The Formula One Teams’ Association is teetering on the brink of self-destruction. And that is not really a surprise given that trying to get competing teams to work together for the best interest of a nebulous thing called “the sport” is about as easy as herding cats. Everyone knows that the teams will get a worse commercial deal from the Formula One group if they do not act as a single unit, and one might be tempted to say that they deserve that fate if they do not have the foresight to understand the full picture. However, it is a bit more complicated than that, because some of team bosses know that their future depends on success on the race tracks rather than the commercial deals that they can cut and so their priority is not what is best of the sport as a corporate unit, but rather what is best for Fred Bloggs Esq, soon-to-be ex-team principal of Pink Flamingo Racing. In such situations it is all too easy for Bernie Ecclestone, the man currently in control of the commercial side of the sport, to gently ease metaphoric crowbars into the divisions and thus heave FOTA apart.
The major problem at the moment appears to be Red Bull Racing, which some feel is using a different interpretation of the Resources Restriction Agreement (RRA) than the other teams. Red Bull does not really care about the RRA because, no matter what noises the major players may make, the sport is simply a marketing tool for a sugary drink company and if one morning Dietrich Mateschitz gets up feeling grumpy, the involvement could be over by lunchtime. Mateschitz has loads of money to spend on marketing, as his cans are more expensive than his drink, and he and Red Bull do not ultimately care whether they get a few more millions from a better commercial deal brought about by collective bargaining. Success, in any case, means that Red Bull’s annual bill for the team is reducing as sponsors rush to jump onboard. Yes, Mateschitz has invested a lot and deserves to be respected for that, but do we really believe that Red Bull will be in F1 in the year 2050?
No… we do not. And that is the problem.
Team boss Christian Horner said the other days that Red Bull is an F1 brand. That is not true because tomorrow the team could easily become United Diaries Racing… It is not bound to the sport like a McLaren or a Ferrari, the real F1 brands.
In the overall scheme of things one might argue that Red Bull is not an essential element in FOTA, but as long as the team is winning races, then it is important. And if it is winning races because it has a different interpretation of the RRA the pressure is on the hard core F1 brands because they are unable to compete while keeping to the RRA but need success to keep the sponsors happy and so on. So when push comes to shove, therefore, the needs of the individual must come before the needs of the union – and FOTA blows up.
However, there are two ways in which this process can be stopped. The first is that Red Bull stops winning races, and quickly ceases to have the same kind of relevance. This is not as crazy as it sounds, as much of the success is down to the genius of Adrian Newey. So if Ferrari was to very rapidly offer Newey a huge sum of money to move to Maranello (or Papua New Guinea come to that), the problem of FOTA unity could be sorted out quite quickly.
The other way to solve the problem is for the FIA to head the problem off at the pass and bring the commercial rights of the sport back in-house, by buying the rights from CVC Capital Partners, using borrowed money, just as CVC bought the rights based on loans. This is a scary move for a bunch of blokes in blazers but perhaps they could find a nice tame investment bank to help them out. The terms of such loans need not be anything like as aggressive as those in the current era and thus teams would get more that they do now and ultimately would get even more. If the teams cannot get together to create a suitable structure to divide up the spoils in a grown-up way then the federation should do it for them, by means of some sort of foundation or charity. This would be sufficiently hands-off to avoid the problems with the federation’s status as a non-profit organisation; while at the same time stopping all commercial interference in the championship. Suitable trustees would then oversee the money, which would be generated using the existing structures. In this way everyone would still make money, but the splits would be fairer and the sport could begin to operate like a corporation.
Great article. I wonder if any team bosses read this blog. Would be interesting to know.
That all seems to be far to sensible to actually happen in F1!
A fantastic article Joe, I had been seeing snippets that Red Bull were causing trouble in FOTA and had no idea about the details behind it, now I know. Keep it up.
Reminds me of what Ben Franklin said, “We must, indeed, all hang together, or assuredly we shall all hang separately.”
Enlightening Joe, good post!
Ah, Red Bull, the team that brought you David Coulthard in a Superman cape, Dr Marko stroking a white cat and pushing the button for Mark Webber’s ejection seat, young driver programs large enough to put on a five-a-side football match, farting noises when the driver comes off the throttle, and now, to top it all off, the impending demise of FOTA and a new Concorde agreement which will consolidate even more F1™KING POWER in the hands of B. Ecclestone.
