It has been a year since Formula 1 faced the greatest existential threat in its 70-year history. The consequences of the pandemic have been far-reaching, leading to a severe economic contraction of global markets and a transformation of the way we both live and work.
Like all industries, Formula 1 was not immune to the impact of the pandemic and had to adapt – and fast. In the best tradition of its engineering principles, F1 quickly found a solution to become the first international sport to restart after the virus outbreak. It was a testament to F1, the FIA, race promoters, the teams and media that our sport put on a 17-race championship at a time when so many others were unable to operate.
While many sports struggled with large viewership declines last year, F1 viewership trends compared positively to other sports that experienced similar temporary shutdowns, and particularly those with an international footprint. Alongside this, F1 was the second fastest growing major sports league in the world in terms of follower growth and saw the fastest growth in engagement compared to other major sports with a 99% increase in 2020. To achieve these results in such a challenging year was a remarkable achievement.
Changes were made to help us through this difficult period. In our sport, costs were reduced and compromises brokered, leading to sensible regulatory decisions to help the 10 teams across the grid. We advocated for and welcomed the move to delay the new regulations until 2022 and bring down the budget cap to $135m in 2023, from the originally proposed $175m.
But the reforms over the past 12 months are just the beginning. We must continue to drive through change for the future prosperity of our sport.
The impact of the pandemic forced the world to re-examine many of its values. It coincided with a wave of historic protests, highlighting social and racial injustices, while the dark days of lockdown also gave us time to think about the impact we all have on the world and the need to drive harder to reduce and tackle the effects of climate change.
The actions Formula 1 is taking to improve the financial viability of the teams and the sport as a whole, increase sustainability, and accelerate diversity, equality and inclusion are an acknowledgement of the challenges we are facing. But we must accelerate this progressive course of action to ensure F1 not only maintains its relevance but plays a leadership role in a global context. We must continue to reduce costs, drive expansion in key markets, grow our fanbase, champion sustainability, increase diversity and inclusion, all while ensuring the governance of our sport is both transparent and fairer for all.
Following a period of reform and growth under new ownership, helping bring F1 to the threshold of a new golden era, we now welcome Stefano Domenicali as CEO, who will continue and build on the major achievements of his predecessor, Chase Carey. I believe Stefano will lead us into a realm of fresh thinking with an energy bound in both a knowledge and passion for motorsport. And as the progressive tenure of FIA president Jean Todt comes to its natural conclusion, I hope that when he hands over to his successor, the partnership between the governing body and F1, the commercial rights holder, will continue to thrive.
Along with the Olympics and FIFA World Cup, Formula 1 is the most-watched sporting spectacle on the planet with 500m global fans and a cumulative TV audience of 1.5bn in 2020. That’s because the cars are the fastest in the world, the drivers are the fans’ heroes, the racing is spectacular and the rivalries are intriguing. But, more than ever, it is paramount we address issues both on and off the track to ensure the continued popularity of Formula 1 and to maintain its position at the pinnacle of global sport.
To this end, I believe there is a pressing agenda that all the sport’s stakeholders must address in the immediate future.
Making F1 more sustainable
The climate change emergency is having a profound effect on every global organisation and we at McLaren are not alone in developing our sustainability agenda as we strive towards a net zero carbon footprint and transition to circularity. And the positive changes we are making to navigate this transition will continue to instil confidence in our fans, investors and stakeholders. But as a sport we must continue to prioritise action in this area.
As the first F1 team to be certified carbon neutral in 2011 and to be awarded the FIA Institute’s Environmental Award in 2013, McLaren has long been recognised as a leader in climate action and yet we are still only at the beginning of our sustainability mission.
This is a continuous journey, which affects everyone in their daily lives. Whether it’s small things, such as eliminating single-use plastics, or on a larger scale in following the guidance of the United Nations’ Sustainable Development Goals to be net carbon zero by 2030, or our transition to a circular economy through waste reduction, reuse and recycling.
