British Grand Prix

JAN 04 2016 | TOM STEWART | B00296257 | CRITICAL EVENT STUDIES | TOUR 11005

Power and Decision Making.

The Power and  decision making surrounding major international sport sets  an intriguing background to delivering the event(s) and shaping the outcome. The definition of power has many sources; Niccolo Machiavelli described it as ‘He who wishes to be obeyed must know how to command‘ and Francis Bacon simply said ‘Knowledge is power’. The purpose of the first part of this post is to illustrate the power surrounding Formula One (F1) and in particular the British Grand Prix as an event, how power is defined in context and its influence on the decision making processes surrounding the event. Finally, the post will comment on how F1 links between power and finance are intertwined and together they finalise the outcome of the event’s business decisions.

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Bernie Eccleston F1 supremo on the grid at Silverstone.

F1 is a complicated sport with many participants each with their own agenda trying to maximise their financial investments in a very competitive, compelling  and  volatile sporting industry. The F1 world championship is governed and owned by the International Automobile Federation, or FIA. The commercial rights to F1 (Including television) are leased to Bernie Eccleston. The sport’s main player’s as it relates to the British GP are as follows:-

  • Bernie Eccleston, The 85 year old Formula One president and CEO.
  • The FIA.(Rulebook)
  • The BRDC, the British Racing Drivers Club (850 members and event owners)
  • Politics,Numerous National Governments.
  • The teams and drivers. Mercedes, Ferrari, McLaren, Red Bull, etc.
  • Engine and tyre suppliers.
  • The Fans and consumers.
  • TV and media.
  • The Sponsors.

All of the above are compelled to interact with one another to produce a sporting spectacle that will prove irrestible to the consumers, media and sponsors. This is a huge exercise in social capital, not all of it positive. Not surprisingly the drivers and main personalities attract glamour and together display a lot of  aesthetic labour which the consumers in particular relate to.The sport has a world wide following because it is exciting, glamorous and dangerous. The resultant consumers or fans bring money and from this the industry flows.

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The successful Mercedes team on track.

The British Grand Prix at Silverstone is the home of motor racing and in recent years has been at the centre of a power struggle between the owners of the circuit, BRDC and Bernie Eccleston regarding the future of the British GP. One of the oldest circuits, Silverstone is managed in a very traditional and conservative style which has resulted in a lack of investment, and measured against the new circuits is looking like a poor cousin. The venue has hit the classic problem of a static income combined with insufficient capital to reinvest in the necessary infrastructure to satisfy the circus that is F1.

Access to the circuit by road or public transport is challenging and the onsite facilities lacking in the modern day facilities demanded by the public. This combined with the spiralling costs of hosting the event and ever rising entry costs had put the circuit owners in a precarious position.

There are an infinite number of power struggles in F1 but the British GP has at its centre Bernie Eccleston demanding a better venue for his F1 circus, to a lesser extent supported in this by the international racing establishment always demanding better facilities but loving racing at the track, and Silverstone fighting for its existence and disadvantaged financially but supported by the British racing establishment and its historic importance.

To add to the power struggle new emerging economic powerhouses have emerged with seemingly endless amounts of finance to capture this blue ribbon event in their own countries, promising spectacular new racing tracks in exotic places and more income for F1 as evidenced by the new Government financed circuit in Abu Dhabi costing $250 million. Bernie Eccleston is using the new opportunities to try and leverage more investment in Silverstone by BRDC which will inevitably result in more income to his Formula One organisation. He has threatened to pull out of Silverstone and the British GP citing lack of circuit facilities and planned investment. Also, whilst other national governments around the world engage in geopolitical messaging and have been prepared to pour in the necessary millions of investment to retain or acquire F1, the UK government has been remarkably quiet on the subject. This is surprising as it is estimated that the possible loss to the economy of the Silverstone British GP is estimated to be as much as $1 billion . The BRDC have been less successful in mobilising support although their membership consists of many famous drivers, they have seemed  more interested in their own organisation and are playing a game of brinkmanship with F1 and in great danger of losing. The resistance they display to possibly being dropped as a venue, using social capital in looking to the general public by focusing on the history of motor racing in the UK is not effective. This alone in todays volatile economy will not be enough to retain the event in the UK. They need to restructure to make the event and venue financially significant in the field, and convince Government to invest along with other large institutions.

