Managing Director at MTC.
I allowed myself a wry smile when I saw that the Russian Prime Minister, Vladimir Putin, and the father of modern Formula One motor racing, Bernie Ecclestone, had signed the deal for Sochi to host a Formula One Grand Prix. Not because the two master operators had at last signed an agreement that had been talked about since Mr Ecclestone met Leonid Brezhnev in the Soviet era but that Mr Ecclestone was not, for once, the richest man in the room. The Russian Federal Government’s financial capacity and its will to stand behind projects of this type is the primary reason why Russia presents a great opportunity for Formula One. But, though it may sometimes appear otherwise, Formula One Management (FOM), doesn’t make decisions about who should host a Grand Prix based on the hosting fee alone. Ideally, it wants Formula One to race where there are lots of potential consumers and businesses that will rev up the sport’s finances. With a flourishing middle class that loves consumer goods and a domestic business community that has an eye on global opportunities, Russia makes perfect sense as a host nation for Formula One. The opportunity for Russian business It is well understood that Formula One is a great place to build brand value and awareness. Brands benefit from a transfer of the sport’s
values – innovation, technology, glamour, good organisation and human excellence – and sell more because of it. That is often taken at face value but let’s look at the evidence. Shell’s expertise in fuel and oil development has helped Scuderia Ferrari to 12 FIA Formula One Drivers’ titles and ten Constructors’ titles. The developments are taken from the racetrack and transferred directly into products designed for consumer road cars. Shell’s involvement in Formula One is the single most effective marketing tool it has. The sponsorship decreases consumer price sensitivity, drives volume at the pump and is directly responsible for a significant portion of the company’s global premium fuel sales. This global promotion generates a significant increase in volumes and trade-up levels to its premium fuel Shell V-Power. Global effects You might expect Formula One to work for fuels, but what about a sector like insurance? Superficially, Formula One is a high risk/high reward environment, so it would seem counterintuitive for an insurance company like Allianz to be involved. However, what Allianz spotted is that the sport’s fans understand that racing is all about risk management and would accept Allianz, a Formula One Global Partner and sponsor to the AT&T Williams team, as a credible partner.
In the first year it engaged in Formula One marketing, Allianz saw a 35 per cent increase in the idea that it was a ‘fair partner’ and a 27 per cent increase in ‘trust’ among the Formula Onewatching public. These positive effects are global too; executives in New York, London, Paris, Mumbai, Tokyo and Dubai who were aware of RBS’s Formula One sponsorship were, on average, 25 per cent more willing to do business with RBS than those who weren’t. With 200 businesses, including Accenture, AT&T, BP, Johnnie Walker, Jose Cuervo, PETRONAS, Santander, UBS and Vodafone, all successfully using Formula One to develop their global businesses, we can see that the sport is a consistently effective marketing platform for a broad range of sectors worldwide; yet Russian engagement has been sparse, with only some smaller entrepreneurial companies making the move. Marketing efficiency and shifts in brand values rarely convince CEOs to make multimillion sponsorship investment decisions. They want to see bottom-line results – deals done, M&A activity driven and profit banked – and it is here that Formula One excels and Russia’s biggest opportunity lies. The Russian businesses that are getting involved with F1 Sibur, Kaspersky, Marussia, etc, are joining a sort of ‘Davos on wheels’. It serves as an informal mobile office for the movers and shakers that run the global
11/6/13 12:07 AM
economy. Each year, more than 30,000 VIPs and 500 government ministers are hosted in Formula One in 20 of the world’s leading economies. The 200 blue chip businesses that support Formula One as sponsors create more than four per cent of global GDP. That means that if the sport and its sponsors were a nation, it would rank as the world’s fifth largest economy. These are largely successful, forward-thinking and progressive companies who operate to global corporate governance standards. For Russian businesses, tapping into this concentrated ‘Formula One Economy’ is the real opportunity. Partnerships built on technology As the eighth largest economy, a member of the G8, G20 and UN Security Council, Russia is appropriately confident in its development ambitions. But the impact of the global financial crisis and continued restructuring of the global gas market could lead to vulnerability in the economy’s reliance on energy exports. Russia is making efforts to increase the value of overseas sales of engineering products from €20bn to €47bn. To put that into context, let’s look at the limited high-value engineering (HVE) sector. Motorsports alone contributes €7.1bn in sales from 4,500 SMEs, and the broader HVE segment of UK manufacturing
accounts for 35% of all exports and contributes €178bn worth of value toward the UK’s balance of payments. Formula One isn’t a panacea, but it is the oxygen that fuels innovation in the automotive and high value engineering sectors, and Russia can use that to accelerate its own engineering businesses. Motorsport developed industrial processes such as non-destructive testing, simulation and manufacturing processes, and short timescale turnaround. Companies such as Prodrive, Williams F1, Ricardo, Xtrac, McLaren Applied Technologies, and some less renowned names, are developing standalone businesses to commercialise motorsports-related technologies which have become increasingly relevant to mainstream manufacturing and could be applied to Russian businesses. Russia is building a home for this sort of innovation-based business, Skolkovo. Skolkovo is a massive Kremlin-backed innovation hub on the outskirts of Moscow. Now entering its fourth year of operation, Russia has invested €1.2bn with $11bn (70% from private equity) to come in the next seven years. Imagine the impact that motorsport’s fastpaced innovation culture could have on Russian energy efficiency, industrial process and the Russian HVE landscape in partnership with a domestic business like Basic Element Group,
THROUGH THE LOOKING GLASS
“The 200 blue chip businesses that support Formula One as sponsors create more than four per cent of global GDP. If the sport and its sponsors was a nation, it would rank as the world’s fifth largest economy.”
