Giedo Van Der Garde vs. Sauber F1 Team

The news has broken that Giedo Van Der Garde is to take legal action in Australia next week over what he claims is a breach of contract by Sauber, when they replaced him for 2015 by one of Felipe Nasr or Marcus Ericsson, despite him apparently having already signed for the team for 2015.

A Swiss Court of Arbitration has apparently ruled that Van Der Garde did have a valid contract for 2015. It appears that the court action in Australia is a request for enforcement of the arbitrator’s decision in Australia. This would place Van Der Garde in a strong position to possibly enforce the arbitration decision via legal action to impound the team’s cars and other assets when they arrive in Australia for the Grand Prix.

Some thoughts on this:

1. Van Der Garde has already successfully sued another F1 team over contractual matters. He won a court case in 2010 against Force India (they were actually entered as Spyker at the time of the original contract) over F1 testing mileage, and eventually collected compensation from the team. The court judgement is worth a read, since it provides a fascinating window into the behind-the-scenes processes by which drivers get testing roles in F1, and how those arrangements can rapidly unravel.

2. It is not clear what relief is useful for Van Der Garde if the court in Australia rules in his favour. As has been pointed out by Joe Saward on his blog, forcing Sauber to run him in 2015 is not exactly logical or smart for multiple reasons; he will be paying an unwilling team for a drive in a car that he has not even sat in, let alone tested. The only reason that suing the team makes sense is if he made a down-payment for 2015 when he signed his contract, and is still in dispute with the team over the down-payment.

3. If Sauber decides to tough it out and meet Van Der Garde in court, they have to be prepared for the possibility of an adverse ruling. This would throw their entire 2015 sponsorship up in the air from a legal and commercial standpoint, since running Van Der Garde would force them to stand down one of either Felipe Nasr or Marcus Ericsson, which would in turn carry negative contractual and financial implications for the team.

4. F1 team owners and bosses tend to not look good when cross-examined in court cases. Most recently, Eddie Jordan was excoriated by a High Court judge in the UK when Jordan Grand Prix attempted to sue Vodafone over a title sponsorship deal that ended up with Ferrari. The sort of business practices that seem to be the norm in F1 tend to be viewed by many legal jurisdictions as sharp practice at best.

It really will not be good for Sauber as a team to be forced to defend their position in court. I anticipate an out of court resolution, which may cost Sauber money and leave them struggling later in the season. A number of people experienced in matters F1 have commented that Sauber had to sign their current two drivers for 2015 in order to be able to get funds to survive the winter, and they are still in a precarious financial position.

It is possible that Sauber may also face legal action from their other former driver, Adrian Sutil, according to Auto Motor Und Sport.

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The Texas 25% rule

When driving conditions are bad in Texas, the population of drivers can be divided into four categories:

25% of drivers drive as if it is a nice sunny day, and then some of them wonder why they just left the road, violated fundamental laws of physics etc.
25% of drivers set off at incredibly low speed, tiptoeing down the road with their nervous eyes darting around inside their head-on-a-swivel. They get in everybiody’s way and they are a menace because you don’t know what they are going to do next
25% of drivers adjust their driving to the conditions, and make it from point A to point B without getting in an accident or causing collateral damage
25% of drivers stay home

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The Dullness of modern F1 cars

A discussion has started up at James Allen’s blog about why modern f1 cars are deathly dull to look at. Here is my contribution.
The dullness of modern F1 cars is a combination of several factors:

1. Too much empty space on the cars. Teams cannot get sponsors, but they refuse to lower their rate cards. As a result, blank space predominates on many cars
2. Loss of sponsorship from B2C companies. Most sponsors are big-ticket B2B corporations, with very understated logos and images. They are not snazzy and exciting – they are not trying to attract Joe Blow and his family members
3. Perpetuation of a car shape profile that is based around irrelevant aero, and 18 inch rims, which no manufacturer would use on a performance road car.

Ideas for change?
Well, a cost cap with teeth is desperately needed, but it seems that the F1 governance model is broken right now, so that may be as likely as pigs flying. In the meantime, I want to see the axe taken to aero (no front and rear wings, partial wheel fairings, opening of underbody aero rules), a modest increase in horsepower (no, not 1000bhp, who apart from the factory teams can afford to pay for it?), harder tyres on 13 inch rims, and a move to social media the hell out of F1 weekends. Absent significant change in these key areas, F1 is going to continue as a declining sport based on a broken business model.

