Why Fiat's chairman wants control of Formula One
|Luca Ciferri is chief correspondent at Automotive News Europe|
Fiat Chairman John Elkann's bid for control of Formula One racing may give Ferrari a global marketing boost, but it comes at a time when the luster of the world's most watched motoring event is fading.
Earlier this month, Elkann and James Murdoch, chief executive of international operations at global media group News Corp., made a joint bid to buy F1 from CVC Capital Partners for a rumored 8 billion euros after current business agreements end in 2012.
Elkann's bid was made through Exor S.p.A., the holding company he heads that has a controlling 30 percent stake in Fiat Group, which is Ferrari's majority owner.
While F1 is still the world's most popular motoring event with 200 million TV spectators in over 60 countries, the number of viewers has declined by 10 percent from 2006.
Paying spectators are also increasingly avoiding the race tracks where the cost of the ticket is now a luxury item and only two automakers still race their cars in F1 -- Ferrari and Mercedes. Renault is now just a part-time entrant, while BMW, Honda and Toyota pulled out in recent years.
And the sponsors that provide most of the money to keep the F1 circus on the road continue to quit the event.
Why would Elkann want control of F1 at a time when the race series is losing some of its popularity?
Well, re-launching F1 would help to boost the image and global awareness of Ferrari. The sports car company was the world's most profitable automaker last year in terms of operating margin, but it does not spend on advertising. Racing in F1 is Ferrari's only publicity, so it needs the F1 audience to grow, not decline, to justify the huge investment needed to compete in the hugely expensive F1 series.
The ages of Elkann, 35, and Murdoch, 38, add up to 73, while Bernie Ecclestone, the longtime unrivaled F1 boss and current CEO with a 20 percent stake in F1, is 80.
I don't know if the young John and James will be able to find enough partners to line up the huge financing to win control of F1, but I wish them my sincerest luck.
Having watched F1 as a true aficionado for more than 40 years, I hope they would revitalize the sport and stop me from falling asleep during the increasingly boring races.
You can reach Luca Ciferri at firstname.lastname@example.org.