More importantly, it’s our ambition to extend this drive beyond mere compliance and to actively find and deliver solutions to the environmental challenge. For example, McLaren became the first Formula 1 team to use natural fibre composites. Working with a sustainable lightweight specialist, we developed a natural fibre racing seat which had the same strength and stiffness but with a 75% lower CO2 footprint than its carbon fibre counterpart.
It's time for the entire sport to tell its powerful, positive story and showcase its credentials. People often think of Formula 1 cars as gas-guzzlers, but the reality is that from the 256,551 tonnes of carbon that F1 emitted as a sport in 2018, only 0.7% was from the race cars themselves. The challenge for F1 is no different than for other global sports or global logistics companies.
In fact, Formula 1 has a smaller carbon footprint than the Olympics and FIFA World Cup, even though they are only four-week events and we compete for nine months of the year.
The FIA and F1 have committed to the next generation F1 engine being 100% sustainably-fuelled and have already begun research and development of a 100% sustainable fuel made from bio-waste. This will be game-changing for motorsport and the automotive sector as a future drop-in fuel for road cars, and has drawn the attention of manufacturers who are interested in the plans F1 is pursuing. Formula 1 can use its ingenuity and know-how to play a vital role in this mission to tackle the climate emergency, just as we did as a sport in answering the call to build more ventilators for the covid pandemic.
The data shows there is scope to reduce the CO2 output (shown in percentages) of the sport in other areas, including logistics (45%) and personnel travel (27.7%). Like many international competitions, Formula 1 is not alone in addressing the carbon footprint sustained in reaching all corners of the globe, given its world championship status. However, steps need to be taken to diagnose the impact and to act accordingly.
Moreover, F1 will not only reduce its environmental impact on the world, but positively contribute to making life better.
Over the decades, Formula 1 has played an important role for innovations that have developed in the white heat of competition and have trickled down into the automotive sector. One area in particular has been the positive impact the sport has had in road safety. For example, innovations such as traction control and ABS, both developed in F1 in the early 1990s, have directly influenced today’s road cars as active safety measures. While seat-belts and even the humble rear-view mirror were born from motorsport, today the transfer of technology and innovation has moved into such areas as materials, sensors and data science. Furthermore, we are now seeing human performance become a focus, with real-time biometrics and cognitive monitoring opening the door for potentially broader medical uses in the general population.
Beyond technology though, there is know-how. And it was know-how that enabled Formula 1 as an industry to come together in record time and have the teams apply their unique expertise to produce 10 years’ of ventilators in 10 weeks to help tackle the coronavirus pandemic and, ultimately, save lives.
Formula 1 can continue to pioneer new advances in mobility safety and solutions to benefit society long into the future.
Equally, like many other global sports, F1 has incredible power to address societal issues by raising awareness, influencing opinions and changing behaviour. At McLaren, we have recognised this opportunity by helping confront the growing mental health crisis through partnering with the charity Mind. As an elite sports team, we are major advocates of better mental health and have found we resonate with a hard-to-reach audience, particularly young people, who are increasingly impacted. We have used the platform and reach of Formula 1 with our fantastic drivers and team-mates to talk about the subject openly, raise funds and, somewhere hopefully, make lives better.
With every team pursuing its own cause, under Formula 1’s #WeRaceAsOne platform, the power of the sport to drive positive change is huge.
Building the fanbase
You ignore your fans at your peril. They are and will continue to be the lifeblood of our sport and while it has been devastating not to have spectators at many races over the past 12 months, McLaren has worked tirelessly to engage with our fans through video-conferencing and on social media. It’s vital to remember that Formula 1 survives because of its fans.
The sport appeals to a broad demographic of age, gender, location and its new ownership has continued to expand its reach. Through the development of its digital media output and development into the realm of esports and gaming, it is engaging with a new generation and segment of fans.
One of the most significant advances in building a new audience has been via the Drive to Survive documentary series, which was recently the number one show on Netflix in 25 countries and the number one show worldwide on its day of release. Add to that the fact that Series 3 was bigger than Series 1 (unheard of for Netflix) and the attraction of F1 and the impact is clear. The success has been the result of a number of factors, including the ability to watch on demand, the human stories of the protagonists and an entry level guide to a very complex sport.
