Well, quite a lot actually. Like A1 GP, Superleague Formula became a siding for drivers who’d failed to reach Formula 1, but with over three-quarters of 2011 season events cancelled and no announcement yet for 2012, it’s surely time to use those hackneyed words, “They think it’s all over…it is now.”

So what’s a billionaire Russian oligarch to do? If you’re Chelsea owner Roman Abramovich then you get into bed with the happening F1 team of the moment, Sauber F1.

It’s not the first time Abramovich has been seen near a Formula 1 car – his super-yacht used to be a regular fixture outside Monaco’s harbour (during the grand prix), although whether he was actually watching any of the racing is unclear.

The joint press release from Sauber F1 and Chelsea FC this morning, talked of a “new and innovative partnership”, but I couldn’t see anything innovative beyond the obvious contra-branding deal and “..a focus on synergies and ways to enhance performance in business and sporting matters.”

..I’ve always welcomed Formula 1 as a haven away from  football, so let’s hope this move by Chelsea and Sauber doesn’t start a trend..

At the Chinese Grand Prix earlier this month, subtle Chelsea branding ‘Out of the blue’ featured on Sauber F1 team cars, and ‘True Blue’ continued the tease at the Bahrain race, which the Chelsea FC statement said “..left fans guessing as to its meaning.” Really? I can’t say I even noticed it.

Perhaps I’m just a luddite of ‘The Beautiful Game’, but I’ve always welcomed Formula 1 as a haven away from football, so let’s hope this move by Chelsea and Sauber doesn’t start a trend..

Chelsea chief executive Ron Gourlay said: “This is an innovative partnership that will see a football club link up with an F1 team like never before, bringing together two of the world’s biggest sports and uniting our fans.

“We felt that this Swiss team, the fourth oldest of the existing teams, reflects our own ideals perfectly.

“In a year when Chelsea celebrates 20 seasons as a Premier League team, Sauber does so as an F1 team. We share many philosophies when it comes to how the respective organisations are run, from the development of young talent to constantly striving for success. Their philosophy towards grassroots development has produced some of the best drivers in F1, which mirrors our dedication to develop promising young football talent through our Academy.

“This partnership will benefit us both greatly, with the potential to create unique commercial opportunities. It is a shared vision to unite the two most attractive sports in the world.”

Monisha Kaltenborn, CEO of Sauber F1, added: “A partnership like this between Formula 1 and football has never existed before in this form, yet there are numerous commonalities and possible synergies. The Sauber F1 Team and Chelsea FC are dealing with many of the same sporting and commercial topics and we want to strengthen each other in these areas.”

Sauber F1 confirmed that both partners would “..feature the other partner’s logo and thus benefit from a significant market presence outside their original sport.” Chelsea FC will display the Sauber F1 Team logo at home matches on advertising boards at the stadium and on interview walls, whilst Sauber F1 will display Chelsea FC’s logo prominently on the side of both race cars.

The newly-liveried Sauber C31 will be seen for the first time at the Spanish Grand Prix, during the weekend of 11th – 13th May 2012.

The move by the sport’s second most successful team, follows on from the news last month that Ferrari and Red Bull had already agreed to join the board of Formula One, in exchange for greater controls and share of the sport’s $500 million annual earnings.

At the time we suggested that it wouldn’t be long before McLaren and Mercedes joined Ferrari and Red Bull, but Mercedes has been holding out for more favourable terms in the new Concorde Agreement – the sport’s commercial contract between the rights holder and teams, which will run from 2013 until 2020.

“I don’t see much (racing) history in this team which would justify a bigger bonus” Ecclestone told German magazine auto, motor und sport, after his meeting with Daimler AG CEO Dieter Zetsche last week.

The article in thisismoney.co.uk, written by Christian Sylt and Caroline Reid of Formula Money, said that F1’s board had not yet voted to approve an initial public offering of the company’s stock, but that the sport’s majority owner, private equity firm CVC Capital, is working towards a flotation in June.

This could be delayed until later in the year or postponed even further, depending on market conditions and whether there are problems in gaining approval from the board of F1’s Jersey-based parent, Delta Topco.

