Pirelli's Paul Hembery on Formula One

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Pirelli's Paul Hembery on Formula One

In this first part of an exclusive interview with Paul Hembery, Pirelli Motorsports Director, MTD Racing News asked Hembery to respond to calls for changes in Formula One.

What changes are needed with regard to Pirelli's on-going involvement in F1?

Formula One has a lot of very strong positive assets; it's a unique championship in the sense that it's a genuine world championship. We do travel the globe and we're present on all continents. We have a very strong sporting history, the brand of Formula One is extremely well recognized around the world and we also have a very substantial and important fan base.

But as ever in life there are always opportunities to improve and in an ever-changing world as businesses adapt then so must sport to compete in the future in a way that allows access to a wider audience and maybe help to create new fans coming into the sport, which can either be through age or by going into new territories.

The type of changes that we see where F1 could consider modifying it's approach is certainly to become more fan-friendly, and fan-friendly in reality means the drivers needing to become genuine heroes, visible and well-known. They need to be the people that fans look up to and most of all of course identify with. In most sports you can identify the stars and motor racing is different because they wear helmets while practicing their sport and that means they have to work much harder to have their faces recognized around the globe. And that works on various levels, it can be on-event of course, but it also works off-event. There is no testing today and the number of days that drivers are now actually working, compared to other sports such as golf, tennis, you look at the number of races that other sports do such as NASCAR, the number of races they perform during a season.

You look at baseball, I seem to recall LA Dodgers telling me they have 163 games a year, so there's a great need to invest in [the F1 drivers'] public persona. We're starting to see changes with someone like Lewis Hamilton who's investing heavily at the moment in his brand following a little bit the David Beckham approach by being involved as well in fashion, and these are all aspects that we feel we need to see much more of because it's vital that we have readily identifiable heroes in our sport.

You look at people such as Ken Block, who we work extensively with, who was one of the first people really to understand how to convey an image with the new platforms that are available to communication today and has created a very successful brand by doing that. And that's a good example because you need to look at these types of things that are happening and try and understand why they're happening and why people are interested and find them very popular.

And that goes on to the next aspect of F1, which is the availability for fans to interact with the sport itself. You know there's a lot of footage created during a race weekend and while certain broadcasters will obviously have some level of privilege over the images that they're allowed to use and have priority over there's still a lot of footage that can be recycled and reused by people who are maybe wanting a different aspect and approach and that could be sitting through the whole race through the eyes of a certain driver if you really wanted to as such.

So these are areas where we're seeing platforms such as YouTube that are considering for example taking away advertising online and they'll go to a subscription-based product in the future but how many user have they got, one billion? So they only need to have a small percentage of that to start paying one dollar a week to have the content that they want and suddenly their business model goes through the roof and it becomes a very large income stream. But you need to create the drug, you need to create the volume and the interest, and once you've drawn those people in then you're more likely to maintain them.

The English Premier League has done a very good job for example of growing into the Asian market and they've by and large by investing in going there and physically being present. Pre-season they don't play their games in England, they go generally speaking down to Asia and play demonstration games and start to create a fan base in non-local markets.

These are all small aspects where today currently F1 is not investing and if it is going to grow in the future it has to grow its fan base and accessibility to its fan base. The television model is of course complex today. All the free-to-air channels are struggling to pay the fees required not just for F1 but also for many products and content. And pay TV, while it might be providing an instant hit in terms of finances, certainly doesn't have the audience base that's going to grow you as a sport into a very strong global phenomenon. So there's a balance to be had there and Formula One is at that point where it has to decide what's more important: short-term financial gain or long-term growth of the sport. And there's no easy answer to that. But you can also look at territories and divide your approach by territories, which again is something that the English Premier League has done in the past where it's provided rights to certain locations and territories on a very competitive basis to create interest and grow a fan base and create the passion for the sport, which then will eventually evolve into an income model and would allow you to have a call on fans.

It's going to be very hard for any sport to be on a pay-only basis to new fans. It's very hard to imagine that people will start paying money to watch a sport when they have no understanding of that sport and no passion for it or have no means of creating that interest. Currently there's almost no online free access to imagery of Formula One. And that's the challenge for the sport and it's probably the same for a number of other sports.

Because of that changing television model we're seeing many cases now where mobile telephone providers recognize they also need content and the mobile device is of course becoming ever more popular. People are watching videos and films on their mobile devices and less and less on television. The mobile operators are in need of content as well, so some of them have even gone to the extent of starting to combine with content creators and this could be the way that the media world goes in the future. And Formula One will have to be at the forefront of that to ensure that they don't get left behind because as we know there are many examples in the past of products that were seen as almost household staples that have disappeared. You can take that as PCs, you can add on Nokia phones, Olivetti printers - there's a whole host of products that you cannot imagine your life without and then suddenly in a few years they've disappeared. So I guess you can add in video cassette rental companies as well and probably today DVD sales. So there are always a few examples of obsolescence with technology and that's always going to be a challenge for F1.

So there are no easy answers, however, the first basis is to fully map what you're trying to achieve and gain a level of agreement on what your objectives are.
When we've had very strong racing - if you take 2012 when we had seven different winners in seven races and lots of overtaking - so when we had that very exciting product we weren't growing audiences but we weren't losing audiences so it's not just about the on-track racing. We've had that compelling racing and unpredictability, which is what most people would say you need in any sport to make it compelling.

Now having had that product there needs to be other reasons involved as to why when we had what on the surface is as good as it's going to get we weren't able to substantially grow the sport and that has to be around the marketing of the sport and the strategic direction that the sport will take. When we want to grow, we to have to look at when we're in China, India, what efforts did we really make as a sport to actually make it an activity that was in the face of the public. If you're going to turn up, have a race and go away after five days it's going to be very difficult to create long-standing interest in the sport and local promoters can certainly do a good job. And there are many examples of new promoters - Melbourne, Singapore and Austin for example - events that have come along a do a great job of promoting their events and creating a lot of business success around it. But it's very hard for those individually to be totally responsible for a whole country or geographical region to be promoting a sport such as F1 when you're trying to achieve substantial global appeal.

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