So after a great start to the 2012 season the F1 teams have left Melbourne and are on their way to (or have already arrived in) Malaysia. Aside from the racing, which is sometimes more interesting than the politics of F1, is a recent piece on the Autosport website by two well connected F1 journos: Jonathan Noble and Dieter Rencken. The piece is significant as it suggests the underlying reason as to why both Ferrari and Red Bull Racing left the team’s association: FOTA.

One of the perpetual tensions between Bernie Ecclestone’s Formula One Management (FOM) and the F1 teams, is that the teams feel that they are not receiving their rightful proportion of the media/ circuit revenues – as they are a key part of the show – and Mr E points out that they are taking none of the risk in running races and securing media deals and therefore do not deserve a more significant share of the benefits. The indications from the Autosport piece is that this could be the start of a process where some of the teams actually end up taking a stake in the commercial side of F1. They speculate that Ferrari shares could be transferred to provide them with a stake in the sport – you may have seen that the Lehman Brothers $1.5billion stake in F1 is up for sale, so ‘go figure’ as our American cousins like to say.

While the Autosport piece makes no direct reference to Red Bull Racing, or their owner Dietrich Mateschitz, acquiring a stake, they do mention RBR in the same piece with a quote from Christian Horner, so there is a certain amount of implication by association going on. An investment by Red Bull would make a lot of sense as Mateschitz currently owns two teams (RBR and Toro Rosso) and so, you could argue, is more exposed than individual teams and could therefore, like Ferrari, see the sense in acquiring equity in FOM. This provides a rather persuasive explanation for why they left FOTA, as presumably this placed some restriction on their flexibility in dealing with FOM, which could involve a range of issues, including share swops or buying shares for cash. Of course all of this is pure speculation at present, but I suspect the story will unfold simultaneously with the negotiations for the Concorde Agreement. I hope that the politics etc. don’t become more interesting than the racing, because I hope the racing will be fantastic this year, but I suspect that we will have a fascinating sideshow evolving that will certainly bring about some different arrangements than we have seen in the past. Don’t expect more of the same.

After dropping rather a lot of hints, I received the Senna DVD for Christmas and enjoyed watching it in between various helpings of turkey and Christmas pudding. It was certainly an outstanding film, recounting the story of the Senna versus Prost duel simply by using film clips and interviews. It was also good to see a clip featuring a rather younger version of my co-author Richard West announcing Senna’s arrival at Williams back in 1994.

I am also looking forward to the much-heralded ‘Rush’ to be directed by Ron Howard: Richie Cunningham from Happy Days and director of Frost/Nixon; Da Vinci Code and A Beautiful Mind, amongst others. The film will, I understand, be a dramatisation of another epic F1 duel, that which took place between James Hunt (McLaren) and Niki Lauda (Ferrari) in 1976. It is rumoured that Russell Crowe will be playing Richard Burton, who really did feature in Hunt’s life at the time – I wonder if Tom Cruise will be playing Bernie? One of the contrasts between the Senna vs Prost and Lauda vs Hunt battles was that Lauda and Hunt actually got on very well off the track while fighting for the championship on it – both of them spoke their minds, regardless of political niceties, and both recognised the other as a kindred spirit. Given the early publicity surrounding the film I was rather amused to see that the former editor of BusinessF1, Tom Rubython, had undertaken a wonderful bit of opportunism and followed up on his biography of James Hunt ‘Shunt’ (Btw if you want to read about James Hunt his ‘official’ biography by Gerald Donaldson is outstanding), with a book on the battle between Hunt and Lauda entitled ‘In the Name of Glory – 1976’. So we now have the book as well as the film, but it isn’t the book of the film and it won’t be the film of the book, but probably most people won’t know and won’t care  – timing is everything.

Apparently an exchange of views has occurred between Bernie Ecclestone and Lewis Hamilton regarding the choice of management Lewis made, following his split with his father Anthony, back in 2010. Bernie having the view that it would have made more sense for Lewis to stick with his father, and Lewis declaring himself very happy with his move to Simon Fuller’s XIX Entertainment.

