One of the fascinations of Formula 1, from a business strategy perspective, is how the same organisation suddenly shifts from being nowhere to a championship contender and equally how a championship contender suddenly ends up nowhere.

The obvious explanation for many is that it is simply all about money, the more money you have the better car you produce and the better driver you recruit so inevitably you will win more races. Not so. If it was all about money why didn’t Toyota’s huge investment in an F1 operation allow them to win a single race, even though today some of the top-teams are still making use of their wind tunnel in Cologne? If it was all about money then Renault would not have won their world championships in 2005 and 2006 and the team that was BAR and then Honda would surely have achieved more success on the track before they became Brawn in 2009?

Of course money is a key part of the equation. I remember former Jaguar Racing boss, Tony Purnell, describing Formula 1 as a ‘celebration of unfairness’, you can see his point, the richest teams have the most resource to get sponsors and performance on the track, and when they do well they get even more revenue from the distributed media royalties via Formula One Management, the more you have the more you can get. But that’s what makes it fascinating when the underdog does pull through. When Williams produced their FW07 car back in 1980 they were running on a shoestring and only could afford one week in the wind tunnel at Imperial College to try out Patrick Head’s ground-effect design, and yet they produced a better car than the all-dominant Lotus and went on to become world champions. When Dietrich Mateschitz bought Jaguar Racing for a ‘nominal sum’ (and all the debts as well – so in reality a bit more than £1) most could not see how he would turnaround a team that had showed potential as Stewart Grand Prix, but had become a corporate political football for various groups of Ford’s management to fight over and ultimately destroy, and yet today we all see them as the obvious favourites for the championship.

Today many argue that the technology is so tightly regulated and the focus so much on continuous improvement, rather than innovation, that we will not see the kind of turnarounds that we have seen in the past. I’m more optimistic, there is a huge wealth of engineering talent in F1 and it is not just about the superstars drawing the seven figure salaries, there’s a lot of creativity out there and maybe this year we could get a few surprises that show that at the end of the day performance in F1 isn’t just about money.



So it looks like Toyota never will achieve that elusive Grand Prix win

An announcement is expected later today that Toyota will be withdrawing from F1, as I’ve posted before on this blog, the signs were never good, and even the fact that GM have pulled out of the sale of their European operation due to ‘improving business conditions’ was not enough to save Toyota. Clearly like Honda, BMW and Bridgestone they’ve decided that their strategic priorities are elsewhere.

It certainly resolves the problem of finding a place on the grid for the Sauber team, at least one less headache for Jean Todt to deal with as the new FIA President.


Will Renault follow the Mercedes approach to F1?

If we put Ferrari to one side as a special case, and omit Toyota, as it remains unclear as to whether or not they will continue into 2010, we are seeing a new kind of involvement from those automotive manufacturers who plan to remain in F1.

The emerging model appears to be far closer to that of the eighties and nineties where the car manufacturers focus on engine supply, but with the added commitment of full or part ownership of teams. The engine scenario for 2010 looks to be dominated by Mercedes (McLaren, Brawn, Force India) and Cosworth (Williams, Campos, USF1, Manor, Lotus) with Ferrari and Renault also supplying engines to Toro Rosso (and also Sauber if they secure a place) and Red Bull Racing respectively. It looks likely that Mercedes will be aligning their brand more strongly with Brawn, but also that they may be seeking to identify a separate identifiable brand in the way that Cosworth will no doubt do. The other interesting question is Renault. Will the team be looking to find a buyer and shift to the kind of model which Mercedes are developing? – I suspect so.

Renault will be fighting it out for sixth place in the constructors championship in Abu Dhabi along with Williams and BMW Sauber

Renault will be fighting it out for sixth place in the constructors championship in Abu Dhabi along with Williams and BMW Sauber

So with Brawn having now secured the 2009 Constructors Championship, is there anything left for Abu Dhabi? Certainly there is. If we look at the current positions in the championship we can see that there are still a number of places left to play for. Nobody can now beat Brawn and Red Bull for first and second places, but everything else is pretty much still to be decided.

