F1 Fanfiction
F1 Fanfiction

Episode 15 路 4 months ago

Fireside Chat w/ Cold Brew Money - Economics of F1

ABOUT THIS EPISODE

Meet our friends at Cold Brew Money Podcast at our latest episode of our mini series called Fireside Chat. We discuss about the economics of F1 and try and understand how money makes this sport go.

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In this episode we discuss:

  1. Ca$h is King!
  2. Constructors and drivers
  3. Budget Caps
  4. Driver salaries
  5. Pay Drivers
  6. Cost of building a F1 car
  7. Logistics of F1
  8. Sponsorships
  9. Prize Money distribution to teams
  10. Costs of hosting a race
  11. Broadcasting rights and costs

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Music:

Intro: Howling (Sting) - Gunnar Olsen
Outro: Your Intro by Audionautix is licensed under a Creative Commons Attribution 4.0 license. https://creativecommons.org/licenses/by/4.0/Artist: http://audionautix.com/

They apparently had only seven hundreddollars in their bank account. That's the level of Scan Dad wasplaying thello, hello, hello. These oho set an open, and this is called Romany.We are talking about money because your friends and family won't hire the how'sit going. We good. How are you, but how does it feel commuting fifty episodestalking about? I know right at the episodes. I don't think I've done anysing for fifty consecutive weeks other than go to work. You know like this islike a project that has survived a whole yearis pretty interesting. Did you learn anything about money yeah? Definitely how to value fixthoughts. How do you create a checklist? How doyou invested in next once so many things that I and you open the guidinglight o o right? I think I think I think, the main purpose of the podcastas to make sure the we you know we give the tool side the skill Si that isneeded to people earlier in their you know like just a personal finance, so jecte. I think that that kind offrom the feedwater we got that we get something that purpose right, like alot of young adults, are listening to the to the podcast, so it which hasbeen interesting. He hang on on great wait, Wi what what's happening- and Ithink our show has been- I think our show- has been hijacked here. Folks, you are listening to if one fanfiction. This is one of the lounge side, fireside chats that you are having. Weare your original hosts. I am a cash and I'm certain- and this is theepisode- Oh actually not- who am I kidding- We've got a fun episode foryou this week. It's about all it's all about the the finances of F one and whobetter to have it with with the finance Goos at cold. Brew Money: Hey, Hey,folks, Rom Colooney! Thank you for being on the show and having us.Actually, this is we are on their show, so you got to check them out and I I,like you said, be Barino pressure, life Odussyn e whole tagline. Is We talkabout finance and money because your friends and family won't? We startedthe podcast because we realized that is a stigma, especially in India around ittalking about finances and we as young at does when we just start earning likenot a lot of people know how to manage it, and we realize that, as we arelearning about it, we wanted to share it talk about it, so these can be partof that kind of region as we now this is. This is really awesome because I'vebeen following you guys and that's bang on, because growing up, I've not hadthe level of financial exposure from my family or my friends that I should havewhich which not which didn't happen until my like mid is- and I would haveloved to you know- have some platform like this, where I could get thatinformation at a very younger age to be. You know way more ahead in that tragedy,as you mentioned a thief at this point in my life, so yeah cold, brew moneyfor everyone. Listening if you have not checked them out, which rock are youliving under? Go check them out right now, it's at the rat, cold Rumani onany streaming platform that you gat you partest from, and we are so happy to behere on this podcast with the Cold Rooney and now, let's get into theepisode your happy to have you as well. I started watching trying to survive.As I said, I think two episode or three episodes a go. I finish the CDs in onesitting one weekend I think, and then I told a Ti that we need to get theseguys. We need to discuss our fun, it's so interesting, so we decided we'll doa cool up kind of thing and I one like overall, it's very interesting becauseI feel not a lot of people follow it. It's not as Davis and especially whenyou're like craved in India, Rita. Not of not a lot of people are talkingabout it. We just have Cartino and that's it that's the exposure that wehad for to have fun. I think the Tais tried to survive wasbasically one of the best investments that riveting has done recently, and Ithink that has helped and gain such a large fan following in decent times,especially in the US, which is kind of the target market at the moment andyeah and exactly you kind of proves, you started following a and because yousaw it yes, it walked yeah. My my own exposure to a ron was waitingfor you know Indian CITATO start and...

