In the last 48 hours there have been some interesting moves in Formula 1, in addition to the Young Drivers test at the Yas Island circuit. I will probably have a wrap-up of the testing at the end of the week. In basic terms it looks pretty much as it should do with a Red Bull fastest.
The Williams team announced that Rubens Barrichello will stay on for 2011, which was not a surprise. The team has a contract with Pastor Maldonado for the second seat and an option on Nico Hulkenberg and while keeping the German is the logical thing to do, the team must be certain that it has the money to do the job properly. Signing Maldonado guaranteed that. If the contract was 100% solid then it would have been announced by now so it is logical to suggest that there are clauses in the deal that would allow Hulkenberg to stay if the team finds the funding from somewhere else. Maldonado would not perhaps have signed the deal if there were no guarantees and one can imagine a situation in which he would be farmed out to HRT (or whatever it is called by the start of next season) with his funding if Williams finds the money to keep Hulkenberg. HRT could use the cash and would benefit from Williams technology, which would make the team much more competitive so Maldonado would have a better place to learn about F1 than in the frontline, under the spotlight.
Two questions come to mind, therefore: can Williams find the money? And can HRT keep itself alive?
Williams has been working hard at raising money in a couple of places for some time and it has played a very clever hand. The team has made an investment in Qatar with the opening of the Williams Technology Centre in the Qatar Science & Technology Park. This has led to a number of deals with Qatar-linked companies, the most recent of which is a deal with the J Sainsbury’s supermarket chain. If Qatar is going to get involved in Formula 1 – and the signs are that this will probably happen – then the Williams team is an obvious route in. The team has heritage and while not able to compete with the big teams because of its lack of manufacturer support (or a billionaire backer, such as Red Bull Racing) it is still in the hunt. There are also rumours from Germany that the team is also close to doing a deal with the Volkswagen-Porsche company. This merger is coming together slowly and the signs are that the company will be wanting to get involved in F1 with one brand or another. Ultimately it is hard to see the firm being anything more than an engine supplier, as running teams has proved to be rather expensive and not a very good return on investment for the likes of BMW, Honda and Toyota. Renault, Mercedes and Ferrari have fared rather better. It helps that the government of Qatar is an important shareholder in VW-Porsche and obviously having a German like Hulkenberg would be a good idea. The question is really whether or not the German firm will commit to F1 and build an engine for the 2013 rules; and whether if that decision is taken whether it will decide to get up to speed by doing an engine-badging deal with Cosworth for the next couple of years, so that its engineers can get up to speed.
The question of the survival of HRT is another issue. Yesterday Toyota announced that all dealings with HRT had been terminated and would not be restarted. This was a most bizarre press release. Normally these things are designed to tell the world something positive, but an announcement that something is NOT happening is therefore rather suspicious. My feeling is that Toyota has had enough with the Spaniards who currently own the team and are trying to force the situation. The Carabantes have been singularly unsuccessful at raising money and their decision to take on Juan Villalonga to help came too late to make a difference. If the team is to survive next year, it needs to be building a car NOW. The culture of mañana may work in Spain, but it does not work in Formula 1 and the feeling is that the Carabantes have now blown their chance and must be convinced to sell and recoup some money, or watch as the team goes to the wall. In fact, they own very little beyond the entry as the team seems to be rented (complete with all people and equipment) from Colin Kolles. He may not have the money to buy the entry from the Spanish, but he will be happy to work with others if they show up with more idea of what F1 is all about.
In fact, it could be that a smart investor will pump money into Kolles’s operation now so that he has the ability to build a 2011 car and then negotiate with the Carabantes over the question of ownership. It would be a risk, but the outcome would likely be a capitulation by the Spanish because they would get something from a sale, but nothing if the team shuts down.
One way or the other, the Carabantes now face the choice of failure or complete failure. The only hope was Villalonga, but they did not give him enough to find money.
The other fascinating point in recent days has been the announcement that Mubadala Development Company, Abu Dhabi’s state-backed investment fund, has sold its five percent stake in Ferrari back to Fiat, five years after taking a share in the luxury carmaker. The deal was valued at $167 million. This was decided not by the Emiratis but because Fiat had an option to buy back the shares, that were acquired in 2005. Mubadala has lost a lot of money in recent months because many of its investments that suffered in the economic downturn – although share prices will in most cases come up again as confidence returns. It reported a loss (announced in September) of about $1 billion, but some of this is simply accounting for the loss of share value rather than actual cash. The Government of Abu Dhabi is not in any trouble. According to The Economist the sovereign wealth fund ADIA is currently estimated to have US$ 875 billion in terms of total asset value. And the economy has not been much affected by the global financial crisis. Oil keeps coming out of the ground and there is no reason to suggest that is going to stop. Mubadala still has over $20 billion in assets under management. This move is interesting in the light of rumours that Bernie Ecclestone is working on a deal to have Abu Dhabi take over the Formula One group from CVC Capital Partners…
I wonder what this conversation was about http://twitpic.com/37ov2t
Ubaid,
Hmm… I think we were talking about babies… Nick is a new father… Ross is a grandfather… Stuff like that.