What a positive influence they’ve had on the sport.
Ash,
I think one should add the good things as well, to be a little more balanced.
Joe, the prospect of FOTA falling apart does fill me with raw terror. For one they’ll be good for picking off one by one and you can fully expect Bernie to target the boys and girls at Marenello first. However if Formula One continues down the path it is on, as seems inevitable, then what can we look forward to?
Ever increasing ticket values for one as the hosting fees go up 10% ever year… in 10 years time will there be any circuits left? I’m convinced that at some point Formula One will not make any sense for circuits and they will stop making themselves available.
When you combine this with what I see as an inevitable move to Pay TV, as Free-to-air can no longer compete with the huge sums on offer, I do fear for the future of the sport.
Joe,
you mention differing interpretations of the RRA, could you give us a quick primer in how their interruptions differ if you get the chance? Is it, so to speak, the business equivalent of the double diffuser situation, where people just found a legal and viable alternative via clever reading, or is it simple that because red bull is large and not very car focused as a group they’re able to lose a lot of cash in other parts of the organisation; hence Ross Brawn calling for a more forensic account analysis?
thanks, for time and the blog.
p
pm,
I honestly cannot go into details on this without stirring up trouble. All that we need to be precise about is that there are different interpretations. If we say more than that people will start jumping up and down.
As usual a fantastic article, Joe. It does seem that the individual team principals are looking to make a deal with Bernie, instead of standing shoulder to shoulder and as such, be stronger. After all it´s money, and teams shich struggles wants more. I also don´t expect Red Bull to have a long-term aim to stay in F1, but perhaps another decade or so. The difference between Ferrari and Red Bull, is that the F1 team run by Ferrari, are only there because Enzo Ferrari cared only about F1. His roadcars pays for the show, and other teams are there for other reasons. I´m fine with that, but so many observers fail to see this and think that once you´re in, you stay. F1 doesn´t work that way.
However, I would hope that the FOTA finds a solution
A very good article indeed.
The way to solve F1′s financial and technical squabbles is simple: frame the technical regulations in such a way as to ban Adrian Newey. “No member of the design team shall be bald & have a brain the size of a planet.” Something like that.
A little harsh on Adrian, certainly, but think how it would help to even out the field!
Disclaimer – No, I’m NOT being serious!
First time I’ve read your blog Joe and I have to agree with the above comments that this is a very, very interesting and well written article.
Keep it up and keep it real fella.
The RRA was always going to be treated with a pinch of salt. I’m just surprised that Ferrari/McLaren/Mercedes etc have not launched close divisions called ‘sport development centres’ that develop their kit from alternative budgets.
Or am I being a little too cynical?
Would be interesting to see Newey at Ferrari….I shudder to think how many zeros they would add onto his pay cheque, mind!! Presumably Marlboro would have to sell another few million cigarettes to cover it!
The mention of Papua New Guinea had me laughing manically. Nice article.
Joe,
Which teams do you think will still be in F1 in 2050 and which of the current brands in F1 do you consider to be real F1 brands?
Johan,
Ferrari, McLaren, Williams, Sauber. Cannot see Force India still being there..
Interesting times at Pink Flamingo…
Mr. E has a tried and true formula of divide and conquer, it used to be Ferrari that he went for to break up any unity in the teams but now it seems Red Bull are the easiest way in.
A few weeks ago there was an interview in the F1 official web site with Bernie and C. Horner acting very chummy. Mr E said something about how FOTA was unnecessary (then again he would, wouldn’t he?) and Horner hinted at agreeing with him…sad.
The FIA taking over seems like a pretty good idea, but as another poster already mentioned, maybe it makes a little too much sense to be carried out in this circus.
http://www.formula1.com/news/interviews/2011/9/12582.html
It makes a change from it being Ferrari that are the splitters.
Although I gather that Ferrari have regularly offered Adrian Newey big money to go to them, but so far, it hasn’t done the trick.
Are Red Bull nee Jaguar nee Stewart one of the teams fretting about too-regular name changes vis a vis the teams Lotus?
