What are the benefits of F1 racing to automobile manufacturers?

Speed ??test F1: It is difficult to see an increase in economic benefits but a long-term brand effect

International online reports: On September 24, the F1 Grand Prix "kicked off" in China for the first time. This important event The many "benefits" brought by the event to all parties will gradually emerge: the 670,000-square-meter Shanghai International Automobile City is fully displayed through the F1 event, which is not only conducive to the development of Shanghai's automobile industry, but also adds a lot of value to the surrounding land; according to statistics During the F1 event, 18% to 20% of the foreign population came to Shanghai to watch the game. The benefits this brings to Shanghai's tourism industry are obvious. But these seemingly fresh profits have nothing to do with the event organizer, Shanghai International Circuit. After three years of hard preparation, when the Shanghai F1 event begins, the issue of return on investment is still a major problem that Yu Zhifei, deputy general manager of Shanghai International Circuit Co., Ltd., must face.

Marginal interests are difficult to save.

At the "First China F1 Development Forum" held on the eve of the F1 Shanghai Station, I faced reporters regarding "How much investment will the Shanghai International Circuit invest in F1 this year? "How is the return situation?" Yu Zhifei's answer was not calm: "Your question is just like what our leader asked me."

"It is not easy to bid for an F1 event, and it is even more difficult to run it well and ensure its healthy and sustainable development for seven consecutive years." The words of Qiu Weichang, deputy director of the Shanghai F1 Organizing Committee, made Yu Zhifei find a "close friend" ". According to the seven-year operating contract signed by Shanghai International Circuit Co., Ltd. and the F1 Management Company, the income from the Shanghai F1 event belongs to Shanghai International Circuit Co., Ltd. It mainly consists of ticketing income, advertising sponsorship fees and ancillary commercial consumption income. It consists of the majority, plus some peripheral outdoor advertising revenue and dividend income from Shanghai International Circuit’s partial equity holdings in Shanghai Event Business Co., Ltd. The F1 management company holds the core interests of the F1 event, such as venue advertising, television broadcast rights and development rights of related products.

According to estimates by industry insiders, Shanghai International Circuit Co., Ltd. has invested 2.6 billion yuan in the construction of the circuit; and there is no guarantee that it will be held for the first time in the future, because several stations may join every year. Or be cancelled, so Shanghai will have to spend an annual F1 application fee of about 166 million yuan, and an annual TV broadcast rights purchase fee of 150 million yuan. In the next seven years of hosting F1 events, Shanghai Circuit’s total investment in F1 events will be nearly 5 billion yuan.

It is an indisputable fact that the imbalance between expenditure and income has put the Shanghai Circuit under tremendous pressure in operations. In this regard, Yu Zhifei indirectly said: "For all racing venues in the world, if we only consider the development of the event itself, its profitability is very limited. Therefore, we regard the 5.3 square kilometers of Shanghai International Circuit as a competitive, A comprehensive entertainment and economic venue, the Shanghai Circuit will be developed and operated from multiple perspectives." Regarding the return on investment, Yu Zhifei also set a time limit for himself, he said: "7 years." This happens to be the number of years that the Shanghai International Circuit signed a contract with the F1 Management Company.

The long-term brand effect

According to people familiar with the matter, in order to provide ideas for Shanghai Circuit to solve profitability problems, in August 2002, Shanghai International Circuit Co., Ltd. invited Roland Bay Ge Strategy Management Consulting Company customized a consulting report for him. Roland Berger mentioned in the consultation report: "The Shanghai International Circuit should comprehensively utilize its hardware facilities, increase utilization rates, and improve operating levels. The comprehensive commercial development of the circuit's software resources should be centered on the brand strategy of the circuit and the event. For the purpose of improving brand value and obtaining long-term commercial benefits,”

In terms of event management positioning, Roland Berger suggested that Shanghai International Circuit should assume more roles in the racing industry based on its overall development goals. Just provide the venue. For example: In the short term, several famous international events can be introduced to create a brand; in the medium term, domestic events can be developed while expanding international events, and the utilization rate of the racing track can be improved. In addition to holding international events similar to F1, the venue should also be fully utilized to hold some domestic events and entertainment participation events, so that the brand operation and operating income of Shanghai Circuit can be complementary. In principle, Roland Berger suggested that the Shanghai Circuit follow the procedure of “first international events, then national events, and finally other racing activities”.

