Winning Formula: F1 CEO Chase Carey

“We have a problem,”  Eddie Jordan says in a charming Irish lilt. “You have to understand market forces – and at the moment the market force dictates that Formula One, and sport in general, is suffering.”

When it comes to F1 and motor sports, few people are more ‘in the know’ than Jordan, now a youthful and enthusiastic 71-year-old. As a former driver, F1 team owner and long-time TV analyst and commentator, he’s seen it all. But don’t let his cheerful demeanour, Rock ‘n’ roll-esque purple suit and steady stream of jokes fool you. Jordan is worried – and believes the sport he loves is in trouble.

“I think a lot of the excitement is draining from Formula One,” he tells a group of horrified enthusiasts at the Dubai Motor Show. “The younger people, the teenagers, 90 percent of them are looking at their phones all the time… the world has changed.”

Abu Dhabi has hosted the final race of the season since 2008

Looking at the statistics, it’s clear that the changed world Jordan is referencing is not an easy one for F1. Despite a $44m rise in revenue to $1.82bn in 2018 compared to 2017, for the second year in a row Formula One Group reported a loss which grew to $68m from $37m the previous year.

In the long-run, a perhaps more alarming issue for the sport is that – by its own admission – it struggled to strike a chord with fans – particularly young ones. In a public discussion on Reddit earlier this year, F1 global research director Matt Roberts revealed that just 14 percent of the sport’s fans are under the age of 25, while the average age is 40.

“We need more razzmatazz. We need more craziness.”

“It could even get worse, unless people have quality time to put their phone down,” Jordan says. “[This will continue] until we are able to give them enough reason to watch Formula One by making it exciting. We need more interesting characters. We need more razzmatazz. We need more craziness.”

Chase Carey to the rescue

He’s not the first to say so. Former Formula One boss Flavio Briatore previously told Arabian Business the sport is “too boring” while F1 star driver Max Verstappen said it “needs more energy”.

Indeed, it is in holding fans’ attention that F1 has struggled. Historically, it hasn’t helped itself either, with team bosses and F1 officials repeatedly saying the wrong things in the eyes of many fans. In 2017, for example, Enrico Galliera, chief marketing and commercial officer of Ferrari, said the company is more focused on technological development than racing.

The capital’s F&B sector has seen a major boost in sales thanks to F1

In 2014, perhaps more gallingly, then Formula One Group CEO Bernie Ecclestone bizarrely said F1 “doesn’t need” young fans as they don’t have the money to buy advertised products.

And until recently, F1 was conspicuously absent from social media – which Ecclestone described as “nonsense” he couldn’t see the value of.

But all that has changed under Chase Carey, the 65-year old Irish-American who took over from Ecclestone in January 2017 as CEO and executive chairman of Formula One Group following Liberty Media’s $301m take-over of the company.

“[F1] does not live in a bubble and so, clearly, the way events are managed and exploited, not just in sports, is changing very rapidly and that has an impact on our sport”

Armed with a stream of fresh ideas drawn from a long career at News Corp. and 21st Century Fox – as well as a memorable and well-twirled handlebar moustache – Carey is on a mission to help the sport catch up to the demands of 21st century fans.

“It’s true that when we took control, some areas were totally non-existent or hardly developed, such as marketing, sponsorship and digital,” he tells Arabian Business. “[F1] does not live in a bubble and so, clearly, the way events are managed and exploited, not just in sports, is changing very rapidly and that has an impact on our sport.”

To address this new reality, Carey and the Formula One Group have taken it upon themselves to transform the way the sport presents itself. In addition to the wildly popular ‘Drive to Survive’ series on Netflix, the company has launched its own Grand Prix streaming service and F1 ‘festivals’, allowing fans to immerse themselves in F1 in the heart of some of its host cities.

The Abu Dhabi Grand Prix is big business for Yas Island

Just as importantly, Carey wants to change the sport itself. In 2021, F1 will introduce unprecedented rule changes that will mean the cars can drive closer to each other. Also planned is fairer finances among teams, with a strictly monitored $175m cost cap per team on anything that applies to on-track performance.

These changes, Carey says, will end a growing spending gap between the sport’s wealthier teams and those with fewer resources, thus making races more competitive – a trend he says is already beginning.

“It’s true that one team, Mercedes, and one driver [Lewis Hamilton] are scoring win after win, but it’s also true that Ferrari and Red Bull are becoming more competitive and that has led to some really exciting racing with the outcome uncertain right to the end,” he says. “The fight behind the top three teams is also very close with teams and drivers fighting it out from start to finish.”

“The problem of the Arab world is that we don’t have a national hero. We don’t have an Arab driver”

This on-track excitement, Carey adds, is ultimately what will keep the sport afloat. “More exciting races means more people are aware of it [Formula One], and that can be seen from the fact that the TV audience, the digital one and number of spectators at the track are all on the rise.”

