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.

The Future of FOTA

December 7, 2011

The news that both Ferrari and Red Bull Racing are planning to withdraw from FOTA has led many to suggest that this is the end of the team’s association. Clearly it is better for the teams to act as one if they wish to get a bigger share of the FOM revenues, but as seems to always happen, self interest is the decider at the end of the day. They are all agreed that they want to reduce costs – doesn’t any organisation? The important question is therefore how do you do it? When you’ve got your own bespoke test track then a ban on testing means you can’t use one of your key assets to improve your performance, so you can see why Ferrari would feel that being in FOTA isn’t in their best interests, RBR are in a different situation where their business model is a very different one to the other teams, so, again it may make better sense for them to go their own way. Of course we also have HRT who were the first to leave FOTA back in January 2011. The other reason rumoured for the departure of Ferrari and Red Bull Racing is the issue of third (or fourth) cars where constructors are allowed to sell/loan their cars to other teams, a practice well used in the 1950 and 60s. Stirling Moss’s legendary victory for Lotus at Monaco in 1960 was not achieved for Lotus Racing, but for Rob Walker’s private team using a Lotus 18. This is an issue which FOTA has been divided on and it could be argued that building more cars would effectively reduce the costs of certain teams such as Ferrari and also for RBR, whose original concept was to provide cars for Scuderia Toro Rosso. It’s just a very different way of achieving the same objective.

However regardless of the reasons for Ferrari and RBR to leave the team’s association, does this spell the end of FOTA? As history has a habit of repeating itself, it is interesting to note that in the controversies around previous Concorde Agreements, there were three teams who were united in refusing to sign up to the fourth agreement which was due to run from 1997 to 2002. They were McLaren, Williams and Tyrrell. In many ways it was this stand that led to the financial demise of the Tyrrell organisation, a team who had dominated F1 in the late sixties/ early seventies. Eventually a revised, fifth, agreement was drawn up which included the three teams and was to run from 1998 to 2007. The current (sixth) agreement is to run until the end of 2012, and this is where the negotiations are focused. The point of history is that the three teams who resisted the fourth Concorde Agreement are very much at the heart of FOTA today, McLaren providing the chairman, Williams a committed participant and the team that was originally Tyrrell Racing has now morphed into Mercedes GP (sorry Mercedes AMG GP!), via spells as British American Racing and Honda, with senior management team Nick Fry and Ross Brawn very much committed to FOTA. So even if FOTA doesn’t represent all the F1 teams, it may represent a significantly powerful voice that can influence the terms of the seventh Concorde Agreement, if it holds together.

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.

Force India could be one of the teams looking for a name change. Photo: Jenkins, Pasternak & West

The commercial rights for Formula 1 are held by Bernie Ecclestone’s Formula One Group which is owned by CVC Capital Partners. I’ve heard on the grapevine that the new Concorde Agreement (the one that all the teams are currently focusing on to carry on from 2013) is likely to stipulate that any team using the terms Formula 1 or F1 in their name will be required to pay a licensing fee to FOG. A quick review of the full names of the teams on the official F1 site shows that this could effect ‘Mercedes GP Petronas F1 Team’, ‘Renault F1 Team’, ‘Force India F1 Team’, ‘BMW (yes it’s still there!) Sauber F1 Team’ and ‘HRT F1 Team’. The implications are that if a team wants to avoid paying significant sums to FOG then they may need to come up with a new name before 2013.

All of this suggests (as previously blogged) a tightening up of FOG’s position on the rights to use and promote the F1 brand and use the paddock area, for example the team’s having to remove their tractor units from the paddock if they had decals of brands which had not paid to be advertised in the paddock. Perhaps I need to look at renaming my blog?

WilliamsF1 Flywheel based KERS system may become standard in 2013

WilliamsF1 Flywheel based KERS system may become standard in 2013

At the meeting of the World Motorsport Council on 21 October 2009 the proposals put forward by the Environmentally Sustainable Motor Sport Comission (EMSC) were supported. These proposals were significant in that they made an unequivocal statement that ‘Motor sport must move from a power per unit.. as basis for engine performance regulation , to one of power per unit energy.’ In short this means that rather than defining engines in terms of volume or rpm, they will, in future, be defined in terms of brake horse power (bhp) per litre of fuel. They also state that it will be necessary to limit the amount of fuel/energy consumed: so we may go back to the days in the 1980s and early 1990s when F1 cars had a fuel capacity limited to 195 litres and we had cars running out of fuel on the last lap – some of us remember when victorious Nigel Mansell gave Ayrton Senna a lift on (yes on, rather than in) his Williams back to the pits during his celebration lap after Senna’s car had run out of fuel at the end of the 1991 British Grand Prix.

The other interesting note in the EMSC proposals relates to KERS systems: ‘Energy consumption and CO2 emissions should be regulated on an onboard energy reservoir to wheel basis’. This implies that although KERS will not be used in 2010 it is planned to reintroduce it, potentially on a single spec basis to save cost. Later in the document they make the statement that ‘Technology such as fly wheels reducing dependence on batteries and concentrating on ICE load shift [ICE = Internal Combustion Engine I think!] proves to be the most promising way forward.’ Good news for Williams who have been developing their own flywheel system as a potential spin-off from the F1 operation.