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Quick Items – 27th January 2015

Why managers hate Agile – Part 1
Excellent blog posting that surfaces some of the obvious reasons why many managers and leaders in large corporations dislike Agile. The main takeaway – it conflicts with the top-down command-and-control model that is still prevalent in many large corporations.

Recruitment
The way that most corporations recruit is fundamentally flawed, and has been for decades. Here is an interesting and different approach to recruitment.

Discrimination against the unemployed
Academic research confirms what many people have suspected – employers and recruiters don’t like the unemployed and go out of their way to not hire them. Which proves that you should never admit to being unemployed, either in a cover letter or a resume.

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Peyton Manning – What Next?

For the third time in 3 years, the Broncos came up short in the playoffs. This time, they were one and done. Today, they did not look even like they were able to stay with the Colts. By the end of the third quarter. the Broncos looked like a team with little in the way of offensive ideas.
More seriously, Peyton Manning, when he did throw deep, looked horrible. Either he and his receivers had never practiced any deep plays recently, or his accuracy was absent. Balls sailed, floated and wobbled in the air, falling incomplete or landing out of bounds. The only good thing is that none of them were intercepted.
The Broncos loaded up on savvy veteran players at a number of skill positions to complement Manning after they signed him in 2011. The veterans are not getting any younger. The team is in good salary cap shape for 2015 and beyond, but if Peyton does retire, they will probably enter a re-building phase. They may soon be looking for a new offensive co-ordinator. Adam Gase is in demand for head coaching positions at present, so he may be gone from the Broncos soon. (The latest rumour mill is that John Fox may be pre-emptively fired by the Broncos for failure to advance in the playoffs, so that the Broncos can promote Gase to the head coach position to prevent him from leaving). Not only that, but defensive co-ordinator Jack Del Rio is also rumoured to be interviewing for head coaching positions, so if they are unlucky, the Broncos may be looking at a coaching overhaul on both sides of the ball.
Manning’s contract salary in 2015 is $19m, which is top of the line franchise money. The question is whether he can play at that level next season.
People have wondered for years why Manning has such a poor playoff record compared to other top flight quarterbacks. My take on this is that he has a poor record because he commits himself 100% to off-season preparation and work, so that he performs, week in and week out, at an astonishingly high level. The downside is that when you reach the playoffs, Peyton does not suddenly become even better, he is already operating at 100%. Other team QBs raise their game, this is the playoffs, lose and you go home.
The question that only Peyton can answer is whether he can continue to play at a level that meets his own standards next year. If he decides he cannot, I am sure that he will retire. I cannot conceive of an athlete of Manning’s intelligence and integrity phoning it in, hanging around when everybody can see that his skills have diminished.
One aspect that sets most smart athletes apart from the rest is their level of self-awareness. They know when to move on. There is nothing sadder than athletes who suffer from the “one last fight” syndrome that boxers fall into, a script which never ends happily. Not all great athletes are able to let go of course. Jerry Rice played into his 40’s, until he reached the point where Mike Shanahan had to sit him down and inform him that he might not even make the Broncos roster as their #4 wide receiver. Then he finally realized he had to retire. His love for the game overrode any consideration of his level of play. Of course, he might simply have not known what to do after retiring from playing, an affliction that has derailed the lives of many professional athletes. I do not think that Peyton Manning will be short of well-paid things to do after he retires. He is a natural for TV work, and his endorsement portfolio has the revenue stream of a small country.
My $0.02? Sometime in the next 2 months, Peyton Manning will retire from playing.
UPDATE – That was fast…John Fox is leaving as the Broncos head coach, less than 24 hours after the end of the Broncos’ season.…the entire coaching team may be heading in all sorts of different directions over the next few weeks. If coaches suspect that Peyton Manning is retiring, they may not want to wait to see what rebuilding takes place, they may want to stay in control of their destiny and get out ahead of any re-organization.