Or may be it’s Mercedes nee Brawn nee Honda nee BAR nee Tyrrell kicking up? Or else maybe Force India nee Midland nee Spyker nee Jordan (did I miss one…?)
Joe,
I’ve heard this weekend that Bernie and Horner are very good friends… so here is my take.
Bernie is looking for someone to take over the management of FOM, who better than his trusted friend Horner? Now Mr Horner knows how difficult FOTA can be so he is trying to rip them to bits so that his watch is less difficult.
Or maybe (as you mentioned in your article) Bernie is getting his crowbar in through Horner just because he can
All speculation but either way, I enjoy the sport and the politics, who said F1 was boring! Great article BTW
A pretty good read, but the teams don’t have the unity to buy up the sport, or the cash to pay off the loans.
Deane,
You think CVC had the cash? They borrowed it and paid off the loans using the revenues of the sport.
There is, of course, the third option – cut the middleman out.
Constructors could split from Formula One and start their own formula, say, Formula C. There are lots of circuits that are struggling financially under FOMC fees, some have or will soon drop out of FO schedule. So those struggling circuits (and surely some others) could be easily convinced to switch to another provider of the pretty much same racing entertainment.
The advantage of this option is that Constructors don’t have to pay loads of money for a bunch of worthless contracts (what are FOMC contracts going to be worth without major teams? Very little, I’d guess).
The third option
Who wants to compete for a Formula C title? It means nothing.
The phrase that is important is FIA Formula One World Championship and no-one else can use those terms nor regulations
“….metaphoric crowbars……”. Love it! Piles of cash would be another description.
I think you are correct in that the FIA is theoretically the only “neutral” party My ultimate able to administer the sport for the best of all involved.
My ultimate fear is that with all that money coming in the FIA agency established to run the sport would become a cash swallowing bureaucracy interested in building it’s own empire of regulation, inspection, and form filling minions.
When you stop to think how much Bernie manages to get done, essentially by himself, it is really incredible.
Advance apologies for the poor editing on the previous comment
> Who wants to compete for a Formula C title?
I suspect there will be plenty of teams who would want to compete for a Formula C title (or Ultimate Formula, Pro-Formula, whatever), providing that it pays. Cutting the FOMC out, Constructors could charge the tracks about 50% less yet getting the same amount of money as they do now.
People have a short memory, after a year with Ultimate Pro-Formula C not many would recall what Formula One was or care why it had disappeared.
The third option,
We have been through this idea before several times and the third option does not exists. Just as A1GP was doomed from the start, as are all the other similar ideas. You have to understand that the FIA Formula One World Championship has 60 years of history and tradition behind it. That counts for a lot.
Many of us will remember our scepticism, nay disbelief, when we first heard of the RRA, but we were assured that it could be properly policed and audited.
Even if some were not convinced at the time, it all went quiet and we assumed it was working ok, by some miracle the teams, famed for working around, over, though and under the technical and sporting regs were going to comply and not spend a penny over the limit directly or indirectly.
The huge differences in budget between the front and rear of the grid would effectively be limited, giving the guys down the back a better chance to compete, very amusing concept!
The well known disparity of Ferrari getting double that of anyone else from Bernie is now going to be challenged by Red Bull also wanting double. If any FOTA/Concorde agreement requires the acquiescence of the lower teams then they have nothing to loose by refusing if they were getting next to nothing anyway. But without FOTA they have no say.
The UK commentators always mention the only time the back-end teams can have any real influence is on the forming up lap, the slower they go, the hotter the engines will be at the front.
Bernie still seems firmly in control, even if a CVC Director was appointed to oversee F1 not long ago. I don’t see Bernie allowing F1 to be sold to anyone even though he is now out-vote-able by the iDirectors of CVC.
But we have another year yet in which to speculate on the FOTA and Concorde situations, a year with reduced tv coverage but increased revenue for CVC, so why sell, it’s going great!
All the top teams break the RRA, Ferrari conveniently have nearly 100 engineers working on their historic car collection and not their race team, ho ho ho. Mercedes conveniently ignore their engine department, and the amount of ‘external companies’ (which under the RRA rules you can spend more money on) have massively increased, but are largely bogus.
