“We don’t need F1 to Fail for Formula E to be Successful” | Jeff Dodds, Formula E CEO (Ep113)

23:43There is a plan at which we think all of a sudden we don't need to put in the same levels of investment. We can run the business at a good profit. But it doesn't feel like that's necessary now. And our investors are saying it's not the right time. They just want to keep investing, grow the business. Do not miss out on the opportunity for growth. Motorsport is riding high right now. The electric vehicle market is growing rapidly. We've got great tailwinds. The one thing you don't want to do is take your foot off the investment at a point where you've got great tailwinds. So that's where we are.

24:14In terms of what you see in profitability and revenues, it depends whether for us how we account and what you see is. If it's race revenues from different countries we race in, whether it's sponsor revenue. So there's a lot of different things. So we're pretty happy that we're growing our revenues. We're reducing our losses. And we continue to invest and take advantage of the growth that's available for us.

24:35Jeff Dodds:Commercially? Yeah. Do you have a group of partners that are, should we say, very much aligned and very closely in tune with what Formula E stands for, i.e. companies that are doing a huge amount in kind of electric green energy space? When you say commercially, do you mean sponsors and partnerships? Yeah, sponsors and partnerships. So I think I said so. From an investor point of view, our primary investor is about 70 % of our ownership, which is Liberty Global. Then you look at our sponsors and partners and you've got a massively wide range, right? You've got ABB, title partner. Then you have people like Saudia, Sabic.

25:12You've got Google Cloud came on recently. You've got Infosys. You've got Tata. Then you have smaller, more consumer brands. So people like Hackett, Antifagasta, the mining company, a really broad range. I would describe them all slightly differently. So they're all in it for a slightly different reason. but what they all have is a focus on technology, innovation, and a kind of predisposition to the energy transition or sustainability. So you look at people like ABB are our title partner. They are an energy business at heart, right? You look at people like Fortescue, a big mining company, but they have Fortescue Zero, which is an arm of that, which is creating green energy, so renewable energy.

25:55Yeah, so they're all in it for similar reasons.

25:57Jeff Dodds:So, I mean, really, looking at the conversation I'd had recently with MotoGP, and you were looking at the conversation geared towards, look, we've got a brilliant set of partners, but they're all very endemic to what we are. Tire manufacturers, you know, to do with bikes, et cetera. But the beauty of the position you're sitting in is, let's just use, if you have some green sustainability underlying everything, brands from every walk of life are focused on developing their footprint within that space. And if this is a great sporting property to go and pair up with and do that, you're in a really strong position.

26:28Yeah. And I would say we have historically more of a reliance on traditional enterprise businesses or B2B businesses, because largely this was a platform for businesses to sell to each other or to share learnings and technology ideas about energy transition and renewable energy. But when you look at the ecosystem today, you've got us as a championship with investors. You've got partners who are very wide ranging. You look at technology partners, people like Infosys, Google Cloud, to kind of big energy partners, people like ABB and Fortescue. You've got airlines, you've got chemical companies, you've got clothing manufacturers, you've got this really broad range.

27:09But then you go into the teams, Porsche, Stellantis, Jaguar, Mahindra, Lola, Yamaha, Nissan. You've got these big, big motor manufacturers. Then you've got independent racing teams. You've got people like Andretti or TWG as they are now, Penske Corporation and Penske Racing, Envision, the big Chinese renewable energy company. You've got a real wide range of racing companies and manufacturers. Then you've got the media partners, you know, whether it's CBS in the US or Roku or whether it's ITV in the UK, CCTV in China, Eurosport. We have then a wide range of media partners. And then we've got all of our suppliers.

27:48So the ecosystem is very big and very broad. But I think you're right. Historically, if you go back 12 years, we had exactly zero fans. The sport didn't exist. There were no fans. You had to start from scratch. So to sell to a consumer business and say, hey, come to us because we can expose you to no fans is not a particularly compelling proposition. So you start with B2B and enterprise businesses because we're starting this thing. It's going to ride the wave of the energy transition. It's focused on sustainability, which is an absolute top priority. Come and be part of a community and meet other like-minded people who do business with each other.

28:29when you've got 400 million fans and a half a billion cumulative tv audience all of a sudden you start to transition into space where it's very compelling for a consumer brand because they get to associate with a forward-thinking next generation sport with a different fan base but a big fan base that's that's when i say we're at this kind of transition point in the

28:49Jeff Dodds:sport commercial and when i say commercial i'm just talking about i said the partnerships yeah one key revenue stream yeah how's the uh experiential ticketing hospitality side let's say the revenue that you generate around the races yeah and again we're we're this is one of the areas we are very different to someone like formula one so in formula one they take a an out-of-town circuit a fixed circuit we're sitting here talking in the uk so for ease i'll use the uk they're at silverstone you know the fans all drive there it's a big weekend experience we're not so we race downtown in the excel you know we'll have 40 50 000 people come over that weekend through public transport because you're on the public transport links a very indoor outdoor racing setup it's a very very different type of racing so our priority i would say we are a sport where the audience is huge on a digital and a broadcast basis and growing but if you're going to build a racetrack in the middle of a city like we do in Tokyo you can't build a hundred thousand grandstands in the middle of Tokyo city that does not work so you might be able to build a grandstand for 10 ,000 people or 20 ,000 people but our model is very different over time we will introduce more fixed circuits partly because of the economics of doing that it's cheaper we don't build racing circuits but also partly because as the cars get faster and faster and faster and they're at that point now you know it's quite difficult to build a racing circuit in the middle of a city for a car that goes way over 200 miles an hour and can get to 100 kilometers 30 faster than the formula one car where why is the model being to build your own racetracks rather than use existing infrastructure i'd imagine the costs associated with that are a significant one on yeah on the line um look i think if you were if you were talking to the founders of the business partly they would say we wanted to take a product to the people, not expect the people to come to see a new product.