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Refereeing in the Cowboys – Packers game

More controversy, as a pass from Tony Romo to Dez Bryant was declared to be an incompletion after a challenge by Green Bay.
The rule in question has been in place for several years. It always causes trouble for referees and causes angst amongst teams and spectators. However, based on the TV replays and comments from experts, the referees interpreted the rule correctly in this case.
So, the Cowboys run comes to an end. This is merely the beginning of what could be an interesting Spring and Summer for the team. They do have salary cap space for 2015 but may have to get creative to re-sign the marquee players and draft class. Several of their marquee players are free agents, including DeMarco Murray and Dez Bryant. They also currently have no head coach. As I write this, Jason Garrett just became a free agent.

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The refereeing in the Cowboys-Lions game

The offensive pass interference non-call in the Cowboys-Lions game is causing much online angst, as many people blame the incident for the Lions’ loss.
First off, we have to gain better perspective. The ultimate bad outcome in a game is where the wrong call (or no call) decides a game on a point-scoring play. This was not a point-scoring play. If the call had been confirmed, the Lions would only have gained a first down. A first down is not points on the board. The Lions might have scored, they might not. Hell, they might have thrown an INT. So claiming that this call decided the game is nonsense.
Secondly, as you can see from the video review, a proper call might well have been offensive pass interference. The Lions player appears to grab the Cowboy player’s facemask earlier in the play. To the people demanding replay for pass interference calls, be careful what you wish for.
Thirdly, this media firestorm would not have occurred if the Lions had scored more points in the second half of the game. They could not score points because the Cowboys defense played better than their offense. When a team resorts to complaining about a single call as being responsible for their defeat, you know you are dealing with a situation where they failed to win the game by on-field play. (I remember after the Giants beat the Patriots in Superbowl XLII, Bill Belichick waved off questions about the David Tyree helmet catch by pointing out that the Patriots were unlikely to win any Superbowl if they only scored 14 points).
Smart players and coaches often point out that single calls are a side issue. Other less smart folks play the “woe is us” card.
Fourthly, the major contributor to issues like this is the NFL rule book, which is hilariously complicated, and continually becomes more complicated. Every year some more subtle caveats and wrinkles are added to the rules, and the job of officiating becomes more and more complex. At the same time, the clamor is for more and more calls to be reviewable, usually after a contentious incident like the Cowboys-Lions incident.
The NFL and its consumers cannot have it both ways. Either the referees are in charge, in which case give them a simpler rule book and rely on them, or the referees are not in charge, in which case let’s make every call on the field of play subject to review. (I’m joking, this latter scenario will never occur, because it would result in games lasting 4+ hours, which the TV networks will not support).
Fifthly – How come the NFL, the most valuable sports league in the world in terms of team values, TV rights and other financial measures, does not have full-time on-field officials? This is crazy. The officials are all doing this work as an adjunct to their day jobs. Think about that for a moment and you will realize that they are being asked to get everything right 100% of the time off of a very complex rule book in front of hundreds of millions of people, in their spare time? How many things are fundamentally wrong with that picture?
Firing officials is often proposed as a sanction for bad calls. Left unexplained is how continual churn of officiating crews is going to improve overall quality of officiating. If you accept that the NFL is the most challenging environment in which to get officiating right (and the poor performance of the replacement officials in the 2012 lockout tends to suggest that), then forced ranking and firing of the bottom tier of officials might make some teams feel better, but it is unlikely to improve the levels of officiating. You have to look at it from the perspective of an official. Why should they volunteer for a part-time job, working in a high-pressure public environment, from which they can potentially be fired for one bad call?
Support for that is coming from within the football commentariat. A contributory factor being cited for Sunday’s issue is that the match referee did not have his normal officiating crew – he was working with a crew assembled just for this playoff game.
(By the way, the NFL has, just like the individual teams and their treatment of the cheerleaders, tried to nickel-and-dime the officials on several different levels, including compensation if the referees are full-time employees. This was one of the issues that led to the 2012 lockout and the replacement officials fiasco. )
My conclusion is that there is a lot of air being moved over this issue, but a lot of the air is carrying hyperbole and BS. The underlying issues are the over-complex NFL rule book, the desire to get every call right that continually expands the reviewable calls list, thus making games even longer, and the chiseling approach of the NFL to referees, whereby they seem to be trying to get high quality officiating on the cheap. In most areas of life, you get what you pay for (or not).