It’s important that Formula 1 continues to make the sport accessible, not by dumbing down with gimmicks but by simplifying its rulebook and avoiding acronyms which can alienate first-time viewers. As society evolves and consumption habits change, it’s critical Formula 1 recognises the need to adapt accordingly – as other sports have done. For example, the introduction of a new sprint qualifying race on three Saturdays in 2021 is a worthwhile experiment and further innovations should be considered. It has real potential to excite existing and new fans and create commercial value for our partners, the broadcasters of the sport and the promoters.
We need to remember that we are all fans of the sport. Because of that, the workforce of tomorrow’s Formula 1 are the fans of today and we must recognise the importance of diversity, equality and inclusion across our industry.
We need to be proactive to increase the pool of both female and ethnic minority talent across all areas of motorsport. I know we still have much work to do. For example, women currently comprise 12% of McLaren’s workforce, but by 2030 our objective is to have a workforce more representative of the population.
While McLaren fully supports F1’s #WeRaceAsOne initiative, there is still more that we can all do through education and STEM subjects to encourage future employees from different ethnic and socio-economic backgrounds. We cannot lose sight of this goal and it is vital that as a sport we tackle this challenge together and this is something I know Formula 1 is laser focused on.
Reach new markets, limit races and increase testing
As Formula 1 strives to increase its fanbase, it’s important to focus our energies on key growth markets: USA and China. That’s why I’m delighted with the recent news that a second Grand Prix in America will take place next year on the streets of Miami. Being from the US originally and spending time with our Arrow McLaren SP IndyCar team, I have seen first-hand the passion of the fans in the US for motor sport, so it’s imperative we build our foothold in the United States – the biggest market for sport anywhere in the world.
While it’s vital that Formula 1 retains its European roots and traditions, the impact of the pandemic last year proved that a shake-up of the calendar had a positive impact with the fans. We need to look at opportunities for expanding F1’s reach across the globe, in particular in Asia and the Americas, but limit the number of rounds we compete in.
The intensity of a 25-race global schedule, designed to add in more race locations around the world, places a challenging physical and mental strain on travelling personnel. A better way to race across 25 markets would be to have an F1 season of, say, 20 races, of which 15 or so would be fixed annual events and the remaining five shared between different venues, on a rotational basis each year. It’s important we have variety in our race venues and allow new countries the opportunity to host a grand prix, while maintaining a level of scarcity value in our sport. By comparison, NFL teams play only 17 regular season games across a four-month period, but the sport boasts some of the most valuable sports franchises in the world. So volume doesn’t automatically equate to success.
Back in March we had one test session comprising three days at the Bahrain International Circuit. The condensed track time made it a viable product for television and while the Covid-19 pandemic prevented spectators from attending, it was the perfect blueprint for how testing should be held in the future. However, I think we should go further.
After the winter break, the fans, media and drivers can’t wait to get back on track as new cars are put through their paces for the first time. I strongly believe these should be promoted events with a strong fan presence and interaction. We should be driving awareness into new markets with a different circuit hosting testing each year. Without the intensity of competition of a grand prix weekend, testing provides a golden opportunity to sell our sport at a local and international level.
We also need to have more opportunities to test throughout a season to help young drivers. Modern Formula 1 cars are extremely complex and without real-world participation, it is very difficult for up-and-coming racers to experience the rigours of an F1 car. I welcome F1’s new 2022 rule to mandate that each team must run drivers with no more than two F1 races in their careers in two practice sessions each season. But this needs to expand. We can then also encourage drivers from the region we are racing in to participate and grow awareness for the sport in that territory.
Young, up-and-coming racers bring dynamism to the sport which the fans love. They shake-up the established order, breathe fresh energy onto the grid and can revitalise a team. Drivers are key performance differentiators, so as teams continue to reduce costs across their operations, it’s prudent that driver salaries, along with the top three highest-paid employee salaries, must ultimately move under a defined allowance.
