Discussion
With Audi and Mercedes being BMW's main competitors could we see BMW return to F1? Or is not a good marketing exercise especially if your not winning like Alpine? The FIA and existing teams don't exactly make it easy to get in though.
I'm happy to see Audi and Cadillac join the grid adds more stories to next season.
I'm happy to see Audi and Cadillac join the grid adds more stories to next season.
Piginapoke said:
BMW would likely buy a team if it wanted into F1, but that seems very unlikely given its falling profit and expenses on the new EV cars
An F1 team wouldn't cost them a penny in real terms, it would simply be a self sustaining entity that provided free marketing. The initial capex would be safe as the team as an asset would remain on their balance sheet - and would only be expected to rise in value.As a company they have to accept falling profits as they transition to EV (doing better at that than their German rivals so far), but chiefly as their real rivals now come from the East, which is reshaping the entire car industry in terms of profit expectations moving forward.
Best guess is that you're right, if they wanted in they would have made a play, they would have battled with Audi for the grid spot. But for whatever reason, they simply aren't interested.
Not really sure they'd get any benefit out of it? They've already got a long history of making "sporty" cars and that's well recognised by the public.
Mercedes was different - returning as a works team was a smart move, they turned the brand into something more sporty/youthful rather than the stuffy old man cars of years gone by. Hence the abundance of AMG-Line diesel A-Classes which followed...
Mercedes was different - returning as a works team was a smart move, they turned the brand into something more sporty/youthful rather than the stuffy old man cars of years gone by. Hence the abundance of AMG-Line diesel A-Classes which followed...
Zetec-S said:
Not really sure they'd get any benefit out of it? They've already got a long history of making "sporty" cars and that's well recognised by the public.
Mercedes was different - returning as a works team was a smart move, they turned the brand into something more sporty/youthful rather than the stuffy old man cars of years gone by. Hence the abundance of AMG-Line diesel A-Classes which followed...
I think you might be onto something with regard to the reputation BMW already have for sporty cars. Not only do they not need to shout about it via F1, but also in a way the message is probably best delivered by keeping the quality and performance of their cars impressive and letting the product do the talking, rather than attaching themselves to F1 which has become a bit of a circus - it's just not on tone for what BMW are these days.Mercedes was different - returning as a works team was a smart move, they turned the brand into something more sporty/youthful rather than the stuffy old man cars of years gone by. Hence the abundance of AMG-Line diesel A-Classes which followed...
Additionally, despite increased electrification, F1 may well not be 'electric enough' for certain manufacturers plans moving forward. BMW are track testing M3's with hub motors, a dedicated motor in the hub of each wheel - which I can imagine one day is the sort of thing that F1 will adopt, but no time remotely soon. If BMW wants to push the boundaries of EV performance and invest heavily in marketing the benefits of pure electric, they're not going to be well served by a sport that is supposed to be cutting edge, but for various reasons can't electrify beyond a certain point.
This is if course the reason F1 is pushing to electrify as fast as possible, to remain as relevant as possible to manufacturer's, but in some cases it won't go far enough to be compatible.
TheDeuce said:
An F1 team wouldn't cost them a penny in real terms, it would simply be a self sustaining entity that provided free marketing.
People keep saying that but it can't be true because otherwise there would be no annual expenditure and need for a budget cap (which some teams still manage to come well under because they don't have the money to spend).Yes, the franchise itself will not lose value under the current regime, but I see it as the difference between buying a car as an investment and putting it under a cover and never using it or actually running it, fuelling it and insuring it - any increase in value would be eaten into partially or fully by the running costs unless they stay ahead, and you cannot leverage any gains until you sell it.
Also, a team that comes with a couple of world class drivers and a genius engineer contracted to it would be worth far more than one that doesn't, no? And If you purchased one of the latter it would take a significant investment to turn it into the former?
The more I think about the more your statement seems way oversimplistic and not entirely accurate.
Edited by Evercross on Thursday 15th January 11:07
Evercross said:
TheDeuce said:
An F1 team wouldn't cost them a penny in real terms, it would simply be a self sustaining entity that provided free marketing.
