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F1 races to reach younger audience after Covid engine trouble

Ben Woods
F1 Bahrain race
F1 Bahrain race

When Formula One drivers accelerate out of the grid at the Emilia Romagna Grand Prix next weekend, Stefano Domenicali will want to keep up the momentum.

F1’s new boss is trying to piece together a winning streak after a record number of viewers tuned in for last month’s season opener in Bahrain.

The curtain-raiser became the first F1 race to reach 2m viewers for Sky Sports, with an audience peaking at 2.23m.

There were also bumper ratings for American broadcaster ESPN, with average audience numbers hitting an all-time high of 879,000.

For Domenicali, a former Lamborghini chief executive who took over from executive chairman Chase Carey in January, the boost is a welcome start as the tournament fights back after Covid.

But turning that early victory into long-lasting success will be fraught with challenges.

The celebrated racing series is battling to secure its future in an increasingly crowded media market where a welter of streaming platforms are fighting for younger viewers - a feat made even more complicated because F1 must grow its direct-to-consumer streaming service, F1 TV, without compromising its numerous broadcast deals.

F1 is also trying to crack the American market as it seeks to plot a safe passage though this tricky landscape, in a bid to increase the number of races held around the world.

The competition’s director of media rights Ian Holmes is aware of the challenge, but believes growth is lying in wait amid the tangled web of streaming and social media services.

He says some terrestrial and cable broadcasters are countering declines in their traditional TV audiences by launching on-demand platforms, creating more options for selling rights.

“If they have another way of commercialising their business [through streaming] then they can generate more revenue, and the more revenue they generate the more money they can pay us.

“Is this a way of defraying a drop, or increasing the total amount? That depends on the market. But the likelihood is, if there is more competition you will drive a good fee.”

Getting sport back on track

Former Lamborghini chairman Stefano Domenicali (left) must drive his beloved sport to safer ground after pandemic disruption - Dan Istitene - Formula 1 
Former Lamborghini chairman Stefano Domenicali (left) must drive his beloved sport to safer ground after pandemic disruption - Dan Istitene - Formula 1

The opportunities ahead come at a defining moment for F1, as Domenicali attempts to stabilise it following a tumultuous period triggered by prolonged negotiations over new rules and the disruption from the pandemic.

F1’s owner Liberty Media, its governing body the FIA, and the 10 teams involved signed a new framework for the sport in August in an attempt to make it more competitive.

Coming into force next season, the so-called Concorde Agreement will close the financial gap between the richest and poorest teams to help fight accusations of one-sided racing.

Introducing the new regime would have been difficult enough without the financial pain wrought by the pandemic.

The crisis forced F1 to hold a slimmed down 17-race season last year, causing revenues to tumble 40pc to $1.bn (£800m) and widening operating losses to $444m.

Viewing numbers also suffered. The average global TV audience dropped 4.5pc to 87m over the period, while unique viewers fell 8pc to 433m.

Grand Prix of Monaco 2019 - Formula 1  - Icon Sport /Agence Nice Presse 
Grand Prix of Monaco 2019 - Formula 1 - Icon Sport /Agence Nice Presse

Domenicali has some causes for optimism despite this pressure.

Revenues are on course to bounce back this year as F1 holds a record 23 races.

Race promotion fees — paid by the tracks to bring the competition to their venue — have dropped from a 30pc to a 12pc share of total revenue in response to the crisis, but are expected to rebound as the vaccine roll-out allows more fans onto the terraces.

The competition is also poised to capitalise on a recovery in the advertising market, as consumer brands step up their campaigns with the worst of the pandemic now behind them.

And F1 could benefit from cost cuts which organisers and teams were forced to find last year.

Greg Maffei, chief executive of Liberty Media, the American investment fund controlled by billionaire ‘cable cowboy’ John Malone, said F1 had “learned how to travel light, travel fast and be effective and way more quick in getting stuff done”.

Deutsche Bank analyst Bryan Kraft wrote last week that this focus will not only help save money, but could also allow F1 to add another race or two.

The battle for eyeballs

F1 car coming out of pitstop - Hoch Zwei /Corbis Sport 
F1 car coming out of pitstop - Hoch Zwei /Corbis Sport

For Holmes, F1’s success lies in securing deals that both bring coverage to TV viewers and provide support for streaming.

A deal with Sky in Germany handed the pay TV firm’s subscribers access to F1 TV as part of their package.

Meanwhile, talks are underway in Brazil to quickly grow F1 TV by striking a deal with a mobile phone operator, making it available to millions of customers.

There are also advanced discussions in a number of markets for F1 TV to appear as a channel on mass market streaming services, the company said.

But these deals will only provide a short-term solution. The true prize is wooing a younger fan base in an age when there is more competition for attention than ever.

F1 increased the number of people who follow it across major social media sites by more than a third to 35m last year. including in China. Video views increased by 47pc to 4.9bn.

It will be a challenge to transform these huge followings into paying subscribers — a task made all the harder because young people are used to getting content for free.

In the meantime, Domenicali has his sights set on the American market.

The 55-year-old Italian wants to add a second Grand Prix alongside its race in Austin, Texas, to help to boost its fan base and commercial income across the Atlantic.

In a market dominated by national series NASCAR and the Indianapolis 500, whether the appetite for more racing exists is an open question.

As the 2021 season gathers speed, Domenicali can certainly look forward to a brighter period.

But in a fast-changing media landscape, it may take some time for F1 to reach full throttle.