whose assets include an aluminium smelter, an auto OEM, an auto components business, railroad equipment engineering, aircraft assembly, etc. They also largely funded the development of Sochi which will host Formula One next season. Motorsports and Russian business have much to offer each other. The call from the top Russian business leaders from companies like Alrosa, Gazprom, MTS, Lukoil, Rosneft often view major sponsorships as a cost rather than an opportunity and dread the phone call from Mr Putin, suggesting that they might like to consider supporting the Olympics, the World Cup or Formula One. This view is incorrect and largely a cultural hangover from Soviet times when factory operators paid for roads, power, schools and other public infrastructure. With smart planning and focused exploitation strategies, Russia’s Formula One Grand Prix will create profitable enterprise as well as a socially valuable contribution. Perhaps we will see Russian drivers Daniil Kvyat and Sergey Sirotkin make it to the podium, but it is in the business arena that Formula One and motorsports has the power to create real global heroes for Russia. 71
11/6/13 9:36 AM
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Liam Clogger is CEO and Founder of Compelo, which has recently become part of the Progressive Media Group. Previously he spent a decade as Head of Communications at Williams F1.
With its inherent functionality to allow the fan not just to passively consume but also to contribute and communicate, the mobile will shape and define forms of motorsport that prosper and those that wither on the vine.
One of the consequences of the explosion of social media and mobile devices has been the equally rapid evolution of language and jargon to define new technology. Hastily considered terminology is not always useful – and none more so than the labelling of the observable phenomenon of sports consumption on mobile devices as so-called ‘second screen’, paying deference to the primacy of the television. However, with the irrepressible march of Smartphone technology and the expansion of mobile networks, humanity has today reached a critical juncture at which more people on the planet have access to a mobile phone network (91 per cent) than have access to drinking water. Europe is the world’s most advanced Smartphone geography, and in 2013 Smartphone ownership will for the first time overtake the number of standard mobile contracts; thus, the screen in our pocket has become, by default, the first screen. The yardstick for evaluating our screen hierarchy isn’t, and never has been, about size, it is all about utility, and for that reason, the mobile has justifiably claimed the top spot. With Formula One at the vanguard, motorsport has tended to elevate the importance of the telecast above all else, and to invest its energies in the ‘old school’ first screen, the television. But with other motorsport rights holders unable to command equivalent premiums with broadcasters, the time is perfectly pitched to make a strategic breakaway from conventional wisdoms and embrace the opportunities presented by mobile to take a leadership position. And while received opinion has tended to regard the internet as an engine to break down rigid paradigms, it can also be argued that the internet is returning many areas of social activity to normalised patterns of behaviour. Mobile tends to skew this view even more sharply and, addressed correctly, in-the-palm connectivity can fundamentally shift the fan from the sofa to the pitlane. Like many sports, Formula One, and all international motorsport, has laboured under the yoke of unilateral broadcast, obliging audiences to consume motorsport through the lens of the director and the commentator. But
the holy trinity of mobile, social and data has the power to fundamentally change this and put the fan at the heart of a multi-directional matrix of motorsport consumption. And with the observable potency of mobile, social media and data, motorsport has an embarrassment of riches in one particular respect. As one of the most measured, sampled and analysed sports in the world, Formula One is awash with data and blessed with a technically literate audience. By unlocking the value in this data, the scope to evidence and underpin prevailing editorial narrative is limitless. Do historical records of driver height and weight validate the view that Nico Hulkenberg’s stature could have been a statistically-significant disadvantage to Ferrari in the new turbo era, for instance, and to what extent has Fernando Alonso been ‘car-limited’ this season, having to earn his competitive margins on Sundays rather than Saturdays? Do the numbers substantiate the commonly-held view that Mark Webber is an unlucky driver? Data-enabled social conversations around motorsport can restore the fan to the centre of the proposition. Richer data means greater insight and engagement, which in turn sponsors the appetite for audiences to get involved, to share their view, to provide crowd-sourced datasets. Capture of real-time audience opinion, both during races and, perhaps more importantly, in the long interludes between events, which is one of the structural weaknesses inherent in all forms of racing bar NASCAR, is one of the significantly different values that mobile can offer rights holders over and above television. With its inherent functionality to allow the fan not just to passively consume but also to contribute and communicate, the mobile will shape and define forms of motorsport that prosper, and those that wither on the vine. Motorsport’s rights holders should recognise the huge transformative shift in media consumption patterns and sweat less about their primary television contracts and more about the opportunity provided by data, social media and their management of the first screen elect.
THROUGH THE LOOKING GLASS
11/5/13 4:24 PM
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