Don’t remember anything about F1.
What I find hard to get my head around about HRT is that they apparently made no improvements to the car all year, and yet they did not fall off the back of the field… or at least, not any further back than they were at Bahrain. Isn’t the F1 field – or at least the front runners – said to gain a second or two of performance improvement over the course of a season?
It’s a shame, because while the business and management (especially the musical chairs with the drivers) has been woeful, the team personnel themselves seem to have performed heroically.
I’d be sorry not to see a twelfth team on the grid next year.
Very interested in these rumours that Bernie Ecclestone is working on a deal to have Abu Dhabi take over the Formula One group from CVC Capital Partners…
I’ve been less than impressed with how CVC has gone about running Formula One. Essentially financing the sport by charging the circuits more and more, who in turn charge the fans more… or just go out of business.
All of this while not developing the sport. After all where is HD? And why has formula1.com not been developed since FOM bought it?
Another superb example of insightful journalism Joe. Love it.
Great background as ever Joe.
“This move is interesting in the light of rumours that Bernie Ecclestone is working on a deal to have Abu Dhabi take over the Formula One group from CVC Capital Partners…”
Given venture groups like CVC like to sell on the high, would now be a good time to derisk their portfolio and free up some cash?
Epic season, 19 races next year, 5 champions racing; it can’t get any better can it in terms of valuation?
The announcement that Hülkenberg wouldn’t be driving at Williams seemed pretty definite. You don’t think the wild card for the seat might be Giedo van der Garde?
Mark Jackson,
No.
Hi Joe,
What about Renault-Lotus deal? Do you have any news?
gordini,
Interesting at the moment. Things seem to be fluctuating. The Renault thing was supposed to be announced and has been delayed. Lotus Racing is Lotus one day and then something else the next. I guess it is either vacillating politicians or financial negotiations. Probably the latter.
Just a thank you note. These kind of insights is what make reading your blog so interesting.
Another great article Joe.
I fail to understand what the HRT proposition is to the outside world and therefore what possible value there might be for investors or sponsors. Anyone considering entering F1 would be better placed with a clean sheet of paper than the baggage that would come with HRT. And surely anyone with money to invest would approach Torro Rosso or Sauber in the first instance?
It’s also worth noting in conjunction with the Williams story that the company has already successfully supplied its hybrid ‘KERS’ system to Porsche for its GT3 R Hybrid which was promoted earlier this year by Hulkenberg lapping the Nordschleife Ring. The connections with Porsche and Qatar are so strong it would be a very comfortable fit. The question to be asked though is whether the final engine configuration for F1 bears any similarity to Porsche’s road engines. (That said Renault road cars don’t feature 2.4l V8′s do they?). Forced induction is something Porsche are almost defined by so it could be a strong marketing and engineering case to enter F1 to showcase its credentials in engine build / performance.
‘The culture of mañana may work in Spain’
Well, I will definetely not wait until tomorrow to say this: wow. what an stupid thing to say.
Paulinux,
Let us see how many Spanish F1 teams there are by new year
Wow Joe what a scoop!
Abu Dhabi to take over F1.
They have the money, yet i always thought Formula One as one of Britains best exports…
Joe, you are amazing.
You took just one day off, and then returns on great form to the job of clarifying us about ongoing situations and its possible developments in the F1 scene.
I thought I was going to give myself a break from the whole thing, but here I am, checking your personal musings – my favorite tag.
Personally wishing that Williams Team can find a way of keeping Hulkenberg in their lineup – sick tired of ‘populismo latinoamericano’, which I have to stand in a daily basis, and now seeming to set foot in motor sport.
Things are starting to really heat up.. fascinating.
hi Joe, what about Bernie E buying HRT’s entry at a firesale price and the selling the spot to the “right” person at a premium ?
Graham,
I believe he has already tried
Give the man a couple of days off and… Boom, you get a post like this! Very thorough article as usual Joe. Any ideas on who the potential parties could be to buy the entry from HRT? Do VW / Porsche have any significant middle eastern investors who’d be willing to invest in HTR as a stopgap?
Hi Joe.
Thanks for another interesting and enlightening post. I have enjoyed your views and reports this year ( as always ) and want to pass on seasons greetings to you and yours. Have a great break.