A decision to go ahead will be sought at an extraordinary board meeting next month.

Somewhat surprisingly, there’s no mention of Fernando Alonso, who won the grand prix and now leads the drivers’ championship.

* * *

Anyway, here is what he said:

Double world champion and Lotus Ambassador Emerson Fittipaldi gives us his thoughts on last weekend’s Malaysian Grand Prix..

Lotus: This season is shaping up to be a classic. Have you been on the edge of your seat too?

Fittipaldi: The racing is better than last year and it’s good to see the teams closing in and in some cases being even faster than the Red Bulls. Of course it’s a great field with six world champions and a lot of new talent.

Lotus: Just two races in, and Kimi Raikkonen looks like he’s lost none of his speed. Are you surprised how quickly he’s got back to grips with F1?

Fittipaldi: I am surprised that it has taken no time for Kimi to be back at the top of his form. Michael Schumacher is on form this year too, but it took him two years to get back in the groove. Kimi was on it from the very first test.

Lotus: Romain Grosjean once again qualified strongly but ended in the gravel within four laps. What advice would you give him?

Fittipaldi: The same advice I’d give any driver, especially a young one: first you have to finish, then you can finish first.

Lotus: As a driver pairing, how good a partnership do you think Kimi and Romain make compared to the teams around them?

Fittipaldi: There are good pairings all around, and Lotus is no exception. With Kimi racing so well and Romain showing a lot of speed the pair will keep each other honest and the results will come.

Lotus: We had a red flag period for nearly an hour due to rain. How difficult is it for a driver psychologically when a race is suspended?

Fittipaldi: I’m totally in favour of stopping the race in critical aquaplaning conditions. There is nothing the driver can do to defend himself in these conditions. I actually believe the red flag period in this case to be beneficial to the drivers, they can enter again and re-start the race at their best.

Lotus: Lotus once again proved they are quick, but due to Kimi’s gearbox penalty they perhaps don’t have the optimum result. How do you think the E20 ranks compared to the McLaren, the Red Bull, the Mercedes and the Ferrari?

Fittipaldi: Lotus has made the most progress of any team. I am happy to celebrate the 40th anniversary of my 1972 World Championship with Lotus and see the marque becoming a serious contender in F1 again. I know so many of the people involved I am sure that they will get the job done. I have a lot of respect for the new management and especially for my friend Eric Boullier.

Lotus: In mixed-weather conditions, experience usually comes to the fore. How impressed were you with Sergio Perez, in just his second season, challenging for the lead like he did?

Fittipaldi: I have known Sergio since he was in karting, and he’s always been fast. He is Mexico’s new hope in F1, and this is great news. His strategy was perfect and he drove like a veteran, turning in the fast laps when it mattered and making everybody follow.

Lotus: You achieved success in F1 at an incredibly early age. What do you think is going through Sergio’s head right now? And how much is he daydreaming about Ferrari?

Fittipaldi: I think that he is taking things one at a time, and trying to do his best this season. Today he showed again that he is very focused, so I wouldn’t say he’s daydreaming just dealing with the present.

My chromosomes would beg to differ.

But my apparently male characteristics – a penchant for obscenity, extreme competitiveness, and a collection of filthy jokes – might explain why I’ve yet to feel at a disadvantage for wearing heels in the paddock.

The accepted wisdom is that women don’t get equal treatment in Formula 1. We’re relegated to the roles of PR, grid girl, or girlfriend, and not accepted as journalists, drivers, or engineers.

Kate finds time to get in a bit of shopping whilst ‘working’ at Monaco.

That myth (which may have been true at some point) seems to have arisen from Beverley Turner’s book The Pits, an account of the ex-ITV reporter’s life in the F1 circus.

But times have changed since Turner last made her way through the paddock security gates, and my experience of life in F1 is no different to the experience of anyone else just finding their feet in this most competitive of environments, irrespective of their gender.

Sure, I had to spend most of my first season answering questions about which driver I fancied, and who I thought had the sexiest bottom. (The answer to both? None. Not interested in the drivers in that way.)