...they would show some of the of the onraces like Michael Show. Marker is the only diver that I know, but this shouldbe fine like I am excited to learn more about. I know it's a very, very popularsport in Europe and it's it's. The numbers are pretty interesting. YeahEurope, essentially, is the Mecca for the sport and then, as you say like for me, to growing upnor in was the only person I knew, but I hope, with the Wood InternationalCircuit and now with drivers and Vivan other things. Hopefully, India alsopicks up on the spot. Cool go cos. Let let's get started withthe episode right, the first like economics of fun, and we can start withthe budget and driver. So you guys are the SESIA SAR and so just take a door yeah. I think economics enough. Onewould you know, is basically what this port is all about. It's all about money,as this is a very popular catch phase that Hamilton said recently that cashis king and that applies. You know, to the full extent, to the sport. Cash isliterally the king here, because without cash, these cars wouldn't exist,and you know just the amount of effort and money that they have to pour intothe sport is ridiculous, totally a D- And I guess like beyond just that. The cars itself is so expensive,there's so much that goes beyond the racing where it's hot taing, it'sbroadcasting. You know the federation itself gettinginvolved with all the minor aspects, understanding how such a global sportoperate, because usually some of these sports that we watch that's hosted atone place and it's done. But this port literally moves around the world fromfrom March when they started to December when they are in. So it's abig big logistical and financial challenge yeah and just to give kind of an overviewlike people who don't follow. So there are like ten construct and correct meif I'm wrong anywhere, it ter act, ten constructors. So then can such stars, which meansthere are ten teams. Each team has two drivers, and then they have the startfrom Australia, usually write the and then that that isn't margin all theway to December and they go across the world and then a brown tree everywhere, and Ithink there are ten twenty one races or they have changed that twenty oneapprox by and large, that is the number but yeah with cashes king nowadaysthey've increased that to twenty three the season and they want to pump in more races. Butthe drivers are really revolting and the revolt led to twenty three, buthopefully that doesn't increase yeah and then all the races happen over theweekend Friday's practice Saturday. They compete for the pool positions andthen Sunday is the main re state, and all of this is regulated by F. I aI don't know. What's it stands for, but that's their regulatory body yeah. Ithink that's, basically the Federation Internationale Day, Automotons Yeah. Ithink it's French, so yeah yeah. That's that's a very high level over you. Ifyou guys are interested, listen to a one, an fiction wet they go into thedetails or else like even you can watch a drive to survive cool, let's start with constructors anddrivers and the first topic that we wanted to putch upon his budget capsright. So is it like similar to the football where, like every team hascertain cap, they can go over it and things like that for like? Can you justtwelve into details? Sure that's that's! What's going tohappen, but right now it's not a level playingfield per SE. So, to give you give you an estimate like, for example, twothousand D, nineteen merciing up spending more than north of fourhundred and fifty million dollars and, on the contrary, the bottom table team,which was Williams, ended up spending like hundred thirty two million dollars,which is still less than their previous ser, which was like one fifty milliondollars. So there is a big difference between the the people who keep doinggood and you know, keep getting price money and more sponsorship versus teamsthat are at the bottom of the table and just can't compete and keep up with thebigger teams yeah and there's a huge rift betweenthe top teams and like the mid back and the bottom pack because, like if youtake a look at the amount of money spent by each team, like you know, mostof these factory and red bull, all of them kind of spend newly for fifty million dollars and theteams. After that, like you, can see a mid pack there with Reno McLaren kindof are in the range of two hundred and then fromthere. It keeps going down solike when, when a team's budget is more...

...than double, then the other team, likethere's, absolutely no way the team spending less. I can compete with theyou know the yeah and in the in on, like essentially, if you're spendingmore directly means that your car will bebetter right or there is a regulation on pokamal nodding. So I'm guessingit's true. No To no you're. Absolutely right. I'm I'm totally agreeing withyou, because what happened is you have more money, go by more engineers, go bymore engineering resources and do whatever you want at that point, youmay just break a car and make a new car every weekend I mean not possible, butthat's the idea right so crashing for someone like Williams likeif the driver was to crash and free practice, that's going to hurt them somuch versus if Louise Hamilton was to crash toto will be like sure. What'sthe part we're going to build, it was bout us as for ride. Oh Yeah, all right, a right. Yes, I have a Flingot to say it stillbe on this topic were what's going to happen, going ahead, which is going tobe this year, but because of cowed that got pushed to next year, which is thatthere's going to be a cap on every tiems spending, and this only includeslike the engineering effort in the car. It said sorry, the car itself, the drivers, salary, the top three orfive management salaries and some of the other minute stuff don't getconquered in this, so that upset of the hundred and seventy five millionaire. Iremember the figure right, but now there's going to be a cat going ahead,which is in conversation that is going to keep decreasing by a few numbersover the next few years, but I think that's interesting in the sense thatthat gives all teams a level playing field. So what is a tighter race? Theseason can totally be. You know way way way more tighter, where it could beanyone's game at that point, yeah and one point to act o that islike the budget caps primarily were introduced because of giving thecurrent conditions because of cord nineteen like most of these companieswere facing. You know large financial crisis, and it was. It was a choicebetween whether constructors start dropping out versus they want tocontinue. You know having this series going on so because top teams were themost to lose at this, because when they are spending nor for for fifty milliondollars, it's not just easy to cut your budget down to you know less than half,because it diletto translates to pretty much cutting people off the you knowfrom their jobs and that that's not always ideal, and not just that. Ithink even the kind of investments that these big companies put in is it s not easy to scale back thatthat much yeah, that's insane like from from or city spent, what a four eightyfour million and dropping down on to hundred and seventy five. I don't knowhow they'll do that. I think it definitely favors like thethe lower or das more than the higher ones, that they'll have to get creative,somehow yeah, the one more thing, actually one exemption kind of is therefor these larger teams, as that, since most of these larger teams like Frarimost cities, also to develop their own engine and also provided to other man,factors as well, because they are given a little exemption in terms of engine development. So the CAP that ourcash mentioned arlier is mainly for what they call as car performance costs,and that involves like eroding and everything else, Lerac and everything.But the engine doesn't count towards the CAP. It has, I think, a differenttap from what in Okar the cost of engine will beseparate from the overall budget eaton. That makes sense. I can yeah, because, by current estimates from what I haveread, the cost of developing FN engine fromscratch. If you know a new manufacturer decide to that is close to one point:five billion dollars- and you know that's that's too large- an investment that they justcannot cap act in terms of engine that there is morecities and then Honda. It is for Alpha, Dori and red bull. Then you have theReno, that's a I, and the Burey makes it oh yeah and has an all that theyhave their own engines or no, they. So those are back markers asa people have been calling them for...