They need to be more careful giving Teams a place in F1 from now on. HRT was a joke, and a mobile chicane too often.
Maybe they should have a F2 championship where new teams and drivers could start. It would have a “real” budget cap and rules that is actually enforced by FIA and still use the same resources of F1 such as bulk transport, same weekend and tracks as F1, journalists are there… etc….
They could trial tyres, environmental experiments, new regulations, use 1 – 2 year old F1 chassis, reconditioned engines , other parts sold by F1 teams that are currently thrown out? drivers in this “Formula 2″ level could develop easily under less pressure.
F1 teams could use this to bring on young drivers.
But really the FIA must decide on team orders before the next season. Times have changed,
Yay an update! I have been worried how I will last till March.
I hope Hulkenberg won’t end up at HRT. Unless the car improves by leaps and bounds.
Wonder how the Team Lotus thing will turn out…
Meanwhile I’m still somewhat sad about the last race. Alonso is not one of my favourite people but somehow as the race progressed I could almost feel his + Webber’s despair at how things were turning out and ultimate realisation that there was only so much they could do + it wasn’t enough. Seemed like an unfolding nightmare. I found it painful to watch.
Very interesting news Joe. Thankyou for bringing some more light to this murky situation. I do hope Williams can come up with the money, so that they can hang onto Hulkenberg and let HRT have Maldonado.
Joe, I remember reading that the VAG board had dismissed entering F1 by 2013, regardless of the brand. But you believe they are still in the picture?
Lustigson,
What you may have read was that the Volkswagen brand was not coming to F1. VW has about 10 brands to choose from.
I am amazed that the Yas Marina track, which cost so much money and looks great but still they continue to use Mr Tilke who continues to design tracks that the best drivers in the world cannot pass on. Why ?
cobbs,
A very good question when there are better track designers out there.
Dear Joe,
You sound like if Nico Hulkenberg still has a chance to remain with the WilliamsF1?
After the team’s announcement on Monday as well as Nico’s announcement on his web site (in addition to today’s news report about Willie Webber getting upset about the axe Nico received after the race), is your second paragraph still true? Or, Hulk’s chances are now only with Force India?
It would be a shame if Williams can’t keep Nico, his qualifying laps at Brazil were one of the highlights of the season for me.
So maybe HRT will disappear, so what? It would be bad news for the rank and file staff but hopefully the arrogant Kolles would slip into obscurity where he belongs.
Vw seem to have been on the verge of entering F1 for years, hopefully they will do so now and help Williams move forward. Remaining an engine supplier would be a wise move as running the whole team seems to be beyond the capabilities of most car makers.
Thanks for the insight Joe.
Some of the other sites had the “Hulkenberg leaves Williams” thing as a definite story. Reading between the lines of your post, it seems not. I suspect that Maldonado’s sack full of money comes with a condition that he drives for the senior team. However, surely the precedent would be a certain Mr. Vettel who had a year with the juniors before being promoted. I think Hulk should stay, Maldonado have a year with HRT/whatever it is called then move up in 2012 when presumably Rubens will retire. I guess this is the sort of problem that Frank and Patrick are happy to have.
Apart from that, I echo the sentiments of one or two other posters who are looking forward to your updates and analysis of all the Lotuses, Lotii, Lotusii, well, you know what I mean!
@ Cobbs,
As was commented earlier, HRT did well to hang on to the coattails of the pack this season and in fact were rarely lapped more than twice during the races, despite their apparent lack of pace and upgrades.
Formula 2 already exists – it is barely worth its famed title.
Still think that the only viable option for HRT, assuming that Villalonga can find them some money but not enough to have Toyota develop the TF110 chassis, is to go back to Dallara with some millions and ask them to attach Williams gearbox, moving rear wing, and single diffuser, as well as trying to tighten the car up a bit.
And then, if Villalonga can then proceed to find enough money to let them run the season without Embratel money (such as it was) they can maybe run Klien for the results and Chandhok for what sponsorship he can bring in Indian sponsorship ahead of the Indian GP next.
If not, they’re not long for this world, I think.
Interesting that Bernie had tried to purchase and flip them though. I guess his offer must have been distressingly low — or the Carabantes distressingly detached from reality.
Joe,
Word over here in the US is that FIAT is looking to sell over 40% of its stake in Ferrari, to help fund it’s Chrysler takeover. VW is reportedly at the head of the line to buy. I’ve also heard TATA mentioned as well.
Travis,
I think that the stock exchange would be a better idea. That way they stay well in control.
Joe, another insightful article. This is why your blog is a must read. Keep it up, but get some rest this off season, will you?