The subject of driver management in motorsport is an interesting one. There have been various forms of ‘manager’ over the years, the fact that Bernie is commenting on Lewis’s management is germane as he began his involvement in F1 as a driver manager, first advising Stuart Lewis-Evans in the 1950s and then with Jochen Rindt in the 1960s. Here the focus was very much on negotiation and contracts, something that Bernie, as we now know, had a bit of talent for. These tend to be independent managers, focused on motorsport who are directly advising one or several drivers and who certainly tend to be with them at races. They have often moved into management either from being a driver, or more often when they supported the driver at an earlier stage in their career. Examples would be David Robertson who looked after Kimi Raikkonen and Jensen Button, Martin Brundle looking after David Coulthard and Willi Weber with Michael and Ralf Schumacher.

Today it is very much the norm for drivers to have their own managers, effectively managing their financial affairs and negotiating on their behalf, although there are still one or two who like to handle things themselves such as Gerhard Berger and current world champion Sebastian Vettel. At the F1 level there are not often the close family relationships between driver and manager, such as that which existed between Lewis and his father, although Mark Webber took things a stage further and is living with his former manager, Ann Neal, and Jean Todt’s son Nicolas was managing Felipe Massa when Todt was CEO of Ferrari, which must have made negotiations interesting. Flavio Briatore may have had to negotiate with himself when he was Team Principal of Renault and also managing Fernando Alonso. So things have sometimes got a bit complicated.

An alternative approach is followed by those who go down the professional sports management route: using a specialist organisation to provide the support, such as the services provided by CSS Stellar which in addition to a range of sports/entertainment businesses includes individual sportsman/woman management.  This was founded by lawyer Julian Jakobi, formerly Ayrton Senna’s manager. As far as I’m aware the first driver to go down the route of using a professional sports management organisation was Jackie Stewart in 1968. JYS enlisted the help of Mark McCormack’s IMG operation, (he of – ‘What They don’t Teach you at Harvard Business School’ fame), which up to then had focused on professional golf players such as Arnold Palmer, Jack Nicklaus and Gary Player. Famously JYS’s first ‘assistant’ ,provided by IMG, was one Martin Sorrell who went on to do rather well for himself eventually becoming chairman of marketing communications conglomerate WPP. Here the benefit of the management company is more geared towards the wider ‘celebrity’ of the driver and makes a lot of sense – as was the case with JYS – if you have an eye on the longer term earning potential of the individual ‘brand’. It is therefore probably too early to say whether or not Lewis has made the right decision in going to XIX Entertainment. However one thing I did find out on a visit to Tennessee was that XIX Entertainment owns Graceland, Elvis’s former residence, I wonder if they’ve now got an eye on a certain property in Stevenage?

The Three Futures of #F1

December 1, 2011

With the 2011 season now at an end the teams are working even harder on their 2012 cars. We are also getting more clarity on driver line-ups, with F1 very much in tune with work practices in general – extending the retirement age with Kimi Raikkonen now returning to F1, this time with Lotus Renault, not sure if he’s having to make bigger pension contributions.

But while much of the media attention focuses on 2012, the movers and shakers: the Team Principals and FOTA, the FIA, Formula One Management and CVC are all focused on 2013. This is when a new Concorde Agreement should come into effect. Recently in the FT, Leisure Industries Correspondent, Roger Blitz aligned the politics of F1 to those of the Eurozone, with an intense battle emerging between the haves (Bernie and CVC) and have-nots (FOTA and FIA) – my definition not Roger’s. The complex web that is the governance of F1 is yet again going to be stretched and rewoven, and currently, no-one is quite sure how this will all end up. Certainly we will see Bernie at his best – he always enjoys a good fight – and will undoubtedly be focusing on divide and rule with the teams, not a new strategy, but always an effective one, but who knows perhaps Martin Whitmarsh and his peers will be able to keep FOTA united and carve out a good result? The key is going to be where the FIA end up. In the past they have traditionally aligned against the teams, but perhaps this time we will see a new permutation? Expect plenty of off-track fireworks during 2012.