...ages and usually most and all of theseback markers take secondary engines from the Hirte suppliers and that'swhere they also get sort of called, as the teams for the higher teams of hasis technically a beating for Ferrarius it uses for ARY engine and so on, andso forth, quarter o cool. So it's very much like,like the arpin industry, also right, like all mostly yeah, all the olderairplanes are rare crowds, tave used to buy a lot and every thing in trees, Yep,okay and I think in terms of how economics works for these companies.Is that, like not all teams even want to develop everything right like theycome in as privatier teams, where they basically like horses, a perfectexample for that, because they pretty much by all the parts that they can buy,which is a loud enough fun so that they don't have to you know,spend an almost anything into our end and just by the parts from and mostmost of the parts of the bier from Faradic has bruin that you no. Theyhave a good character for last year, but but but yeah that that saves them a lotof money and, I think, is a very good model for new teams which are planningto join yeah. Absolutely, I think they don'thave to scar start on crash, like not inventing the wheel and focusing on thethings that matter, which I think are the drivers. We, where is the mostmoney spent from that budget from that cab? Is it on the drivers or thearentem? I want to see it has to be the car,because, at the end of the day, it's become a computer. At this point right,the number of just the number of buttons that go on the steering wheelis insane like it's so mind, blowing that these drivers can understand them,no wheres which and then even change them at the speed that they go butaerodynamics and the the engineering that goes behind these. These machinesis definitely where we are spending the big box salaries. I'm I'm glad thatit's not capped. Other Isis, I guess like mercies and folks like the Ferrariand stuff are just gonna, be broken with the amount of money these these high drivers take like. I think, Lewis is taking thirty millionthis year, which in if we go by the news, he took a baker because he wasexpecting fifty million wow. That's that's fifty million!That's like equal. I think Ronaldo, like all the top to your football, ison that much right. I think that's more than what they want. It is almost onethird Williams budget that, when you put, I think right after Hamilton comes Maxit to the twenty five million dollar salary and I think that's basically hadbill saying that he is the start of the team and so like all of the. If you take a lookat the salaries of all of these drivers, y all of the top drivers always get avery big pay check, and then, if you see, there's a very large drift andthen suddenly all newer drivers and smaller teams are paying like onemillion and like will gins a buildin driver. They canstill like t things like. It starts tramping up there. I think sojer Perisgets about eight million and Bo tasket around ten million and Ricardo gets fifteen alone got twenty,and I wetoing so a twenty million. That's alot I feel anyway, who am I to cut that's interesting and then foreveryone like, and it was covered in the drive to survive series as well buyinginto the team's right like drivers and representing the countries, andthey basically use the money that comes with those drivers. To be part to get aseat in the Afon because, as we saidinitially, there are just twenty drivers in total, so that's also a bigdeal. Do you guys want to like touch on it like what happens with that? Buying seats is a has been a part of onsince the start of fun. I would say like right back, if I don't know, ifyou guys have seen rush the movie rush, where which was about the rivalry bit:Preen Nikel art and James Hunt and Nikola, who, when he like, basicallyjoined a fun, he wasn't getting a seat so young married, so he basically gotout a loan and bought his own seat and and yeah I mean it's a part of thesport. It's not looked down upon at all in the sport, because people dorecognize how much money is required. You know when you need for o eightymillion dollars to develop a...