And – like all the other newbies – I had to prove my worth, to demonstrate that I had as much passion for this sport as anyone else in the paddock. Once my colleagues had established that I saw more beauty in the closing laps of the 1979 French Grand Prix than I did in Jaime Alguersuari’s eyes, I was treated no differently to anyone else.

Except for one small thing, that is…

However high the heels I’m wearing, and no matter how clingy my dress, I am referred to as a chap, or one of the boys. They might say ladies and gentlemen in the press conferences, or at the driver media calls, but in the press room itself we’re all boys.

In this sport, to be accepted as one of the boys is a high compliment, and I wear my chap-hood with pride.

Which isn’t to say that a little bit of femininity doesn’t go a long way.

When I first started out in F1, I made a point of dressing down. At the ripe old age of 28, I bought the first pair of jeans and (non-sporting) trainers I’d ever owned. I wore button-down shirts, no jewellery, and the barest of make-up.

As a highly respected male journalist told me last season, “you’ve got balls as big as I do – you just wear them slightly higher up”.

With no experience of life inside the paddock, I’d assumed that in order to be taken seriously in a sport outsiders perceive as an all-male bastion I would need to strip away all external signs of girlhood.

It didn’t hurt, but it didn’t really help much either.

As the years have progressed, I’ve become more confident in my presentation. Now in my third season, I wear the pencil skirts and high heels that have always been my trademark in the real world.

If anything, I now find it easier to secure interviews than I did when presenting myself as gender-neutral. No one in the paddock has been taken aback by the fact that a girl is choosing to dress in a feminine manner, and no one has treated me any differently.

Well, aside from the oh-so-funny jokes about my tyre choice on any given weekend…

Where I do find myself at a disadvantage in F1 is in my status as an online journalist. While I sell stories to a range of serious outlets (often without a byline), I regularly hear PRs telling drivers not to worry about being interviewed by me.

“She’s only a blogger,” they’ll say. “Don’t expect anything too difficult.”

Which is why I am now earning a reputation for asking difficult questions. Remember that competitiveness I mentioned earlier? If you denigrate my efforts and assume I’m not serious, you’re only motivating me to change your mind.

The office. Not always this tidy, but in the hot and muggy climate of Malaysia this is the best (i.e. coolest) place to be.

Because one thing everyone in this paddock has in common is that we’re fighters. Whether you’re manning the press room, changing the tyres, or looking after a driver’s media commitments, you’ve earned your right to be here.

No one is parachuted into Formula 1. This is the top tier of international single-seater motorsport and it takes a lot of effort to make it through those security gates (and just as much effort to stay in). Quivering daisies need not apply – this a sport for the bloody-minded, the hungry, and the passionate.

If you possess those qualities, there’s not a person in here who cares what you’ve got between your legs. All that matters is that you’ve got balls.

As a highly respected male journalist told me last season, “you’ve got balls as big as I do – you just wear them slightly higher up”. It was the highlight of my year.

Kate Walker is a guest blogger for SkiddMark and spends her time travelling the world reporting on F1 for girlracer and GP Week. She can also be found on Twitter, LinkedIn or her personal blog.

Photo credits: Kate Walker, Lost-In-Sky on Flickr

Private equity group CVC Capital Partners, has held the majority stake (63.4%) in Formula One since November 2005, when they acquired the shareholdings of Bambino, Bayerische Landesbank and JP Morgan Chase, and was approached last May from a consortium formed by Rupert Murdoch’s News Corp and Exor, the Agnelli family investment company that controls Fiat (and Ferrari).

At the time, CVC politely declined further discussions, saying that their stake in Formula One was not for sale and whilst James Murdoch informed CVC that the approach was friendly, that’s usually how most hostile takeovers begin..

Meanwhile, two of Formula One’s most high-profile teams – Ferrari and Red Bull quit the Formula One Teams Association (Fota) last December (followed by Sauber), instigating a ‘divide and rule’ tactic intended to secure greater influence and share of income for those teams who contribute most to the sport’s value.