However there are those in F1 for whom 2012 and 2013 matters not a jot: for the technical strategists in the teams work is well underway for the 2014 regulations which will require the cars to have 1.6 litre V6 power units and substantial Energy Recovery Systems (ERS) to harvest and reuse the energy to improve performance. The engine manufacturers are well underway with a variety of permutations and concepts and the teams will be keen to see how they can build the optimum package from this new powertrain.

All in all the next few years are going to be a busy time for anyone involved in F1, regardless of whether or not the Eurozone holds together.

The Turkish Grand Prix reaffirmed Sebastian Vettel and Red Bull’s dominance of the season so far, it was an exciting race, but there seems to be some developing unease about the impact of the Drag Reduction System or DRS and the effect it is having on overtaking. The Guardian’s Richard Williams seemed to capture this perfectly with the following tweet: Another hectic GP. But does your heart sing to hear (for example) that Alonso has used his wing flap to pass Rosberg? Mine doesn’t”. Part of the problem is that the DRS provides a differential advantage to one car over another, which means the overtake often looks (as was the case in Turkey) more like someone passing a back-marker than a fight for a place in the race, we certainly did get a lot of overtaking, but perhaps not enough racing.

The other main area of speculation related to Michael Schumacher, who seems to be still struggling to assert himself both as the lead driver in Mercedes and as a serious contender with the current crop of drivers. I was recently going through some old tapes of interviews with some of the senior technical people in F1, and came across one from one of Ferrari’s former technical chiefs, he made some interesting comments on Schumacher: “From a Ferrari point of view I don’t believe Schumacher is so good as a test driver. He is good at setting up the car for himself, but I tell you he is not so good as a test driver because in three years with Benetton the car was not one of the best chassis.” The suggestion being that Michael is great when you develop a good chassis for him to work with and get his own set-up, but if you want to develop the car that is a different story, however given the general absence of testing today perhaps this is a non-issue.

The news that the popular Sam Michael is leaving Williams at the end of the year, along with aerodynamicist Jon Tomlinson, has also had quite a bit of coverage. If you look at Williams’ performance, it really drops off from 2005 after Sam Michael took over as Technical Director, but these things are never as straightforward as that. They also, of course, lost the manufacturer support of BMW in 2005. However, given the focus on aerodynamics I also wonder how much is due to them never having really got to grips with their 60% wind tunnel which came on stream during 2004, they say it’s all about aerodynamics and perhaps Williams have struggled to get their new facility to work as well as some of the other teams. It’s interesting to note that Mike Coughlan, their new chief engineer, is not an aerodynamicist.

Away from the track we have the possibility of a bidder for the commercial rights business of F1 from News Corp. and the Agnelli family’ Exor SpA. This appears to have produced some interesting reactions from Bernie Ecclestone (standard response – it’s not for sale, unless they make a really silly offer) and Max Mosley (News Corp. would not be the right buyer for F1 – something to do with them owning the News of the World). The other interesting issue is the view of the FIA and more particularly Jean Todt (who some believe is supportive), and also the teams – what is their take on a Ferrari connection to F1 ownership (perhaps it just makes their implicit influence more explicit!), and is there a place for the teams as part of the consortia? – historically they have always avoided such commitments. Either way it looks like this has a way to go before it plays out, and throws another interesting variable into the Concorde Agreement discussions.

John Hogan is a man who has seen it all in Formula 1. As a key part of Phillip Morris’s development of the Marlboro brand in F1 he has been behind the scenes of many of the shifts and changes over the last forty years. Having had the privilege of sharing a platform with him in the past, I know he is also pretty clear as to who the most influential people have been in the history and development of F1. In his view there are three: Enzo Ferrari, Colin Chapman and Bernie Ecclestone. Each has had a profound effect on the sport/business of F1 well beyond their respective organisations. Ferrari in building the world’s most renowned motorsort business, capturing the blend between mystique, glamour and the power of racing; Chapman in driving new technologies and commercial opportunities, providing the basis for today’s focus on aerodynamics and the use of commercial sponsorship; and Ecclestone by creating a global media product out of a series of fragmented commercial arrangements between race organisers and teams, which is today surpassed only by the Olympics and World-Cup Soccer, and they occur every four years. The big question of course is will anyone approach the contribution and impact that these three gargantua have had on the development of Formula 1? I don’t have a ready answer, but I think Tony Fernandes could be on the right track.