People keep saying that but it can't be true because otherwise there would be no annual expenditure and need for a budget cap (which some teams still manage to come well under because they don't have the money to spend).Yes, the franchise itself will not lose value under the current regime, but I see it as the difference between buying a car as an investment and putting it under a cover and never using it or actually running it, fuelling it and insuring it - any increase in value would be eaten into partially or fully by the running costs unless they stay ahead, and you cannot leverage any gains until you sell it.
Also, a team that comes with a couple of world class drivers and a genius engineer contracted to it would be worth far more than one that doesn't, no? Plus there would be ongoing costs involved with getting a team to a position that it is a winner.
The more I think about it, the more your statement makes no sense.
Edited by Evercross on Thursday 15th January 10:43
If however you conflate sporting ambition to win with commercial value then things become less safe. In your example, if you pay for the best drivers and best designer etc, then that does raise the stakes considerably and if that expenditure doesn't yield strong results on track, they could see a sizeable loss on paper, although almost certainly not once the value of F1 marketing for the BMW brand (brand recognition works even if the sporting results aren't amazing) is factored back in.
I don't agree that amazing drivers add value to a team, as they're not an asset of the team, they're simply hired entities - if they perform well because the team and car are competitive then that is what adds value and by maximising that performance potential the drivers inflate the teams value, but the drivers themselves can leave at relatively short notice so they personally don't ad inherent value to the team if the performance isn't there.
Realistically if BMW re-joined the sport it would be big news, loads of media interest etc, they'd have zero problems funding a team for many years of that alone, whatever their performance. In reality however, they can't join unless they build their own engine - they famously build their own engines for their road cars, they can't really rock up at F1 and stick a Merc PU in the car. They also have no reason to invest in their own F1 engine building programme because their commercial focus as a manufacturer is on electrification now, not new engines, so there's little to no crossover between being an F1 engine supplier and car maker for them now.
TheDeuce said:
I don't agree that amazing drivers add value to a team, as they're not an asset of the team.
Read fully what I said - the value is having them under contract. The contract is absolutely an asset.I stick by what I said - you are oversimplifying things by saying that any F1 team cannot be a money loser, plus take a look at the accounts of AMR GP Ltd. for a concrete example.
Yup, Stroll Snr. can sell the franchise for a tidy sum but if he was to do so tomorrow would he recover his entire investment? The franchise system was set up to ensure that no team simply folded into nothing as was often the case under the old regime. The franchise system doesn't guarantee that every team is a profit centre, just that they have a minimum value that makes them viable for selling. The franchise gets you a seat at the table but you still have to do something with it.
Another analogy is like buying a house - you buy a house with the intention of living your life out of it and absolutely the house itself has a value that is (mostly) distinct from whatever life you lead and job you have. Manage your life well and your house will facilitate you enjoying that life with a surplus of disposable income, but manage it badly and you can find yourself in massive debt. The house is totally ambivalent to that but yes indeed you can still sell it at the end for probably more than you paid for it.
Edited by Evercross on Thursday 15th January 14:48
Evercross said:
TheDeuce said:
I don't agree that amazing drivers add value to a team, as they're not an asset of the team.
Read fully what I said - the value is having them under contract. The contract is absolutely an asset.I stick by what I said - you are oversimplifying things by saying that any F1 team cannot be a money loser, plus take a look at the accounts of AMR GP Ltd. for a concrete example.
Yup, Stroll Snr. can sell the franchise for a tidy sum but if he was to do so tomorrow would he recover his entire investment? The franchise system was set up to ensure that no team simply folded into nothing as was often the case under the old regime. The franchise system doesn't guarantee that every team is a profit centre, just that they have a minimum value that makes them viable for selling. The franchise gets you a seat at the table but you still have to do something with it.
Another analogy is like buying a house - you buy a house with the intention of living your life out of it and absolutely the house itself has a value that is (mostly) distinct from whatever life you lead and job you have. Manage your life well and your house will facilitate you enjoying that life with a surplus of disposable income, but manage it badly and you can find yourself in massive debt. The house is totally ambivalent to that but yes indeed you can still sell it at the end for probably more than you paid for it.
