Few sports series are as financially demanding as Formula One auto racing. Team expenses come to an average of around $250 million every year, fueled by salaries for superstar drivers and races in all corners of the globe, from Singapore to São Paulo. It is no surprise that F1 is dominated by automotive heavyweights, but if you think it’s no place for a family business, you would be very wrong.
The 2017 F1 season was famous for being dominated by Mercedes for the fourth year running. It was followed by archrival Ferrari, with the team owned by energy drinks titan Red Bull one spot behind it. However, in fifth, one place ahead of the team owned by French automotive giant Renault, was Williams, a British outfit that has managed to stay in family hands for 40 years.
With nine championships under its belt, Williams is the second-most successful team in F1. Some of racing’s most famous names, including Damon Hill and Nigel Mansell, have contributed to this tally and built it into one of F1’s powerhouses. It started with just 17 staff members in 1977 but had 719 by the end of last year. One thing that hasn’t changed in that time is control of the company.
Sir Frank Williams founded the eponymous team with its former engineering director Patrick Head and still controls it through his 51.3% stake. However, the team isn’t just owned by the Williams family; it is operated by them, too. Sir Frank is the boss, and his daughter Claire is the deputy team principal, which differentiates Williams from every other outfit in F1.
“Being a family business at the very pinnacle of technology and sport makes us a great partner for brands,” said Williams’ skilled chief executive Mike O’Driscoll in an interview with this author for Forbes last month. O’Driscoll is an auto industry veteran who started as a business student with upmarket brand Jaguar in the 1970s and worked his way up to becoming its managing director in 2007.
Over the following four years he revitalised the Jaguar brand, and oversaw the introduction of an all-new product line-up, including the launch of the award-winning XF, XJ, and XK models. He led the early development of the acclaimed F-Type sports car and presided over the sale of the company from Ford to Indian conglomerate Tata.
O’Driscoll stepped down from his role at Jaguar in 2011 and joined Williams as a non-executive director in the same year. He took over the driving seat two years later and in 2014 helped Williams land an estimated $25 million title sponsorship deal with drinks brand Martini which has poured fun into the team as Forbes has reported.
This year construction equipment manufacturer JCB and aerospace firm Bombardier joined Williams’ roster contributing to its revenue for the six months to 30 June 2017 rising by 7.4% on the same period the previous year. It hit $115.7 million (£85.9 million) and was reportedly also boosted by a payment of around $13.5 million (£10 million) from Mercedes for Williams allowing its driver Valtteri Bottas to join the team this year.
He was replaced at Williams with 19 year-old Lance Stroll who partnered F1 veteran Felipe Massa and scored an impressive 40 points as well as one podium place at the Azerbaijan Grand Prix.
This followed a strong 2016 season when Williams made an underlying profit of $20.9 million (£15.5 million) on revenue which accelerated 33% to $225.6 million (£167.4 million). It largely comes from three sources – brands which work with its engineering division, prize money and sponsorship. O’Driscoll is well aware of its USP to brands.
“What makes Williams stand out for partners is our racing attitude, our iconic sporting heritage, and our commitment to being the fan’s team, and we do that by constantly bringing the fan into the sport. We have a 20 million plus global fan-base, and believe in keeping them at the heart of the sport. A great example is the unique free-of-charge event we held earlier this year attended by more than 50,000 fans, and we even had two fans win a competition to sleep in our garage the night before the British Grand Prix as part of a unique Airbnb Williams Martini Racing experience.”
This fan friendliness and heritage aren’t the only assets in Williams’ arsenal as it also benefits from transparency. In 2011 it became the first listed F1 team and a total of 24.1% of its shares are floated on Frankfurt’s junior exchange. Sir Frank’s stake gives him control whilst 3.6% is held by an employee trust with 9.3% in Head’s hands and 11.7% owned by American investor Brad Hollinger.
It is a powerful combination of history, stability and transparency which is rare in any sports series, especially one as cutting-edge as F1. This high-octane association doesn’t just have a halo effect it drives revenue too.
The Williams Advanced Engineering (WAE) division bills itself as providing technical innovation, engineering, testing, and manufacturing services to a range of sectors from civil aerospace to defence and energy. In short, it works with brands to bring technological developments from F1 to other industries and it is as innovative as they come.
As Forbes has reported, WAE has partnered with supermarket chain Sainsbury’s to develop an aerodynamic device, resembling the wing of an F1 car, which clips to refrigerator shelves and channels the flow of cold air onto the products. In July WAE also announced that it is working with British company Advanced Healthcare Technology to create a capsule, called Babypod, which is inspired by F1 driver safety systems and is used as emergency transportation for new-born babies.
