“We want to be the most inclusive championship in the world, not the most exclusive one.”
Jeff Dodds, who as CEO of Formula E and a very accomplished noise generator, is almost duty bound to create such soundbites. It might read as a bit fluffy on first sight to some. But think about it properly and he’s probably right. Formula E is an open book when it comes to most of its constituent parts, including its commercial optimisation. Although the fruits of this might still take a while yet to properly emerge.
As a shiny new toy (Gen4) awaits, and with a few new tracks (to be fully known in three weeks’ time), decent date equity in the calendar dates, a stable-ish grid (probably 22 cars next season) and Dodds geeing up his troops (some new) to push on the desired TV and streaming deals for next season, the Formula E garden should be starting to really bloom.
Dodds will tell you it is already. Again, that’s part of his job and he’s adept at articulating it, eloquently. At the same time though, there is some confusion as to why there is not more monetisation of Formula E, considering that the promoters this time last year pronounced a ‘record-breaking cumulative audience of 44 million tuned in to watch Round 2 (Mexico City) in January, while CBS coverage in the US at the same race ‘reached 11 million viewers which was a new benchmark for Formula E broadcasters in the US and a figure that significantly surpassed competitor viewership in the same market.’
So, clearly the problem Formula E has at present is getting a proper foothold in terms of monetisation and return on investment for the teams. It is still a work in progress. The drivers are well paid of course. An average salary for Formula E drivers across the grid is probably around €1m-€1.3m, perhaps a bit more when bonuses are considered. On the world motorsport stage that’s very decent indeed.
For the teams, there has been in recent months, some concern about the commercial agreement for the Gen4 period and how it will be presented and rationalised.
Formula E will run to a re-jigged cost cap in Gen4 and within that there have been some clear sticking points that needed debate, re-consideration and action. We’re not privy to most of them but ultimately for a world championship of approximately 19 races over four continents, the fact is that at a cost cap of €13m for a team per season is probably presently the cheapest of any recent world championship that has taken place.
“I think we represent, return on investment wise, the best ROI (return on investment) of a racing series,” reckons Dodds. “A world championship, single seater, using next generation technology, over a truly global calendar and you get to have two cars on this grid as a team for that cost cap today. That’s pretty incredible.”
What comes next?
“We’re going through the Gen4 commercial agreement now, which is fortunately I think at the end of the line and about to be concluded,” Dodds told Formula E Notebook at Monaco last month.
“It’s very important for us and it’s very important for them that we retain the cost cap, because I think it gives them (teams) a four-year predictability. The technology is advancing so quickly still that you don’t need to open up for people to spend and get the people with the deepest pockets spending a fortune on battery development for example. We don’t need that today.”
No, they don’t. But the cocktail that needs shaking for teams to be able to manage the more expensive Gen4 project needs a really specific balance if the teams’ possibilities of getting in to the black in the next four years are to be realized. A good slice of that will come down to how Formula E promotes itself off the back of the hardware.
But the financial questions on the cost cap need to be resolved soon. Some manufacturers have lobbied the FIA for more flexibility in some key areas, yet after months of discussions its recently gone quiet.
“The Gen4 is a massive step over Gen3 and we’re doing that for what is a very modest increase in cost for manufacturers and for teams,” says Dodds.
When that is confirmed and if it doesn’t hack manufacturers too much, Gen 4 really will be cleared for take-off. If it catches alight the way it should, and as Formula E believes it will, then disquiet on financial and commercial matters may eventually and finally be quelled.
