It Ain't Over Just Yet

Following my post several days ago, two articles have emerged Pitpass here and PlanetF1 here speculating on the on-going GPMA/FOM battle.

Interesting to note that PlanetF1 thinks that money was the main motivation for Williams joining Bernie's bandwagon but according to Pitpass Williams' signature on the new Concorde was not really about the greenbacks.

Pitpass does however, bring up the issue of Ferrari's special treatment and the major point of contention, i.e. transparency in all aspects of the sports governance. I think even those signed up with Bernie (except perhaps Ferrari) that it is an issue that needs to be addressed. After all, even the hard-up would want to have a better knowledge of how decisions come to be made. They're still spending millions. And during the weekend of the Malaysian Grand Prix, even those that today are siding with Bernie signed a petition addressed to Ferrari calling for a reduction in testing in line with previously agreements.

The PlanetF1 editorial makes a brilliant point about competitiveness. If a breakaway series were to be run today, the GPMA teams would make a far better show of it than the Bernie brigade. The manufacturer teams are more evenly matched. In addition, their large war chests makes B-teams a distinct possibility. Especially, if B-teams could buy current technology there would be plenty of solid racing all the way round the field.

Sure, Bernie has the so-called "crown jewel," Ferrari but lets face it, if Ferrari (or should we say Michael Schumacher) were to dominate, more and more fans would lose interest. Witness the aftermath of the 2004 season on viewing figures. Bernie's signatories save Williams are unlikely to make a sustained challenge on Maranello. Unless of course, Red Bull can make full use of their recent signing Adrian Newey.

The story continues. However, I do think that a breakaway series is unlikely (at this time) but I think its a possibility that Bernie would have to give a lot more concessions and not all of which are pecuniary. Transparency and fairness are definitely on top of the agenda.

NASCAR

More than one publication and Formula 1 website has mentioned NASCAR as a series from which Formula 1 should learn and emulate. For a site thats on the face of it, dedicated to Grand Prix racing, GrandPrix.com is absolutely in love with NASCAR. Do a search on their website for the keyword NASCAR and there's absolutely tons of articles written about or mentions them good old boys. GrandPrix's latest article on NASCAR can be found here. Am I missing something about GrandPrix?

What a lot of people seem to want is for Formula 1 to expand and gain a greater foothold in America. NASCAR seems to be doing the business over there and some people seem to think that Formula 1 should emulate some of its good points. With all due respect to NASCAR and its fans but to hell with that. Formula 1 doesn't need to be like NASCAR. Its a little too World Wrestling Federation for my taste. All that fiddling with the regulations to make the racing close is a little too artificial in my book. Its the same thing I have against the current WTCC rules with all that complicated weight penalty regulations. NASCAR goes beyond that to make things equal.

I've always voiced out that Formula 1 fans deserve to be treated with respect. And the FIA should be listening to folks like us. But somehow all the rah rah of NASCAR seems like overkill. Its all business of course and NASCAR's antics does the trick of attracting massive crowds. The constant fan pampering works. It brings them and their cash in and with it comes massive sponsorship from corporations that can't seem to get enough of bombarding consumers with their branding and "messages." And all that thanking of the sponsors from the race winner. Oh for f**k's sake.

Formula 1 should remain a "pure" sport. To make things more competitive, simply lay down a good set of rules and bloody well stick with it. NASCAR seems to have rule stability but they like to tweak the penalties on a race by race basis to make it fair. The FIA by contrast does not normally tweak rules over a season but insists on changing the rules year on year. Unless of course they're trying to help Ferrari as they did in 2003, carefully "reinterpreting" the rules to shove the advantage back to Maranello.

Of course, the FIA's way costs the teams a helluva lot more cash. If the rules were stable, the smaller teams would be able to catch the major players within a few years. The big boys would be so close to each other, we'd see more of Suzuka style action. They way its going right now, you seriously doubt whether Mad Max really has cost cutting in his mind.

Going back to Formula 1. What Bernie, the teams, manufacturers and the media want of course is for Formula 1 to break into the largest free market economy in the world. Bernie wants more TV revenues. The teams want the massive advertising sponsorship of America's corporations. The media want to sell more magazines and get more Google ad revenues from visitors from the states. The media likes to use the word greedy to describe Formula 1. Guess what? They're all part of the same conspiracy.