30:44That would be one reason. Partly because this was about demonstrating and using the sport as a platform to talk about new energy, energy transition, sustainability. So you want to do that in city centres because it's public transport and there's a casual crowd of people around there that you can educate and talk to. And candidly, the tech, if you go back to the start of the championship, if you used to have to have two cars for a race like a triathlon you used to start in one car halfway through jump into a second car because the battery didn't last for a full race if you took our car you know a start car and put it on a big circuit like a monza in nowhere you might have got two or three laps out of it because the battery would just you know unload pretty quickly so part of the beauty of a city center other than public transport and a new crowd a new audience is the windy nature of the city centre allows you the ability to get the battery charged and to put on a show for 30, 40, 50 minutes.

31:41We're at the point now where we can go to some of these bigger circuits because the technology that underpins the battery and the powertrain is so much better that you want to show a car that goes way over 200 miles an hour. You want to show a car stretching its legs and showing itself off, but you still want it to race for 40, 50 minutes. You don't want it to be over in 10, 15 minutes. So what we can do today, we simply couldn't have done at the start. But you're quite right. From a business point of view, much more expensive to build a race circuit in the middle of a city than it is to go and hire one for a weekend that's pre-existing.

32:17So from an economics point of view, over time, we still want to be doing urban racing. We want to be close to city centers, close to public transport links. But we now have the flexibility to go to fixed circuits. And you'll see it. So you see a couple of great examples would be Miami. We raced at the Harbrook circuit in Miami, which is the Formula One circuit. The MIA, it's downtown. It's in the middle of a city. Good public transportation links. Big circuit, fixed circuit, but it's in a city. Jeddah is exactly the same. You're in the city of Jeddah. You're there on the Corniche. But it's a pre-existing circuit.

32:51We rent a circuit. It's a road style layout. The cars look great on it. We don't have to go and build it.

32:56Jeff Dodds:Where do you feel you're really strong? and where do you feel you can do better? City-wise, location-wise. Well, I always say you want a combination of some circuits that are, well, all circuits need to be road-style circuit layout because if you just look at a big oval track, I mean, that's not our style of racing. So you want kind of these twisty, tight, complex road circuits. From a crowd point of view, we do brilliantly in places like Mexico City. We're a very passionate motorsports crowd. so 40 50 000 people show up to that race sit on the forest soul watch these cars hugely passionate we finished the race they stick around for hours watching the concert and enjoying the food and the culture and the experience we're seeing that happen in san paulo as well we've raced in mexico i think for nine or ten years in san paulo we we're in our second or third but we're beginning to get that sense already that it's it's it's trending in a very similar way obviously motorsport is strong in europe and i think we've raced more in in berlin than we have any other circuits we have a great race set up in Monaco, obviously the home of most women racing on those streets for 92 years, something like that.

34:00We're going to our first ever race in Madrid coming up in a couple of weeks time, already sold out, looks super, super exciting. The one that gets me most excited, and I don't have favourites, of course, but when you can build a circuit in one of the most popular cities in the world, like Tokyo, an incredibly knowledgeable, passionate, technologically biased audience. We go to a night race this year. So imagine the spectacle of racing through the streets of Tokyo under the lights in one of the most amazing night cities in the world. When we launched our first race in Tokyo, I think within half an hour all the tickets had sold out.

34:40It's backed by the Tokyo Metropolitan Government. So the governor's there and the prime minister was there for the first race. And it's just a huge amount of energy and excitement around that race.

34:49Jeff Dodds:what about the media side then because that bit you referenced is is really central to the power that you have yeah media deals of course in sport we know how influential they are and for you here we're talking with you you know as responsible for formulary central yeah how are the media deals set up for you at the moment yeah so we um we're focused on uh reach to start with so again this comes back to the same point about building a fan base we're building a tv audience or a global audience. I think the challenge in sport is often when people talk about media deals, what they really hear is broadcast television deals.

35:27And we look at it much more broadly than that. So I will talk about TV first. So TV, still highly prized, highly valued by sponsors. It's an engaged audience. We want reach. So a lot of our deals are free-to-air TV deals around the world. And we try and do deals with the most compelling free-to-air operators we can find. So as I say, CBS in the US, ITV in the UK, CCTV, which is the Chinese state broadcaster, we have Fuji TV in Japan, Mediacom. I could go around every market in the world, but we have great free-to-air TV offerings in most of our countries. Sorry, just quickly, so I'll just jump in.

36:04Jeff Dodds:So that's, I mean, that's audience and reach over financial. Yeah, because you go to pay TV. Exactly right, and that's a choice you make, but you make it at a point in time. And I think the standard model in TV would be build an audience. Once you've built an engaged audience, then you go to look to do a pay deal if you want to because then you can monetize that audience. It's difficult to monetize something if it's not big. So at the moment, and this is the point about continuing to invest for growth, we're prioritizing growing an engaged fan base and growing an engaged audience. And then there comes a discussion point about the right point at what time do you try to monetize that audience.

