From time to time, Formula 1 teams have been bilked or short-changed by sponsors. The nature of F1, with its glamour, glitz and seemingly unbelievable sums of money, makes it an easy haven for swindlers and "characters" of all types.
This year's sponsorship scandal is The Sponsorship That Never Was. It centers around Brawn GP, who claim to have concluded a very large (130 million Euros) multi-year deal with the German corporation Henkel. Henkel has been a sponsor before - they bought space on the McLaren cars for a couple of years recently. However, they then left F1.
The deal was supposedly concluded in July 2009, at a time when Brawn GP was performing well on the racetrack (Jenson Button had won 6 races in the first part of the season) and the team was looking to parlay its on-track success to sign long-term deals to allow it to continue beyond the 2009 season, the budget for which came mostly from Honda.
However, it now seems that the sponsorship deal was not what some of the parties think it was. Henkel is now claiming that the people supposedly negotiating on its behalf were (a) not authorized to conclude a deal of this size without board-level approval, and (b) that key documents purporting to commit Henkel to the deal with Brawn GP contained the forged signature of the CEO of Henkel, making them invalid. On this basis, Henkel has commenced legal action in Germany to have the contract declared null and void.
This news has become public only after a 75% stake in Brawn GP was sold to Mercedes, which is renaming the team Mercedes Grand Prix.
There are several interesting aspects to the story. Firstly, given the vertical nature of decision-making in most German corporations, there is no way a decision of this kind, involving the expenditure of in excess of 30 million Euros a year, could have been taken without Supervisory Board and CEO approval by Henkel. If Brawn GP were presented with a letter supposedly signed by the CEO, this might have been convincing, but I would personally have wanted evidence that it represented the outcome of a Supervisory Board meeting.
I do not believe that Mercedes were ignorant of the issue prior to purchasing the majority stake in the Brawn team. The CEO of Mercedes and the CEO of Henkel apparently discussed the contract in September 2009, at which time Henkel advised Mercedes that as far as they were concerned, no such deal existed. Mercedes therefore knew about the issue before concluding the deal to buy the 75% stake in Brawn GP.
However, if this deal (which would, given current sponsorship rates in F1, have given Henkel a lot of car space - even title sponsor billing) does not exist, and Henkel can convince the courts in Germany that it is null and void, Mercedes GP and Mercedes-Benz has a large budgetary hole to fill in 2010 and beyond.
All of this explains the recent interest by Mercedes GP in hiring Michael Schumacher. If you have a 35 million Euro shortfall in your budget, what better way to plug it than by signing the most popular German sportsman of the last 40-50 years? Henkel might even be persuaded to stump up some cash in 2010 for space on a car with Michael Schumacher driving it. Signing Schumacher out of retirement is one of the few ways in which Mercedes could hope to bring large amounts of income to Mercedes GP. The sums of money involved in F1 are still too large for Mercedes to have a hope of finding one corporation with 35 million Euros not allocated for marketing spend in 2010. However, it is possible that 5 or 6 German corporations could be persuaded to stump up 4-5 million Euros each for a car driven by Michael Schumacher in 2010. Mercedes always wanted to have Schumacher drive for them in Formula 1, but their failure to lock him up contractually in the early 90's when he drove for them in sportscars allowed him to escape to Benetton and thence to Ferrari.
I therefore regard the affair as another example of the old adage "in Formula 1, just follow the money". Brawn GP looks to have been fooled into signing what turned out to be a non-existent deal with Henkel (the perpetrators of the deal from the Henkel side are now in deep water, with criminal charges for fraud and embezzlement likely), which leaves Mercedes with a large budgetary hole to fill for the next 2-3 years. What better way to fill it than by luring Michael Schumacher out of retirement?