There are rumors and speculation that the underlying motive behind the attempts by Giedo van der Garde and his lawyers to claim his seat in the Sauber team at the Australian Grand Prix is that it is part of an attempt to force the Sauber F1 team, either into bankruptcy, or to a point where the team has no choice but to accept an offer for it to be bought, or it will go bankrupt.

The theory behind this is that van der Garde’s father in law is the Dutch businessman Marcel Boekhoorn. He is estimated to be worth $1.5bn. If those estimates are anywhere close to true, he could probably buy the entire Sauber team out of pocket change.

One thing I have learned over the years, from reading biographies and news articles, is that highly successful wealthy business people seldom frivolously invest their own money in projects with a low chance of success. Wherever possible, they try to invest other peoples’ money, and limit their own personal exposure. They know the value of money and what it can do, and they are experts at making it work for them.

It is therefore far from obvious to me why Marcel Boekhoorn (or anybody else for that matter) would want to buy the Sauber F1 team. Based on what has been happening to the team over the last 3 years, it appears that the team is struggling to survive. It’s sponsorship revenues have declined as external sponsors depart. The most recent departure was NEC, which sponsored the team last year. NEC left Sauber at the end of 2014, and is now a sponsor for Force India. The only current visually significant sponsor on the car not brought to the team by drivers is Oerlikon, whose name adorns the top of the dorsum next to the engine air intakes.

Rumors in the F1 journalist community have Felipe Nasr’s sponsors providing around $25m this season, and Marcus Ericsson’s sponsors providing another $15m. Let’s add $10m for Oerlikon, and $10m for other smaller deals. That gives a total sponsorship revenue stream of $60m. Now we have to add revenues from FOM. In 2014 this estimate was published about the revenue distribution in 2013. This showed that Sauber may have been paid over $70m in 2013. However, that number will have reduced significantly this year since the team failed to score a point in 2014. Let’s say it is $40m.

This gives total team income in 2015 as $100m. That sounds a lot, but in reality, according to recent stories, to run a properly functioning team takes at least $125-150m a year. That does not include further investment in people and facilities to move the team up the grid over time.

There is also the matter of what debts Sauber has accumulated over the years. If the team owes money to banks or other financial institutions, it will have to fund interest and principal payments on the debt, which will eat into its free cash flow. The fact that Sauber spent a lot of time and effort  in 2013 and 2014 trying to find investors from Russia, prior to finding it’s current drivers, suggests that they were trying to find external investors to stay solvent. It is almost impossible to know what debts the team currently has.

So if Marcel Boekhoorn was to dip into his pocket and buy the team, his committments would be the money to buy the team itself (believed to be owned 66% by Peter Sauber and 33% by Monisha Kaltenborn), and money to pay off the debts. Then there is the ongoing funding of the team. The economic model of F1 currently requires buyers to stump up seriously big money every month just to keep back of the grid teams afloat, since those smaller teams all get low payouts from FOM. The payouts are skewed heavily towards the historically successful teams.

There is also a severe lack of new sponsors in F1. The sponsor changes in 2015 seem to mainly comprise sponsors changing teams (two examples visible are Rexona moving from Lotus to Williams, and NEC moving from Sauber to Force India). There are no new big-money sponsors visible on most cars, and many of the visible sponsors are either brought by drivers, or are companies owned by the team owners.

If Marcel Boekhoorn is serious about buying any F1 team, he had better have a very good business development plan…

Having read the published judgment, there are no more stunning revelations. Because the arguments in the court were confined to the matter of applicability of the arbitration award in Australia, there are no juicy revelations about driver contracts, finances etc.  The rulings are brief, as explained by the judge, due to lack of time.

What is interesting is that the original arbitration ruling on March 2nd was made under UK law, not Swiss law, which is what I would have expected since the Sauber team is based in Switzerland.

The court was not impressed by the argument that because Giedo van der Garde BV (the contracting entity with Sauber for the driver contract) and Giedo van der Garde are two separate entities, that the ruling does not really apply to Giedo Van Der Garde the person. Well yes. If I heard that argument in front of me in a court, I would be tempted to respond “nice try…and do you think I came down from the hillside with the last rainstorm?”

The ruling pretty comprehensively demolishes all of the other arguments from Sauber. It will be interesting to see what new arguments they come up with in the afternoon appeal hearing.