...championship wearing team. You willtake any amount of money that comes by so PA drivers have been an atical part ofthe sport. Currently I think there are two Peter. I was three petries actuallyon the on the grade. One is Lance troll who, whose father Larden Stroll, who isa Canadian millionaire, and he basically bought the formerly known asfor Sendeth, became racing point and now is under the Aston Martin brand.And similarly we have two other drivers. One is Nicholas Latif who who bought a seat in to Willems, andthe last is the very famous Musae who basically has bought into heart anda whole discussion this year of buying into a finite thing and frombased on what I've read is because of Masa been rid because he is not. Thereare better drivers who who didn't get a seat and he was able to his buy into itbecause of his Russian nolit father yeah totally. It is actually that,because I I let me put it this, I wouldn't be surprised if his teammatemakes Sir make at one point: laps him. That's that's how he's driving, but I a he was ahead of Hamilton in thelast tree so far, but buying buying in is one on a new entrance. That's also verymuch possible like if one of the teams was like Williams, was in a very badposition, and there were news that you know her for some years, probablythey're going to step back and get out of it one to recoup and see how theycan enter in again, and there have been teams in the pastto which have entered and left if one, but for a new entrance to come intointo the sport. It's I think, like roughly around two hundred milliondollars, which eventually gets you into the sport. So anyone can come in other.One quick point there is that the two hundred million dollars that youmentioned is just the money that you go to FIA and you don't get that back everthat just like a registration fee and that's mainly to protect the earningsof the rest of the teams, because if a new team joins, that's basically goingto, you know make the pot smaller for everyone. So that's more like a feethat you pay to play and just sort of curiosity or of like a teep wanted todrive, and he just paid two hundred million tomorrow. Will you be able todrive or other other requirements that the drivers need to only if he's aRussian Oliver, but in some sense? Yes, so because youbring that up. I want to. I want to talk about Yuk Sunetois, a new driverin this year's formation, and it's highly debate not debated, but it's afact that he's gotten Honda in some sense backing him and and that's whyhe's sort of gone up the ranks I mean given he's a very good driver, so nonothing against him, but the Honda backing that he's had has played a verybig role in him, jumping up their ranks and then moving from f go to e on thisyear and similar goes with. Like many other people to like you mentionedPares Berasus with racing point last year, and he has this Mexican sponsortell hell if I'm not wrong and now that he's with the red bull, the sponsorcomes with him. So now pencil sponsors apparais car in in red bull, so some ofthese drivers bring their own sponsors which gives them that edge into thesport and then they get the money to so I say I have it and said recently: It'sa billionaire club. So essentially, if there are teams thatare struggling like low to year teams- and if they get these drivers, thenthey are able to get those that get that money as well. Essentially in somesense, yes- and that's- that's essentially what's happening with- hasat this point because the money that they've got with a German backingsponsor and they wanted a German driver which is probably why make sure Mac isalso there and the money that Russia, God that's given half the money to buildthe car and they're not going to use it for this year, but then they're goingto use it for the next season. So yes to to Carter. Okay, so you talk aboutbuilding a cartlet. Let's get there like the cost, and we discuss this aspart of lir budget cat like building a car. It's the biggest budget thatbiggest chunk of your budget. That goes into this, so like what a the parts andhow much does it cost and also like repairs, and all that do- and this isgen like really out of curiosity- do they have a bunch of cars that are justlined up and they like? If something breaks, no right, okay, they haveliterally to CAS that's it with the SE...

...and the fine, that's little the twocars that they have like. They do have some spare chaseslying around, but not the whole built cars because you are like creating thechases itself. You know takes a lot of time so yeah and that to again you know,actually that depends on what team you're talking about, because there wasthis time last year. I remember for house where Ithink Manag I keep forgetting his name: KevinMagnessen. Yes, that's how short lerouet forget you anyway, so keen isan he was complaining last year about you now having a purchase. He felt thatthere's some crack in the Chasse or something and actually has was not ableto change this Shasi because they didn't have one and they didn't have.The means to you know, create the ashly as fast as they could so like they hadto use the old chase till they had a new one, so yeah. It just goes to showthat you know it's super expensive to develop these things in a fun yeah and the biggest cost, as wetouched Lordlier to is the engine that combined with like the gear boxand that the anger entire piece that sits behind you, that's where theentire power is, I think, the biggest second after that would probably beaerodynamics, because that is what's going to get you through those speedsand give you edge over all the other people. The engineer is backing thosedesigns. I think those are paid definitely high bugs because there is there's this thing going on indebates right now between red bill and other teams of Wind Bang Bending. Soyou know for folks, listening after you're done with this go and check outwhat win Brer win wing bending is, but just that slight bend that theengineers were able to get for these teams has given red will such a bigedge the season, but talking about the whole break down right like if you havelike a une a fifteen million dollar budget. Most of it is research anddevelopment, the production of the car and the operations, it's roughly I'd,say two thirds of that entire money. Is there yeah and you you might not be able toimagine the costs of developing these you know part is an and I'm noteven talk about the talking about the Arengo here, I'm just talking aboutactually manufacturing these parts. So you know just manufacturing. The engineunit takes around ten million dollars for these teams. So you know that is ahuge part of the cost, and this is just the manufacturing part of things, andyou know things like the the chap see, which is basically a carbon fiberMonaco that costs her on seven million dollars. Again. You know it's most ofthis is completely handcrafted and yeah. You don't have an a Samitelle oranything for this, because I mean it's literally, that you know those fewtwenty thirty engineers which are there working only know how to actuallycreate this car at all. So it's not like that. You know they can have anassembly like that for the engine is it created every year or because I thought always that once theengine is greater, you have that in in done right they got do they do researchevery year on it and try to improve it. Tear of the year over there to by andlarge stays the same, because the specs are provided by FIA as part ofregulations, but this port is at least in myknowledge- is one of the biggest one where they try to find loopholes evenanywhere they can and they'll try to bend those regulations as much aspossible to give them. You know the minutest advantage. Even on the enginesyeah, I mean most of the engine kind of remains the same, but but they keep bringing an up grades allthe ways, because you know as ike I said like even gaining like a tent in alot. Time gives a huge advantage to the teams and so like, for example, youknow when Ferrari was. You know, court cheating some time ago, like basically they theywere tracking the the sensors that, if I was using formeasuring the fuel injection into the engine and what they were doing isbasically when so the censor kind of samples, the rate of flow of fuel andwhat they would do is the gap in which the sensor is not measuring. They wouldinclude increase the fuel flow so that they can qustion more fuel to theengine, so so, for example, this when they were caught, they had to obviouslyremove this out and then n. They lost a...