As for buying the commercial rights, FOTA don’t have the money, and the EU probably wouldn’t allow the FIA to have them back, not after forcing them to dump them in the first place … Which is a shame.
Karen,
Well, you would say that, wouldn’t you? It is inconvenient for Mr E’s empire that there might be another buyer that would not be under his control. FOTA has as much money available as CVC did when it bought into F1. They simply borrowed money, so all that is needed is a fancy business plan to impress a bank. It i a solid investment, moreso if the elements of disruption are removed. As to the FIA doing the same thing, the important word in your post is “probably”. The reason that the EU forced the FIA to change before was because the people running the FIA and associates at that time were, how shall we say, pushing the envelope, when it came to the EU regulations. Things have changed and if everything was properly organised there is no reason for the EU to get involved at all and reason for any questions about competition law.
So bye-bye to FOTA then?
Bludd,
Let us see.
Joe,
isn’t the idea of a FIA driven commercial spin off closely similar to the FISA, FOCA situation there was back then?
Technical and sporting rules have a huge impact on the budget and the spectacle, so they cannot be developed by someone who has no commercial interest in it.
An interesting alternative would be for FOTA to buyout from CVC and transform F1 in a franchise sport like NFL or NBA in the USA.
Mclaren and Ferrari already are de-facto franchise teams.
And to stir things up a bit, why not appoint Mosley as first chariman of this new structure…
That would make for an interesting off-season
Fine work again Mr Saward.
I have suspected for sometime that the Red Bull owned racing team has not being playing well with other children in the playground. That boy Horner cannot be trusted, he has a poor memory and always gets caught out when telling fibs. To watch him worm his way out of it with more white lies is quite amusing though. He also seems to give in to peer pressure from the headmaster.
Well FOTA is not ALL the teams now. It is all minus HRT I believe. So let Red Bull go and let Bernie try to deal with the block left. Because Red Bull vs HRT will be as thrilling as the debacle at Indy when only Bridgestone teams ran. The real problem is that the only leverage the teams have is to walk away and that is Bernies stranglehold. They dont want to walk, they want to be in F1. Bernie is betting they wont miss a race, the question is will FOTA call him on it?
Great article.
the other alternative is do nothing and watch CVC go to the wall as more and more countries bail out of paying stupidly high fees….
in the current global economy, I can’t see a host of new potential victim countries willing to commit financial suicide.
First Class Article Joe. How you manage to pick your way through the legal minefields of what commentators like you can and cannot say without bringing the roof down on top of you I’ll never get to grips with ! But you do it. And you do it damn well !
Ecclestone and Mosley created the modern F1 world we know and unquestionably their far-sightedness about what it should become was a work of genius, but the staggering greed of the current commercial rights owners negates all that good work. As you have remarked and I have commented before, using our sport as a milch cow to pay off their debts is just about the worst financial hit the sport could take. Your solution of FIA taking back the commercial rights with a buy-out is by far the best solution but with the best will in the world I cannot see the bureaucrats running FIA having anything like the commercial balls to see it through. They would faint at the scale of the money involved. !
Doesn’t give us a great deal of cause for optimism does it ?
Do CVC even want to sell? How is F1 working out for them as an investment?
Andrew
CVC is an investment fund. These things have time limits
Joe, I was wondering when you would get around to commenting on Mr Horner’s recent rumblings about FOTA. Looks like the divide and conquer approach will work again (it has not failed as an approach for over 3 decades … maybe I’m wrong on that timeframe). It seems to have come about much more easily than I expected this time around because the teams, for once, seemed to be acting like adults … but then reality bites! It amazes me that some people are happy to be used as pawns. But as you say Joe much of their motivation is personal survival and status. Pretty base really.
Maybe FOTA needs a Commissioner, similar to the NFL who is hired by and acts as the point man for FOTA.
He is contracted to act on behalf of FOTA for a period and be the counter to Bernie.
I know getting a whole bunch of ego’s to accept this kind of situation would be hard, not impossible but very, very challenging.
When the impact of the divide and conquer strategy used by Bernie is muted by having only one face to negotiate with then the easily fractured nature of FOTA will be blunted as one of Bernie’s negotiating tools.