36:46But we're not focused on that right now. We're focused on growing that audience. But we're not only doing it through traditional broadcast TV. So obviously, we're a sport born in the digital age. So you look at things like the Evo sessions, and I'm sure we'll come on and talk about that. But, you know, using the power of digital platforms, social media, the influencers who are an amazing group of storytellers, we're building a digital, engaged digital audience at the same time that we're building a broadcast audience.

37:18Jeff Dodds:That's, well, I guess firstly, we're looking at it. You've got commercial partnerships. You've got the ticketing and events, let's just say. And then you've got media. Am I missing anything out there on core revenues for you? Yeah. So obviously, locational revenue. So you go and race in cities. You know, there are cities that pay you money to turn up because if you think about bringing a big sport to a big city, you know, our analysis was a on average, you generate between 50 and 100 million euros of economic value for the cities in which you race, whether that's, you know, a lot of people turn up, they book hotel rooms, the fans come, you go to hotels, you go to restaurants, you go and do other things while you're in the city.

37:53so for a lot of cities there's the opportunity to grow the impact of the city by bringing sporting events so so yeah there's also event revenues that's a big part yeah yeah has anything surprised

38:04Jeff Dodds:you since you come oh my god you kidding me how long we got no give me but i'm always fascinated on that business so you know you come in you've had three years now in the position you've had a wealth of experience across lots of different companies and you then find yourself in a position here where you've got an establishing property with great opportunity yeah but little foundation let me go right back to day one so obviously i came out i was the chief operating officer for virgin media and o2 so i was at virgin virgin media i was there when we pretty much just after we'd founded it actually but i was there in the early days i was there when we sold it to liberty global i was there when we merged it with um with telephonica with o2 in the uk you know these are some of the biggest deals transactions done in the UK.

38:47I was the chief exec of a telco in the Netherlands. So, you know, I would say I was a businessman, not a sports rights holder. Day one, when I walked into this job, and if we have time, I can talk about how I ended up in this job. But day one, when I walked into this job, I remember walking into my office and sitting down, and I'd obviously got my own perception of the business. And I was just looking at what the plan was or wasn't and where the opportunities were and where the risks were. First of all, for the first time that I could remember, I was looking at a list of opportunities that was longer than the risks.

39:26And I'd come out of telco and media, highly mature business, highly regulated, complex, lots of headwinds. and I was staring at a list of tailwinds, the tailwind of electrification, the tailwind of the growth in sports rights, the tailwind in growing fan base. There was just a lot of tailwinds. So I remember sitting there thinking, well, first of all, this is pretty incredible, right? Because I can stare at two lists and try and manage the risk down, but we've got all these great opportunities we can invest in and try and exploit. So that surprised me. In a scale-up business, So compared to a telco, in a telco, I might have got a call, and apologies if people think this is a flippant statement, but if one of my team came to me and said, oh, that hasn't gone to forecast, it's 5 million worse, bit of a shoulder shrug and okay, well, let's go and find some efficiency somewhere else and thanks for letting me know.

40:26So, you know, a five million swing in a scale up sports business is like a punch in the stomach. It's a difficult day at the office. Right. And I describe it to my team as I've gone from something that's not massively exciting, but it's also not volatile in a sense that, you know, there are challenges, but you see them a long way out to a daily game of snakes and ladders. where every day in the business, every day, I'm going to get an email or a phone call or a person walk into my office and it's going to be a ladder and I'm going to feel amazing about it. And every day, I'm going to have the same and it's going to be a snake.

41:08And at the end of the week on a Friday afternoon when I'm driving home or I'm on a plane or whatever I'm doing, providing we've moved up the board, it's a good week. Now, because we have tailwinds, most weeks we're moving up the board. But the volatility and the emotional roller coaster of a smaller scale up business in sport. The other thing I would say is in business, customers are absolutely critical. And in sport, the customer is the fan and the fans are absolutely critical. But the level of passion and the polarizing viewpoints of fans in sport versus business is completely different. And I think whereas I've come from a world where I can listen to a lot of perspectives and they're broadly the same, and then from that you can make a decision that you know on balance is going to be reasonably well received, that is just not the case in sport.

42:05If you listen to everybody's opinion in sport, you would never do anything because everybody has a different point of view and they are all incredibly passionate about them. So I think there's some of the things that feel different.

42:20Jeff Dodds:Brilliant answers. We've spoken a lot about it from what I would class as the central position. Yeah. Teams. Yeah. These teams. Teams are so important in so many ways, it goes without saying. You have the people that are rolling out every single weekend with their different liveries and different owners. Investing their own money. Often personal money if it's an owner. And that is such an interesting side of this. because again we have seen the growth of individual racing assets over the years and they have become i referenced it earlier enormous businesses yeah can we just start what from the manufacturers to um you know getting the drivers in place yeah to the sponsorships to the technical side when you're founding new teams yep what goes into it how is it how has it been putting this this group this grid together so a lot of the hard work done before me right so um back in the early days yeah exactly in the early days that the the founding team and a number of them still around by the way um i chapeau right i took my cap to those guys because that going out and convincing people to spend tens and tens of millions of euros on creating a team in something that doesn't have an established fan base is a is a big sell right um and back in the early days it would have been on the promise of the technology transition.