...lot of performance and then they havebeen slowly building up their engine again to reach the same. You know samepower as before so yeah. They have to keep developing these because once theystop doing that, they're going to lose that ACH interesting story there so Ferrari is- is publicly traded underunder the taker RAC trace and last year when, when this all of this fiasco cameout, their stock was just way down it's slowly. Building up, I think it stays directly proportional to how word andthe team is doing enough on, but yeah they took a big hit, two thousand inand nineteen n when in the teams who are not doing that good, do you do inWesson for are to how do you have now? I did think because I think evenMcLaren I forget they are. They are to care, but even McLaren is publiclycreated, races in the US and that's still easier for me, but yeah foray other than F one. It's. Idon't think it's doing that. Well, as a company yeah, I mean if it keeps winning in ifone I might just hard of love for this port, do it who so that was the Carl. Do we want totouch upon anything like on building the car that we've massed anything elsethat you wanted to talk about the just a passing statement there like we spokeabout engine, but even even the minute parts like a front nos or ar wing is,you know as North as two million dollars so Bako twenty one where youknow Max was stepping crashed. He definitely broke his friend and Ererand the exile- and you know the the stuff that was got lost in collateraldamage as part of that crash. That has definitely gonna set the team back liketen million dollars, just just the outer parts, and not even counting theinner part. So each crash is just too expensive. Even if it's likesomething where Charles lacle was on the pool, but he went, he was in acrash at that point. I'm pretty sure. Besides the mechanics in the garage and the person handling the budget,everyone else is probably happy with Charles being there. But those guyswere the sad age people because they knew what was going to happen becauseof that. But for the Barochan like berely, theTire Company would ste be paying for it. I hope they do because they areactually they won't, because what they are saying is this. There was debris onthat track. So that's not the claim. Let's see what that the use, I was going through the list that wehave like. We have a document, a set of tiles. Twenty seven hundred, I don't bay sponsor the tires or the cut.The constructors still have to cavor those til. They have to pay for it. Ohman and they eat US satis. Pretty much like I think. In a weekend they have.They have a like number of set pairs of ties that they can use. I guess it'ssomewhere around twenty sets or something like that to ton twenty fiveside: Cool Cool. Then, let's move to the next piece that you wanted todiscuss or districts of. If one, what is the cost? And we touched upon thisagain in the beginning- everyone moves across the world throughout the year.So every weekend they are in a new country, new city. A lot of the raceshappen in European countries, but then a lot of paces are outside of that aswell. So there is a huge cost of logistics, and just try to that, like.I saw one video by windower productions on the low districts of everyone likethat. That's what also got me addressed it, because it's a lot. It's a lot likemoving all those cars, your entire team and then building those padus like ared bull building that you tree flowed a that's a lot yeah. Logistically, Ithink it's just too much. That goes on to the fact that when the celebrationsare actually going on- and you know everyone's pouring champagne over eachother- there is a huge team behind where which is definitely almostwrapped up and they're. You know planning to go to the next location. Asfar as I know, I think, like DH, DHL being their biggest partner in thiswhole frate part, and you touched upon wendovers video, so its own point,there easier part is definitely Europe where they can just move things aroundand busses, but the frat part is is also how you know they move betweencontinents. It's said that it's that the whole cost is roughly, you knowupwards of eight million, but beyond the just the money. I think thelogistics of the whole thing t is just...

