Formula 1's first-ever head of sponsorship and commercial partnerships talks about his plans for the commercial evolution of the series under its new owners.
It’s the world’s fastest sport that for too long was accused of standing still under Mr Formula 1, Bernie Ecclestone.
But since the changing of the guard brought about by Liberty Media’s completion of its $8-billion takeover of Delta Topco, Formula 1’s parent company, in January, the pace has been relentless.
An influx of hires to bolster the senior management and a new headquarters in the heart of London’s fashionable West End have changed the face of the organisation, with plans now being formulated to attract new fans, and sponsors, after a decline in audiences in recent years.
“We call it the 60-year old start-up,” Barnett tells Sportcal Insight. “In many ways it feels that way and if you talk to any of the people that have been here a long time they’ll tell you it’s like working in a brand new organisation.”
Barnett is one of the newcomers, having joined in late April from World Rugby where he was first head of broadcast, commercial and marketing, and then chief commercial officer.
His remit, quite simply, is to build on existing partnerships and attract new sponsors, something the series has struggled with over recent years.
His appointment coincided with CAA Sports, the division of USA-based entertainment and sports agency Creative Artists Agency, being brought in by the Formula 1 management team to exclusively represent its sponsorship rights worldwide.
That was intended as a short-term deal to “get some points on the board quickly,” Barnett says, while he built his team, which is now six-strong and expected to double in size within a year. “There is much to do in the space,” admits Barnett, who reports in to another of the new guard, managing director of commercial operations Sean Bratches, formerly a senior executive at sports broadcaster ESPN.
“Although Mr Ecclestone did an amazing job of building Formula 1 to what it was, he had two main focuses: high race fees and strong TV revenue. So the commercialisation of the events and the series itself was very much an after-thought.
“The combination of there not being much precedent and having new ownership who have a very broad view of how it should be approached and no pre-conceptions, meant I was starting with a blank slate to really look at the development of the sport.”
Formula 1 currently has six global partners and two suppliers. Barnett knowing three of those global partners inside out, having worked closely with Emirates, DHL and Heineken during the 2011 and 2015 Rugby World Cups when they were worldwide partners (they are all also signed up for the 2019 edition).
World Rugby has traditionally had six worldwide partners, and Barnett says he sees value in limiting top-tier availability.
“We have six global partners right now. At the top level, we will probably grow by three or four at the most,” he notes, with financial services and technology two categories thought to be under consideration.
“But the next level down is a little more infinite. The only thing which we are limited by is the [amount of] trackside signage. Above and beyond that we are growing exponentially our digital properties and what we can do with fans.”
Barnett concedes that sponsorship was “somewhat forgotten about” in the pre-Liberty era, but that provides the opportunity to build flexibility into the new commercial model.
He explains: “When you look at the [Uefa] Champions League or World Rugby, it is quite a fixed package. So if we had a sponsor drop out it was about approaching a brand in that category and saying ‘here’s what a package looks like, how much are you willing to pay for it?’
“What we are doing at Formula 1 is trying to tailor-make something that meets a sponsor’s objectives. There are some brands who are not interested at all in track-side signage. They want more access to our database or ability to reach our consumers off the track, so we are then able to construct a package that suits them much more. Not every sponsor has to have the same inventory.”
In late June, the new owners of Formula 1 announced they would be seeking a 30:70 ratio in terms of free-to-air and pay-television coverage of the sport in future rights deals, albeit it will honour an exclusive six-year, £1 billion contract with Sky in the UK from 2019.
Bratches told the FIA Sport Conference in Geneva: “Free-to-air is critically important to us. My vision as it relates to media rights is a hybrid of free-to-air and pay. Our plan is to balance the two but have a prominent, over the year, free-to-air voice.
“That is important from a fans, sponsors and relevance standpoint. There is the cauldron full of cash on the pay side and on the other side of the scale you have brand and reach.
“My view is a 30:70 model of free-to-air to pay, where you have a number of grands prix to be on free to air and then we can play and toil with the pay side to generate revenue that we can reinvest back into the sport.”
Does a stated preference for pay-TV, therefore, make Barnett and his department’s job more difficult? After all, the promise of fewer eyeballs is not exactly a selling point to prospective brands.
“It’s difficult to give a generic answer because it’s different in every market,” he notes. “For example we will be going exclusively pay in the UK at the expiration of the Channel 4 deal, so that’s going to be a difficult situation there. But when it comes back to engagement versus exposure, you could argue that the audience, albeit lower that you’ll get on Sky compared to Channel 4, is a much more highly-engaged audience and, from a sponsorship perspective they’re the people that are actively involved.”