McLaren and Ferrari are almost dead level for third place on 71 and 70 points apiece. Given that Ferrari have announced that they are focusing all their development efforts on 2010, does this mean McLaren have everything to gain if they find a few tenths of a second between now and the 1st November? If McLaren have one team they will focus on beating it has to be Ferrari and so the interesting question is whether or not the boys from Maranello really have now moved on from 2009. Also Toyota can still mathematically achieve third place, but this seems unlikely. The other battle is for sixth place, it doesn’t sound much, but given the way in which the Formula One Group revenues are distributed – this could make a significant difference (ie millions of dollars) in team revenues for 2010. Currently this battle is between Williams, BMW Sauber and Renault and you can be assured that each one of these teams will be wholly focused on grabbing sixth place. So the headline titles may have been won, but the race is still very much on until the end of the season.

Constructors Championship Positions after Brazilian Grand Prix





Red Bull/Renault















BMW Sauber/BMW






Force India/Mercedes



Toro Rosso/Ferrari


Toyota's previous second place was in 2005

Toyota's previous second place was in 2005

Second at the Singapore Grand Prix was a great result for the Cologne based team, and equals their best result since they entered F1 in 2002.

It is known that the team do not have their budget signed off for 2010 and therefore the fact that they have effectively released both their drivers (Jarno Trulli and Timo Glock) for 2010 could be seen as a clear sign that they will pull out after the Abu Dhabi grand prix. Of course it is also a sign of a team who cannot yet commit to 2010 until the budget is agreed. It is probably for similar reasons that engine customer Williams are actively seeking a change in supply for 2010. TMC are forecasting revenues of 7.8 billion yen for April – September 2009, a 36% drop from 2008. If the figure is well below this then it is likely that drastic action will need to be taken and a high profile casualty will be the F1 Team. Let’s hope it doesn’t come to that.

Things are shaping up for 2010

September 28, 2009

Earlier in the year I had posted a few predictions for a number of key aspects of the 2010 season: teams, sponsors, engines and drivers. We’re not in a position to see how these will totally work out but this is the end of September status report.


So will FOTA support at 14th place on the 2010 grid from BMW Sauber?

So will FOTA support a 14th place in 2010 for BMW Sauber?


We now have fourteen teams potentially lining up with the current batch of ten being joined by Manor, Campos, USF1 and Lotus. The main question is whether we will see the team currently known as BMW Sauber on the grid in 2010. The FIA statement on announcing the 13th entry (Lotus) is quite clear that there are currently only thirteen places on the grid for 2010. Therefore the only way that the BMW Sauber team will have a place in F1 next year is if either one of the current players withdraws (Toyota and Renault must still be uncertain given that Toyota are still awaiting budget approval for 2010 from TMC and Renault must still be considering their options post crashgate), one of the new entrants fails to materialize (USF1 is reportedly struggling to get their car put together in time) or they reach an agreement with FOTA to extend the grid to fourteen. Of course if the FIA had chosen BMW Sauber as the 13th team, then FOTA would have been pretty unlikely to agree to extending the grid as more teams mean more competition for sponsors, and also the potential for a diluting of the influence of the established players. By selecting Lotus the FIA have now put pressure onto FOTA to accept the fourteen cars and allow one of their founding members to continue in F1. A game of brinkmanship is likely here with FOTA hoping that one of the new teams don’t make it and the FIA trying to make sure they do. Of course if Toyota and Renault do pull out the situation could suddenly change.

Sponsors: There seems to be a bit of a transition going on with some long term sponsors leaving over the next year or so (e.g. RBS, Philip Morris), others continuing (Santander) and some new faces entering (e.g. Virgin, YouTube).


Four teams may end up with Mercedes engines next year

Four teams may end up with Mercedes engines next year


Some aspects of the engine situation have still to play out. Will Williams switch to Renault? Will Red Bull Racing switch to Mercedes? Will Mercedes buy into Brawn? Will Cosworth supply all four of the new teams? It appears that Ferrari are likely to supply the BMW Sauber team should they get a place, so a potential scenario is that Mercedes supply four teams (McLaren, Brawn, Red Bull, Force India); Cosworth four (USF1, Manor, Campos, Lotus); Ferrari three (Ferrari, Toro Rosso; BMW Sauber renamed); Renault two (Renault, Williams); and Toyota one (Toyota).