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Two of the big brands in action at Silverstone, Ferrari and Red Bull.

The Three-Dimensional view of Power as described by Lukes and articulated by Lorenzi (2006) as ”The power to prevent the formation of grievances by shaping perceptions, cognitions, and preferences in such a way as to ensure the acceptance of a certain role in the existing order.’ most appropriately describes the process acted out over the last 8 years between F1 and the BRDC. The BRDC have demonstrated their disagreement with F1 by not fulfilling the demands set out fully but accepted their offer of contract extensions as the only way forward. F1 on their part remain unrepentant. The conflict for BRDC is that they have an almost break even race economy of huge proportions (Much greater than their net worth) and rely heavily year on year to host the race and to do that have to pay the huge fees demanded by F1. They are in an almost unbreakable financial cycle and this combined with their deep seated ‘need’ to keep  BRDC and ownership of Silverstone at the same time as hosting the British GP leaves them utterly exposed. They are selling the family silver just to remain in existence. Most certainly there is not a ‘willing compliance to domination‘ as described by Plaw (2007), but rather an acceptance that there was no alternative.

In this case it is clear that the greater economic strengths are more bound together and attracted to one another. Eccleston’ s apparent power domination over BRDC  has everything to do with his experience and dominance in the Sport, his financial muscle and his own social capital built up over 40 years as a major player. This dominance is given additional dimension because of his relationship with the media whom he has under contract to his organisation. He is totally dominant.The social capital at the decision making level seems to be more one dimensional. It does not seem to seek to help the British GP and Silverstone ( a weak partner) with investment for example, but only seeks to harden its stance over the annual fee due of £16 million with little leeway other than allowing a little credit. As the race teams or manufacturers are insistent through their own contracts with F1 that they do not want to see any more events on the calendar they are helping to channel F1 away from circuits like Silverstone. One reason is simply that F1 has its own huge banking debts and needs to drive increased income streams every year.

Lukes writing as articulated by Plaw (2007) if ‘the victims’ real interests are complex and conflicting, it will be unclear when those interests are manipulated or altered to their disadvantage by third parties’.  It is true that much of the subject matter is discussed behind closed doors  and not in the public domain. However the major points  of the interactions are known and it should be reasonable to assume that indeed the domination by F1 over the British GP and BRDC is necessary for F1 to continue to be sustainable and that there will sometimes be victims. How the victim responds will ultimately decide their own outcome.

There is no doubt that the reason a sea fisherman’s son rose to become one of the most influential individuals in the world of sporting events amassing a fortune of $4.5 billion dollars along the way was his ability to understand power and how to use it to his best advantage. His level of power enables him to take on national governments (Germany) on alleged financial irregularities over race hosting and be able to drive a deal which cost him $100 million to settle and keep out of court. Money talks, Eccleston has a net worth of $4.2 billion and BRDC, owners of Silverstone are valued at around $34 million.

Power in F1 is  complex and varied and depending on your perspective will prove to be effective (F1) or ineffective (BRDC). As Lukes (2005) described, it is ‘essentially contested’.

Rationalisation and McDonaldization

The aim of the second part of this post is to illustrate the role that Rationalisation plays in the  multi-million pound Sport of Formula 1 and its relationship to the British GP. Society consumes products using their senses and in motor racing all senses are utilised in the process.

http://www.cpp.Edu’s guide illustrates how Max Weber (1864-1920) described Rationalisation as the ‘process of replacing traditional and emotional thought with reason and efficiency’. With this came a division of labour, rules and regulations, impersonality and a concern for technical competence all imposing structure. Ritzer (1993) took this theory and developed the McDonaldization idea and described it as ‘the process by which the principles of the fast food restaurant are coming to dominate more and more sectors’ of society, a metaphor for over rationalisation of society. The theory is delivered within four dominant themes:-

  • Predictability; structured environment, event delivered per knowledge.
  • Calculability; product delivered in similar manner in other countries.
  • Efficiency; division of labour, staff each with their own roles to complete.
  • Control; pre-determined packaging of event, technology used to maximise control.