43:43And now, of course, that's become a reality. So in some respects, it's slightly easier now. So the reminder on the teams for us would be we have six manufacturers in Formula E. So we have, and apologies, there's no reason for the order, Porsche or a manufacturer. Stellantis, and for many people in our world today, that would be DS, Citroen Racing, the brands under the Stellantis banner, but Stellantis. Nissan or a manufacturer. You have Jaguar, who are a manufacturer, so part of Jaguar Land Rover Group. You have Mahindra, the big Indian auto manufacturer. And you have Lola with a technical partner with Yamaha.

44:21So there are six manufacturers. And I might get this slightly wrong, but I think as of today, IndyCar would have two manufacturers. NASCAR would have three. And Formula One had four. I think they might have just gone to five. but basically we have a very strong number of manufacturers and it's those manufacturers that do deals with customer partners as well and I'll just pick one as an example. So you'd have the Andretti, the TWG team, overseen by TWG, also the people behind the Cadillac Formula One team and they are a partner today with Porsche. So Porsche provide the powertrain for them but then they go a bit like an engine manufacturer would work in Formula One.

45:04So we have 10 teams on the grid today. We'll go into the Gen 4 era, I imagine, with slightly more than 10 teams and six manufacturers. And the economics are slightly different between being a manufacturer, because you're investing more money, because you're developing the powertrain, and being a team where you're effectively doing a deal to receive that engine. But your investment is slightly lower. And I say slightly, but slightly lower because you're not having to build the tech. In our world, to be a team in Formula E, you have a cost cap. Same way you have a cost cap in Formula 1. And apologies, I don't know the exact cost cap in Formula 1 now, but I think it's about$220 million, something like that.

45:41Jeff Dodds:Yeah, it's about$140,$50 million. Yeah, something like that. In ours, for a team running two cars, the cost cap is around€14 million. One for€14 million, so€7 million per car. So you're getting two cars in an FIA World Championship with 400 million fans, half a billion cumulative TV audience for 14 million euros a year cost cap. Now, on top of that, they can spend money on drivers. They can pay driver salaries. So they're largely in control of that. But the core running of the team, that's the envelope they're working with them. And the manufacturer cap is 25 million. Every two years. So when you're looking at how much you spend in success.

46:24Jeff Dodds:Is there a link? Yeah. So if you're a team, again, you have to think about why the teams are investing in it. But some teams are getting a big R &D return. So you think about the amount of money a motor manufacturer spends on R &D, on developing powertrains and new cars. And you'll see cars launched like the new electric Cayenne being launched by Porsche. It includes an awful lot of Formula E technology that they've developed on the track in their Formula E team in that car. So for a lot of them, there's an R &D return on investment. For others, it's seen as a marketing investment. So they'll look at it and they'll say, so if you take someone like Cupra, so Cupra are a team in the championship, Cupra-Kiro, they're part of Volkswagen Audi Group, but they're not a manufacturer.

47:05So therefore, for Cupra, it's very important for them that they're getting eyeballs on the brand. They can associate with racing DNA, which, of course, Cupra has lots of. So there are other motor manufacturers in it, Citroën Racing being another one with a customer team, that are very focused on getting a marketing return on that investment. So you've got a combination of R &D, ROI, of marketing return on investment. And then look, for a lot of, historically in motorsport, a lot of privateers, a lot of private owners are very successful business people who love motorsport, they love competition, and this is their way of engaging with their fans, their customers, their employees around something which is the pinnacle of competition.

47:50and innovation. And it's a real passion for theirs. And if you take someone like Jay Penske, you know, part of a very famous racing family in the US, Jay's a passionate racing fan, an extraordinarily successful businessman. And, you know, in spite of running many, many businesses, he turns up at those races himself and puts himself, tests himself at the pinnacle of competition. So that's, for him, it's as much about business as it is about passion.

48:17Jeff Dodds:You very sensitively just dropped in there that there may be more teams joining the group yeah well and i say that's not me being being um uh smart it's that we don't know because we know which manufacturers are signed up for the gem 4 era fully we have an expectation of which teams will sign up for the gem 4 era but until the contracts are signed and in my bottom drawer i never like to be presumptuous but my expectations are there'll be more than 10. we're investors we always love looking at attractive sports properties and assets what's my what's the entry point if i'm yeah if i'm interested in investing in a formulary team yeah what have i got to be looking uh i best to sensibly capitalize on the opportunity oh look i think that it's very different by team so obviously there's manufacturer owned teams um and they may be open to investment they may not be and then there's independent teams and i would say to anybody looking to invest in formulary uh at the team level not the championship level but at the team level then the first port call will be go and talk to the individual teams understand a little bit about how they're financed understand a bit about what their ambitions are and why they're in the sport and then talk to them about whether they're open to investment and i think for a number of the teams you look at for example the kiro team you know the kiro team is is backed by um uh bennett rosenthal david kaplan um two of the founders varies capital management over in the us very very successful business people that are investors in other sports and they look at this and they've seen the upward direction of sports rights and what's happened to sports rights they look at formula one teams they can see what's happened to the valuations of formula one teams and i would say you know shrewdly have got in at a point a transitional point of the sport here um and i would suggest anybody interested go and talk to the independent teams and the customer teams and and get a better understanding of what their investment thesis is.