All the pieces have been lining up for a fundamental change in the ownership and governance of Formula One, which has just received a major push by news this evening, provided by Mark Kleinman of Sky News*, that CVC Capital Partners has retained Goldman Sachs to begin preparations to sell part (or all) of its stake in F1 during the next few months.

If CVC do elect to sell only ‘part’ of their 63.4% share, it is likely they will retain a controlling interest. It is also likely that CVC’s stock would be combined in a listing with the 15.3% held by LBI Group (the holding company used to contain the assets from the bankrupt US bank Lehman Brothers).

Lehman’s estate, which emerged from bankruptcy protection earlier this month, is expected to yield $1.5bn from its 15.3% stake in Formula One’s Jersey-based holding company, Delta Topco, hence the mention a few weeks ago of an estimated $10bn valuation of the business as a whole.

When Lehman Brothers originally went bankrupt in September 2008, CVC attempted to seize its Formula One shares, since Delta Topco’s articles of association give it the power to force any shareholder which becomes insolvent to sell to the remaining shareholders at a fair price. But with a $639bn debt to service, Lehman put its business into bankruptcy protection believing it would be worth more if sold as part of a controlling interest in the sport. Lehman Brothers is the 2nd largest shareholder in Formula One, after CVC Capital Partners.

CVC have power of veto over the sale of any shareholding in the Delta Topco, however when it requested the transfer of the Formula One shares from LBI, Lehman argued that US bankruptcy law would overrule its obligation to CVC. This was never tested in court, so ultimately CVC retain the right to seize the LBI shares.

The restructuring deal would likely bring in a number of prospective new investors and earn some significant payments to Ferrari (and possibly other teams). In addition to News Corporation/Exor, this could include Abu Dhabi sovereign wealth fund Mubadala and the world’s richest man, Carlos Slim, whose telecommunications company, Telmex, already provides financial support to Sauber driver Sergio Perez..

According to the report on Sky News, such a deal would depend on creating a formal process for appointing and removing a chief executive – which would be an essential precursor to any form of stock market listing or IPO (Initial Public Offering). The deal also includes a provision to formalise Ferrari’s role in Formula One – as the sport’s longest standing team – with a shareholding in the sport’s holding company and enable both Ferrari and Red Bull to nominate a director to sit on the company’s audit and nominations committees.

It is believed that Luca di Montezemolo would represent Ferrari, whilst either Red Bull founder, Dieter Mateschitz, or team principal, Christian Horner, would represent Red Bull Racing,

This is a significant step, not only because it paves the way to recognise key stakeholders in the sport in a more conventional and secure manner than currently provided by the Concorde Agreement, but it could also put in place a defensive layer to prevent an unwelcome takeover in the future.

The process, sometimes called a ‘scorched earth’ strategy (in its most extreme forms), is designed to make the business less attractive to a takeover by either placing key assets outside the company’s holding, or adding onerous conditions to the holding company’s articles of association. Either way, Formula One becomes a stronger business (and investment) proposition if the key teams are disincentivised to leave. Something that would be good for the sport, as well as for those financing its growth.

The proposals being explored include the introduction of single car customer teams, enabling new teams to use cars deployed by other constructors during the previous season. New teams would then be able to use these ‘customer cars’ for up to 3 seasons, before having to introduce their own designs, which would go some way to avoiding the situation illustrated by HRT this weekend, who have been excluded from tomorrow’s Australian GP after falling outside the 107% rule.

Apparently team managers are due to meet during the next few hours (in Melbourne) to discuss these proposals, plus other issues relating to the 2013 Concorde Agreement, but it remains to be seen if other big teams such as McLaren and Mercedes, will join Ferrari and Red Bull in gaining a share of the sport they’ve helped create.

* The original article by Mark Kleinman on Sky News was taken down shortly after being published, however any F1 scribes who would like to take a look at its contents should get in touch with me using the feedback form on this page or by sending an email to press[at]fitchmedia[dot]com.

‘Yes Men’ are all too easy to acquire, and the higher you climb, the less likely anyone will actually tell you the whole truth.

Earlier in the week, I brought you news that motorsport writers Joe Saward and David Treymayne had joined the Board of Caterham Cars Group Limited, and we naturally wondered what these appointments implied – for Caterham and the role of such well-respected independent journalists.