“Our advanced engineering business is increasingly appealing to partners who want clever, agile innovation to support their own business objectives,” says O’Driscoll.
“Chief executives and chief marketing officers see us as a progressive business partner that can help them drive growth through our leading position in elite motor-sport, through our fan-base and through our advanced technology business, offering innovative programs that drive efficiency and performance.”
It has attracted a suite of blue-chip sponsors to Williams. Many of them based in the United States as it is one of the few teams with a commercial manager responsible for the region. O’Driscoll explains that Williams “have a team dedicated North and South American team, led by Justin Mountstephens.” The sponsors which come from the country include IT consultancy Avanade, anti-virus software developer Symantec, fitness equipment manufacturer Cybex and paint supplier PPG. O’Driscoll says that although the allure of F1 is a driving force for them the decision ultimately comes down to profit.
“The emotional case for bringing a brand and its customers into the elite world of motor racing is still very powerful. Formula One symbolises prestige, style, speed and technical excellence. The sport is truly global, with only about 20 races each season, and each race is a truly unique and high-profile experience.
“We also know that any partnership must be based on a solid business case that demonstrates to prospective CEOs and CMOs, a genuine return on investment. We continue to innovate, to give our partners the platforms, content and creative assets to maximise value for their businesses and connect to their consumers. We ensure we have the data to provide the essential metrics that businesses need to make the rational case for partnership, as well as the emotional. Whether it’s building brand awareness and consideration, or creating money-can’t-buy business-to-business hospitality events, we believe a partnership with Williams can support the strategic objectives of businesses today.”
All that is missing is a return to the sharp end of the grid. Williams last won the F1 championship in 1997, but by 2006 it had slipped to eighth in the standings unable to compete with the blockbuster budgets of teams owned by manufacturers like BMW, Honda and Toyota.
Worse was yet to come as Williams finished just ninth in the standings in 2011 with five points. The following year it won its first race since 2004 but this proved to be a false dawn. It went on to suffer its toughest season yet in 2013 and scored points on just two occasions. Since then it has taken decisive steps to reverse this decline.
The first came when Claire was promoted from marketing director into the role of deputy team principal in March 2013. She knows the team from the ground up and soon put this knowledge to good use. O’Driscoll took over the wheel three months later and the team launched a new driver line-up to boost its chances on track.
It paired Bottas with Massa, an 11-time Grand Prix winner with Ferrari and very nearly champion in 2008 when he missed out on the title to British superstar Lewis Hamilton by a single point.
Bottas, a product of Williams’ young driver programme, joined the team during its difficult 2013 campaign. The Finn had two victories under his belt at the prestigious Masters of Formula 3 and won the 2011 title in F1’s feeder series GP3. However, Williams needed more than new drivers to complete its turnaround.
O’Driscoll also made a significant appointment to the engineering department in July 2013 when Pat Symonds, who had worked on four championship-winning F1 cars, became the team’s chief technical officer.
It was too late for Symonds to have an impact on the 2013 car so instead he focussed his attention on the following year. This offered greater opportunity for improvement as F1’s 2.4-liter V8 engines were replaced with more environmentally-friendly 1.6-liter V6 turbos.
It levelled the playing field as none of the teams had experience of the new engines. Williams chose to get theirs from Mercedes and it was a smart move as the engine has dominated the grid. In 2014 it powered Williams to third place and although it has since slipped two spots there is light at the end of the tunnel.
“Elite sport is challenging in almost every sense. Formula One demands the highest possible performance from engineers, drivers, mechanics and everyone behind the team – and that’s why we love it. Our race performance hasn’t reflected the potential of our car this year, but these setbacks motivate us to work smarter and harder in the future,” says O’Driscoll.
When Bottas left for Mercedes the team’s legendary chief technology officer Paddy Lowe went in the other direction and replaced Symonds. Lowe masterminded Mercedes’ four championships and although he started too late at Williams to affect the outcome this year the team is in pole position to improve under him in 2018.
Stroll, the son of a Canadian billionaire, has surpassed expectations, and still has room for improvement as he only has one F1 season under his belt. Williams also has an opportunity to take on new talent as the 36 year-old Massa is retiring with the contenders to replace him including Russian driver Sergey Sirotkin and Poland’s Robert Kubica who had a successful career in F1 until he was injured in a rally accident in 2011.
“Watching Lance develop this season has been very rewarding, and vindicated our belief in his talent – it’s worth remembering he is still only 18 years old, and has set new Formula One records in his first season,” says O’Driscoll. “We put a new technical team in place at the end of last year, under multiple world championship chief technical officer Paddy Lowe, and we are confident we will see our new engineering group make a major step forward next year.” With just over three months to rev up performance before the start of the season the race is already on.