In terms of the comprehensive utilization of the circuit's hardware facilities, in addition to the stadium and track, the attached commercial areas and areas surrounding the circuit are also one of the focuses of development; in terms of the commercial utilization of the circuit's software resources, in addition to the television broadcast rights, the circuit and event advertising rights In addition, we can consider issuing sports lotteries, etc.

Under the influence of this report, Yu Zhifei also mentioned the importance of building his own brand. Yu Zhifei said: "I have two things that are the most precious now. The first is to build the Shanghai Circuit's own brand; the other is to gradually establish its own team and organize its own league."

< p>Yu Zhifei persuaded the owner of the Jordan Racing Team to put a track mark with the word "上" on his racing car so that all people who do not understand Chinese can recognize the Shanghai Circuit. "This is our first step in building the Shanghai Circuit brand. ". In addition, Yu Zhifei also bought out the five-year management rights of the National Track Championship; received sponsorship of more than 20 million yuan from Giti Tire to establish the Shangsai FRD team.

Yu Zhifei’s goal is “to have our own Chinese F1 driver and F1 team in a few years.” After Yu Zhifei was elected as the vice chairman of the China Automobile Sports Federation, a senior figure from the China Automobile Federation said, "Yu Zhifei's election will accelerate the commercialization of China's motor sports."

According to international experience, in the operation of racing circuits in various countries, although there are not many international events every year, they account for more than 60% of the event operating income. What is known at present is that Yu Zhifei and the Shanghai Circuit still have a long way to go in terms of profitability, because what stands in the way of Yu Zhifei, the Shanghai Circuit, and even the entire Chinese motor sport is not the issue of profitability in one or two years, but the issue of automobiles and The popularization process of automobile culture.

Lin Hanmin: Zhuhai can spend 10 yuan and earn 3 yuan

Although Zhuhai Circuit missed F1 after the competition with Shanghai, Lin Hanmin, general manager of Zhuhai Circuit, passed the Hong Kong He emphasized to reporters on the phone that he hopes that the F1 Shanghai race will be as exciting as possible, because "Shanghai F1 is not only a matter of Shanghai, but also a matter of the entire Chinese racing industry."

"China Business News": As one of the competitors for the right to host F1 that year, how do you think the 16th F1 race of the 2004 season ended up in Shanghai?

Lin Hanmin: F1 is a money-burning game, but there are still so many places rushing to do it. In addition to displaying the image, the most important thing is that there will be considerable economic benefits. Spectators gather during the competition, which is a good opportunity to make money for local hotels, restaurants, tourism, transportation, retail, entertainment and other industries. In addition, using F1 can create agglomeration benefits. Many related companies, such as automobile, tire, and oil companies, will also take the opportunity to expand their influence in the market and hold related exhibitions, conferences, business forums, etc. in the surrounding area. It is another great boost to the exhibition industry. Most importantly, Shanghai can take this opportunity to enhance its international image. This is a good time to attract international investment and accelerate economic development.

"China Business News": As far as the organizer of the event is concerned, what do you think the economic benefits of Shanghai Circuit Co., Ltd. will be?