Edited by Evercross on Thursday 15th January 14:48
I think with the current uncertainty in the car market and in general anyone would be foolish to enter F1, anybody who foolishly thinks F1 offers free anything is dumb beyond belief, yes you get marketing, but you get thatwith adverts anyway.
BMW do not need that, they are the top end of their market, they arguably need to sell more smaller cars and electric stuff, but they decided to move away from it a bit after initially being keen.
I am sure if they had their time again Audio/VW would possibly not do it, they did it at a good time, a lot has happened since then, and some of their brands have lost huge sums. But they were committed too early really
BMW do not need that, they are the top end of their market, they arguably need to sell more smaller cars and electric stuff, but they decided to move away from it a bit after initially being keen.
I am sure if they had their time again Audio/VW would possibly not do it, they did it at a good time, a lot has happened since then, and some of their brands have lost huge sums. But they were committed too early really
Evercross said:
TheDeuce said:
I don't agree that amazing drivers add value to a team, as they're not an asset of the team.
Read fully what I said - the value is having them under contract. The contract is absolutely an asset.I stick by what I said - you are oversimplifying things by saying that any F1 team cannot be a money loser, plus take a look at the accounts of AMR GP Ltd. for a concrete example.
Yup, Stroll Snr. can sell the franchise for a tidy sum but if he was to do so tomorrow would he recover his entire investment? The franchise system was set up to ensure that no team simply folded into nothing as was often the case under the old regime. The franchise system doesn't guarantee that every team is a profit centre, just that they have a minimum value that makes them viable for selling. The franchise gets you a seat at the table but you still have to do something with it.
Another analogy is like buying a house - you buy a house with the intention of living your life out of it and absolutely the house itself has a value that is (mostly) distinct from whatever life you lead and job you have. Manage your life well and your house will facilitate you enjoying that life with a surplus of disposable income, but manage it badly and you can find yourself in massive debt. The house is totally ambivalent to that but yes indeed you can still sell it at the end for probably more than you paid for it.
Edited by Evercross on Thursday 15th January 14:48
bergclimber34 said:
I think with the current uncertainty in the car market and in general anyone would be foolish to enter F1, anybody who foolishly thinks F1 offers free anything is dumb beyond belief, yes you get marketing, but you get thatwith adverts anyway.
BMW do not need that, they are the top end of their market, they arguably need to sell more smaller cars and electric stuff, but they decided to move away from it a bit after initially being keen.
I am sure if they had their time again Audio/VW would possibly not do it, they did it at a good time, a lot has happened since then, and some of their brands have lost huge sums. But they were committed too early really
Yes, even if you said they'd get their money back when they sold the team in x years time, it's still a huge investment. At the very minimum it would be a couple of billion dollars to buy in, either buying or creating a team, then another $400M per year running costs. Cost cap is now $215M, plus another $130M for the engine manufacturer, plus out of cap expenses is easily $400M total for a top team. That's a lot of sponsorship to make up for the $60-80M prize money.BMW do not need that, they are the top end of their market, they arguably need to sell more smaller cars and electric stuff, but they decided to move away from it a bit after initially being keen.
I am sure if they had their time again Audio/VW would possibly not do it, they did it at a good time, a lot has happened since then, and some of their brands have lost huge sums. But they were committed too early really
BMW profits have been on a downward trend in the last couple of years, so it's a lot of money to ask the board to approve.
It's not a risk if the asset has long term protected value. F1 is in rude health with many 10+ year contracts.
Alpine + Horner + Bunch of US and Saudi money >> BMW F1.
The F1 entry will be worth the same in 5 years time (probably) so it is less of a gamble.
BMW spend €10bn a year on R&D...
Alpine + Horner + Bunch of US and Saudi money >> BMW F1.
The F1 entry will be worth the same in 5 years time (probably) so it is less of a gamble.
BMW spend €10bn a year on R&D...
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