Expanding the budget cap to include a defined and regulated allocation for driver costs and the top three salaries in each team will include all key performance elements and truly put the sport on a level playing field. Any team would be free to exceed the driver and top three allowance but at the penalty of reducing their racing operations budget cap by the excess amount.
This is F1 at its very best: a strategic balancing act to find the most efficient way to spend finite resources and extract the best overall performance to win.
To safeguard our future, across all areas, we must continue to drive down the costs of our sport.
The future beyond 2021
The rapid advances in e-mobility and the shift away from hydrocarbons raises an interesting question for the future of the Formula 1 powertrain. Formula 1 has already made huge strides through the introduction of state-of-the-art powertrain technologies. Where the thermal efficiency of petrol engines is around 30%, current Formula 1 engines are reaching more than 50%. That means the V6 turbo-hybrid is the most efficient internal combustion engine ever made.
Any future power unit formula must also inspire future engineers to develop solutions that can benefit the automotive industry. We must strike a balance between a sustainable future, by creating super lightweight materials and synthetic fuels, while also keeping development and running costs under control.
Before the new power unit regulations come into effect, Formula 1 will undergo a facelift in 2022 with an entirely new chassis based on ground effect. With less drag and simplified aerodynamics the intention is to help the cars overtake each other. I welcome the changes to the regulations aimed at increasing the ‘show’ and which will also bring down costs with the inclusion of more standard parts and reduced R&D time. However, while each constructor is responsible for the manufacture of performance differentiators, I have concerns over the increase in components that teams can acquire from other outfits.
Governance, team affiliations and a level playing field
The rise of team affiliations has become unhealthy for our sport. It is not in the best interests of competition if two rivals, or even three, share assets and align strategically. One of the fundamental principles of Formula 1, as opposed to other one-make racing series, is an open competition between constructors.
I do not wish to see the number of teams in F1 reduce, but team affiliations remain an issue because they do not promote a level playing field. This is where further changes need to be made to the governance of Formula 1.
There have always been conflicts of interest in Formula 1 and it’s unlikely to change anytime soon, so it’s even more important that F1 and the FIA, who have no other agenda than the whole sport’s success, call the shots in the best interests in F1 and not be blocked and slowed at every turn.
Currently, decisions about the future of the sport can be halted by a minority, rather than majority, and they are further skewed by some teams’ voting power being in favour of their affiliated team partner. There have even been instances when an affiliated team, to satisfy its bigger partner, has voted in favour of a clear disadvantage to itself. This isn’t sport. This isn’t putting the fans first. It is a situation that must be addressed and so we call for secret ballot voting to be implemented in all F1 Commission meetings with immediate effect.
In other sports the regulatory body has the power of governance because they always focus on what is in the best interests of the sport overall, which should be the key consideration in Formula 1. With a change in the voting procedures, it could lead to more agile decision-making that would ultimately benefit the interests of the fans and in doing so the sport at large, including the participants.
In summary, Formula 1 is in robust health despite the challenges of the past 12 months. And the future of the sport is bright. Positive action has been taken on a budget cap to help set a more level-playing field. There is progression on key issues such as sustainability, diversity, equality and inclusion and we are reaching new fans, while continuing to appeal to our core audience.
But we must make greater efforts to be less insular. We’re so busy running the sport and competing, that it’s easy for us to look no further than the next few races or season. F1 can benefit from seeking advice from world-class experts in areas such events, sustainability, digital marketing and fan engagement. At present, recommendations and even decisions on these strategic imperatives are being taken by racing people who know a lot about racing but aren’t subject matter experts and specialists in these key areas. The sport would benefit from outside perspectives through a marketing council that can address, advise and help innovate new directions to grow Formula 1.
Like so many millions of people, I love our sport and am a huge fan of it, but more than ever, we need to make it greater. Formula 1 will be stronger tomorrow if we take action today.
Zak Brown
Chief Executive Officer, McLaren Racing
April 2021
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