12 June 2020

Quarantine is a quick way to crash the Formula One economy

By Roland Grant

In the time of Covid, few industries have taken as big a hit as sport. With stadiums deserted and gyms closed, event re-runs on YouTube and social media gimmickry have scarcely sated a global fanbase hungry for fresh excitement. The Belarussian Football League – for some weeks the only top-tier European league still operating – became an unlikely focus for sports betting websites and internet streaming, reflecting the depth of the crisis.

The 2-metre rule, shop closures, gatherings restricted to six and a 14-day quarantine period for UK arrivals – all have contributed to economic havoc, but the latter poses the greatest threat to the UK’s £24bn sports industry. Restrictions on movement for UK arrivals make it almost impossible to hold major international sporting events, even behind closed doors.

Formula One is in the firing line. While Liberty Media, the multinational that owns the championship, has announced a provisional calendar that includes the British Grand Prix in August, this is still very much subject to coronavirus restrictions, after the Government initially rebuffed F1’s lobbying for an exemption in late May. While there have since been murmurs of the Government ‘rowing back’ on its original stance, no official exemption has been forthcoming, and serious doubts remain.

The British Grand Prix at Silverstone would normally attract around 200,000 spectators over the weekend, providing an economic boost of around £29m to the surrounding areas of Northamptonshire and Buckinghamshire. But even without spectators, the implications of cancellation are wide-reaching and threaten thousands of jobs. Without it, the F1 season, in which nearly half the races have already been postponed or cancelled, looks increasingly unviable. A quarantine period would make it near-impossible for teams based outside the UK, like Ferrari and Alfa Romeo, to take part. The seven UK-based teams would also be thrown into chaos if required to self-isolate after returning from overseas events. Full exemption from quarantining seems the only way to resolve the impasse.

This level of uncertainty is stretching teams to breaking point. The two most iconic British names, McLaren and Williams, face existential threats. McLaren has already cut 1,200 jobs. Williams – a once mighty successful team – have been losing sponsorship money for years due to declining performance, and coronavirus looks like the straw that broke the car’s back: after fifty years as a staunchly independent family business, last month they were forced to seek a buyer. But the impact of the crisis is being felt far beyond the teams themselves. While they alone employ around 6,000 people in the UK, many more jobs are involved in the supply chain of small and medium-sized enterprises (SMEs) producing F1’s specialist parts.

In ‘Motorsport Valley’, an area stretching roughly from Northamptonshire to Surrey where most of these SMEs are clustered, around 4,300 companies employ roughly 41,000 people, creating a combined turnover of about £9bn per year. Without a British Grand Prix, these companies’ existence – and the UK’s position as world leader of the motorsport industry – are severely threatened.

Yet the Government could ease the misery at a stroke. Formula One’s management has created credible plans to hold races behind closed doors while establishing complete isolation for the logistics required to run races – a so-called ‘biosphere’ encompassing the core F1 supply chain. Planes would be chartered to nearby airports, team members would undergo strict testing before travelling then sleep in hotels close to the circuit with no outside contact, and full catering would be laid on at the venue.

Elsewhere in Europe, several races have been given the full go-ahead as governments have officially backed the initiative. The Austrian and Hungarian Grands Prix are now scheduled for early July and seem certain to go ahead. By comparison, the UK’s quarantine period appears massively cumbersome and inflexible and looks set to inflict thousands more entirely preventable job losses.

As the infighting gradually recedes, the Prime Minister’s woolly, inconsistent messaging – such as his ‘conditional plan’ from early May– continues to infuriate both sport’s power-brokers and business as a whole. But Formula One Management’s ingenious strategy offers Boris a welcome, low-risk opportunity to save face. Now that teams are capable of isolating en masse, exempting them from quarantine and holding the British Grand Prix behind closed doors would pose a minimal threat to health. Backing this plan would also send out a strong message that the Government has finally grasped the need for a nuanced approach to revive crucial industries on the brink of collapse.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Roland Grant is a business strategy consultant specialising in the sports and media industries.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.