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Ecclestone Runs Into F-1 Apathy in China as Ferrari Lures Elite

April 11, 2013

Ecclestone Runs Into F-1 Apathy in China as Ferrari Lures Elite

A Ferrari race car model is sold in a Formula 1 Special Merchandise Shop in Jiangsu Province, China. Photographer: China Photos/Getty Images

Bernie Ecclestone is struggling to get the Chinese interested in Formula One even as Ferrari SpA (FERI), which runs the auto-racing series’ most-successful team, lures the country’s elite with $970,000 luxury cars.

Formula One said it trails Italian soccer’s Serie A and the National Basketball Association in popularity in China, and the state-run broadcaster cut its coverage of the 2012 championship by almost one-third amid an audience share of 4 percent. The 10th edition of the Chinese Grand Prix is April 14 in Shanghai.

Ecclestone, Formula One’s chief executive officer, said the audience in China is “disappointing” given the size of its population. “We decided to go to China because we’re a world championship and it’s part of the world,” he said in an April 5 interview. “The organizers are doing their best.”

Formula One, which persuaded state authorities to build a $240 million racetrack outside Shanghai a decade ago, has had little success attracting local sponsors in China, said Mark Gallagher, a former Red Bull Racing team board member. The 11 teams currently count one Chinese company between them as an official partner. UBS AG (UBSN), Switzerland’s biggest bank, took over as the race title sponsor in 2011, two years after China Petroleum & Chemical Corp. (386) cut its ties.

“In downtown Shanghai on the Friday or Saturday before the race, you don’t get the impression Formula One is in town,” Gallagher said. “There’s no buzz.”

Formula One gets most of its $1.5 billion of annual income from Europe, where all the teams and more than two-third of drivers are based. Seven races in Asia, the Middle East and Australia generated $402 million in 2011, compared with $902 million from nine European events, according to a prospectus for Formula One’s initial public offering that was postponed in June because of market conditions.

Ferrari Expands

As Formula One faces indifference, Ferrari -- the only ever-present team since the series began in 1950 -- is expanding in China. The carmaker opened its first showroom in mainland China in 2004. It now has 25 with plans to add another five by the end of the year, Ferrari spokesman Stefano Lai said.

A dealership in Shanghai, Ital Automotive Co., said this week it’s selling a Ferrari FF for about 6 million yuan ($970,000). That’s as much as three times more expensive than in the U.S. because of higher taxes. Ferrari, which sold 784 cars in China, Taiwan and Hong Kong last year, uses the Shanghai race to entertain Chinese clients, Lai said.

Driver Drawcard

London-based Formula One doesn’t have a marketing budget and relies on race organizers, teams and TV companies for promotion. It may need a team such as Ferrari or Red Bull to help generate interest by developing a “superstar” Chinese driver, said Gallagher, a former general manager of engine maker Cosworth Group’s Formula One operations.

When Li Na became the first Chinese to win a tennis Grand Slam singles title at the 2011 French Open, the television audience in China soared to 116 million. According to Formula One’s latest Global Broadcast Report, races in 2012 averaged about two million viewers in the country.

Formula One’s champions include title-holder Sebastian Vettel of Germany, who leads the standings after two races, and Spain’s two-time winner Fernando Alonso. The series this year has no drivers from Asia for the first time in more than a decade. The path to Formula One is “more sophisticated” in Europe, starting at age 7, making it hard for Asian drivers to compete, said Force India deputy team principal Robert Fernley.

Broadcaster Blamed

Ecclestone says repeated changes to the schedule by China Central Television are limiting local audiences. In a “troubled year” for the sport in China, the state broadcaster cut coverage by almost one-third in 2012 and didn’t show races held in Japan, Canada and Hungary, the Global Broadcast Report said.

“Normally you’d rely on television, but the CCTV people do what they like,” Ecclestone, 82, said by telephone last week.

For this season, Ecclestone said he has arranged to switch the series to a network of regional broadcasters. An e-mail sent to CCTV’s English-language website seeking comment about the reduction in Formula One programming wasn’t returned, while calls to two CCTV offices were answered by people who said its sports channel doesn’t have a spokesman.

Many fans who attend the Shanghai event, where tickets were listed at between $61 and $4,600 on a race website, are expatriates or wealthy Chinese who are among Ferrari’s target audience, Gallagher said. The gross national income per capita in China was $4,940 in 2011, according to the World Bank.

An e-mail to Jiang Lan, general manager of local race organizer Shanghai Juss Event Management Co., seeking comment about the popularity of the race wasn’t answered.

Singapore Success

Nine months ago, Ma Qing Hua became the first Chinese-born driver of a Formula One car in a practice session with the now defunct HRT team, according to Formula One’s official website. He’s now a test driver for the Caterham team.

While competent, he’s unlikely to be good enough to attract attention in China, Gallagher said.

To be sure, Ecclestone has had more success igniting interest in Asia with the Singapore Grand Prix, the sport’s first night race, which has sold out each year since joining the series in 2008.

Jenson Button, the 2009 world champion, said in September there was a “really good fun, party atmosphere” at the event, which offered 2012 race goers access to a Katy Perry concert.

For now, the Shanghai event may continue to get a lukewarm response, according to Gallagher.

“It’s not going to be heaving,” he said.

To contact the reporter on this story: Alex Duff in Madrid at aduff4@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net


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