Lin Hanmin: As far as I know, the organizers of more than a dozen F1 races around the world are making a lot of money. There are many ways to make money by running F1. During the competition, tickets, advertising rights transfers, TV broadcast rights transfers, etc. are all large sources of income. In normal times, due to the effect of hosting F1, the popularity and level of the venue have been improved, which will inevitably attract more car events to settle there, and the venue rental fee can be increased accordingly. Whether the organizers of the Shanghai Grand Prix can make money from it depends on how they sign a profit-sharing agreement with the F1 management company. But one thing is certain, even if the organizer may not make money from it, Shanghai as a whole will certainly not lose money on this matter.

"China Business News": If it was not Shanghai but Zhuhai that won the right to host, how sure do you think you would make a profit?

Lin Hanmin: Zhuhai has the advantage of hosting F1. Zhuhai is located in the Pearl River Delta. It is one of the areas with the highest consumption power of domestic residents. It is also close to Hong Kong and Macau. There are a large number of mature F1 fans here. . More importantly, Zhuhai already has a ready-made racing venue. We only need to improve the venue to host F1. This can save a large amount of construction costs for venues and supporting facilities. It is no exaggeration to say that if F1 was run by us, we could spend 1 cent and earn 3 yuan.

"China Business News": In your opinion, what impact will F1 being held in Shanghai have on the operation of domestic racing venues such as Zhuhai Circuit?

Lin Hanmin: There are advantages and disadvantages. For example, because the Shanghai F1 race is about to start, various media have come to interview me in the past few days, which will have a good effect on increasing the visibility of the Zhuhai Circuit. Generally speaking, the benefit is that because Shanghai holds F1, more and more people will pay attention to motor sports, which will be beneficial to the development and popularization of motor sports in the country, and will also be beneficial to the operation of domestic racing venues. The bad thing is: Since the start of F1, a large number of companies have been attracted to invest the advertising costs used to sponsor motor sports in F1, and it has become more difficult to obtain sponsorship for other events. But I believe that as long as domestic motorsports develops better and better, companies will spend more and more money on sponsoring motorsports, and everyone can work together to expand this market.

"China Business News": Specific to the Zhuhai Circuit, have you ever thought about how to use the positive effects of F1 to promote yourself?

Lin Hanmin: It is certain that domestic motor sports will develop faster and faster. I estimate that this emerging market will increase from tens of millions of yuan last year to hundreds of millions of yuan this year. , these hundreds of millions of yuan do not include F1 itself. As for how to make full use of this effect, this is also a question we are thinking about. Although we did not succeed in F1, we still obtained the right to host many other events, such as the International Supercar Competition (i.e. GT Competition) to be held in October. Although GT is not as important as F1 at present, it is closely related to F1 is one of the three most watched events of the FIA, with top sports cars such as Ferrari and Porsche participating, and its development momentum is very good. As the first domestic racing circuit, we hope to work with Shanghai F1 to push domestic motor sports to a new level of development.

Sinopec: Only the lubricating oil was lost

Walking into the F1 stadium in Shanghai, the Sinopec logo that won the naming rights of the F1 China Station can be seen everywhere: all the high-quality asphalt that is subject to the friction of the racing car. The track is made from Sinopec's "Donghai" brand asphalt; the high-quality No. 98 gasoline that supplies racing cars as fast as lightning comes from Sinopec's own good oil... However, Sinopec's only lubricant brand - "Great Wall Lubricant" has been missing. It was shortlisted as a racing lubricant, but was replaced by a foreign brand. There is one small flaw left in the midst of perfection.

Naming and building momentum

In 2004, at 6 pm on March 16, London time, after difficult negotiations, Sinopec finally won the naming rights of the China Grand Prix from 2004 to 2006. TV naming and track advertising and other rights. Sinopec’s package agreement includes: winning the naming rights of the F1 China Grand Prix; Sinopec’s giant advertisements can stand in more than 20 prominent positions at the Shanghai Circuit. At the same time, Sinopec’s LOGO will also appear on the trophy of the F1 China Grand Prix. The most important thing is that Sinopec can appear together with the F1 logo, which means that Sinopec also occupies the important commercial promotion resources owned by F1.

