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 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.

I was intrigued to read the interview that Bernie Ecclestone gave to the Telegraph Newspaper earlier this week. It seems to suggest a trend towards openness about dealings within F1 and may also be part of a public relations push to present CVC Partners investment in F1 in a more positive light.

The interview was ostensibly concerning the fact that Formula 1, not Bahrain, would be picking up the tab for the cancelled (or is that postponed?) race which was due to take place on 13 March 2011. However there seemed to be an underlying message that a) F1 does not try to rip off the countries in which it holds Grand Prix and b) They want to be more open and set the record straight regarding what really does go on. Ecclestone firstly confirmed that the widely quoted $40million fee which Bahrain would normally pay for holding the race was ‘close’ to the mark. He also made the point that, contrary to speculation, there was no $20million fee for holding the first (or last) race of the season. It is unusual for him to be so specific about some of the contractual dealings relating to Formula One Management, so could this be a new period of openness and transparency in F1, perhaps a kind of Grand Prix Glasnost? Let’s see what happens as the year progresses.

Formula 1 and the real world

February 17, 2011

The news that the situation in Bahrain appears to be getting worse and with F1 testing due to take place 3rd-6th March and the Grand Prix on the 11th March it seems that F1 is becoming caught up in the political shifts that are occurring in the middle east. If you combine that with the Gribowsky affair in Germany and the potential of a connection to the various dealings that went on when F1 was acquired by CVC Capital Partners in 2006 then it appears that F1 is once again getting in the headlines for non-sporting reasons. However, the good news I hope is that the teams themselves find a way to formally agree a realistic reduction in costs and that the Williams flotation goes well. The fact that such a well established F1 team is going to the market and opening itself up for wider scrutiny is I think a good thing, and if the Williams float goes well we may see others following their approach.

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