Wealth Blog

China turns off Formula One

PUBLISHED : Thursday, 06 February, 2014, 12:35pm
UPDATED : Thursday, 06 February, 2014, 1:51pm

Whoever ultimately succeeds Bernie Ecclestone in Formula One is going to have his work cut out.

Figures released last week in the annual “F1 Global Media Report”, published by the sports commercial rights holders, showed the global television audience in 2013 dropped by 10 per cent, with 50 million viewers choosing to switch off. Significantly, the biggest drop was in China where just 19 million viewers tuned in, a drop of 30 million compared to 2012. The close to US$ 200 million per year it takes to field a top two car team is largely funded by sponsorship and it is the half a billion global TV audience that persuades many companies to use the sport as a marketing platform, so any drop in viewing is bad news for the sponsor hunters.
Empty grandstands

Ecclestone blamed the total domination of the sport by Red Bull’s champion Sebastian Vettel as the reason for the switch off, but in the case of China, the move away from state broadcaster CCTV screening the show and the rights being allocated to a host of regional broadcasters was the cause. There is probably more to it than that, as the empty grandstands at the Shanghai Grand Prix suggest that even with China’s growing love of the motor car, the high octane world of Formula One just hasn’t caught their imagination as much as Ecclestone- and the multinationals who saw Formula One as a marketing tool to help them in the world’s second largest economy- had all hoped.
Time for a change

A good CEO can probably turn his hand to running all sorts of different companies, provided he has the right vision and leadership skills. 

One job that looks likely to be filled this year, but probably not with anyone from this part of the world, is that of running Formula One motor racing. Bernie Ecclestone has presided over the sport for four decades and is, at 83, at an age when most people would consider retirement, but he says he has no plans to let go. But add in the fact that he has a trial for bribery looming in Germany, and is awaiting the judgement on another trial held last year in the UK, it’s not surprising that the shareholders, stakeholders and administrators of the sport are thinking about succession. 

Last month, Ecclestone resigned as a director of Formula One Management, the company which runs the sport. Whilst he maintains that he will continue to run the sport and it is "business as usual", even though he isn’t on the board any longer, the past few months have seen plenty of speculation about who might be the successor.

Insiders such as highly respected team boss Ross Brawn was mooted when it became clear he was leaving his previous employer Mercedes, but he has decided to quit the sport altogether and go fishing for a year before deciding what to do next. Bernie himself anointed Christian Horner, the youthful boss of world champions Red Bull as his chosen successor, when the time comes for him to step down, but Horner has committed himself to remaining in his current job and with his team’s new car only managing to cover about 100 miles over four days of testing last week, he looks to have his work cut out to retain the championship for a fifth year.
Enter the grocer
One name that has been doing the rounds and which clearly shows that lack of industry background is not a hindrance is Briton Justin King. King resigned last week as CEO of UK grocer Sainsburys after a stellar decade-long career which saw him turn round the ailing retailer to being a major force on the British high street again.

As long ago as April last year, trade journal The Grocer was mentioning King as a possible successor to Ecclestone, and his departure this week has added fuel to those rumours. King might not have worked in the sport before, but he’s heavily involved, being an active supporter of his 19- year- old son Jordan’s blossoming career as a driver. Young King won last year’s British Formula 3 championship too and shown his credentials as top rookie at the Macau Grand Prix, where he came fifth on his debut last November. It will certainly help his aspirations to make it to Formula One if his Dad ends up running the show.

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