From PR disaster and potential financial crisis just six months ago, Formula 1 has bounced back to enjoy one of its strongest seasons in recent history, delivering a golden year for the sport in a Coronavirus-hit 2020. Lizzie Isherwood, Communications Director at ESA member CSM, examines the lessons of the 2020 season.
Head here for part one of this series on the future of Formula 1
While the 2020 Formula 1 season has certainly delivered on track, events behind the scenes and away from racing have come together to build a brighter future for the sport, underlining its versatility and commercial strength.
It’s safe to say Formula 1 wasn’t in a healthy place financially at the start of this season. As race after race was cancelled or postponed, conversation quickly turned to the apparent financial fragility of the sport. Its share price (FWONK) crashed to just $20.51 on the NASDAQ in the days that followed the Melbourne fiasco. Just two months earlier, it had hit a high of $48.95.
To compound the issue, many teams that struggle to balance the books in a ‘normal’ season, found themselves in a more vulnerable position than ever, forcing the sport to act quickly. In April, Formula 1 unlocked more than $1BN in liquidity and provided cash-strapped teams advance payments in a bid to secure the financial health of the sport.
The logistical challenges of going racing provided one hurdle to Formula 1, but the financial pressures, the scrutiny of the business model and questions over the sport’s relevance in 2020 was something altogether more complex for Liberty Media to face.
After an early wobble, it has used this crisis to refocus on what lies ahead. It has experimented with new fan and partner engagement opportunities, built broader social relevance and secured its long-term future against the backdrop of a classic year. Formula 1 has come good when it matters most.
Unlocking new partner and fan engagement opportunities
The absence of fans at track has not only been a loss to race organizers, but it has also presented a challenge to Formula 1 and its teams from a fan engagement perspective. This is an area that continues to grow in importance for the sport, as we’ve seen the development of fan-first apps, inner circles and a notable shift towards more fan-friendly social content.
A great example of this is Formula 1’s Virtual Grand Prix series; a reactive move that gave its gaming series a spotlight it would not otherwise have received. The series delivered exceptional results, while doing wonders for the fanbases of its younger drivers at a time when sports fans were hungry to see a semblance of normality. Seeing the likes of Charles Leclerc, George Russell, Alex Albon and Lando Norris regularly battle it out from their living rooms, with the accompanying live streams, brought fans closer to the young drivers than ever before. The format provided the new guard with the opportunity to build their brand identity in an authentic way, and it’s likely to have a number of ‘traditional’ F1 fans hooked on Esports now, too.
The Virtual Grand Prix series also provided great opportunities to partners; we saw DP World ambassador Ian Poulter swap the golf club for a racing simulator as he represented Renault for a handful of races, while Red Bull raced a number of high-profile sports stars including Sergio Aguero and Ben Stokes. All of this has served to open up the sport to broader audiences, while its already-established Esport series is likely to benefit from greater exposure.
The digital shift is a trend that we’ve seen grow across 2020, with the fan-free nature of most events forcing partners to identify new ways to engage with customers, prospects and fans.
We’ve seen partners experiment with at-home hospitality packages featuring goodie bags, behind-the-scenes paddock tours or exclusive Q&As via Zoom, arguably providing greater insight and access – albeit from a distance – than we’ve seen before.
We’ve also seen teams open up to more social and digital content, likely in exchange for rights that could not be used. A great example of this was Dell’s McLaren Substitute Teacher campaign. McLaren and Dell capitalized on the situation in the UK, where pupils were being homeschooled, and created an engaging, light-hearted but ultimately educational piece of content. With a particular focus on STEM subjects, this piece felt authentic and relevant and the inclusion of a competition element will have helped all parties from a data capture perspective, too.
Heineken experimented with a number of fan engagement strategies across the season; the at-track fan screen – where fans’ video messages were shown – was met with a mixed response, particularly when Heineken ambassador Nico Rosberg made an appearance. Its two-race deal with Scuderia Ferrari around the team’s home races was altogether better received as it celebrated Italy’s spirit and strength during the national lockdown. Using the distinctive Italian national anthem to tell this story and showcasing some of Italy’s most beautiful theatres, with messages from Charles Leclerc, this piece was another example of relevant, but alternative content.