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The FIA attempt to intimidate Gary Hartstein

Gary Hartstein used to be the the on-track F1 lead phsyician. He took over the role after the retirement of the late Professor Sydney Watkins, and held it until he was suddenly fired by the FIA.

Hartstein works at a hospital in Liege, Belgium, and writes a blog where he opines on matters of medical and motor racing interest. He commented earlier this year on the challenges facing Michael Schumacher. More recently he has commented on the aftermath of the tragic incident that injured Jules Bianchi.

More recently, something part laughable, part-sinister occured in Hartstein’s world, when Gerard Saillant of the FIA visited his employer in Liege, making all manner of claims about Hartstein’s blogging activity, and asking them to either prevent him from blogging or fire him.

Everything in Hartstein’s account of the incident suggests that the FIA is behaving like a collection of thin-skinned, censorious bullies. Not only that, but their actions in attempting to induce Hartstein’s employer to order him to cease blogging or to fire him leave them vulnerable to civil legal action.
I have seen similar attempts here in the USA by practitioners and sellers of pseudo-medical woo to silence critics. This long blog posting from Dr David Gorski shows how one of this critics started emailing his place of work complaining about him, after Gorski skewered his shrill and threatening emails sent to him personally.
If Gary Hartstein decides to take legal action against Gerard Saillant, he and the FIA are going to be in a very difficult position. By including an email purporting to come from Corinna Schumacher in the “evidence”, they have ensured that if legal action occurs, she will be a person of interest to the court. She may even be asked to testify, and if she is cross-examined, she may find herself answering questions about Michael Schumacher’s condition. I cannot imagine her being willing to subject herself to that kind of process. If she does not stand behind the email, then things will not go well for Saillant. He will be the #1 defendant, subject to cross-examination about who paid for his trip. If it was paid for by the FIA, it automatically makes the FIA a defendant in any legal action, and that risks dragging Saillant’s boss Jean Todt into the case also, especially if he authorized the effort to muzzle Hartstein.
I cannot see how this will turn out well for Gerard Saillant or the FIA. IMHO Saillant’s FIA career just ended. If Hartstein takes legal action, the FIA will most likely have to claim that he was freelancing and get rid of him. To do anything less will most likely drag them into court as the other defendants to a lawsuit that they will find very difficult to defend.

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F1 Crisis – Part 2

 

The current F1 crisis has several root causes:

1. Revenue Distribution and disparity

A lot of the revenues from the sport are being extracted to pay the returns demanded by the current owners, and the remaining revenue distribution is hopelessly inequitable. Not surprisingly, the leading teams are not about to voluntarily give up revenues, and they all have signed contracts protecting their positions. Realistically, the only way that more money can flow to the teams is if the governing body (FOM) reduces the revenues that it takes from the sport before the revenue distribution to the teams.  This by itself will not entirely cure the issue. The revenue distribution needs to become more equitable.

A contirbutory factor is lack of transparency. Major corporations, as a rule, are fans of transparency, because they are mostly publicly quoted, and they therefore find it difficult to enter business areas where the rules are secret. If they are not allowed to explain the rules in public, it becomes more difficult to justify participation to stockholders.

PROPOSAL

Tear up the entire contractual mess. Rewrite it with transparent rules on how teams earn money.

Moving towards an equitable revenue distribution will require F1 to stop tip-toeing around the 350 pound gorilla in the room – Scuderia Ferrari. With its history as a founder member of F1, Ferrari has always succeeded in punching above its weight. However, in recent decades Ferrari has accumulated a ludicrous amount of power. The news that Ferrari held a veto over all aspects of the Technical Regulations was a shock to many when revealed a few years ago. More recently. the revelation that Farrari collects a percentage of net revenues “off the top” (i.e. before distributions to any other participants) has caused further angst.