Anonymous consumption is seen in ticket purchasing, and other sold services such as parking and camping at the event. Fans turn up and are simply pointed efficiently in the direction required. Fast food outlets abound and externalisation of labour is evident everywhere on the consumer side of the fence.

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The teams and car design are strictly controlled within a hierarchy and this set of controls travels to all of the circuits in the same manner. The only thing that changes is the Country and circuit design and even then many of the circuits seem similar especially when viewed on TV and digital media, the other form of consumption of the sport. The TV coverage is consistently the same, presenters, practice, qualifying and the race and interviews, all over 3 days.

The car technology rules are designed to offer a predictable safe experience and the teams are also ordered within a structured hierarchy. The car design is very strictly controlled with dimensions, weight, aerodynamics, engine, fuel and tyres all specified. Branding and sponsorship exist on the ‘uniforms’ of the teams to portray the sense of  excitement of a Roman amphitheatre.

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Even the drivers roles are strictly controlled, automatic gears, predetermined tyre changes, fuel allowance, race marshals’ flags and severe penalties if not adhered to. Function replaced by technology and external control.

The British GP and F1 is  challenged with having  to try and retain interest from consumers by constantly changing the rules to attempt to even competition and provide opportunity for different teams and drivers to win  making the championship a more exciting spectacle. Extreme control is exerted upon the teams and the design of the cars and the entire process of racing. In simple terms the intention is that they should all be similar in design and performance.

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Cars on the grid displaying their uniformity.

Although McDonaldization  is attributed to have many benefits and advantages including reducing costs, creating a safer environment and a predictable sense of excitement and spectacle,  there is a strong  argument that these rational systems may  produce negative results to those expected or desired. Ritzer (1994) described this ‘Most specifically, irrationality means that rational systems are unreasonable systems. By that I mean that they deny the basic humanity, the human reason, of the people who work within or are served by them.’

The ‘irrationality of rationality’  is illustrated by this process in that rules are handed down through the hierarchy to exert controlled changes but the teams that have the biggest budgets generally adapt to new rules better and quicker and can afford to, whereas the smaller teams with limited budgets are put under increased financial challenges and through lack of performance do not command the same financial backing. The cars may look the same due to the rigorous regulations and control but the performance ability tends to match the budgets of the more successful teams, therefore a two tier system exists resulting in consumers becoming less engaged. The critics who comment on events becoming too uniform and ordinary have justification due to the results being too predictable. The fan experience also has shortcomings, long queues and once inside they are in a controlled atmosphere with restricted consumer choice in a very expensive arena.

References:

web: http://www.brainyquote.com/quotes/quotes/n/niccolomac144982.html

Sylt,C. and Reid, C. (01 Nov 2009) ‘Loss of British GP could cost economy…’ The Telegraph Newspaper.(Finance/economics)

Sylt, C. (05 Oct 2015) ‘British GP needs $23 Million Lifeline..‘ Forbes

Willett, M. (Aug 06,2014) ‘The Fabulous Life of…‘ Business Insider.

Lorenzi, M. (2006), ‘Power: A Radical View’ a critique. Universita di Firenze.

Plaw, A. (2007), ‘Lukes’s Three-Dimensional Model of Power Redux: Is it Still Compelling ?‘ Review Essay. Florida State University.

Lukes, S. (2005), ‘Power: A Radical View’. Basingstoke: Palgrave MacMillan.

web: http://www.powercube.net/wp-content/uploads/2009/11/power-after-lukes,Gaventa, Jonathan. (2003) ‘An overview of theories of power since Lukes and their application to development’.

web: http://www.mcdonaldization.com

Wills, D. ‘Basic Ideas of McDonaldization’ Course Reading. USA cpp.edu, Cal Poly Pomona.

Ritzer, G. (1993), ‘The McDonaldization of Society’. London. Pine Forge.

Ritzer, G. (1994), ‘Sociological Beginnings: On the Origins of Key Ideas in Sociology’. McGraw-Hill.

 

 

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