Saturday, May 23, 2015

Hundred million dollar baby

(by Kate Walker 5-21-15)

One hundred million pounds sounds like a lot of money. To most of us, that's because it is. But for those rarefied individuals who are accustomed to negotiating in the tens of millions of any currency, £100 million doesn't go as far as you might like.

A one-bedroom apartment in One Hyde Park, London will set you back over £9 million, but a penthouse in the exclusive address - the world's most expensive residence at the time of development - sold for £145 million despite being an empty shell in need of full refurbishment.

A Learjet 85 is a relatively inexpensive $21 million to buy, although operating costs make the private plane rather less of a bargain. And if exclusivity is what you're after, why not go the full-hog and buy an Airbus A380 for personal use - $300 million for the plane, and up to $200 million for the custom interior.

And then there are the yachts. In Formula One there is a saying which goes 'if it floats, flies, or f***s, rent it don't buy it'. In addition to the potential billions spent on a world class yacht - such as the $4.8 billion History Supreme with its dinosaur bones and 100,000 kilos of gold - there are the staffing costs, mooring fees, and endless tipping of harbour masters to contend with.

All of which is a very long-winded way of saying that while Lewis Hamilton's new Mercedes deal might sound like it involves a heck of a lot of money, there are an awful lot of very rich people out there wondering why on earth a racing driver has accepted a deal that leaves him living so close to the poverty line.

In a casual conversation with a team PR earlier this season we discussed the F1 cliche that driver salaries are not paid in order to get the men behind the wheel to commit feats of derring-do inside the cockpit. Racers don't need to be paid to go racing - they would happily do it for free, so strong is the impulse to drive, to compete, to win.

Instead, drivers are paid for all of the rest of the work that their job entails: the sponsor dinners, the photo shoots, the media commitments, the meet and greets... It is here that a driver is said to earn their keep, for without the fan and media interest that makes teams more appealing to sponsors, competitive budgets are harder to come by.

Like any driver at a top tier team, Hamilton's days away from the track involve a number of corporate or sponsorship duties unrelated to pre-race preparations, or to time spent in either factory or simulator.

In his years with Mercedes thus far, the team have been careful to balance Hamilton's off-track duties with time off for the man himself. A motivating factor for Hamilton's switch from McLaren was said to be the endless list of glad-handing of sponsors that a race drive with the team entailed when the Woking racers were riding high in the championship standings.

An excess of sponsorship commitments (and the rest of it) can lead to burnout, and off-track duties need to be carefully managed to ensure a driver remains on top form throughout the season. But opportunities also need to be managed, and a championship-winning team with the title-defending driver needs to capitalise on their success in order to strengthen the foundations for more success in future.

Details of Hamilton's new contract are confidential, but the Briton's increase in salary - widely reported as a reflection of his market value as defending world champion - will also see an increase in those off-track promotional and media duties so detested by those who would rather spend their days in the thick of competition.


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