Ferrari has been treated like a special child, and, as one might expect, children treated in this way tend to become spoiled, entitled adults. The time has come for F1 to rein in Ferrari’s disproportionate influence. This will likely be painful, and it may lead to Ferrari leaving the sport. But, sports are fond of stating that nobody is bigger than the sport, and Bernie is always saying that nobody has a divine right to be in F1. So, it is time for F1 to rein in Ferrari, and, when the inevitable hissy-fit and threats to leave occur, the response should be “we will be sorry if you leave, but make sure the door doesn’t hit you on your way out”. My prediction is that if Ferrari leaves F1, they will be back within 5 years as a more respectful participant. Sure, they can win at Le Mans, but that event lacks the global reach of F1.

2. Lack of budgetary limits

This is one of the 350 pound gorillas in the room (the other being Scuderia Ferrari). It is no use having a more equitable revenue distribution model if the revenues are still insufficient to give a well-run team a chance to survive. Previous attempts to agree on budgetary limits such as the Resource Restriction Agreement, and other ideas floated by FOTA, failed because the teams could not agree among themselves on the rules, and Bernie Ecclestone lost patience and did deals with all the teams individually, beginning with the grandees (Ferrari, Red Bull) and concluding with the minnows. In practice he had to do that to ensure that the financial governance was structured enough to assure revenues and profits for CVC into the future. Because the most powerful teams refused to consider a budget cap, ergo, there was no budget cap. I have limited sympathy for the teams on this issue. They allowed themselves to become divided.

Budget limits are not rocket science. The skill exists to write regulations to prevent teams and manufacturers from hiding expenses and activities elsewhere. These are enforceable using forensic accountants. If a team is found to be cheating, a large fine (enough to hurt) plus the attendant bad publicity will keep it in line. Budget limits also reduce the chances that a manufacturer will be criticized for excessive spending. In the past, ungodly sums have been spent by the likes of Honda and Toyota on F1, sometimes to little overall effect. Budget caps will reduce the chance of that happening/

3. Broadcasting and marketing 

Back in the late 1990’s, FOM set up its own pay per view TV channel (FOCA Television, aka BernieVision). The aim was (I believe) to gradually move all broadcasting to FOCA Television, away from host broadcasters. However, because PPV was not yet mature, not enough people paid for the channel so it was abandoned. However, FOM has since signed deals with a lot of PPV channels and moved live broadcasts to those channels. As a result, it is becoming increasingly difficult to find live coverage of the sport on major and free-to-air networks.Viewing figures have dropped in many countries.

Add to that the contributory marketing issues of a loss of viewership and ineptitude in social media engagement (both of which will impact a team’s ability to gather sponsors), and it is easy to see why we have arrived at the current situation where two teams have effectively disappeared within a few weeks of each other, and a team like Sauber, with a great history of participation in the sport, is reduced to a pay-driver merry-go-round just to make ends meet in the short term. This is not good enough. It makes the sport look out of touch with reality, and inept.

PROPOSAL

1. Stop attacking social media. Social media fans want to sample before they buy. They are the ones that need to be nurtured to replace the ones that will eventually die. Formula 1 needs to avoid “Cadillac Syndrome” (the eventual arrival at a point where all of the sport’s consumers are dead)

2. Look for opportunities to do hybrid TV deals with both PPV and FTA channels, offering better packages to PPV.

4. Technical Regulations

The current chassis regulations are way too restrictive (and yes this is going to sound ironic) while allowing too much aerodynamic influence on car behavior. Gary Anderson has already made some suggestions about how to greatly reduce aero influences.

PROPOSAL

Form a committee not including current teams (who will try to pack the decisions) and empower the committee to slaughter Sacred Cows. This will result in weeping and wailing from the teams. Too bad.

5. Reliance on Manufacturers

Max Moseley, when he was leading the FIA, was very concerned about F1 not pandering to manufacturers. As he correctly observed, motor racing is not their core business. They will come and go as they please. While they are in the sport they will often spend lots of money, but then they can (and will) depart on a whim when a recession hits, or when they find something else to spend the money on. This leads to a boom-bust cycle, which prevents sustained growth.

The plan to have Cosworth supply engines to mid-grid teams from 2007 onwards was an honorable attempt to create a lower-budget base for those teams. However, it failed, mainly because of what economists call The Law Of Unintended Consequences. The V8 engine freeze reduced the costs of the other manufacturers to the point where they could undercut Cosworth and price it out of the market.