Time to share the wealth

If Carey’s plans work, it may not be long before Abu Dhabi and Bahrain have company as Middle East host cities. Although the CEO’s lips are sealed when it comes to details, he’s quick to point out at the region “has plenty of potential for growth” when it comes to young fans.

“We want to carefully evaluate all the opportunities that might arise in the near future, without ruling anything out for now,” he says cautiously. “You should never say never. It’s just a question of finding the right opportunity.”

Former F1 boss Flavio Briatore with ex-F1 CEO Ecclestone

With Carey at the wheel, F1 seems to be racing towards that opportunity at top speed. Whether it crosses the finish line, however, will largely depend on whether those young fans can keep their eyes off their phones and on the track.

Luckily, F1 today is about far more than just the racing and cars – and there remain millions to be made by hotels, restaurants and brands in host cities such as Abu Dhabi.

The big party weekend

When it comes to the ‘razzmatazz’ that Jordan talks about, few do it better than Abu Dhabi, where an entire industry has sprung up around the race, giving the emirate a significant economic boost.

“The younger people, the teenagers, 90 percent of them are looking at their phones all the time… the world has changed.”

The numbers speak for themselves. According to Saeed Al Saeed, destination marketing director at the Department of Culture and Tourism – Abu Dhabi, over the last 11 years a whopping 1.4 million visitors have come for the event. In 2018 alone, the race attracted 135,000 attendees, about 80,000 of whom were foreign visitors. Similar numbers are expected for the 2019 edition.

Even as Formula One’s worldwide TV audience has plummeted 18.3 percent to 490 million viewers over the last 11 years – largely due by a move from free-to-air to pay TV networks – for Abu Dhabi, the event has grown.

Mansour Bin Jabr is behind concepts Mr Miyagi’s & The Scene

For the capital’s hotels, restaurants and clubs, the sizable crowd of visitors – including many not going to the race - means big bucks.

“Abu Dhabi hotels operate at full capacity during the race weekend, and the influx of tourists to the capital to attend the Grand Prix affects every other aspect of the travel industry here,” Al Saeed tells Arabian Business.

“During their visit, F1 tourists have a lot of free time around the Grand Prix in which they are likely to take advantage of the city’s various offerings, including entertainment venues, cultural attractions, retail sites and F&B outlets,” he says.

“It’s true that one team, Mercedes, and one driver [Lewis Hamilton] are scoring win after win, but Ferrari and Red Bull are becoming more competitive”

For a taste of the boon that Abu Dhabi gets from the race weekend, try to book a room in the capital on race days. On the off-chance that you get a room – with most hotels operating at full occupancy – you’ll quickly find yourself paying a lot more than usual. Last year, according to DCT Abu Dhabi statistics, average daily room rates spiked significantly, rising from $94 (AED349) in October to $140 (AED515) in November, with revenue per available room (RevPar) up to $113 (AED416) compared to $70 (AED258) in the month prior.

Those guests will need to eat - and many will be looking to party - and Abu Dhabi’s restauranteurs and nightclub operators will be waiting for them with open arms.

Eddie Jordan is a former driver, F1 team owner and TV analyst

“During F1 weekend alone, the turnover that you make is ridiculous. It’s ridiculous,” exclaims Mansour Bin Jabr, the young Emirati restauranteur who brought Italian concept Cipriani to Yas Island in 2009 before it was sold to current owner Bulldozer Group.

“The numbers that Cipriani does, or any of the other competitors around, is $1.6m (AED6m) in three days on a weekend,” he adds. “That’s the turnover for most restaurants in Dubai for a whole year.”

We need a hero

But the party can’t go on for too long if on-track excitement continues to fade, which is why the Middle East could do with its own ‘national racing hero’ according to former racing driver and long-time F1 analyst and pundit Khalil Beschir.

“During F1 weekend alone, the turnover that [F&B outlets] make is ridiculous. It’s ridiculous”

He says the sport’s popularity in the region – particularly among young Arabs – would be given a significant boost by the presence of a top-level Arab driver.

“The problem of the Arab world is that we don’t have a national hero. We don’t have an Arab driver,” Beschir says. “Look at Mexico, for example. Where was F1 before [Racing Point driver] Sergio Perez? Look at Spain before [retired F1 star] Fernando Alonso, Formula One was nowhere. We are missing these kinds of local heroes.”

Lewis Hamilton is a six-time Formula One World Champion

More so than a local hero, Formula One needs a global saviour to catch up to the demands of the younger, digitally-savvy generations. It’s only hope seems to be Carey. Luckily, he is up for the chase.