50:08Jeff Dodds:And there's a pressure on you as Formula E Central to build the overall value of the proposition. If we're looking at Formula 1, it's been a rising tide lifts all boats. Absolutely. What teams were trading for 10 years ago, you know, it's obviously been, and there's lots of reasons for that. Well, let's be clear they were being given away, right? So let's be clear they were trading for nothing 10 years ago. And now, every single one You probably need to spend a billion, right? Yeah, you probably need to spend a billion to get into Formula 1. But even since, you know, post-COVID, so when things like the drive survives and cost caps, etc.

50:33Jeff Dodds:come in, You've seen massive growth. And let's say a team like a Haas or a Sauber, these teams which through no necessarily exceptional performance have now just traded at such a high level because scarcity value is so big. The scarcity value of getting into the club. Do you feel, I don't want to say pressure, do you feel that responsibility? And do you therefore work really closely with the teams, the stakeholders to try and build that collective value? And I think it's beyond responsibility. It's an obligation. right so we we it does this model does not work if the championship grows and the championship grows in value and the teams don't in fact i would i would actually say i don't think the championship can grow in value without the teams that underpin it growing in value that there's a disconnect between the two things so you know we can have a maximum of 12 teams on our grid today That's the maximum cap number of teams under the FIA's regulations.

51:27So that's what we can have. So when that grid is full, you have a scarcity value of the license. As we continue to grow the championship, we race in more places around the world. We grow our TV audience. We grow our fan base. We bring on more partners. The revenue grows. You expect that to translate at the team level as well. Them to bring on more partners, more team sponsors, more revenue, and the teams to grow in value. And that's what we all want. We want an incredibly healthy ecosystem.

51:54Jeff Dodds:sports men and women in this day and age play a huge role in the increase exposure and value of sport now you know people follow teams sorry people follow individuals as much as they used to follow teams yep or more in some cases exactly with that in mind then how do you look at the driver lineup and who have your drivers traditionally been a lot of people you know may not know where how to become a racer and formulary so many questions there yeah sorry about that can you try I can't remember what the first one would have been. Well, the first way you framed it, I think it's really interesting, is the sportsmen and women.

52:27Yeah. Right, so that's the other. The other interesting thing is this incredible rise of the value of women's sport and the interest in women's sport. Now, we have a hypothesis, which is that men and women can compete equally in Formula E. I would argue all motorsport, but I'm responsible for Formula E, so in Formula E. What we would also say is they certainly haven't had the same opportunities to compete equally. So one is we have a huge program, dedicated women's testing, trying to support pathways for women into elite motorsport. And nothing would make me happier than when we see the first women competing against men.

53:06When I say first, it's happened in the past. But when we see men and women competing against each other in an elite motorsport, not in a separate series for the women, but they're at the elite level competing for a world championship. But of course, if you're a team, it's the stopwatch they're staring at. So they're looking for the most competitive people they can put in their cars who are going to give them a chance of winning races and winning championships. So we're providing opportunities for women to prove that they have the potential to do that. And that's what we're trying to do as a championship.

53:40When you look at where the teams, the drivers come from today, I would say, and I might could be slightly off here, but maybe a third to a half of our drivers have been involved in Formula One in some way, shape or form. Jean-Erik Verme, Pascal Verlein, I think Sebastian Boemi. You go through it. There's a lot of former Formula 1 drivers. There's a lot of people that have been on a pathway towards Formula 1. So they've gone through Formula 4, Formula 3, Formula 2, and then maybe haven't got the seat or maybe have decided at that point they'd rather just focus, rather than chasing that, they'd rather focus on a world championship in Formula E.

54:15And you have people like Taylor Barnard, Filipe Drogovic, Pepe Marti that have come from Formula 2. In fact, Drogovic, Formula 2 world champion or Formula 2 champion, sorry. Taylor Barnard, very successful in Formula 2, has come across the Formula E being very successful in Formula E. And then you've got other drivers from other sports. So we have people like Nick Cassidy, very successful motor racing driver, was very successful in Super Formula in Japan, which is single seater racing in Japan. So they all come from different places. We have rookie testing going on. We'll have rookie testing in Madrid.

54:47Porsche, for example, testing Iyan Goyev, who was the Turkish driver who won DTM last year, he'll be testing in Formula E. So what you have is 20 of the best motor racing drivers in the world, bar none. These are absolutely top of the tree single seater racing drivers. Now, the reason they may not be racing in Formula One isn't always, by the way, based on ability. And I think you and I both know that. Often it's about, There are commercial reasons as well. And we're also focused on if you come and be a racing driver in Formula E, we want you to earn a living. We want you to be well paid for taking on a very risky job and racing in a world championship.