...too crazy because they need to again, you know, preserve these parts, becauseif the front wing gets damaged, that's eighty two million a sorry ten million.At that point. Logistically you know it's just a nightmare. I can't believe how these guys actuallyplan the entire think, because these teams have a lot of times just one ofthose parts, and it's not like you know. If your Aben packets catch tool in youcan just order it there's the that et cannot be replaced and a lot of times.What happens is like these factories are located. Most of these factoriesare located in UK and like if something breaks and they need a new part. Theyhave to actually ship it from the factory itself and Yeah. It's notalways easy to do that when you have a race somewhere on the other side of theworld, is there out back to back races right back to back weekends, whenthey're easing in five days apposite ship? All of those things again thatthat sounds crazy and I guess there's a you know basically, there's this whole crew thatthey have, which entirely works only on large istics. Each team has thatprobably, like smaller teams like have people playing dual roles but yeah atleast these larger teams like merciless and Friday. Have this antichresiscompletely focused on you know as soon as the race finishes, literally as thepodium is going on there packing and you know ready to go to the next oneand like especially, if you think about it, this season, like they're, going tohave some triple headers, which, which is just going to be insane becauseSunday, when the race gets over. You are packing and you're ready to go tothe next location and again Thursday. You have to be there because freepractice starts so yeah. It's super difficult, okay, let's, let's hop on to the nextsection sponsorships, if one wouldn't exist withoutsponsorships, I guess because like whenever, even the drivers, theirentire suit is filled with sponsors every way there are so many of them yeah. Let's, let's talk about sponsorssponsors is interesting because before going into like the shadiness ofsponsorship, the good part about how sponsorshipworks also is the title sponsor because in that becomes your registered nameand you can't get out of it. Even if something was to happen to the team andyour team at existed at at that point. So point in case was: was we males teamwhen all of his assets were taken away? And there was a point when the team wasgoing to get shut but because for India was part of the registered chassy nameas as the sponsor primary sponsor, they still had to keep that. So then itbecame racing point force in your force and dear racing rot or something likethat, but point being that titles concert gets you the the registeredname for that season, and then you end up having that name as part of yourteam. So for the other example, there's a red bull having Honda in their namethis year, which probably won't be next year, but you you have to have Hondawhenever you publicly say anything with respect. I e Yahi think sponsorship,basically, is the bread and butter of a fund. One exists for sponsorshipspretty much and that what pays the bills for almost all the titssponsorships have always been an important part and thus have also beensheds censorships. So you know as where there's money you know, you'regoing to have all these weird shidy things going on and yeah, obviously Fon is not exam from that people. Try and just you know, turn ablind I towards it, because they love the sport and they don't want to get that money out of the sport,because if that happens, yeah the sport probably won't exist at all. Now, whatdo you mean by shady sponsorship like is? He can give an example yeah I mean so. Let's take an example here it of rich energy, which was a sponsor ofhorse, so basically rich energy. Was this new sponsor title sponsor thatcame to horse where they claimed that they were aenergy drink company which they were launching, you know very soon, and they had. Basically, it was entirely ascam. The company was just on paper like they did not have any physicalpresence anywhere and basically, as as I had mentionedearlier, you know like most of the teams are based of UK, and so thusthese teams have to kind of do some financial disclosures and because ofthat, basically, what h happened is a lot of Renato skind of were investigating this rich...

...energy and they went through a totiens. They went to these documents and kindof found. The address that's mentioned on those documents for rich energy andpeople were like actually seeing it on Google cases or somebody actually wentthere as well to actually check out. If there's anything now and then basically,it was just one building and it turns out, like you know, around fiftydifferent companies are registered with the same building so yeah. You know,what's going down here, they apparently had only seven hundreddollars in their bank account. That's the level of scan dardas playing that interesting. So basically, what happened with horsesthat they like had a long term. I think two yearssponsorship deal with them. Something like that, and there was this Guy William Story who was the co of richenergy, and you know used to talk shit a lot about red boil because they weretrying to compete with red bill as or energy drink and and the funny thingwas that nobody could actually bite an product anywhere, because you knowpeople were crying so high to VII, but it was so rare to get a single kind ofrich energy, and the funny thing is that even the logo that they had wassprit up stolen from something called White. It bikes or something like that,which is a mountain biking, company and yeah. Basically, this energy were notable to hold their part of the deal. They were not able to pay. Has themoney that's required, and Ah it was a whole story, and you know basicallythat William Story went row on to it ter he started. You know bad mouthingHarsenet. You know we are quitting this sponsorship deal because housesperforming pory and then it turns out that he was kicked out of from thecompany and a you can't fire me if I could yeah pretty much. That was a rich of it.That's any other examples marlborough. I we were discussing that before westand like fording like Marlborough, because it's sort of back for company,I think I fund banded from sponsoring, but before, if you're, I think MichaelShumaker Ferrari had this whole Marlborough logo on the rare wing, sothey are still part of it, but they have changed the way they sponsor now,so they come under different disguises, different company names right now. It'scalled mission vino right, yeah mission, Venia, Yeah Malborg, is beingassociated with this court like way long. If you see any of those old carsyou're going to have a big rare wing, Marlborough, white and red car, but athing like around two thousand and six for Ari came down with strict antismoking. You know promotions and laws and stuff. So that's when they bannedanything that had to do anything with with cigarettes, but obviously no onetold them that you can't ban shell companies a D and everyone's veryfamous for finding these loopholes. So there's mission Vennor, which under thehood, is a promoter for Malborg or cigarettes. They are it. They had a very famous carsomewhere in that error, where they basically had bar cords and the shapeof the bar cord was such that if the car went whenever the car went onstreets or I was at high speed, you could see the the triangle ofMarlborough and that obviously again got into controversy. And then theymoved to mission Vino in an emble fashion in such a way that, whenwritten horizontally but tilted and then looked at from a vertical point ofview, they're going to then again see the Marlborough in em as well. You cansee the year as well. That's pretty evident what it is and you have youhave you visited mission, winner's website. It's just you know a load ofcorporate speak like it's. You know that synergy, and you know all allthose corporate words, some God Dairo one sentence, all copra cuss in there, but it's it interesting right. Thewhole. The whole gene is very interesting because, because mission,when I was not the only one doing this, even McLaren has a backer which, underthe hood is, is, is a cigarette company. What's good to see here is there arestricter countries which force these teams to not have those logos as wells?For example, Australia has very strict anti smoking laws and whenever thesecars are racing on those tracks, they have to mask that Torno change that so they change their body before theRas. A cuspn o a GAM, makes sense hey...