Let NASCAR be that and Formula 1 be itself. The difference is culture. The rest of the world has as much understanding of NASCAR as a drawlin Southerner has of Formula 1. Which is pretty much bugger all. So just pick which one you'd rather watch and leave it at that. For I hope that Formula 1 does not dilute itself to capture a market that for 10 years couldn't give a two fingered salute about it. After all, there are plenty of Formula 1 fans worldwide who'd never give up watching it. Keep em loyal to you Bernie. Stop trying too hard chase new ones.

NASCAR does however remain an object lesson to domestic series the world over on how to run a championship. Take Malaysia for example. Now just because Sepang holds the title Sepang F1 circuit doesn't mean it can afford to be aloof and arrogant. Formula 1 is a class of its own that has no equal in the world outside America. Its attraction is the drivers and teams that are simply at the pinnacle of the sport. Fans will come automagically.

Its different with domestic racing series. You have to work hard to please the fans. And be in no doubt that these fans need pleasing. For otherwise they couldn't care less about your precious series with its "gentlemen" drivers that collectively have less wheel ability than Alonso's toenails. And without them, the championship quickly loses the chance to bring in ever greater commercial sponsorship in order for the domestic series to survive and thrive. Without that growth, you can't attract new drivers into the sport. Bloody hell, you'd even lose the old hands. And that ladies and gentlemen means the end of the series.

I mean, just look at the Malaysian Super Series and the MME crowd attendances. Pathetic. The racing establishment ought to spend more time improving the spectacle for the people in the grandstands not puckering their lips to kiss the arse of politicians and businessmen or cutting some billboard deal.

The racing establishment in Malaysia should look to the example set by NASCAR. Lets face it. No championship created here will ever be the next Formula 1. But by looking at NASCAR's example, perhaps a racing industry can thrive in Malaysia, once again. For that to happen, the cash needs to flow in. It starts with the fans. Wake up for god's sake.

CVC And Williams

CVC Capital Partners, with investments in Kwik Fit, The Automotive Assosication, Dorna and a host of other manufacturing, media businesses among others, have now acquired around 85% of the shares (up to last week when JP Morgan also sold out)in SLEC. And thus, through some complicated shareholding structure, controls the commercial rights to Formula 1.

Bernie sold his remaining shares in SLEC to CVC or more specifically Alpha Prema, the company that now holds the SLEC shares. In turn he's used the proceeds to buy into Alpha Prema. Bernie also retains excutive control over the sport. Beyond their investments, little is known about CVC. Apparently, even the investigative resources of UK's The Times unable to break through the veil of secrecy. Truly a "private" equity firm and perfect for one such as Bernie who values discretion.

Heck, to be honest, if I were a billionaire tycoon, this is the route I'd go down as well. Not for me the American style stock market listing with its attendent weight and constant public glare into my financial affairs.

Interesting to see the timeline of the buyout.

24/07/2005 : Hutchinson Whampoa linked to Formula 1 buyout. This was quickly dismissed by Bernie. With all due respect to mega tycoon Li Ka Shing, I doubt if Bernie would have really wanted Chinamen to run Formula 1. Excellent businessmen of course the Chinese but I think a little too calculative and naive about the success factors of the sport. Rather like the banks you might say. And you know about dealing with the teams right? It takes a certain touch to it which Li may not understand. And moreover, the teams may not understand him. Its a culture thing.

30/08/2005 : Some speculate that the teams were involved with in a USD 1.5 billion bid for Formula 1.

31/08/2005 : Bernie says F1 is "not for sale," in this article in F1Racing.net amid speculation that Formula 1 is to be flogged off for a billion bucks. Yet another denial this year that eventually was proven to be true!

17/10/2005 : Bernie says he'd like Formula 1 to be publicly sold. Well, in the future it just might given CVC's modus operandi of first acquiring companies and then flogging them off at a profit.

1/11/2005: Bayerische Landesbank, who together with Bernie eventually sold the first tranch of shares to CVC, urges peace in our time. Perhaps to sweeten the deal?

18/11/2005 : Jean Todt, John Howett of Toyota, Nick Fry and Bernie allie, Flavio Briatore meets up with Bernie Ecclestone in Monaco to discuss the future of Grand Prix Racing. The Pitpass article here indicates its not about Bernie or even more money The major point of contention is that the manufacturers are simply not happy about the sport's governance by the FIA. Perhaps to allay CVC's fears regarding the breakup of Formula 1 as we know it. If Toyota, Honda and Renault are still willing to jump in with Bernie then all is not lost.