55:29I think one of the great challenges of motorsport is if you and I were backing a young person into motorsport today, and again I'll get these numbers slightly wrong but maybe it's going to cost us two to three hundred thousand pounds a year to get them in at the bottom level in Formula 4. Maybe that's going to cost us over half a million for them to be competitive in Formula 3. Maybe you're into two to three million by the time you want to get them into a seat for Formula 2 and in Formula 1 there is a real mixed bag of people that will be well paid and people that are paying well to be in that seat and we just believe that you know for the whole business system to work well that the driver should be there on merit and they should be paid to put themselves in that seat and and take the risks they do and have you seen the brands that

56:24Jeff Dodds:a driver may be the representation they have beyond their performance on the track have you seen that start moving the needle for teams and for you centrally in how they engage yeah again this is really interesting so sport as a platform you know the number i i hear most regularly there are five billion sports fans around the world um so sport is an incredible platform to um to engage people um to tell stories to people to generate revenues from people and part of the sport is the driver and it's interesting in most of them a bit like nfl i guess we're one of the very few sports where the star of the show you barely get to see them because they were a helmet the whole time so drive to survive in formula one did an incredible job of allowing the driver to shine to show their personality some of their vulnerabilities um to be their authentic selves and to create personalities and and brands in their own right in a way that we'd never see seen before.

57:25And of course, we're also trying to do that. We have our own series out on Prime Video on Amazon called Driver. We're doing these influence events where the driver partners with the influencer and gets a chance to coach them. So we're trying to create these opportunities for the driver to build their reputation, build their personalities. And the teams are attracted to different drivers for different reasons. So you might find there's a, for example, you know Porsche are a German brand they have Nico Muller and Pascal Verlein a German racing driver and a Swiss German racing driver and so sometimes brands are attracted by the nationality of the driver because they that gives them a way to connect with their fan base or their you know their their local base others are because of the personality of the driver and arguably you could say you know cupra is a is a great young disruptor um car manufacturer and they have dan tickton racing for them who's kind of the self-described bad boy of motorsport and you know dan has a an interesting background and he's very outspoken and he's a he's a an aggressive driver a disruptive driver he's a challenger driver um uh cupra a spanish brand pepe marty spanish driver so you know different teams pick their drivers on different merits and sometimes it's purely about do we think this is the fastest person we can put in the car sometimes it's a combination of their ability to perform in the car and what they bring as a personality what they bring as a fan base where they're from there's lots of different reasons we've been flirting with it a few times

58:55Jeff Dodds:now i want to ask properly about it it's brilliant when we talk about the ways that sports properties try and bring in new audiences and leverage different content creators and it's always a really hard one because it's okay i want to do it but i also want to you know keep the foundations of the sport you don't want to corrupt the core product but more and more now we see crossover if you want to call it crossover yeah that's right so content creators influencers etc getting involved in sport in different ways and bringing their audiences to it now you have done this in fascinating ways you just mentioned how you've done it and i'd love you to explain properly it's also you know an interesting time to do it because there was a lot of uh social media activity around it very recently in the evo um yeah when in jeda um is he hammond yeah had a crash into the wall thank god she was okay yep um tell me about the thought process behind that and why it's so valuable to be able to leverage that side of you say creator economy audience attention yeah to build the sports value so it goes back to almost one of your first questions which is about the fan base and the crossover of fan base so um we have a younger fan base and a lot of our fan base are new to motorsport so we're introducing people to motorsport for the first time and if i spent my life just trying to convert motorsport traditionalists to come and give us a go one it would be very expensive and two candidly probably quite unfulfilling for us as an organization when we have this kind of really raw green fan potential fan base out there who love sport are interested in tech interest in sustainability interest in innovation but maybe just haven't considered this as something that they'd enjoy watching and we can either go and try and talk to those people directly or we can talk to them through the things they care about and the things they care about are often influencers who they have a connection with last year we did the very first evo session the concept was pretty simple which was we want to expose the sport to a new audience and we're going to get to that audience through some of the most followed people in the world.

1:00:55And we're going to get them to tell the story to their audience in a way that we know their audience connects with. Because no one knows their audience better than these influencers. They're amazing at building communities. Last year, we had people like Brooklyn Beckham. We had people like Sergio Aguero. We had people like Mr. Beast involved in the championship. So the world's most followed YouTuber. And actually, Mr. Beast had a low speed crash last year, which was very good for us. So hundreds and hundreds and hundreds of millions of video views of our sport through the eyes of people that were being given an opportunity to try a sport at an elite level with all the infrastructure that goes with that for the first time.

1:01:41Now, look, what I would say is the benefits were we grew our fan base pretty considerably. And you talked about fast growing fan base. We exposed the sport to new people. we exposed it to people that are potential fans of sport that just didn't know very much about us we did it in in a way that allowed us to maintain our personality and to to be disruptive in the way that we are lots of benefits we've decided to do it again but there were lots of learnings as well right so we learned about where we should do that and how we could do that in a more efficient way we learned that it's not just about reach from an influencer it's about depth of engagement so it's not just how many people follow them but it's the the level of engagement they have with those people um that we therefore we changed our model slightly coming into this year um but i also talk quite candidly about that's not an easy conversation to have with a motor racing team because what you say is what we'd like to do is we'd like to take your very very very very expensive highly tuned and personalized cars for your drivers and we'd like to give it to somebody with a bit of we're going to give them some sim time with you and some racing experience are going to get you to give some coaching then we don't let them take it out and and take it on track and you're talking this clash of cultures because often a racing team is a precision instrument dealing in milliseconds it's run with a military position that that unlike any other sport um all about data all about engineering and then you're saying and we'd love you to work with this person that candidly isn't going to turn up when you think they're going to turn up they're going to come in they're going to have an army of people following them they might not listen to what you're telling them because they're not employed by you and they are they're not so interested in shaving milliseconds off their time or that's not why they're here they're here to create compelling content for their audience so you get this incredible clash of cultures of you know these high precision instrument teams working with these creative powerhouses and storytellers and we're in the middle mediating saying we know it's uncomfortable guys um but this is how we're going to grow a sport and this is going to be good for all of us in the end and look we're very privileged that the people that invest in our sport are investing in formulary because they they see the growth potential and they want to be part of that growth um and they trust us to try these things out and to do them in the right way.