On his first day in office at the turn of the year, new Formula 1 chairman and chief executive Chase Carey, a long-time understudy of media tycoon Rupert Murdoch, outlined ambitious plans for the sport, envisioning 21 grands prix with the “excitement and buzz" of NFL American football’s Super Bowl.
“They should be week-long extravaganzas with entertainment and music, events that capture a whole city," he told international media at the time.
That is music to Barnett’s ears.
He says: “The concept is that Formula 1 is the fulcrum for this huge entertainment platform that will cover fashion, music, food, eSports and education. So F1 comes into town on a Tuesday or Wednesday prior to the race weekend and there will be a whole bunch of activities throughout that part of the week. In fact you may not interact with the race itself at all, but you will interact with many other parts of the F1-related activity. So it gives me a great opportunity to sell MasterCard as our music partner, Martini as our fashion partner or whatever it might be. That’s not to say some brands won’t sit across multiple strands of that.
“Let’s fast forward a year from now. There should be no excuse for a brand to say to me ‘because you are motor sport I’m not interested in you’. I should be able to say ‘oh, you’re interested in fashion, well we’ve got this’ or ‘you’re interested in music, we’ve got that’.”
In the week leading up to the British Grand Prix in July, Formula 1 offered fans a snapshot of what race weekends could come to look like with the staging of London Live, a show in the heart of the city, featuring teams, drivers and cars, alongside a host of stars and headline music acts.
For Barnett, it was “the first tangible example” of the ‘new era’ that Liberty and the senior management had talked so much about.
“We put our hands in our pockets to put on an event and didn’t ask the teams to pay up [it cost them through the logistics of supplying their cars], we didn’t ask the city of London to put money in and we didn’t ask our sponsors to pay extra. That event itself did more to show people that we are thinking about things in a very different way than anything else.
“We had Little Mix, Kaiser Chiefs and Bastille playing. If you take away the car part of it, that probably gives you a flavour of how we would see a city centre activation happening in the future, where during the day it can be used for educational purposes, or more experiential things, like taking part in a tyre challenge, and then in the evenings you might have bands playing or a fashion show.”
In the same week, Formula 1 unveiled a partnership with Snapchat, the photo and video messaging app, marking its first commercial collaboration with a major digital and mobile-first platform.
Throughout the remainder of the season, exclusive content has been pushed through Snapchat’s 'Our Stories'.
It is a collaboration few would have envisaged when Ecclestone was in power.
While the 86-year old promoter was widely credited for turning the sport into a multi-billion-dollar business, he was increasingly regarded as out of touch, at a time when Formula 1 has to compete for attention with other sports and entertainment products.
Ironically, in April 2016 Ecclestone banned prominent British driver Lewis Hamilton from filming footage for his Snapchat videos inside the F1 paddock.
“That was F1 then with Bernie. And this is F1 now after Bernie,” reflects Barnett on the sport’s new digital-friendly approach.
“One of the first things that Sean Bratches and Chase Carey did when they joined was to tell the teams ‘so long as it’s not during practice, qualifying or the race, you can do whatever you like at the track with your social media’. That has seen a massive explosion in what the teams have done in that area and we actively encourage the drivers to talk about what they are doing at the track for people to understand it a bit better.”
Barnett believes loosening the reins will reap commercial benefits for all involved.
“The new positioning of F1 is that it should be at the nexus of entertainment, sport and cutting edge technology. To reinforce that we have to have the most advanced digital media platforms, they have to be the most engaging platforms, but they still need to have the sport at the core.
“So it’s very much about how do we achieve those objectives through engaging with new consumers through digital media, through making interesting and engaging content and through trying to bring the teams and the drivers along with us in terms of understanding that mission.
“This is such an untapped asset. There is so much opportunity for the sport to evolve and grow.”
What then, can Formula 1 aspire to?
“If you want to look at reference points for Formula 1, certainly what the NFL and NBA have done internationally, and what the NFL does when they are in a Super Bowl city. The top US leagues do sports marketing much better than most other leagues.
“The Super Bowl not only has a whole bunch of activities in the week leading up to it, but it is actually ambushed by non-sponsor partners looking to feed off that crowd.
“I think that is a measure of success for us if, all of a sudden, we find our Grand Prix weekends significantly ambushed by brands.”
This interview was written by Murray Barnett and originally published by our partners SportCal .
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