...by the way. I think, like everyone'sgot in this, this email of an Nigerian prince trying to send you money rightthat if you haven't, go check your spanfolder, I guarantee you have that email, but for everyone that's actually beenthrough, because there was. There was a season where an Nigerian princeinvested into F one, which was obviously a scam, because when he hadto actually give money he just disappeared. He took all the fame. You know he cameinto the PARDEX. He came into all races. He was trying to launch this new brand of his calt minusagain very similar study to rich energy. They didn't really have any product inthe market, but just trying to create the brand first before hitting themarket, but that's really bolder. You know withthat confident just come for the races to have anything to like you up. I wonder if he's the same agete princetill sending everyone emails o like let's make the brand first, thenwe'll get the money money, Fesano, ther, interesting one islike Singapore, one of the sponsor and- and he hosts like after parties andthere a sponsor for that. It's called sugar book, I'm not wrong. It's it's! A dating website made forold, rich people to find young hot. The girls is so to say like an a, but you went download andsign up for I love I'm still waiting for my billions for, but it's yes, some of these, some ofthese ones have been just to shady like rich energy is one example, but thereave been like three or four other energy drinks that have tried to poseas energy drinks and be Shell compans for A. I think. At this point it mightbe like a badge of honor that I was. I was able to pull off a self company. That's true cool cool! Let's, let's move o the nextsection, the grand brandre and the cost of hosting a race, I'm guessing the theand this question was I because I couldn't find the answer and drive tosurvive, but essentially, how do they decide? Which country will hose therace for that year? And then are this? Are these countries paying moneybecause, for example, Monaco has the race every year right, but then India?I think there was only one race, the the oesel yeah, Oh yeah. So how do theydecide on that? So there's there's a running, there's a running partnership betweenFIA and these prats per se, and they they usually you know, have three tofour years of contracts and that's why both the international had a three yearold contract. There was there's controversy,obviously politically, why Wud got canceled because then the then up government with myapathy it termed if one has not a sport, but an entertainment and Levy, try toLevy Entertainment, tax on FIA and then Bernie a Kelston, the guy running theshow was like by so yeah, but but yeah. There they're theseusually three to four year contracts. I think roughly- and I could be wronghere, but roughly building a track cost somewhere around eighty million andthen hosting is a fee that the track also pays to the FIA, because then thatgives them exclusivity and all of those things. But then there's the other sidewhere FIA also has to pay local authorities and the track for for beingthere, and you know doing the thing. If I is, is the entity that is earning themost out of this like because the cost of hosting a reese isnot exactly public data, so we don't know the exact numbers for that and itit differs from venue to venue because, like, for example, I'm shot. Monaco hasa very big discount in terms of the hosting fees, because Monaca kind ofthe common jewel of Fone and yeah they pretty much want to raise the no matterwhat every year, but other tracks, like you know, let's say, sow the which isgoing to be introduced. This time is prop, is probably you know, just the crowd that you know ms b justthrowing money a tough one to get them there and you know get some sportswacht for their country as well. So yeah I mean from what I have read. Ihad read article by popes, where this Porson had no kind of done. A properbreakdown of the total course that's...

