The nice people at Virgin have published another guest piece from me on the subject of what makes an industry ripe for disruption? You can see it here: http://www.virgin.com/entrepreneur/what-makes-an-industry-ripe-for-disruption

As you will see from the piece I consider that F1 is most certainly ripe for disruption and that Formula E may be the disruptor that changes the rules of the game. However it is also worth making the point that many disruptors do not actually destroy the existing businesses, but create growth through the addition of new customers into the industry. Low cost airlines have not replaced the entire airline business model, but extended the airline business into new markets. You could also see a scenario where Formula E actually attracts a new group of fan into motorsport – someone who is passionate about low carbon technology and who likes the edgy new technology and city racing that Formula E will be showcasing. Who knows we may ultimately see teams like McLaren and Williams entering cars into Formula E when it becomes open to other constructors in 2016. Stranger things have happened in motor racing.

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As the F1 circus moves from short to long haul trips to races, we begin the final leg (or rather legs) of the season. It is now pretty clear to everyone, except perhaps Sebastian himself, that both the drivers and constructors World Championship will, baring any major calamities, be in the hands of Sebastian Vettel and Red Bull. Of course that doesn’t mean to say that the racing will become more processional, both Fernando Alonso and Jenson Button showed at Monza that they both intend to fight to the last, as I’m sure will Lewis Hamilton and Mark Webber. There’s been some great racing, and I’m sure it will continue as long as we have drivers of this calibre in the leading cars.

It is also interesting to see that the form book at the back of the grid has not changed much, HRT bring up the rear, with Virgin still behind Team Lotus, who are also still behind the more established teams. Tony Fernandes has made it clear that 2012 is the year of reckoning for Team Lotus to break into the midfield, and I suspect he may not be the only one of the ‘new’ teams to decide that it is getting to make or break time. Joe Saward (http://joesaward.wordpress.com/)  always has a good ear to the ground and is suggesting that Team Lotus will soon relocate from Norfolk to Leafield – the former Arrows facility in Oxfordshire – and that Virgin are already relocating themselves from Yorkshire to Banbury, with a possible further move to the rapidly developing Silverstone campus, so it looks like the message is you have to be at the heart of motorsport valley to really do well. However, an interesting counter rumour to this is that Scuderia Toro Rosso are going to be sold and relocate from the facilities at Faenza in Northern Italy and Bicester in the UK to the Yas Marina circuit in Abu Dhabi, perhaps we’ll get an announcement at the time of the Grand Prix? If it really does happen it will bring about the first move from Europe of an F1 team, an event which has been predicted by many for some time, so far it hasn’t happened, but this could be about to change.

I was sorry to hear that Virgin Racing have ended their partnership with Wirth Research and will now be moving away from 100% CFD design and back to the wind tunnel. I always saw it as a bold move, the kind of thing we would associate with the entrepreneurial ethos of Virgin, but it proved to be a step too far for the team and their sponsors. It is, after-all, a business venture and if the team is moving back towards HRT, which is where their performance seems to be going this year, then something had to be done. It seems that the obvious step is to go back to the more expensive and less environmentally friendly approach of using a wind tunnel in combination with their exisiting CFD capability.

Virgin now have to recreate their organisation for the second time in three years. It reminds me very much of the challenge that Paul Stewart Racing faced when they morphed into Stewart Grand Prix, like Virgin’s original incarnation – Manor Racing – they knew how to go racing, to find drivers and sponsors, and to set up a car, but they had never done the really tricky bit – design and manufacture their own car. The Virgin model of effectively outsourcing the design and development of the car to Wirth Research was innovative, but appears not to have worked, it is always problematic when the design operation is separated from the racing one. Ferrari faced a similar problem in the eighties and nineties when John Barnard set up first the Guildford Technical Office (GTO) in the UK in the eighties, which then became Ferrari Design and Development (FDD) in the nineties. When Jean Todt arrived in 1993 he formed the view that to build a championship winning car they all had to be located in one place. And so at the end of 1996 they parted company with FDD and had to create a totally new design operation from scratch in Maranello for which they recruited Michael Schumacher’s old team mates Ross Brawn and Rory Byrne, but of course this was only the design part, Ferrari were already building the cars at Maranello, at Virgin they, like Stewart, will have to create the entire process needed to design and build an F1 car from start to finish. There is a common thread between the Ferrari challenge and that of Virgin Racing, Pat Symonds who will be leading the work on the 2012 Virgin, worked with Brawn and Byrne at Benetton (and with Byrne at Benetton’s predecessor – Toleman), he is one of an increasingly rare breed of technical director, someone who really does understand the whole package and how all the different elements are brought together to bring results on the track, it will be good to see him back in F1 soon. I’ll be looking forward to seeing how the 2012 Virgin performs even if it is developed partly by using a wind tunnel.