According to Sinopec insiders: Sinopec’s initial strategic purpose of linking up with F1 is to launch products, especially for overseas markets, such as asphalt, No. 98 gasoline, etc. In a word, Sinopec wants to use F1 to build its image before launching products.

Some people in the industry pointed out that the chairman of the FIA, the old British man known as the "F1 Czar" - Ike Lestone, is a person who can use all "sides" of the entire F1 event. , an “advertising geek” who makes money through packaging. On the platform created by "Lao Ai" himself, the brand promotion performance is extremely intense, and the effect is indeed extraordinary.

It has been widely rumored that the amount of Sinopec’s sponsorship this time is US$200 million to US$400 million. This statement is not unfounded. Judging from the data of previous years, the American Philip Morris (Marlboro) Tobacco Company sponsored The Ferrari team's funding in 2003 was 400 million euros, while the annual funding of the Renault team sponsored by Japan Tobacco Company was 260 million euros. The annual funding of the Toyota team sponsored by Japan's Panasonic Group was 300 million euros. Sinopec has so far kept secret the specific amount of sponsorship for this money-burning game.

In fact, regarding F1 sponsorship, there has been considerable controversy within and outside Sinopec in terms of the input-to-output ratio. But in the end, one of the reasons Sinopec convinced itself was that in the future, all products and souvenirs sold by Sinopec can be marked with the F1 logo - - This "international passport"-style logo will help Sinopec increase its affinity in overseas markets, and the benefits of promoting its products are self-evident.

Feeling proud

What makes Sinopec proud and proud is that the Shanghai F1 race in China has broken through the embarrassing situation of domestically produced special road asphalt not being able to compete with the F1 track. This move of track asphalt is considered to be a sign that the quality of Sinopec’s asphalt has reached the international advanced level.

It is understood that in order to enter the international asphalt market, Zhenhai Refining and Chemical, a subsidiary of Sinopec, has carefully prepared a product quality control plan and established a special F1 asphalt production leading group. Relevant units of the company carry out special research based on the F1 track's requirements for asphalt product quality. By exploring process conditions and fixing product delivery procedures, the process control and delivery quality of SBS modified asphalt products for F1 tracks have been maintained stable, ensuring the supply of high-quality asphalt for the track surface.

The high-quality No. 98 gasoline was allowed to be continuously injected into the racing fuel tank, becoming the power source for racing competition. It was also regarded as the first time that Chinese domestic brand gasoline was used in a world-class event. milestone. This kind of real advertising impact has greatly increased the temptation and appeal of the Sinopec brand to dealers when promoting the layout of the domestic sales network, and also made a good start for it to enter the international market.

But F1 is not only a sports competition, but also an arena of technical strength. Many precision parts that rotate at high speeds have very high requirements for lubricants. Unfortunately, although Great Wall lubricants are first-class in terms of brand and quality in China, sales of Great Wall lubricants increased in the first half of this year after the integration of Sinopec's lubricant brands. 52.9%?, but when faced with the strict inspection of international competitions, it still could not meet the technical and quality requirements and was replaced by other foreign brands.

However, just as Great Wall Lubricant’s promotional focus for the F1 event is: “Emphasis on joining hands with F1, emphasizing the consistency of product connotation and F1 characteristics.” F1 is a benchmark that Great Wall Lubricant has set for itself. With the help of the brand combination effect of Sinopec and F1, while promoting the construction of its domestic lubricant sales network, Great Wall is also working hard to find the next opportunity to make efforts.

Tire Manufacturer: F1 Battle in Shanghai

In the past, the only automotive tire manufacturer supporting the F1 race was Bridgestone, but now there are two: Bridgestone and Michelin Competitors, the biggest difference between the two is: Bridgestone only competes with Ferrari a little bit, focusing on expanding the star team's influence on TV audiences. Michelin, on the other hand, cooperates across the board. It first collects money from the six F1 participating teams, then promotes new technologies through F1, and obtains contracts from more companies to support civilian products produced in China.