...required from right from building thetrack to you know paying the annual fees for hosting, as well aspromoting and everything, because even after Osri and the total amount camedown to around one billion dollars, including everything if you consider along term contract of ten years with Fi, because the way it works is the hostingfees slowly increase each year, and the reason main be is that if you're havingconsecutive races in the same track, you're going to have more people comingin you're, going to have more money coming in so yeah like. If I want agood chunk of that money, so it's it's such a step ladder that and it keepsincreasing in terms of hosting fees. No, I was just thinking you know talking about numbers, these team. These teams need money tosurvive, and you know the first question that comes to your mind is:Where is this money coming from right? So sponsorship is just one part of howI get my team money, but then, what's my incentive to drive that first I meanit's not just for the sponsors, because my cars on the track Martini orwhatever was the Williams with E. It's getting showed right. We are talkingabout rich and your whatever. So these these other things come from. You knowbeing first for being second, like being there on the podium being thereon the table and the higher you are, the better you make and that's that'sthe gist of folie distinct yeah I mean the sole purpose of participating in everyone is for theprice money. I mean that's what the companies are there for and obviouslyfor the backing lights as well, but yeah money is what the main incentiveis for sure and and like what granpre basically means is grand prize and likethat's, how you know F, one kind of has its origin where like used to havethese. You know individual ground previous es, and there was no FIA.There was no fon at that time and then you would have a prize money and allteams would in a compete for that prize money, and I think at that time onlythe first like whoever comes first would get the price man yon nobody else,but obviously that that was not a sustainable model at all, and so theykind of formed FIA and like kind of standardize,the sport a little which would make things easier for all teams and as wellas if they have you know a governing body. They canhave this pool of money that they collect and you know just distribute ittowards the end of the years. So much do the like top teams on Oh wowyeah. That's that's way high up so think they are. The publicly availablenumbers are up until two twenty ninety or two thousand and twenty, but think what I have is two thousand andnineteen were Ferrari. God all the way up to like two hundred and five millionfor just being on that constructors table. I think frary was second to nineteenninety, so this this might be to thousand nineteen stable. But yeah, soaround two hundred million dollars is what they get just from being high upon that table, but it's the entire gag. So let's say the whole pool issomewhere around one billion. That's that's going to be split into thesetent teams, excluding that the lower two or three teams that just make thesmaller box the the big. The biggest chunk of this price is, as essentiallysplit fifteen fifty, where the first fifty goes to Formula One group andshareholders and the second fifty goes to the constructor and and the team andthere's this finer break down of the entire price price. Many as well. Butthe distinction is, let's say for ARY at the top made two hundred milliondollars, the the team that finishes outside of you know, or top the lastone. Yet something around like ten million just for participating in thetournament, so yeah the devides too high, and thatthat eventually becomes the incentive to for you to keep performing matterYand. They also have certain bonuses in place for certain teams so like, forexample, they have this ponus for the team that wins consecutively. So like,for example, basically Morcote S has been the beneficiary for thisparticular bonus in the past few years, and they also have bonuses for the topthree teams which have been winning the most number of races in the past. Ithink five years, and similarly they have some other kind of bonuses inplace as well, so o they have this...

...long term compensation kind of a thingwith Ferrati, because since Falari is one of the only teams that has beensince the origin of fun, they're kind of rewarding them for their loyalty andother teams, which have been there for a very long time, which are MC, Larenand Williams, also received some. You know heritage bonuses because of thesame thing yeah. So even though marcites one the racethat your Friday owned moon them because raris been in this port longer,okay, I alway only the only team, that's never left the sport and comeback, and it's like it's always been there. Since this art of the Scot YeahI mean you could say that Ferrari is, you know, Frari is fun and one is for Thady,because what? What does anyone think when you know you say if one they thinkabout a red car like that's, that's the first thing that comes to your mind, soyeah, Oh cool, yeah, that's IT's true! I thought of it like that. Now, there's this other part, which isan incentive for the drivers to and and that's why you have thedriver's point stable as well and then at the end of the e R again, with thoseother bonuses and stuff the drivers crist money is distributed, so I think,like two thousand and twenty, so Astin were to man like some Eran, like fivehundred and eleven million dollars. If this article from the Internet is to bebelieved and J right behind him was Lewis four hundred and fifty milliondollar, so is that the price man that they got to the team? I guess that'swhat they mean. I I guess so eh all the time money I guess M, but yeah. So it's an incentive for boththe constructors and the drivers at this point where these price monies and theirindividual sponsorship is what gets the show running, and I think also the prize money likekind of has a minimum guarantee component to it for each team, as wellas component, which is based of theconstructor stable, because at the end of the day the economics have to workout like unless teams aren't guaranteed that they are going to make at least xamount of money. You know it doesn't make sense for these smaller teams toeven participate at that point, because if you are, you know putting in oneforty five million dollars or something like that, which are you know,literally scraping by you. You know you're, just like begging sponsors foreach time that you're getting and if you can't even you know, break even it just doesn't make sense for anybodyto Encarta pate. So what basically happens is that the prize man need thatwe have is kind of split which is going to be like distributed with the withinthe teams is split into two parts where one part is fairly distributed equallyto all teams, and the other part is, you know proportional to your rankingin the table cool. Thank you so much. This wasreally helpful. I I personally learned a lot and a teeth. I think he just gotstarted. Yeah Yeah. I think you are you signing up for went years. You speakexactly and that Owatin Tab is that and another Da is trying to survive. No, that's that's the rest of my day hundred percent, and this show itselflike. I think we should can give a couple of minutes, but, like the showitself, it's so dramatized, so it it is like a reality show. Almost all races are like that though, butMaku was like that for sure and there's so much drama even around the spot,like even when the race is not going on. There's always some drama going on.Look, for example, what our casted mentioned earlier about the bendingslike teams are, you know, complaining to a fire about each other, and it'slike you, a bunch of school kids fighting in the school yard yeah, but they are again. Thank you, Saran.Thank you, a cash for talking, and what will do is if it is, anyone isinterested in agone. Amazing show check o their podcast with called Fan. Ansection will link it on the bio below an yeah just reached out of them. Ifyou are interested in Avon as well, it was a pleasure of being him and thankyou for having US ye. Thank you. Thank you guys. I.

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