1:04:12And we don't always get it right. But the good news is we also have a relationship with our teams and our partners where we can say what went well, what didn't go so well. Do we want to do this again? If we do it again, what have we got to do differently?

1:04:26Jeff Dodds:Cost caps, going back to that. If you have a crash in a race and there's repairs. Yeah, we cover those. You cover those. Well, we do, but let's not, look, we cover the cost, but we can't legislate for the disruption, right? So if you were Izzy Hammond who crashed a car, Izzy, by the way, daughter of Richard Hammond, if you don't know Izzy, incredible storyteller, very well followed on DriveTribe, which is her channel. Izzy was driving the lowly Yamaha car. She had a crash, pretty high speed crash into the wall, pretty much wrote the car off. So you're into the millions of damage. And that's a cost that the team doesn't have to bear that we do.

1:05:05And it doesn't sit within the cost cab. But I say, the team then has to go and rebuild a car. So, you know, that's a difficult day at the office for the team. It's difficult for us to go and talk to the team about the upheaval for them of having to do it. I guess the small consolation for the team is that there are hundreds of millions of views of that crash and the exposure that comes with it.

1:05:26Jeff Dodds:There's a lot more people that will see that. Exactly. And Izzy won't mind me telling this because she told it and she told it when she came into my office the other day. But, you know, when Izzy had the crash, she went straight to the medical center. I also went to the medical center to go and check in on her and make sure she was OK. And at the time, she was, her dad was obviously very worried, right, because he was watching it live. And he had his own moments in cars. And he was checking in on her. And only when he was satisfied that she was safe and OK, you know, he was, now I know you're OK.

1:05:59Jeff Dodds:That looked awesome, that crash, though. and you know Izzy's first concern as she was laying there was wow that's cost a lot of money and now that poor team have got to go and rebuild the car and of course we're saying hang on forget that for a second we need to make sure you're okay but she'd also say up to that point the most thrilling experience of her life you know getting as a car fan and a motorsport fan the opportunity to sit in one of those weapons that more people have been to space than have sat in you know elite single seater world championship cars and to have the chance to do that and to tell your millions of followers about the experience and what the journey is like um it's great storytelling for the drivers that have driven cross discipline yeah how different is driving a formula e car very very um so it strategically it's very complex so it's not geared in the way that a traditional racing car is geared um and you have the complexity of regeneration in the car so it it's not a lot of people grow up in motorsport they're all complex but a lot of people grow up in motorsport where it simply is go as fast as you can flat out and there isn't the strategic challenge of regeneration and the jeopardy of running out of power and that's what you get in a Formula E car um so if you talk to a lot of the drivers and it's no surprise to me that someone told me it was 10 I I can't check that but the 10 of the Formula E drivers are currently doing the sim work for Formula One teams to help them understand how the battery regeneration process works because they've been doing it for a long time.

1:07:35So I can't say easier or harder. All I can say is very, very different.

1:07:41Jeff Dodds:There's so much, you know, when you go through this that you learn through these types of things. And for me, it's fascinating sitting here because I think you understand the difference of objectives. And we talk about motorsport a lot, as I said, and it's very easy to just slip into the generic ways of thinking. So, you know, just kind of a couple more things. I was interested in bringing it all together and if we're looking to package this up, Formula One, as we said, is a great example. Lots of people reference it. You're in this really exciting stage now. You're building an organization, but you also want to be independent.

1:08:09Jeff Dodds:What are you looking at from something like a Formula One where you're going, they've done that amazingly well. We want to be developing on that and building something similar. And what are you looking at going, do you know what? This is uniquely us. This is how we're going to do it. I always want to protect what makes us unique, not have us fall into the bucket of best of the rest. It's such a timely question that because it really is changing. We're in a moment of considerable change. So there's a lot I look at in Formula One and I think they do it magnificently. So I think the introduction of new media channels like Drive to Survive I think was superb.

1:08:44I think the spectacle they put on across the racing spectacle, the engagement for the fans, the fan villages, the music, the entertainment, the concerts. I think they really have transitioned from a sport to a sports entertainment product. I think they do that brilliantly. their ability to attract partners and sponsors with the prestige and the allure of kind of the scale of the sport, but also the sparkle of the sport. So I think they've done so many things really, really well. So we're learning a lot from them. We're learning a lot from them. On the other hand, some of the things they're doing more recently, a move towards electric power, a move towards city racing, trying to take more of a focus on sustainability, are things that, ironically, I suspect they're looking over the fence and thinking, what are we doing well?