However, there is no mention of when or how any of these proposals will be implemented. Clearly they will be on the table for the next Concorde agreement to run from 2013, it will be interesting to see whether or not they really do come to fruition.

CIMG7364

Will BMW Sauber become Lotus Sauber?

Putting the Renault situation to one side, Max Mosley made some interesting comments related to the final place on the 2010 grid during the Monza race weekend. The withdrawal of BMW and the failure to find a quick buyer for the BMW/Sauber team before the Concorde Agreement was signed meaning that an additional place has become available.

 Mosley is quoted in Autosport at the weekend as saying that they now have final offers from the ‘three most serious teams’ and that following due diligence they will select one with an announcement being made early this week. He also confirmed that BMW Sauber were one of the three. There is speculation that the other two are Spanish based Epsilon and Norfolk based Team Lotus.

 The odds on favourite has to be BMW Sauber as they are already up and running with some very impressive facilities at Hinwil in Switzerland, and of course they have all the infrastructure and capability to run an F1 team. There is a link between the rumours around Lotus and BMW Sauber – Petronas. Petronas are an oil and gas corporate who are wholly owned by the Malaysian government and currently sponsor the BMW Sauber team. Group Lotus are owned by Proton who produced Malaysia’s first car and obviously have strong links both with Petronas and the Malaysian government. It is not inconceivable that if a rescue package for BMW Sauber is found it would involve capital from Petronas and perhaps also Proton and could therefore end up as Lotus Sauber or perhaps just Lotus.

If this is the case the interesting question is which engines will they run? With Mercedes likely to have their hands full – it could be that Ferrari or Renault get involved, or of course it could be Cosworth. In his interview Mosley took the opportunity to say that he felt that the Cosworth engine may cause a few surprises in 2010, and of course if Cosworth have four customers rather than three it makes their programme even more sustainable. But to those of us who can remember the originals, the idea of a Lotus Cosworth racing again in F1 does conjure up some very evocative memories.

Recent suggestions published in German’s Auto Motor und Sport suggest that the basis for cost reduction in F1 may be based around employee numbers. This makes a good deal of sense as it is the one measure that allows direct comparison with the levels of the early nineties, which is the era the F1 teams have agreed to base their cost targets around.

A 1992 Williams FW14B. Will they be able to build the 2010 car with the same budget?

A 1992 Williams FW14B. Will they be able to build the 2010 car with the same budget?

In a previous post (The F1 Grid for 2010 – An Almost Final Version, 24 June 2009), I noted that in 1992 Williams employed 190 people whereas in 2008 the number was 540. The suggestion published in Auto Motor und Sport is that the number of employees travelling to races will be limited to 45 (which is not a huge decrease over the current levels) and factory based personnel will be reduced to 350 in 2010 and 280 in 2011. If these figures are in any way accurate they still have a long way to go to achieve their objective of getting back to the expenditure levels of the early nineties.

The FIA had set itself the target of 13 teams to compete in the 2010 World Championship. The withdrawal of BMW from F1 and Peter Sauber’s failure to put together a package to allow the former BMW team to sign the new Concorde Agreement has meant that a space now exists for 2010.

So who will fill it? Well clearly there are hopes from Hinwil in Switzerland that a Sauber based package will be put together, but there is now no guarantee that this would be accepted by the FIA. There are also some strong contenders from those who were unsuccessful in their proposals back in July 2009. Many commentators were surprised that David Richard’s Prodrive based proposal and Joan Villadelprat’s Epsilon Euskadi project were not accepted by the FIA. Both Richards (ex Honda & Benetton) and Villadelprat (ex Tyrrell, Benetton & Prost) know how to run F1 teams, as of course does Peter Sauber. There are, as yet, no details from the FIA as to the process or the timeframe for selecting the thirteenth team, but if the team is going to be up and running for 2010 it needs to be soon.

David Richards enjoying a cigar, Imola 2004

David Richards enjoying a cigar, Imola 2004

In a previous blog I described BMW as the Honda of 2009, in that it was Honda’s disastrous 2008 season that caused them (or gave them an excuse to) pull out of F1 at the end of that year. BMW have also had a dreadful season which is a major reason why they have taken the decision not to sign the new Concorde Agreement and to pull out at the end of 2009.

However Honda’s approach appears to be have been far more supportive to the F1 team than BMW. Honda sold the team to Ross Brawn and the management team for a small token sum and then gave them something in the order of $100 million with which to keep the team going and to find new financial backers. A key part of this was the agreement, involving FOTA, that the ‘new’ team would have the benefit of prize money/ media royalties which would have been due to Honda, should they have continued, in other words Brawn were being treated as an existing team rather than a new entrant. The recent statements by former owner and founder of the Sauber team which BMW acquired, Peter Sauber, suggest that as a deal going forward has not been found before the new Concorde Agreement has been signed (due, in Sauber’s view, to the high demands of BMW) then the team cannot be treated as an ongoing team as was the case with Brawn/Honda, this means they have lost many millions in income which would have made the saving of the team more likely. Of course there is still a good chance that Sauber will race next year in some shape or form, what is clear is that it looks like BMW are taking a far tougher position on the rescue of their former team than Honda did with theirs at the end of last year.

Peter Sauber outside the BMW Sauber Motorhome, Barcelona 2007

Peter Sauber outside the BMW Sauber Motorhome, Barcelona 2007

Follow

Get every new post delivered to your Inbox.

Join 1,203 other followers