While it is dangerous to think too far back into the past, the era in F1 from 1973 to 1982, when a team could buy engines from Cosworth, transmissions from Hewland and have a good chance of being competitive, is the model that F1 needs to move back towards. It is no coincidence that many of the current “grandee” teams got their start in that era.

PROPOSAL

1. Rewrite the engine and transmission regulations to allow for customer powerplants and transmissions to be used and for the teams using them to be competitive, possibly via a lower weight limit.

2, Introduce caps on the amount of money that the manufacturers can charge teams for engine supply. F1 may lose a manufacturer or two, but that is preferable to the current boom-bust cycle of manufacturers entering and then bailing at the first sign of poor results or economic trouble.

7. Public Relations

F1 has always looked remote and pretentious compared to most other sports, partly because of the bubble tendency, but also because the rules do not force drivers and teams to be open to the public, directly or indirectly.

The remoteness of many of the sport’s current leading figures, who in some cases have become very wealthy from it, makes discussions rooted in reality occasionally difficult. Many of them have an unerring ability, when put in front of the media, to say things that lead one to conclude that they live in a bubble, with no real connection to what you or I would recognize as reality. The mostly obsequious nature of media coverage makes breaking the bubble difficult. Asking a team principal “why are you managing to sound like a totally out of touch wanker?” would be a good start, but I do not see any reporter having the cojones to do it. Absent any blunt reality check, we can expect leading figures to continue to say head-scratchingly useless and non-empathetic things in public, usually some variant of “I’m all right, those other folk need to shape up or ship out”. That is, until they also begin to suffer financially, at which point they will start whining and complaining and playing the part of the downtrodden.

PROPOSALS

1. Mandated open times at race circuits and on social media for teams and drivers.

2. For persistent public verbal idiocy – a mandated evening of mockery in a bar with some real-world people at least once every 3 months

 

SUMMARY

In the short-term, if teams continue to disappear, F1 will have a credibility issue based simply on the number of participants. While Bernie may continue to insist that 14 cars constitutes a race weekend for F1, any outside observer looking at a grid of that size is going to come to a rather different conclusion, especially if they compare it to NASCAR, which routinely has 43 grid places filled. In the late 80’s through early 90’s, F1 often had full grids with pre-qualifying sessions to eliminate the slowest cars. The current three-part qualifying with only 20 cars, while fairly exciting in a structured way, is a pale shadow of that era.

 

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Crisis? What crisis? Says Bernie Ecclestone – Part 1

Back in 1979, then-Prime Minister James Callaghan left the UK, which was at the time impacted by rolling electrical blackouts due to power generation workers strikes, to attend the Commonwealth Prime Ministers conference in Mustique. TV viewers in the UK were treated to images of him and other dignitaries sitting under palm trees and mugging for the media while their power supplies cycled in and out.

When Callaghan returned by RAF plane to Northolt, a member of the media asked him whether it was a good idea of him to have traveled to Mustique in view of the crisis at home. “Crisis? What crisis?” was his reported response.The quote, as is the case of so many infamous quotes, was pulled out of a much longer series of responses. 

That response, reported countrywide, was probably a major contributor to his and the Labour Party’s resounding electoral defeat, and his replacement as Prime Minister later in 1979 by Margaret Thatcher.

I repeat that tale, not as a cautionary reminder, but as an illustration of how a few words can be pulled out of a longer statement and used for a long long time as a stick with which to beat a person or a governing body.

Today Bernie Ecclestone, the CEO of Formula 1 Management (FOM), is quoted thusly by the BBC:

“People say F1 is in crisis. Absolute nonsense. We’ve had a couple of teams in crisis.”

He pointed out that many F1 teams had failed over the years and criticised Marussia and Caterham for what he said was poor financial management.

“People come and go,” Ecclestone said, adding that team bosses needed to know “how much is coming in and how much is going out”.

So, according to Bernie, Formula 1 is not in crisis, just a couple of teams.

Hmmm. OK then. I guess we will need to overlook a few other salient points.