I agree with you that CVC borrowed the money to pay for F1.
I just wonder what sort of non-performance clauses and penalties may exist for the commercial rights holder if the property in question doesn’t deliver the expected result?
Perhaps this also drives the manic efforts to get governments to buy races that have more empty seats than ticket holders at the track.
phile
> The way to solve F1′s financial and technical squabbles is simple:
> frame the technical regulations in such a way as to ban Adrian
> Newey. “No member of the design team shall be bald & have a
> brain the size of a planet.” Something like that.
A minor distraction. He’d design some virtual hair and a brain compression device and we’d back where we started, just with him looking a bit different…
I am in sympathy with the third option, except I’d call it Formula Zero. Makes more sense to those raised on computers, and those raised on computers will soon outnumber those who were not. (Pirelli would love it too, but who cares about that?)
The claim that any specific name of the championship matters is IMO a very dubious weapon. Unless I’m missing something (which I might be), it is based entirely on perception without any real substance. If all the teams (including Ferrari) and important venues (mainly Monaco) stuck to their joined guns, the public would perceive an unimportant name change and be happy for any reduction in ticket prices.
And what would F1 do then? Without the teams it’s just a name. And if F1 was nothing but a hollow name without major teams, who would pay the $50 million per race and God-knows-what for TV? That money would stop post haste. And with F1 having no major revenue stream, how long would it take for the FIA to make a deal with Formula Zero? The accreditation threat is empty, as can be gleaned from studying the quick accreditation of the very boat-rocking CART.
It is my understanding that the resulting organization could suffer a 25% reduction in revenue and still have a 50% increase in income, simply by avoiding Bernie and Company who skim 50% off the top while contributing nothing. I can see how the teams might be satisfied with a status quo in which Bernie’s arrangements skimmed 15% or 20% off the top for adding nothing, but 50%? I don’t understand the claim that that’s not insane.
RShack,
There is no third option. That is wishful thinking.
joesaward
> pm,
>
> I honestly cannot go into details on this without stirring up trouble. All
> that we need to be precise about is that there are different interpretations.
> If we say more than that people will start jumping up and down.
Wow. This might be the most honest while constrained answer I have ever seen from a journalist. No dodge or avoidance, just the truth.
It seems easy enough, now that you’ve shown an example
Not trying to be dense, but I may be anyway.
I understand that uniting the teams is like herding cats. But if we imagine a parallel universe in which (a) all the teams agreed, and showed (b) good leadership, (c) good management and (d) ample spine, and then (e) did an expert job of presenting the same slate of teams, cars and drivers under a different banner, what would defeat their efforts?
I am not saying they can be expected to actually do items (a) through (e), but what if they actually did? Or is it mainly that those items are unachievable?
With respect to all
I think next season, may not be the same as the others.
I’ve watched F1 since the 60′s
next season I’ll only get to see half the races Live
This will be a first for me , and I’d expect many others.
Interest may well decline and without Fans then what ?
How long can F1 last and how much is it worth commercially
without viewers ?
@joesaward
You may have noticed I said ‘It was a shame’ that the EU probably wouldn’t let the FIA have the rights back, and that’s a widely held ‘shame’ around these parts, because the FOWC would manage the rights, the FIA would require less money than CVC, and the teams could have their 10% rise.
The problem is the EU commission insists that, ‘The role of FIA will be limited to that of a sports regulator, and the FIA will have no influence over the commercial exploitation of the Formula One Championship.’
Which is a shame.
Karen,
You write in the present tense. This is all history. At the time the European Commission was faced by a certain set of circumstances. Things change. I am not suggesting that the FIA do anything other than be the sports regulator, but there is no reasons why, in the best interests of the sport, it cannot establish a suitable Trust or Foundation to manage the rights so that the sport benefits, rather than all the money being poured into the pockets of investors who care nothing for the sport. That is wrong – and even the EU might be able to recognise that.
red bull was lucky that they didnt struggle with the new regulation in 2009, hence they r where they r now.. plus wif newey n tons of cashpile they have, then comes the double title..
f1 need a radical regulation change again, like 2009, and then we can see the end of red bull domination
@joesaward
I, and many people agree, in as much as the rights should return back to the FIA, and then be administered by a third party on behalf of those with a direct interest.