Joe was kind enough to get in touch with me this morning, so I can now shed some light on the story behind their appointments.

Ever since Tony Fernandes arrived in Formula One, Joe has been impressed with his passion for the sport and what he believes in. “He is simply the most dynamic of characters to come into the sport in a long time, and the most ambitious new team owner for decades.”

An Audience with Joe. Picture courtesy of Sidepodcast.

Naturally, being the shrewd person that he is, Tony called upon Joe’s advice when the team was formed back in 2009 (even inviting ideas during his purchase of QPR last August). He wanted some experienced, independently-minded individuals with a bigger picture than your average automotive executive, who were also well connected in both the automotive and motorsport worlds and he seemed to think Joe and David would be good at that.

Over time he gained value from their insights and last Autumn made them directors of Caterham Group.

Although Joe was a vocal commentator in last year’s legal dispute between Group Lotus and 1Malaysia (for the rights to the Team Lotus name), he tells me this was all done-and-dusted long before the question of his directorship with Caterham Group arose, but clearly it’s natural that his insightful analysis of the situation would have further endeared him to Fernandes.

So what does this all mean for Joe and David’s journalistic independence? Well, first and foremost, nobody is truly independent – we all have our favourites either due to an overt relationship or because a person or brand’s values resonate with our own.

Joe assures me, thus far there is no specific role or responsibility attached to their appointment – he continues to share his views with Tony and has no direct association with Caterham F1 as a team.

But he also sees no reason to hide his appointment, believing that his understanding of the business helps him explain the sport more accurately to its fans.

In fact, all of the key journalists and influencers that I know of in Formula One, are also commercially involved with some aspect of the sport, whether that be broadcasting, hospitality, technology or promotion. That’s surely what we want from our writers and commentators – insight gained first-hand rather than as a result of gossip and Chinese whispers.

As for Tony Fernandes and the ever-growing Caterham Group – the quickest way to learn is to avoid repeating the mistakes of others.

Fernandes is learning. And learning from the kind of people known for telling the truth, warts and all.

Photos: courtesy of Caterham and Sidepodcast.

Caterham F1 chief designer Mike Gascoyne was promoted last month to the post of CTO (Chief Technical Officer) for the Norfolk-based group. Gascoyne will be responsible for proposing and coordinating key technical initiatives in Caterham Group’s motorsport activities (F1 and GP2), Caterham Cars, Caterham Composites and Caterham Technology & Innovation.

David and Joe at the Suzuka GP in 2011. Photo courtesy of Kate Walker.

According to Companies House, the appointed directors of Caterham Cars Group Limited are now;

• Mr Mark Duncan Edwards
• Mr David John Tremayne
• Mr Riad Asmat
• Mr Jonathan Mark Christopher Saward
• Mr Ansar Ali
• Mr Graham Alastair MacDonald
• Mr Anthony Francis Fernandes
• Mr Kamarudin Bin Meranun DATO

The nature of Saward and Tremayne’s roles in Caterham are as yet unknown, but one would assume Joe will announce something on his popular F1 blog during the next few days. Both writers publish the GP+ e-magazine, known for its speedy release just hours after each grand prix.

Photo credit: Kate Walker

Frank Williams reaches his 70th birthday in April, and felt it was time to signal the next stage in the gradual but inevitable process of handing over the reins to the next generation.

The first step in that ‘handing over’ is the appointment of Frank’s daughter, Claire Williams, as Director of Marketing and Communications. Claire has worked for Williams for 10 years and is best known to fans as the team’s PR spokesperson and friendly face behind their Twitter social media account.

Claire Williams, daughter of founder Frank Williams and now Director of Marketing and Communications for Williams Grand Prix Holdings.

Claire takes over from Dominic Reilly, who has decided to leave the Company at the end of March. Dominic plans to set up a new venture, and Adam Parr, Williams Chairman has promised his full support.