Leaving primitive schadenfreude aside, it it always awkward to see one party to a legal action getting its posterior kicked in a court room.

We just witnessed that event in the Victoria Court Of Appeals, when the judge read out a short summary ruling. Giedo Van Der Garde prevailed in his attempt to have the Swiss arbitration verdict upheld in Australia. The court dismissed all of the Sauber team’s arguments, swiftly and comprehensively.

The lawyers for Sauber looked half-shocked, half-demoralized. Beyond asking for a copy of the full detail judgment, they said little. The lawyers for Van Der Garde asked for a signed copy to take to Sauber, and then craftily took the opportunity to remind the court that their client was ready and willing to drive, and would be looking forward to traveling to the circuit. They also pointed out that they had emailed Sauber at 7.45pm on Tuesday evening expressing their willingness to work with the team, but had not yet received a reply (HINT TO COURT – We’re not the ones being unco-operative, your honour).

The judge felt it necessary to point out that the court officers were available 24×7 to resolve any issues (HINT TO DEFENDANTS – You had better be co-operative). Van Der Garde’s lawyer then said “I hope we will not be back in front of you under those circumstances, your honour (HINT TO DEFENDANTS – You heard what the judge said. Be co-operative).

Sauber is clearly simply playing for time, for it has been announced that they intend to appeal the ruling this afternoon. Quite what grounds they intend to argue on I am not sure. Their previous arguments concerning non-enforcement were waved away in today’s ruling. From comments made by Monisha Kaltenborn, it seems that they may try to argue on the issue of safety, but I think that is a long shot.

Everything about the presentation of their case convinces me that Sauber never thought that could win in court, and their tactics seem to be designed to play for time and spin out the legal process to the point where they can either avoid having to run Giedo Van Der Garde, or so that they can claim force majeure and not run at all on the Grand Prix weekend.

This is a real soap opera, but with real characters, lots of money and international finance. The only thing missing is sex.

The Day In Court is now over. The court has reserved its judgment until Wednesday morning.

Although the court reports are fragmented, and mostly concern tabloidesque claims made by the lawyer representing Sauber, it is clear that Sauber’s defence of their position did not involve arguing that they are not in breach of contract. Instead, the arguments advanced in court by the Sauber lawyer seemed to consist mostly of dire warnings and predictions, and outright falsehoods. The claim that Van Der Garde has no Superlicense is easily disproved, and Van Der Garde’s lawyer disposed of it during his time at the podium by passing his Superlicense documentation to the judge. The claims that Van Der Garde cannot fit the 2015 car, that he does not have a seat, insurance etc. are all flim-flam. As others have pointed out, at one race weekend Sauber put Pedro De La Rosa in the car at something like 15 minutes’ notice. That does tend to undermine arguments like this. Van Der Garde has a race seat from 2014 which will probably fit the new car, unless Sauber destroyed it.

Worst of all was the argument that Giedo Van Der Garde could be at physical danger if he tried to drive the car. Well, duh. Formula 1 is a sport involving drivers strapped into high-speed projectiles hurtling around racetracks. This could be dangerous? After the break – water is wet, and the Sun rises in the East.

The lawyer for Van Der Garde appeared to spend a lot of his time explaining the contractual background to the dispute, but because that is kind of complicated, most of that has yet to appear in reports. The reports so far mostly focussed on the Sauber “we are all doomed if we put Giedo in the car” arguments.

These arguments advanced by Sauber seem to be so inept and lacking in substance that one is forced to ask why they put up such a poor performance. It is almost as if they were going through the motions. I am wondering if there is a hidden agenda at work.

Also notable was the presence in court of Felipe Nasr, Marcus Ericsson, and lawyers representing them. If Sauber had a strong case, there would have been no need for them to be present. The fact that they felt it necessary to be there tells me that they have little confidence in Sauber’s defense. Their threat to sue Sauber if either Nasr or Ericsson is denied a drive is somewhat predictable, but should not be of any interest to the court. They are not parties to the current dispute. If Sauber is found to be required to run Giedo Van Der Garde, then Sauber has to sort out the issue of competing contracts.

I stand by my assertion that Sauber has to sort this mess out before they find themselves on the back foot in a game of legal Whack-A-Mole with Van Der Garde’s lawyers. Right now, F1 is in the headlines for the wrong reasons.

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.