1. The signing by Sauber of no fewer than 7 drivers at various times in calendar 2014, culminating in their announcement of two new drivers for 2015 prior to the Brazilian Grand Prix, leading to two of their current contracted drivers (one race driver and one reserve driver) issuing statements that leave you in no doubt that they feel that they have been badly treated (possibly contractually). This article in Auto Motor Und Sport makes it clear that the underlying reason for all of the driver signings is Sauber’s desperate need for cash with which to make it to the end of the current season. (The article also reveals that Ferrari’s engine supply is secured via the use of the FOM money to Sauber as an escrow account from which Ferrari is paid directly, rather than Ferrari invoicing Sauber directly – a pretty good indication that Ferrari has a problem with Sauber’s ability to pay).

2. The rumours that Force India only received their fifth power unit component collections from Mercedes when they paid $6m of outstanding invoices from Mercedes by October 27th. Without that payment, they would have not had any race-worthy engines for the last 3 races of the season. (They could have participated in practice using older power units, but they would not have been able to race). The auditor reports on their 2013 accounts also revealed a massive loss of over $50m in 2013, and issued a warning about the “material uncertainty” that the company can continue to operate.

3. The failure of one of the most successful Formula 1 teams of the last 30 years, McLaren, to obtain a title sponsor since the departure of Vodafone at the end of 2013. While they may not need the money, since Vodafone left a year before the expiry of their contract, and would therefore have had to pay a penalty for early termination, it is jarring to see a “Grandee” team running with a mostly blank silver car, with a rotating collection of sponsors from race to race.

4. Worldwide viewing figures for Formula 1 are declining. Google “formula 1 worldwide viewing figures” and see what hits and websites you get. Nearly all of them talk about drops in viewing figures.

5. The publication of the distribution of Formula 1 revenues for 2013 that shows a large disparity between the amounts of money that top teams receive, and the amounts distributed to the bottom teams.

6. The almost total lack of transparency in the operation of Formula 1 from a financial perspective. Unlike most other forms of motorsport, where the amounts of money gained by competing are published, and all teams stand to win the same prize money amounts, Formula 1 is managed by a complex web of secret bilateral contracts between FOM and the teams, where officially no team knows what any other team is getting in terms of revenue and prize money. Ferrari apparently obtains over $200m just for showing up in 2014, while Marussia obtained a mere $10m.

7. The escalation of the cost of engine supply for a 2 car team from $10-12m in 2013 to at least $24m (and in some cases up to $30m) in 2014, due to the introduction of new V6 hybrid power units, replacing the frozen-specification normally aspirated V8 engines.

8. The utter failure of the sport’s governing body to understand the extent to which social media publicises leisure events. When people cannot even put up 1 minute clips of race highlights on Youtube without being hit by takedown notices, you know that you are dealing with a governing body that is clueless about the current media landscape.

9. The creation of the “double points for the last race” idea, voted into existence with seemingly no understanding for what it could do to the Drivers championship. Now that the leading team (Mercedes) has realized that the double points rule has the capability of destroying the credibility of the Drivers championship in a single race, they now think it is a bad idea. However, the sport appears to be stuck with the rule for this season.

This is only events in 2014. Think back to 2013.

1. We saw a supposedly well established F1 team (Lotus) lose its #1 driver Kimi Raikkonen to Ferrari because, if you believe the paddock rumours, by the time he stopped driving for the team, they still owed him all of his 2013 salary. Throughout 2013 we heard stories about how Lotus was going to be bought by a collection of investors, but after months of variations on “the money’s coming soon – honest”, no purchase occurred, and Lotus instead signed Pastor Maldonado for 2014 in order to be able to continue. Concurrently they lost their Technical Director and a number of other senior staff.

2. Sauber (again) spent most of the latter half of the 2013 season in crisis, with suppliers threatening to file court petitions which would have closed the team down

Bernie Ecclestone, smart guy that he is, is not about to be trapped into wringing his hands and shouting “the ship is sinking!”. He is going to continue to ra-ra and cheerlead, It is part of his job. However, those of us outsiders who have been following the progress of the sport over the last few years, it is difficult to not conclude that there is indeed a crisis developing. Maybe those of us not directly involved in the sport can see it better than he can.

 

 

 

 

 

 

 

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