Virgin Racing is launched – I told you so!

The original article in Management Focus, Spring 2009

Virgin Racing is actually one of the reasons I started this blog. Back in March 2009 I wrote a piece for the Cranfield School of Management magazine Management Focus (see above). It was at the time when rumours of a buyer for the Honda team were flying around with one possible contender being Sir Richard Branson’s Virgin Group. It was then announced that Ross Brawn and his management group had bought the team, and there was a certain amount of speculation that Virgin had simply been exploiting the publicity opportunity. I, however, suggested otherwise and put forward the view that I felt the ‘new’ F1 with low budgets and a greater focus on alternative technologies and fuels could fit Virgin very well. So I wrote the piece in early March, but by the time it came out in April Virgin had announced their sponsorship of Brawn GP! It underlined the fact that in todays world, if you have something to say you need to get it out there quickly – I wonder if the academic journals will catch on to this idea?

So yesterday we saw the launch of Virgin Racing with an ambition to be the most successful low budget team. I wish them well, and it will also be very interesting to see whether the established teams are able to reduce down to the size of these new entrants over the next few years – the target is for them to downsize by around 66%. Organisation theory suggests it is far easier to start with a new ’small’ business than to try and reduce an existing medium sized one. It will be very interesting to see how this works out, and I’ll do my best to keep my blog up to date on the subject.

Is Schumacher going to really do it?

So will we see Schumacher addressing the press in Mercedes overalls in 2010?

It seems that since the last race of the season quite a few surprises are still in store, with Button getting cosy with Lewis Hamilton at McLaren, Carlos Ghosn deciding that Renault doesn’t want to stay in F1 beyong 2010 and the big one – is Michael Schumacher really going to make a come back with Mercedes?

I have to admit to being gobsmacked by Jenson Button’s decision to move to McLaren, all credit to him if he really wants the challenge of beating Hamilton at McLaren, but considering he was challenged by Rubens Barrichello at Brawn, which was really his team, I can’t see it working out for him. If Schumacher signs with Mercedes I will be equally gobsmacked, not just because world champions making comebacks do not generally work (Nigel Mansell at McLaren  proves the rule, Niki Lauda at McLaren is the exception), but also because he will be ending his cherished relationship with Ferrari, but perhaps like Button, it’s really all about the challenge and knowing whether or not he can still do it.

It would certainly be a great Christmas present for Bernie. So, I’m preparing to be gobsmacked again.

Renault team sold

So who is the buyer of Renault F1?

The BBC have announced that Renault F1 has been sold, with Renault continuing to have a 25% stake in the team. The team will race as Renault F1 in 2010. No details on who has bought them as yet. Currently at Williams F1 running a programme on business lessons from F1 with a delegation from Abu Dhabi, it’s very foggy here! Will update over the weekend.

Winners and losers in the Silverstone deal for the British Grand Prix

It looks like the F1 Paddock will be back at Silverstone next year, I wonder if the pink limo is Damon's?

There are undoubtedly winners and losers in the recent announcement that Silverstone had secured a seventeen year deal to run the British Grand Prix from 2010 to 2028, with a ten year ‘get out’ clause for either party. The first, and most important winner is the British Grand Prix, although F1 is very much a global activity, there is no doubt of the importance of the British Grand Prix to both those teams that reside in the UK and to F1 as a whole. The second winner has to be Silverstone and, in particular, Damon Hill, Richard Philips and their negotiating team, who appear to have built the kind of relationship with the F1 Commercial Rights Holder (Bernie Ecclestone) that had been impossible for previous management teams. The loser is of course Donington, and although Donington was often portrayed as the ‘upstart’ in this story, it should not be forgotten that Donington is a circuit of historic standing – it regularly ran Grand Prix races in the 1930s, and also hosts one of the greatest collections of Grand Prix machinery in the world. It is a tragedy that it is now left disfigured in the initial attempts to rebuild it as a base for the British Grand Prix. Furthermore Donington have also lost the British round of Moto GP to Silverstone which they hosted in 2009.

The interesting question for me is whether or not there has been some kind of government support to enable the deal to be made. Certainly there have been no fanfares on this subject, but given the history between the current government and F1 it is perhaps unsurprising that this is the case – remember the special exemption granted to tobacco sponsorship at the British Grand Prix and then Bernie’s donation to the labour party coming to light? Well even if you don’t, a lot of politicians do! If you were a member of a private club would you commit to making a large pay out for seventeen years (estimated at £310 million) without any guarantee on revenues?

Formula 1 2010 takes shape

Time for Peter Sauber to light up another cigar

The announcement from the FIA that they have written to BMW Sauber confirming that they will replace the departing Toyota team and take the final, thirteenth, place on the grid is great news and evidence that we may be entering a new era of common sense – let’s hope so. The possibility of Peter Sauber’s team (as it was and will be again) not being on the grid would have been a travesty, and although BMW’s failure to sign the Concorde Agreement earlier in the year means that the team would not reap the benefits of their 2009 performance, it appears that some kind of deal has been formed to allow the team to operate on a financially sensible basis.

The announcement of the transition of Manor to Virgin Racing is not a surprise given the various leaks that occurred earlier in the year, but it is nonetheless welcome. I thought the use of Virgin Racing as the brand, rather than Virgin Grand Prix or Virgin F1 is a clever move as it provides more flexibility for where they could go with it in the future – perhaps boats, balloons, planes or even space craft?

The final piece in the jigsaw is Renault. All the signs are pointing to the likelihood of Renault selling the F1 operation with David Richards’ Prodrive the most likely buyer, with the team morphing into Aston Martin at some point. The engine position is less clear and so Renault may remain as an engine supplier, as I’ve suggested in earlier posts – or alternatively may sell the naming rights to Red Bull, or even McLaren. So F1 has lost Ford, Honda, BMW, Toyota, and possibly Renault, and we now have Ferrari, Mercedes and possibly Aston Martin – it’s not all bad is it?