Unfortunatley due to commitments here at Cranfield I have not been able to make it up to the Autosport International show at the NEC. But I have just seen some comments made by Virgin Racing’s Technical Director, Nick Wirth, about their optimism for 2011. I think the way the Virgin car goes in 2011 will be very interesting. I always remember Jackie and Paul Stewart telling me how the second year was far tougher for Stewart Grand Prix than the first, as they were now using a car that was developed while they were trying to make a reasonable go at their first season, and so we can get a far better idea of the capability (or not) of the new teams in 2011 as compared with 2010. I suspect we will see the new Virgin affirming that their approach of using 100% CFD as opposed to combining this with the wind tunnel, as the way to go, but it might still be too soon for this to really pull away from Team Lotus and HRT.

The other unknown is how Michael Schumacher will perform on Pirelli tyres and with a car that was developed with him in mind. At Ferrari’s annual Vrooom press event Fernando Alonso identified Michael as his biggest threat for 2011. So Schumacher and Virgin could be the big surprises of the season, with the other being just how many Lotus’s we end up with (what’s the collective noun for an F1 Lotus team – is it a packet?).

Is Bernie Ecclestone the Nostradamus of Formula 1? Photo: Jenkins, Pasternak & West

Bernie Ecclestone seems to have a knack for predicting the future in F1 (although like other great forecasters of the future – he sometimes gets it very wrong – the British Grand Prix at Donnington, for example). He has been quoted in the Daily Telegraph as stating that he wouldn’t be surprised if ‘one or two’ of the current teams don’t make it till the end of the season. Given his prediction at last years’ Singapore Grand Prix that USF1 may not make it to the grid, Bernie’s views are normally very well informed and so are taken very seriously, given that he also made the point that he felt Lotus should remain this implies that the two teams to which he is referring are HRT and Virgin Racing. Given that HRT are having to destabilise their driver line-up in order to access sponsor’s cash, it certainly looks from the outside that the team are taking desperate measures to deal with desperate times, and therefore at some point the cash may run out for HRT. However, there does not seem to be an air of desperation coming from Virgin Racing, and Timo Glock, in particular, seems to be giving the Lotus drivers a run for their money in terms of establishing who is going to be the best of the new teams in 2010.

My preliminary analysis on race results so far is that the highest race position of the three new teams is Lotus having secured 13th place at the Austalian Grand Prix, still some way from scoring championship points and unlocking the additional funding that points scoring teams enjoy. If we score their relative results for each of the 11 races so far on the basis of 6 points for the first of the six new team cars having completed the race, 5 points for the second etc. Lotus have 56 points, Virgin 55 and HRT 51, so not much to chose between them on this basis. If we look at the starting grid positions, awarding points on the same basis, then Lotus have 115 points, Virgin 73 and HRT 43. So, at this point in the year we have a clear running order: Lotus, Virgin and HRT. Bernie appears to be suggesting that the financial longevity of the teams is in a similar order, with Lotus being financed for the long run by Tony Fernandes, Virgin Racing have a medium term business model which is dependent on the Virgin brand being used to attract new sponsors and partners and HRT appear to be currently underfinanced and are having to resort to race by race funding strategies to keep the cash flow positive. In the past Mr E has himself stepped in to support struggling teams such as Minardi, in his interview with the Telegraph he suggested that the new teams were already costing him (ie FOM) a lot of money, without much to show for it in terms of media interest and spectators, maybe he’s signalling that they need to be strengthening their balance sheets if they wish to stay in the game, or maybe he’s already privy to one or two exit strategies.

Joan Villadelprat is characterised in F1 terms as someone who knows his onions. In his journey from mechanic to team manager Joan has worked for McLaren, Ferrari, Tyrrell, Benetton and Prost. He is now hoping to make the final step on the ladder, first climbed by Ron Dennis, to become a team principal with his Spanish based organisation Epsilon Euskadi running an F1 team in the 2011 championship. In a recent interview with Autosprint, Joan expressed his concerns about the timing of the 13th team for 2011 – as an FIA announcement is not due until the end of August, by which time the new team will have precious little time to design and build their F1 car for 2011. What is also interesting is that Joan comments on the level of funding he feels is needed to run a competitive team.

Team operating budgets are an interesting topic,given that the teams do not generally publish such figures, or if they do heavily disguise them, estimates range wildly as to what these actually are. For example in 2009 the Black Book estimated Ferrari’s budget as USD404million and McLaren at USD377 million, with the smallest budget being Toro Ross at USD112million. In contrast Formula Money, estimated Ferrari at USD371million and McLaren at USD484million, with the smallest budget being Force India with USD120million. One thing that appears to be agreed, certainly among the teams themselves, is that these figures need to come down. In 1992 Williams employed 190 people, in 2008 it was 540, in 1992 they won the world championship, in 2008 they finished 8th.

When Virgin committed to Virgin Racing they did so when the FIA intention was to impose a budget cap of £40 million for all teams, excluding drivers salaries and a few other costs. This never happened and so Virgin decided to keep their own budget cap in place in the hope that other teams would have to come down to their level. The Formula One Teams Association (FOTA) agreed that costs should come down and that they should aim to be back to 1992 levels by the end of 2012, although how this would be measured and policed remained unclear.