Frank Williams, Team Principal, said, “It is no secret that Claire is my daughter but I am proud to say that she has fought hard to earn this appointment and of all the battles she has had to fight, the prejudices of her father were not the least challenging. Dominic Reilly has proven a unique talent in the field of sports marketing and filling the gap he leaves was daunting.

“But I have come to the view that Claire, with her profound love and knowledge of the sport and the team, can do so and I am proud and delighted that the Board has given her this opportunity. I am equally delighted that Dominic will remain close to the team with his new venture and that we can thank him for his contribution to Williams by supporting him now.”

But Frank is not leaving the sport and will remain Team Principal, attending Board meetings as an observer. He also remains the majority shareholder of Williams Grand Prix Holdings PLC, so will remain a very strong influence.

I’ve noticed plenty of discussions following the announcement which centre on various conspiracy theories – the deal represents the first step in a global Pay Per View (PPV) strategy designed to kill-off free-to-air access, or that private equity firm, CVC Capital Partners (63.4% shareholders in Formula One) is set on packaging up the business, ready for a sale.

Eddie Baker, the man responsible for F1 Digital back in the early noughties was quoted on jamesallenonf1.com as saying, “It’s the most significant moment for F1 since the advent of satellites.”

“It gives him (Bernie) the ability to be able to do whatever rights deals he feels are right without limitations,” said Baker. “That means he can assess every opportunity, he can react to every opportunity, he can move with the times in perhaps a way that we were not able to do in the past.”

It gives him (Bernie) the ability to be able to do whatever rights deals he feels are right without limitations

Formula One is a hugely attractive sport for anyone with a technology or engineering focus. There’s no sport more innovative and none as demanding. It should therefore come as no surprise that FOM has entertained discussions with many advisors over the years, and I had my chance to share a few ideas with Eddie and his team during 2010/11.

Following the Tata/FOM announcement last Thursday, I got in touch with Eddie on his way back from the launch in London, to check that I wasn’t saying anything out of turn.

So the following are my thoughts (not his) about some of the potential opportunities created by a global IP network, which might help a few more people understand how the deal benefits viewers as well as Formula One’s main stakeholders.

The context

I have been involved in a few technology projects in my time, including the first 3G trials here in the UK, various large-scale network solutions and if you’d like to know more about how Bluetooth came to be, then I’m your man. So let me quickly start with the technology and then move on to some of the business implications of this deal.

From Satellite to cable broadcasting

The deal mentions Tata’s global backbone network (TGN) which is one of the largest submarine cable networks in the world. This is exactly what it sounds like, cables laid across hundreds of miles of ocean by undersea vessels, designed specifically for the task.

There have been cable networks on the sea-bed of most major oceans since the 1840′s, but the practice really took off in the 1980s when fibre-optic cables were developed. Prior to this, transatlantic cables required huge voltages to overcome their electrical resistance and numerous repeaters which would distort the transmission and limit available bandwidth. British companies initially led the way (giving birth to big names such as Siemens and Cable & Wireless), but now most are built by consortiums who then lease out their capacity to service providers.

Most people assume the internet is one big global network which everyone is attached to, but in fact it’s a virtual network connected by common protocols, and composed of millions of private, public, academic, business, and government networks including ‘parts’ of these backbone networks between continents.

Tata Global Network

Tata’s global network for Formula One is significant for several reasons; fibre-optic cable networks can transmit data at much higher speeds than satellites (terabits per second compared to only megabits per second).

Tata will spend much of the first year defining service levels, migrating legacy systems, putting in place security protocols and reducing the cost of broadcasting

They also offer much lower latency (delay between requesting data and receiving a response), so they are better suited to real-time broadcasting and interactive gaming. This is a key factor in the deal, which I will come back to later.

Another benefit of MPLS (the mechanism used to connect data being transmitted) is its ability to easily combine data packets arising from different protocols, which will make it possible to combine data from different sources (e.g. race broadcast, advertising, branded content) on the fly (i.e. during a live broadcast). Another key factor.

Initial changes will be invisible to the end-user, Tata will spend much of the first year defining service levels, migrating legacy systems, putting in place security protocols and reducing the cost of broadcasting core programming from around the world, but it opens up several new commercial opportunities for Formula One, should it choose to take advantage of them.