Reflections from Shanghai

Having just returned from teaching on an executive programme in Shanghai – my first visit to the city, two things struck me. First how, despite the internet appearing to be the same as usual, I was unable to blog, twitter or access Wikipedia and second how the internal combustion engine has to be replaced sooner rather than later. I came to the second point after going on a range of exciting taxi trips – the drivers here outshone Rome and Rio for sheer lunacy, but it was the mind blowing number of vehicles that struck me. Shanghai is a huge city – officially the population is just below 20 million, but unofficially probably closer to 30 million, larger than the populations of Australia and New Zealand put together, and it sits in a cloud of permanent smog which will undoubtedly get worse as more of the population acquire cars. Many manufacturers are well advanced in their plans for electric vehicles and it won’t come soon enough for China. I only hope F1 will take a real lead in the new technologies that will propel cars in the future. The sooner we get KERS back the better, as far as I’m concerned. Let’s hope the post 2012 regulations give the engineers the opportunity to develop some creative new ways of powering F1.

F1 Crash Testing Underway

F1 Transporters sighted at Cranfield (but not from this team!)

It’s an interesting question in any organisation, as to who really knows what’s going on? In my time with Massey Ferguson I always found that the lorry drivers were always a useful source of information regarding what was going on at the factory. At Universities it’s the maintenance and security people who have the real story. This morning as I struggled across the School of Management Forum with my carry-on baggage, one of our security guys came over and after a short greeting said, “just to let you know, yesterday there was a xxxx [leading F1 team] transporter at crash test”. Cranfield Impact Centre (http://www.cicl.co.uk/) is part of Cranfield University and one of a number of facilities approved by the FIA for testing the designs of F1 cars to ensure they meet their stringent safety requirements. You can see some downloaded videos of the tests on the site, and Joe Saward also posted on this with some links to youtube: http://joesaward.wordpress.com/2009/11/17/its-the-f1-crash-test-season/ 

I can’t add to what I was told, except to observe that clearly the crash test season is well underway as the 2010 designs are finalised.

I’m off to Shanghai today to do some Executive teaching (not at the F1 circuit unfortunately), so normal service should be resumed later next week.

Campos are leading the newcomers’ race

With news yet to come as to who will get the second Mercedes seat and also Renault’s future intentions regarding F1, attention turns to the ‘other’ race, that of the new teams and how far they are in their preparations. Campos seem to be ahead at the moment as they were the first to announce a driver (Bruno Senna) and have also just announced the homologation of the cockpit structure for their 2010 F1 car by the FIA – which essentially means the car, at this stage in its development, meets FIA requirements for 2010. In a way it is not surprising that Campos are ahead in that they are using the services of Dallara, the highly experienced Italian single seater specialist to design and manufacture their car. Dallara have been involved in F1 back in the 1980s and 1990s and most recently produced Honda’s test F1 car which they were working on before making the decision to initially supply engines to BAR back in 2000.

My guess is that Manor are not far behind Campos and that Lotus and USF1 are up against the clock to get things in place. Of course who ends up being the fastest in the first race could be a different matter entirely.

Has BMW Sauber really been sold?

Mario Theissen (left) with the author (centre) does not regard the former BMW Team as being 'safe' yet

There have been various degrees of disquiet expressed by F1 people relating to the Qadbak acquisition of the team formerly known has BMW Sauber. This inclues a recent article in the Swiss paper Sonntagszeitung suggesting that the deal is close to collapse. In an interview with Autosport.com, former Team Principal Mario Theissen stated that he would not make any decisions related to his own future until “the new team is safe and everything is sorted”. One interpretation of all of this is that the agreement between BMW and Qadbak is subject to the team getting a grid place in 2010, this would make sense from Qadbak’s perspective if they planned to sell the team on and therefore make some money on the deal. All the coverage has suggested that the team was sold unconditionally to Qadbak, but perhaps this was not the case and in fact the deal has not been finalized and will not be until a grid place for the former BMW Sauber team is confirmed.

So which engine will McLaren use next?

Could we see the McLaren and Cosworth names together again?

The general view of the knowledgeable F1 press appears to be that the relationship between McLaren and Mercedes has totally broken down, and that Mercedes will be unlikely to remain their engine supplier for much longer, certainly not until 2015 as their revised agreement states.

So if McLaren do switch engine suppliers who would they go to? Well Cosworth could be a short term solution, particularly if their power unit is competitive, which early indications suggest will be the case. The 2009 Brawn demonstrated that you can still create a competitive car with a relatively late change of engine supplier. McLaren did use Cosworth engines at one time – James Hunt won the 1976 World Championship with a Cosworth powered McLaren, but in the post 1980 Ron Dennis team they have tended to do their own exclusive engine deals such as that with Porsche (badged as TAG turbo), Honda, Peugeot and Mercedes. There are of course other potential sources such as acquiring the Toyota and BMW designs (which are reputedly up for sale at the right price) and making them their own – this would be a big step and considering they are now buying back the 40% Mercedes shareholding it is unlikely that they would want to be extending their finances in this way, although it would be in keeping with their aspirations to build a distinctive McLaren brand to mirror Ferrari. Other options could be Renault, depending on what decisions emanate from Paris over the next few weeks. I have already posted that Red Bull could do a badging deal with Renault to take over their engine operation, so presumably McLaren could do the same, but again this could require extended funding at a difficult time. I think that the one option that can safely be discarded is Ferrari, McLaren are a proud team and even pragmatism has its limits.