Would be nice if Ricciardo get a decent drive, he’s worth it, did a good job in Renault 3.5.
Joe,
You think HRT were using the link-up with Toyota to try and give them credibility for 2011, thereby using it as a selling point to gain sponsorship. Then when they failed to gain any/enough sponsorship, to pay Toyota, they are now trying to back out when the 1st payment came due?
Because who would sponsor them if they admitted they would be running a 2010 B-spec and had no facilities and engineering base?
A bit dirty, but it could have worked.
‘Let us see how many Spanish F1 teams there are by new year’
Oh, probably none, as I too have my doubts about the current HRT keeping the same name at the start of next season. But my comment still stands.
Very interesting piece, as always. Thanks. Your suggestion here seems to be that Williams haven’t necessarily parted with Hulkenberg despite the announcements? Is there really still a chance that the right money could keep him?
P.S. Just started reading the copy of the Grand Prix Saboteurs that I purchased for my father last christmas. He enjoyed it immensely.
Weren’t talking about waistlines by any chance ?
I guess Williams is the prime example in F1 of the first to do something not getting the most benefit from it. F1 finance seems to revolve around the middle east more and more each year. Frank was there 30 years before anyone. I think he got their too early otherwise his contacts book would have his team winning if not dominating championships now.
Shame for Williams & Hulkenberg to part after a promising first season but money talks. Somehow I don’t think Maldonado will set the world on fire but I’ve been wrong before. I hope he does a decent job if it goes that way.
Anyway, Williams put up with Nakajima for a couple of years to get cheap Toyota engines and I’d expect Maldonado can do better than Nakajima.
Today’s Italian newspapers seem to put the Hulk at Ferrari instead of Felipe…
Silly season even after the season?
Baktru,
Yes, well apart from the Williams contract for five years all is well… Money may change that, but
Joe, thanks for the reply. I’m not sure what I’ve read, actually, besides statements regarding either Audi or Porsche being considered for F1. Which fits your description above.
The CVC F1 fund has a rate of return of over 40%, so getting out now could be a wise move considering FOTA want 85% of funds raised, up from the current 50%.
The Abu Dhabi Investment Authority and Mubadala’a interest in acquiring F1 from CVC, may be the other reason for Mubadala selling back their 5% in Ferrari, to avoid a clash of interest.
[...] Source: http://joesaward.wordpress.com/2010/11/17/in-the-last-48-hours/ [...]
Isn’t Williams actually very serious about their flywheel tech?
And they can demo what they’ve been up to next season.
I thought that was a clever commercial play. I think they might even have sacrificed three seasons’ pace because of how much effort they put into the KERS.
Their model is in the eco 911 GTR 3. Which is a major design win.
So, they’re already happily nookied up with Porsche.
– j
Joe, et.al.
also about VW, those brands share almost a complete platform, so they can pick almost (big bold “almost”) equivalent talent from any department. Though the skunkworks outfit resided at AUDI for some time, you need to watch the internal movements of people to tell whch brand they fancy at any given moment, which preference has been in rotation. Their programme really is class. Williams is the entry point, but VW is so unbelieveably political (who else poaches their arch rival’s CEO, to sacrifice him in a hissy fight? OK, Larry Ellison. But that’s the shortlist.) and the attempted Porche “reverse takeover” of VW AG, which ended up ruining Porsche, will still have open sores if not wounds. Bear in mind that Piech was not the favored scion of FP.
I’ve no real insight, but broad – brush I think i’m fairly accurate. VW AG have been making racing vroom vroom noises for ten years at least, very strongly the moment they bought RR&BM pre – carve up with BMW, so i think it’s a matter of time only, whilst they work out their internal concerns. Merely speculation now, but if VW do come in, i think they’ll like to make a point of sticking around, if only to flip a finger at the manufacturers who ran off. So, that in mind, I don’t think it’ll be with just a team.
Putting my mouth where my money would like to be, next season’s comers are FW and Fernandes.
– j
The teams should own the commercial rights to the sport. The stock market is a terrible idea.
Jodum,
I don’t think anyone has mentioned the stock market
Joe
I’ve heard the reason for the Williams lack if announcement is that they are still negotiating with a potential title sponsor (one of the top Qatari banks). If they secure that i understand they would prefer to take Hulkenburg. I wonder of Maldonado to hrt short term with his sponsors showing on both cars might work….
What do you think?
Andy,
A perfect summing-up of the current situation, although I think the expression “Qatari government” would be better than “one of the top Qatari banks”
That would certainly explain FW stumping for the Qatar GP this week…
Bernie and Abu Dhabi eh. A Jewish man and Arabs doing business eh. Maybe Bernie could settle the Israeli / Palestine problem while he’s at it !!