The opportunity gap

Many people are worried about the decline in free-to-air live broadcasting (such as the BBC) and a sense that Formula One is planning to milk its audience of loyal fans through a series of pricey pay-per-view schemes.

Whilst I’m not privy to their current plans, it’s worth bearing in mind a couple of things; the nature of Formula One as a business, and where additional value can best be generated.

Formula One as a business

Formula One in the scheme of things, is a relatively small business – totally dwarfed by the brands who make up its core sponsors. The business (excluding teams) brings in around $1.7bn in revenue each year, of which around $700m covers operating costs and a similar amount is paid out to the teams. With fewer employees than your local supermarket it’s a pretty lean business and yet highly profitable.

Race-hosting fees have taken over from the sale of television rights as Formula One’s biggest source of revenue, with race promoters paying F1 around $30m per race – contributing $600m – $700m to the pot.

The 2011 Formula Money forecast estimates that revenues could rise to more than $3bn by 2016, principally from an increase in fees charged to host each race.

To put those numbers in perspective, America’s NBA generated over $3.8bn in basketball revenues during 2011, with players receiving $2.2bn of this. Major League Baseball generated $7.2bn, whilst NFL football raked in $9.0bn in 2010. Those are national sports, without access to the wealth of emerging world nations like China and India.

Despite a TV audience in 2011 of 527 million viewers, Formula One is a B2B (business to business) operation – fans are an asset rather than a source of revenue – and Formula One’s competitive advantage is based mainly on CEO Bernie Ecclestone’s success in pulling together lucrative multi-year deals.

This is great quote which sums up the role fans play in Formula One’s business model, “If you’re not paying for something, you’re not the customer; you’re the product being sold.” [Source: Andrew Lewis quoted in Eli Pariser’s Filter Bubble]

But with such a huge audience (which dipped slightly last year), Bernie must wince when he sees upstarts like Facebook generate revenues of $3.8bn – and yet most commentators still harbor concerns over Zuckerberg’s success in monetising the social network’s 850 million user base.

Most race venues lose money and are subsidised by their governments, whilst the rest of Formula One’s revenue comes mainly from corporate hospitality, trackside advertising, sponsorship and TV licensing.

A B2C business such as BSkyB, who took over the broadcasting of Formula One in the UK this year, generates more in ‘profit’ each year than Formula one’s total income

A B2C business such as BSkyB, who took over the broadcasting of Formula One in the UK this year, generates more in ‘profit’ each year than Formula one’s total income, but also needs around 17,000 employees to perform its operations.

Therefore the idea of Formula One centralising its race coverage and charging under a pay-per-view model, is about as likely (in the short term at least) as Ed Miliband becoming the next Prime Minister.

Bernie has no interest in running a consumer marketing business and has succeeded over the years in building a low-risk business, where others (teams, sponsors, TV companies and venues) carry the main burden of investment.

It’s a unique (and very attractive) business model and is unlikely to change anytime soon. Nevertheless, Formula One is a long way from being the most valuable sport in the world, and there is still a considerable amount of latent value in its existing business model – so why change it?

New income

Whilst the growth in Formula One’s income is being driven by the fees charged to host each race, there’s an ‘elephant in the room’ that cannot be ignored.

If global brands and governments are contributing most of Formula One’s revenue, how much value do they receive in return? – beyond the intangible benefits through association and the modest exposure of their logo on a 200 mph billboard.

Each race viewer would need to contribute at least $30 each, in order to keep Formula One as fuelled up as it is today, and yet carmaker General Motors spent nearly 3-times as much ($4.25bn) as Formula one’s total income on its advertising in 2011. How much of that spend do you think went into Formula One’s pockets?

In fact, given Formula One’s position as the most advanced and elite motorsport formula in the world, how many car companies actually use the sport as a marketing platform for their products? You can probably count them on one hand.

Even GM’s marketing spend pales in comparison to FMCG brand Procter & Gamble (P&G), which flushed a cool $9bn into shifting deodorants, nappies and washing powder during 2011.

If Formula One were such a great marketing platform, then we’d see a lot more of these brands diverting their spend to reach its audience.