25/11/2005 : Bayerische Landesbank and Bernie sell their shares to Alpha Prema, the controlling company owned by CVC.

6/12/2005: Despite some resistance, JP Morgan sells off their shares to Alpha Prema.

Now, a couple of weeks after the CVC announcement, Frank Williams has just signed up to the 2008-2012 Concorde Agreement effectively siding with the FIA/FOM Establishment and joins Midland, the two Red Bull teams and of course Ferrari.

I'm speculating that the CVC deal and Frank's agreement are related. Make no mistake, now with BMW gone and with them free engines and cash and the exit of title sponsor HP, Williams are strapped for cash. Witness their recent massive car boot sale and the fact that they're considering Narain Karthikeyan as a pay driver for testing. For testing???!!! I'd heard of rent a car drivers who got to race but this bloke is paying for the privilege to test!

So the coffers being less that what is was in previous years, Frank and Patrick has had very little choice but to agree with Bernie and sign up to the Concorde. As Frank said in February, he couldn't afford to be too hard nosed about it because unlike Ron Dennis at McLaren, racing is all he's got.

This is an interesting point. All the GPMA members have got other activities besides racing. They're all in the car manufacturing business. Even McLaren's got other businesses aside racing and its profitable as well. Witness the results of their latest financial statements. They've made some good profit. All the GPMA folks can afford to play hard ball.

Williams' predicament is rather like Ferrari's. Lets not forget that Ferrari are in fact also a "manufacturer" backed team. In its case, its backed by Fiat who effectively bankroll the Formula 1 operation. Some of Fiat's bankers might be unhappy with this and with Luca di Montezemolo for splashing cash they don't have to Ferrari but the Agnelli family that controls Fiat have secured Luca's future there. But, Luca is no fool and Fiat cannot afford to throw money at Ferrari's Formula 1 team they way its done in the past. And so, they did a deal with Bernie to secure more for themselves.

This is precisely what Frank has done for Williams. As Patrick Faure of Renault said last week, Formula 1 stands on the brink. Its future will be decided in the coming weeks.

A major team in Williams has decided to go with Bernie. I think Toyota and Honda actually want to go with Bernie if only the issue of governance and especially rule stability can be resolved. I think the Japanese are very pragmatic and they know what they're in Formula 1 for. Marketing and a way of challenging their young engineers. Screw the money they don't really need it. They're both highly profitable companies. But the FIA is driving them beserk with all these rules changes.

Renault are in a very interesting predicament. Boss Faure sides with the GPMA. Team principal Flavio is Bernie's mate. But CEO Carlos Ghosn, many think will want out of Formula 1 totally by 2008. The current Enstone and Viry operations could be flogged off. In which case, it would make sense for the next (private?) buyer to want to side with Bernie as well. They too, just might sign for Bernie if they can be assured that the FIA will behave themselves. More thoughts and opinions on GrandPrix.com.

Mercedes and BMW are the only ones left then. But I doubt if BMW had planned to invest in a team competing in a two team championship.

I think with Williams on Bernie's side, the GPMA members will follow suit eventually. I think the only reassuarance they need is that Bernie will do something about his joined at the hip buddy Max. To that end it seems that the FIA have revamped the Court of Appeal, perhaps as a response to repeated public and team opinions that it is well and truly a biased kangaroo court. Asides that and commenting about CDG wings, Max has been rather silent about the whole CVC and Williams issue.

In the final analysis I have only a couple of things to say. First, they may be about peace and compromise at this moment in time but you can bet come 2010 or whenever they talk about extending the Concorde, there will still be more arguments and I can just bet we'll all be here again at that time.

Secondly, if the teams and manufacturers can agree then that's great because there's going to be only one Formula 1 and its something I've followed for the last 22 years and would be sad to see it go. However, I'd hate it if those prima donnas at Ferrari are once again given special treatment either in financial or political terms that result in an unfair advantage on the race track. If its equal treatment to all teams big and small then fine. But to offer Ferrari more financial rewards even if they come in last in the world championship is just bullshit.

The GPMA is (was?) a good way of fighting for a more equitable championship. If they can achieve that without a breakaway championship then all the better. I hope we see the end to the FIA and Bernie being Ferrari's stooges. If Max goes or changes his silly tune then all the better.