Drivers: The key to the driver market has been Fernando Alonso, and it seems an announcement will be made shortly that he will be going to Ferrari to join Massa. Assuming Felipe has lost none of his old skill, Raikkonen will join Hamilton at McLaren, Rosberg will go to Brawn to join Button, possibly for a swop with Barrichello, Kubica will join Renault, the Red Bull Racing drivers stay where they are as do most of the others, with it being open as to who joins the new teams – do they want to make the most of the experience out there (for example Jarno Trulli could move to Lotus to help them develop their car – as he worked with Mike Gascoyne when he was at Renault) or do they want to bring on some new talent – a bit of both probably. The interesting question is whether Nelsinho Piquet Junior will get a drive for 2010, the negative associations of crashgate make it unlikely he will go to a team who requires significant sponsorship, but it will also depend on how much financially he could bring to the party. I looked very carefully at the press release concerning Qadbak who have bought the BMW Sauber operation, it mentions middle eastern and European families – but not, as far as I could see, Brazilian. The great news is that next year we’re likely to see a battle between Hamilton in a McLaren and Alonso in a Ferrari. They had a superb fight at the British Grand Prix going wheel to wheel along the Pits Straight and there they were fighting for 16th and 17th – imagine what it will be like when the world championship is at stake.

2010 Calender

September 4, 2009

EMC, well known manufacturer of F1 wing mirrors (you need to look closely!)

EMC, well known manufacturer of F1 wing mirrors (you need to look closely!)

Last night I gave one of my ‘business lessons from Formula 1’ presentations to a group of highly enthusiastic sales managers from the information technology company EMC. EMC sponsor the Toyota F1 team and the sales director joked that when he told people at parties who he worked for the usual response was – don’t you make wing mirrors for F1 cars?! The audience were from all over Europe and at the end a group of Belgians came over and asked me whether I thought we might loose the beautiful Spa-Francorchamps circuit to more lucrative deals being done in the far and middle east. My answer was that I hoped not, but that Formula One Group’s need to service their debt to CVC Venture Capital (which has been loaned by RBS – so I guess that means you and I) places some fairly heavy financial demands which the old, traditional, non-subsidised circuits are in no position to meet. It also made me reflect on how next years calendar was shaping up.

Autosport is always well informed in these matters, and recently Jonathan Noble and Dieter Rencken posted the draft calendar which is due to be approved by the FIA World Motorsport Council later in the year.

March 14 Bahrain (Sakhir)
March 28 Australia (Melbourne)
April 4 Malaysia (Sepang)
April 25 Turkey (Istanbul)
May 9 Spain (Barcelona)
May 23 Monaco (Monte Carlo)
June 6 Canada (Montreal)
June 27 Europe/Mediterranean (Valencia)
July 11 Britain (Donington Park) or Europe (Silverstone)
July 25 Germany (Hockenheim)
August 1 Hungary (Hungaroring)
August 22 Belgium (Spa-Francorchamps)
September 5 Italy (Monza)
September 19 Singapore (Singapore)
September 26 China (Shanghai)
October 10 Japan (Suzuka)
October 24 Brazil (Interlagos)
November 7 Abu Dhabi (Yas Marina)

The calendar follows the long haul sandwich structure that we have this year, with the season starting off with an air freight (as opposed to using trucks) leg in Bahrain, Australia and Malaysia, before moving back to Europe until a rather lonely Canada requires a quick hop across the Atlantic before another European chunk of six races before the final stint of long haul culminating in Abu Dhabi.

The interesting questions are where are S.Korea and India who were both initially planning Grand Prix for 2010, these both now appear to be delayed to 2011 or beyond, but if they do arrive who will be bumped off? It is good to see that the Donnington/Silverstone question is explicitly included suggesting that there will be a Grand Prix in the UK next year. But what of the US Grand Prix? It seems that this, despite FOTA’s desires to have it reinstated, is still off the calendar, but it is interesting to see a three week gap between Canada and the Valencia GP, any chance a US race could be squeezed in here I wonder?