That was the catalyst for my own involvement a few years ago – we knew that advertising was a declining business model with content marketing (branded high quality material) emerging as the future. So the question was how could we build out the infrastructure of Formula One to enable direct and highly targeted propositions to be offered to brands?

If Formula One were such a great marketing platform, then we’d see a lot more of these brands diverting their spend to reach its audience.

Part one in this process was the move to HD broadcasting last year. Part two was envisaged to be co-content creation.

Despite the public perception, moving Formula One into the HD era was not simply a matter of increasing the bitrate of transmissions, races had been recorded in sufficiently quality for many years, instead Formula One had been working hard on the process of embedding meta data within the broadcast stream on the fly.

This opens up the prospect of different packets of content being mixed together during a live transmission (i.e. camera angles, viewer polls, sponsored content) offering broadcasters the chance to sell targeted propositions to their ad buyers.

The addition of Multi Protocol Label Switching (MPLS), as announced in last week’s Tata Communications deal, provides the delivery mechanism to enable this just-in-time assembly and distribution of content along a series of dedicated pipes.

Such a capability would also allow major sponsors to offer branded versions of the race coverage to their own audiences (rather like a digital magazine programme) – hence providing a more tangible return on their investment and bringing new money into the sport.

Take a look at the steps already made by Johnnie Walker, who sponsor the Vodafone McLaren Mercedes team, or Shell and Ferrari – they’re producing some great supplementary content, despite the prohibitions of Formula One’s licensing model.

Not once did we discuss audience-based monetisation, because the opportunities available from sponsorship are far greater and play to the strengths of Formula One as a business.

General Motors spent nearly 3-times as much as Formula one’s total income on its advertising in 2011

The most important benefit I see for fans is the opportunity to rebalance the sport, reducing its dependency on drivers bringing money into a team and thereby enabling F1 be the ultimate meritocracy for driving talent (as it should be).

If we reduce the need for teams to cover the cost of their drivers – who let’s face it, are the stars who attract the audience in the first place, then we get even closer competition, a better spectacle for viewers and a more attractive prospect for brands to associate with. Sports like the NBA already do this for players, so why not F1?

Now, of course I could be proven wrong and find that Bernie takes the business on a complete tangent, but I very much doubt he will. The stability of Formula One over the years has come from it displacing its liabilities into the hands of its business partners whilst tightly controlling its content.

Tata Communications are the newest member in the team, and are tasked with the job of providing Formula One with the tools it needs for the future.

Will the sport’s owners chose to use these tools to make Formula One the most attractive (and valuable) sport in the world? Time will tell. But that’s certainly the ambition.

Coton is a man who knows Formula One and will be conscious of the space a driver needs to focus on their main job, namely winning races, so will be instrumental in creating a ‘bubble’ around Hamilton, that was said to be at the root of his problems last year.

Didier Coton, who runs Sports Marketing and Event Management company Aces Management Group, takes on the task of guiding the 2008 F1 World Champion back to winning form.

Hamilton retains Simon Fuller’s XIX Entertainment to run his broader affairs, whilst the highly-experienced Didier Coton joins XIX to guide Hamilton’s racing career back to world championship winning form.

Coton said: “Being appointed by Simon to join the team is a great honour. I am excited to work alongside two such prestigious personalities and talents. XIX’s visionary approach is unique and one I believe in. I look forward to helping Lewis achieve success and developing long term projects with Simon and his team.”

Hamilton experienced a turbulent year in 2011, which was partly blamed by the media on his long-distance relationship with former Pussycat Doll Nicole Scherzinger. Neither Hamilton nor Scherzinger have ever validated this assumption, although clearly their busy schedules placed tension on their relationship, leading to the pair splitting in October last year.

Since then, the pair have been spotted at a ski resort in Vail, Colorado where they spent New Year’s Eve and earlier this week heading out for dinner in Los Angeles.

With Scherzinger’s recent departure from the judging panel of X Factor U.S., she’ll have a bit more time on her hands, so perhaps that will boost Lewis’ morale and enable him to focus on winning another championship.