1:09:32So how are we growing as a motorsport from scratch? And what are the areas that we're differentiating on? So what you get is this slight conflation, actually, of two motorsports. So our cars are getting bigger and faster. So we move slightly more towards the bigger circuits. They're moving, trying to build those bigger circuits, but in city locations. We're pure electric power. They're moving from combustion towards a hybrid electric power. So it's really, really important for us that we don't just become two versions of the same thing. Really important for us. And partly that comes down to attitude and personality and fan base.

1:10:09And, you know, we are exclusively the only sport motorsport that can race on all electric power. That's our secret weapon. The most efficient, I'm going to go nerdy for a second, but the most efficient combustion engine in the world is a Formula One engine. And I would imagine it's in the 40 % of efficiency, which means over half of the energy created is lost into the atmosphere, which is why you hear that big growling sound, that visceral noise that people love. Ours are operating in the 97 % efficiency mark. So absolutely, our cars in time are going to be faster than Formula One cars. And that's not because we're really clever.

1:10:52It's because of the physics of the technology that underpins our cars. So I think we're on this really interesting journey where over the next two, three, four, five, six years, the cars are going to be faster than Formula One cars. And we're going to continue, hopefully, to grow our fan base and build a compelling global TV audience. And that's why I talk about we have these tailwinds, the tailwind of technology, the tailwind of domestic road car powertrains, the tailwind of sport. We need to not be distracted by trying to be someone else or trying to be too defensive. I think we just need to be ourselves and keep going on our pathway.

1:11:35and if we're lucky Formula One will continue to go from strength to strength to raise the tide to raise all boats as you said earlier because that's good for motorsport but I as much as we talk about them a lot because they're an easy benchmark and we talk about them a lot because people ask a lot of questions about them to us we have to very much stay on our own path.

1:11:55Jeff Dodds:Do you have an internal struggle as the leader of the organization with a definition of success? We've talked about you can measure it in money you can measure it in fan growth you can measure it in what you class as a product yeah when all of this is going on it's very hard to achieve everything at once yeah just really interesting you know from from your side when you're sitting in that room yeah and no one's knocking on your door and you're and you're at your computer and you're just having a problem thinking about everything is that something that you let creep in and if so like how do you um how do you really focus to make sure that you deliver what you believe the organization needs yeah look i would say your business is complex and i'm not sure there's any business in the world that that has a single measure of success um maybe there are maybe if i thought about it maybe there are but but in our world it it's way too complex to measure success by a single metric and it is the things you've just talked about so we have to look at a balanced scorecard, a kind of a balanced view of success.

1:13:00And that is about growing our investment in the sport. That means more people wanting teams, more drivers wanting to drive, more fans wanting to come and watch. And that is measured through revenues. It's measured through fan-based growth. It's measured through TV audience. I can look at a lot of different metrics that give me a sense of success. And of course, our investors and our shareholders are very focused on revenues and financial success. But in order for the championship to be successful and to grow its revenues and its profitability, we need more investors coming in at the team level.

1:13:32We need more fans coming to watch the racing. More cities need our racing to be there. So it's this, you get an intangible sense of success because of the feeling of scale. You know, lots of businesses in the digital age, you just get a sense of scale. And is it relevant in the moment? And does it have a relevancy that people are excited by. So we have ways of measuring that, but we have a feeling around that. Do you feel like you're relevant? You've got this tailwind, you're growing. And then we have very tangible ways of codifying whether that's happening or not. And that is when you start to look at, can we see fan-based growth?

1:14:07Can we see TV audience growth? Can we see video views going up? Can we see engagement going up? Is there a greater awareness of our sport around the world? Are we getting more calls, more people investing money at the team level? There's lots of tangible ways of measuring it but but there's also in sport a real feeling of relevance i think it's a really

1:14:26Jeff Dodds:powerful way to wrap it up thank you great my pleasure always a pleasure great thanks for having me it's been so great and next time smarten up jacket yeah don't let me down our audience would be absolutely they'll be mortified i mean they're looking at me now going what are you doing i mean next time i 100 will be i'm gonna go drift down next time no well exactly i'm gonna go Well, leotard or racing helmet. Well, leotard. Race suit. Full-blown race suit. But seriously, thanks so much. No, my pleasure. Thanks for having me. Thank you so much to Geoff for joining us. Absolutely fascinating. And I think you'll agree, one of the best speakers we've had on the show.

1:15:02Jeff Dodds:Not only is this hugely insightful when it comes to building a new sporting property, but also on the impact Formula E is likely to have on wider motorsport from a technology perspective. Will this be the next major area of investment in the space with the ability to impact business significantly on and off the track. Let's see. Once again, a huge thank you to Jeff for joining us. Now, if you want to see more from today's show, you can do so by going to YouTube or any of our other social channels across Instagram and TikTok. There are more snippets to share and bite-sized chunks to consume. And whilst you're there, please do like, subscribe and follow the show.

1:15:36Jeff Dodds:As you will hear from your other favourite pods, it makes a huge difference when bringing you the best guests and conversations from the world's sport, which is, of course, our endless aim. thank you again for tuning in and we'll see you next week 25 years ago moneyball revolutionized baseball then football sporting directors learned the collect more data lesson and now mission accomplished clubs have 60 times more information than they did then but here's what nobody talks about these clubs aren't meaningfully more successful at player trading they just have more spreadsheets and departments full of analysts gemini sports is your ai powered command center that works with your existing info, team and workflows.

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