Formula 1 took a smart approach to the calendar and its approach to partner opportunities and fan engagement has been similar. Capitalizing on the unusual circumstances to gain real insights for the future, we’ve seen an experimental approach, which has yielded a few misses, and lots of hits. More importantly, it represents an open, innovative approach to protect and strengthen the sport’s commercial future.
Maintaining Relevance: The Drive for Racial Justice and Diversity
Away from the pandemic, 2020 has been characterised by the Black Lives Matter movement and the drive for racial justice in the wake of the murder of George Floyd. Six-time Formula 1 World Champion, Lewis Hamilton has used his profile to demand social change and to promote diversity both within and outside the sport and with that, he has forced Formula 1 to become more ‘relevant’ in social discourse.
From the announcement of F1’s We Race as One initiative, to the Mercedes team switching to an all-black livery and committing to greater diversity within the workplace, Hamilton has been the driving force, with full support from his team.
At Mugello, Hamilton’s message was clearer than ever. While his counterparts opt for F1’s End Racism t-shirts, Hamilton traditionally wears a Black Lives Mattert-shirt, but over the Tuscan Grand Prix weekend, the Championship leader wore a t-shirt with the message ‘Arrest the Cops who Killed Breonna Taylor’. On its reverse, the shirt featured the copy “Say her Name”, above an image of Taylor, who was killed in her home six months ago to the date of Hamilton’s latest victory.
Hamilton’s stance at Mugello wasn’t only different for his more targeted message, but for how and when it was delivered. As Hamilton took top step on the podium, he wore the same t-shirt, which covered his Mercedes racing suit and the logos of paying sponsors. As he put his cap back on following the national anthem, he made a point to turn his back to the cameras, underlining the message “Say her Name”.
This event marked a further shift in the way Hamilton is using the sport and his profile as a platform to demand change. The fact that Hamilton’s Mercedes team supported him in this act, despite the potential backlash from sponsors losing out on media value, shows that this is far more than a ‘moment’. Moreover, in a world where partners are looking for brands and personalities with purpose, Hamilton has underlined his true value beyond his performance on-track.
Following the Tuscan Grand Prix, searches for Breonna Taylor on Google skyrocketed, demonstrating Hamilton’s actions do indeed spark conversation, but – more importantly – education and awareness.
While the FIA’s subsequent decision to tighten rules on podium wear means we won’t be seeing a repeat of the Mugello podium any time soon, Hamilton has added greater relevance to the sport in an age where partners and fans are looking for brands and personalities with purpose.
Securing a New Era with a Familiar Name
Away from the track, Formula 1 succeeded in bringing all 10 teams together to agree the latest Concorde Agreement, which secures the sport’s future for the next five years.
With the agreement signed, Formula 1 is now in a position to press forward with its plans to drive cost cuts and improve racing, safe in the knowledge that all 10 teams – including the US squad, Haas – are on board. Alongside this, the buyout of Williams Racing by Dorilton Capital, and the arrival of the Aston Martin name on the grid, further strengthens the sport’s future and commercial appeal.
From a personnel perspective, the arrival of Stefano Domenicali will provide the sport with a true ‘motorsport’ man at the head of the table. The ex-Scuderia Ferrari Team Principal gained an unfair reputation of being too ‘nice’ for the sport, but those who worked closely with the current Lamborghini CEO have nothing but praise and respect for the man, who is a proven leader, both in business and in motorsport. With Domenicali on board and the Concorde Agreement ratified, the sport seems to be in safe hands.
Doubling Down and Coming Back Stronger
From appearing to drift like a ship without a captain eight months ago, Formula 1 has performed a remarkable turnaround, with a considered, but decisive approach. Its share price has begun to recover ground, peaking at $40.25 in August – the highest value since February – and while we still have a third of the season to run, it has succeeded in providing exciting, unpredictable and safe racing in a year where most sports schedules have taken significant hits.
As the sport celebrates 70 years, Formula 1 has played to its strengths throughout, capitalizing on its established status, while also looking ahead, and being open to innovation to secure its future. This crisis-hit year has reinforced why Formula 1 remains such a strong sporting property. With exciting racing, coupled with personalities like Hamilton and Domenicali in positions of such influence, expect Formula 1 to keep shining bright for many years to come.
Lizzie Isherwood is Communications Director at ESA member CSM