When two strong men meet, the brave one wins

Before the F1 China GP (Open) competition, both Michelin and Bridgestone are at the forefront of the fiercest competition in the Chinese automobile tire market. Having the upper hand in Shanghai will undoubtedly suppress its opponents in terms of momentum and profits, thereby achieving a better position in next year's competition. To this end, both parties have been ready to invest money and develop projects since this year.

First, Michelin announced in the middle of this year that it would increase investment in companies in Shanghai and Shenyang, especially Michelin in Shanghai. Because it was a project that was launched only after swallowing up China’s return, Michelin must bring the most advanced technology to brought to China to ease the pain of a few people at being eaten up by national enterprises. Michelin has made great efforts in this regard. On the one hand, it helps Huili produce the most advanced popular tires, and on the other hand, it also provides real-life experience of F1 racing, etc. event, using the image of F1 to show his style as the king of the tire world.

Relatively speaking, Bridgestone, which has been weakened by the Ford tire incident in the United States, plays a more prominent role in the Chinese market this time. Bridgestone has proposed to significantly increase the production capacity of its automobile tire factories in Tianjin and Shenyang in China. Another production base, the Wuxi factory, has also been completed and put into operation. Bridgestone temporarily leads the number of bases by three to two.

In addition, Bridgestone also learned from Michelin and opened its own tire store. Michelin called it "Chijia" and Bridgestone called "Car Wings".

Bridgestone revealed: "The company will establish a production system sufficient to cope with China's rapidly growing demand for automobile tires. Based on the existing 3,600 general retail stores and 1,000 special dealers, the company plans to The number of 'Wing of Cars' specialty stores in China has expanded to 500."

It's hard to decide when it comes to rivals

In fact, Michelin still has one move left, it won the Bib Gourmand Challenge. In China, the competition will start in October, and all participating models will be environmentally friendly technology products. This will give a good impression to the Chinese government, which emphasizes environmental safety, and will also give Toyota, General Motors, Mercedes-Benz and PSA, which are implementing or contemplating environmentally friendly car production plans, more opportunities. Opportunities, people from Michelin China said that "providing environmentally friendly tires can further enhance the consumption reduction and emission levels of these excellent new fuel vehicles."

The reason why Michelin is so smart is that the differences in technology are getting smaller and smaller. On product alone, Michelin cannot completely overpower the cheaper Bridgestone. Although Michelin F1 technical director Depaye emphasized: "Each set of our tires has more than 200 kinds of materials. Drivers who have tested it all know that using Michelin tires can be more than 3 seconds faster than the opponent." But in terms of results, Ferrari, which uses Bridgestone, can always prove its strength with facts, and Michelin can only cover it up with numerous factors on the field.

Bridgestone seems to be more low-key when analyzing the pros and cons of technology. Hamajima Yuhide, the general manager of motor sports tire development, analyzed: "It can be expected that whether the F1 team uses Michelin tires or ordinary tires, Leestone Tires, both competitors will offer soft compound rubber tires. Ultimately the battle will be the precision of where the rubber is placed, the grip of the soft compound tire range and the durability of the performance that will be the deciding factor. "The key factor in winning or losing."

No one dares to predict their own victory, especially in front of the Chinese audience who are waiting at home with their eyes wide open to see the results. Of course, Bridgestone seems to be betting on Ferrari with confidence. To be stronger, Hamajima also believes that Ferrari's long-term prosperity does not entirely depend on tires. "The technical strength of the Ferrari team can ensure extremely high prediction accuracy, so it is still the most powerful championship contender. And it is good at using braking and The Renault team whose tire grip performance shortens the lap time, the powerful BAR team, and the Williams team with Schumacher returning after a full rest will all become strong competitors to the Ferrari team. Both teams use Michelin tires. ”

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