One of the biggest challenges for global motorsport today is not finding new F1 races, but building the grass roots enthusiasm that underpins the development of talent and expertise that are needed for the future. With purpose built F1 circuits in places like Malaysia, China, Korea, India and Abu Dhabi the problem they face is that, unlike those in the UK, Italy, USA and Japan there is virtually no grass roots infrastructure of racing to support them. The next big opportunity is therefore to embed motorsport in these areas, in a sense to build the foundations under the house, because without this there will be no sustainable future for these circuits.

In addition we see many of the world sports car manufacturers fighting to go even further upmarket. In a market segment which is already well populated by powerful brands such as Ferrari, Porsche, Mercedes and Aston Martin we now see firms like McLaren and Group Lotus also trying to enter this space. Of course everyone wants high value products which can make massive margins due to their brand strength (just look at the success of Harley Davidson as an example of this), but that’s just the problem everyone wants to be there and so the competition is immense, and this of course puts downward pressure on margins. The big opportunity is not to go for the obvious high value end of the market, but the low value, low price segments which has the potential to grow the market and grow the enthusiasm that is needed to underpin and engage with motorsport in emerging markets. That is exactly where Tony Fernandes seems to be heading by linking his F1 project with the Caterham Car company, I think the opportunities here are immense, and it could be that Fernandes is making a small step on the road to becoming the fourth F1 visionary.

I’ve just finished reading Tom Bower’s book on Bernie Ecclestone, one of two recent biographies to emerge on the little big man. I had often wondered why Susan Watkins’ biography of Bernie, which had been due to appear several years ago, had been blocked by Ecclestone, then someone who is savvy in the ways of F1 suggested that maybe he was holding it back in case a less desirable biography came out and this could be used as a spoiler. So we now have Bower’s biography being published and, as if by magic, Susan Watkins book resurfaces, so we have two Bernie’s for the price of one, not bad.

So is Bower’s book the explosive exposé that it claims to be with the title: No Angel: The Secret Life of Bernie Ecclestone? No it isn’t. In fact as you read the book you get the impression that Bower quite likes Bernie, in many ways he is the hero of the story, this is in stark contrast to Bower’s book on Branson which appeared to have a clear agenda to undermine the Virgin founder’s reputation. Not everyone comes out as well as Mr E., the team principals, particularly Ferrari’s Luca di Montezemolo and McLaren’s Ron Dennis, are not portrayed in a particularly positive light. But the biggest casualty is Formula 1, which is consistently misrepresented through a range of the most appalling inaccuracies of any book I’ve read, and that includes a whole list from the Heathrow School of Management. Why on earth Bower, or the publishers, didn’t get one or two people who know a bit about F1 to check over the manuscript is beyond me. Aside from the clumsy interpretation of the technical side of F1, the book is littered with basic factual errors – I’m sure it came as a surprise to Ferrari to learn that they lost Philip Morris’s Marlboro sponsorship in 2007, particularly as they still appear to be enjoying around $100million per annum to this day.

However if you can get past the irritation of a poorly researched manuscript, there are some really good little stories and quotes in here, most of which bring out the intellect and humour of someone who is often greatly maligned in the media. My favourite piece was when Bernie had been asked to provide his first CEO’s report for CVC’s board meeting in Jersey, CVC having just paid $2.5billion for the commercial rights business of Formula 1. ‘Can I send it to you?’ He asked. ‘Yes’, came the reply. A one page fax was then received with the words: ‘There is nothing special to report.’ Priceless.

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