Back in August 2009 Auto Motor und Sport published a piece claiming that the exact details of the cost cutting would remain a closely guarded secret, but that the number of staff travelling to Grand Prix was going to be capped at 45 people, which would have consequences for the drivers physio’s amongst others – it was interesting to see that at the start of 2010 the drivers were protesting about the absence of their physios on the grid (rather than at the Grand Prix) – so whether this was linked to some form of agreed reduction is open to question. The article also said that team expenditure, excluding driver and top management salaries and marketing costs, would not exceed Euro 100m in 2010 and Euro 50m in 2011. It is therefore interesting that in commenting on team budgets Joan suggested that if a team wanted to develop a competitive car then Euro 100m was needed to avoid the team ”..having to start over from zero every year.” This is bad news for Virgin as it implies that the 2011 budgets will not be down to Euro 50m as suggested by Auto Motor und Sport, although they may well be limited to Euro 100 million as suggested by Joan Villadelprat, who, whether or not he becomes a team principal, still knows an onion when he sees one.

 

Are McLaren now in position to dominate the 2010 championship? Photo: Jenkins, Pasternak & West

 

 

 

 

 

 

 

Winners

McLaren. We are now approaching the halfway point of the season in terms of racing, having completed eight races with eleven more to go. It now looks like Montreal could have been a turning point with McLaren finishing first and second by their own efforts, as opposed to winning by default as they did in Istanbul. I have mentioned before that McLaren’s development pace is the best on the grid. Their F Duct system which uses an air intake mounted above the drivers knee to stall the rear wing and therefore reduce drag when optimum top speed is required is, by admission of most of the grid, still way ahead of the competition, and although Montreal, like Monza, rewards a higher top speed, in Montreal they also demonstrated that their car can handle its tyres as well as the Red Bull, this may be a function of the Montreal track (which is rarely used and therefore has less rubber ingrained in the tarmac), but it suggests that McLaren are now potentially building up the momentum to take control of the championship for the rest of the year.

Vitantonio Liuzzi. Tonio is a bit of an enigma, he has always been well spoken of by experienced members of the press – particularly David Tremayne, who is pretty good at talent spotting. But to date his career at Toro Rosso and Force India has not borne out the promise that is suggested to be there. In Canada his performance was mixed, but he came out a winner by the fact that he out-qualified and out-raced his teammate (Adrian Sutil) for the first time. He did seem to regress into GP2 mode with his succession of bumps with Felipe Massa at the start (which will go down well in his native Italy), but he stuck in there to claw back through the field and finish 9th with his teammate in 10th.

Lotus Racing. Lotus now appears to be moving clear of their fellow new teams: Virgin Racing and HRT. Montreal is a low downforce circuit and the Lotus does appear to have similar strengths to the Force India car in that regard, however, it was notable that Virgin Racing’s Timo Glock was unable to get close to either Lotus during qualifying on a circuit where he has generally excelled. In the race it really looked like the Lotus cars are now pulling up to Sauber, Williams and Toro Rosso at the back of the established runners.

Red Bull Racing Pit Crew. It is unfortunate that the TV coverage doesn’t show the actual pitstop time (they show the elapsed time that the car is in the pitlane and therefore the total time of the pitstop relative to the race). The all-time record for a pitstop is 2.9 seconds, and Red Bull Racing came very close to beating this by replacing all Webber’s wheels and tyres in a little over 3 seconds, let’s see if anyone can get under 3 seconds this year.

Losers

Safety Car. Bernd Mayländer, the F1 safety car driver, had a very quite Sunday afternoon, probably enjoying the multiple CD player on his 6.3 Litre SLS Mercedes. Given the potential for accidents and the lack of run-off areas (such as in Bahrain), the potential for deploying the safety car is higher at Montreal than most other circuits – except the street variety. A number of teams, including McLaren, based their tyre strategies on the assumption that an early safety car would allow them to nip into the pits and change away from the option tyre to the more durable prime. Unfortunately for them there was no cause to deploy the safety car throughout the race – although McLaren’s strategy seemed to work out pretty well anyway.

Fernando Alonso. There is no doubt that Fernando was a contender to win this race. However, by his own incredibly high standards he made two fairly basic errors which allowed Lewis Hamilton to re-pass him (after he had overtaken him in the pits) and then Jenson Button, moving him down to third place.

Sauber. So far the 2010 season has turned into a bit of a nightmare for Sauber. Yet again both cars failed to complete the race. Sauber now had 11 retirements from 16 races/per car. Not good for a team that in 2008 were a serious contender for the title.

Michael Schumacher. Although Schumacher’s race, which ended up with him collecting 11th place, was compromised by a novel, but ultimately unsuccessful, strategy of staying out on the softer option tyre far longer than anyone else, he seemed to be colliding with anyone who got remotely close to him. His sparring partners included Kubica, Massa (which won’t have helped his relationship with the tifosi) and Liuzzi from my reckoning, but there could have been more. So will Michael carry on until 2011? My guess is that he probably will, I suspect that ultimately this is not about the potential to win championships, but just to keep racing and this is what Michael enjoys most – so we’ll probably see him competing in Le Mans 24 hour when he’s 56 – he may even last a bit longer than the 18 minutes Nigel Mansell managed this year.