Karen,
you always seem to be able to quote bits of “concorde”, so . .
where are the break clauses?
and on the ball with this, do you know what an “adherence contract” is, in E&W law?
Don’t play with trusts, go for fewer strata of reports. Trusts, of all kinds, get played with. Very occasionally for good reason. I am not actually against the laws, per se, but instead observe that trusts work only when someone perpetuates very cleanly the reasons for, aboriginal, all the way. Codification has to be clear and testable.
I guess I should buy this plate for my next cruiser: B1G 5H0RT
Because it’s leverage, all the way, small principals, save for a very few, and they are diversifying.
(Apparently that plate does exist, issued. I have no synthetic or other way to trade the inflation of claimed rights values against what teams trade at, but it would be the ultimate straddle)
– j
Sorry, to explain: “adherence contract” is almost always restricted to (UK) consumer law. It means any term you are required to sign, but cannot negotiate, is a nullity, you may strike it out. Learn how this works, and utility companies will tremble at your calls. Or sue you.* That’s a bit 50:50, but i promise you from experience that utilities – and retail banks – will do anything to settle out of court, so as not to test the law. This is how all those moaning about unfair charges and taking class action (that’s allowed for a while now in the UK) got stiffed, and i did, well, a bit better.
The concept does not directly translate into corporate law, where the golden rule is caveat emptor, but you can, with a bit of stretch, start to apply the argument. Usually this is solved with arbitration clauses, which in my mind exist precisely to solve the adherence weakness. Personally, i prefer to be told what is not workable faster, but that sucks badly when you sell on contracts with the underlying terms, so very messy. It’s a vast, deep, subject, in motion right now (see Lehman’s UK based insolvency) but being able to break what you were not allowed to negotiate, or offset, or mitigate by your own actions (which have to be expected as specific performance), is a plain test.
Huge subject, but i’ll make a silly wager (because unlikely we will get to test it): I bet there are many clauses in “concorde” which are adherence clauses, maybe argued because “it’s what the other teams want”, “they signed, and you can’t come in unless you agree with them” and so on . .
so, the fun thing, is possibly new teams are too diverted by the contracts to have any money left to make race cars . .
*They do this via the local civic laws. But all of that is bunk, because NO local Magistrates dealing with service under the relevant acts allows for hearings. Rubber stamp, honestly. So, not workable if challenged. I honestly cannot stand all these protestors against big business whaa whaaa poor me, because they should instead look at and try to fix the system, which is a actual action, takes effort, and clear observation. Call out what is broke, not received ideas of being put upon.
John (other John)
> *I honestly cannot stand all these protestors against big business
> whaa whaaa poor me, because they should instead look at and try
> to fix the system…
Not their job, especially with rigged system. Children facing fire hoses and dogs in our B’ham in ’63 didn’t carry drafts of legislation in their pockets. Rather, they made the problem impossible to ignore. Civil Rights Act the next year. Voting Rights Act the year after that. The latter two were done by different group of folks.
Plus, “against big business” is eye-of-the-beholder. Might rather say they are against the system lowering itself to being bought, regardless of by whom.
Now, back to ring-a-ding-ding…
Or better yet, Stevie Ray Vroom…
A very interesting article. I disagree with the notion of some teams being a F1 brand and others not. For many years Arrows, were a brand as were Elf Tyrell
and Renault and now they are gone…
Its not impossible to imagine a time when Williams are just a memory, and they are one of the most successful brands of F1 ever.
The race winners are the brand that matters, and that is as it should be, and for many the only real recognition is given to the driver…
Hi RShack,
sorry just caught up with you here. Big smile on my face thank you your links, and calling me wrong. I usually am. It’s the safe bet.
The problem i have with protesting is it is so inarticulate, so easily hijacked. I fail to see any explicatory message. Maybe that is the point, to simply get notice, but what you have is the unwashed mass talking to the lesser abluted. Sometimes this works, but you say it well, it is a loaded system, and for that, direct assaults rarely make for useful change.
But for all the restrictions we have, here’s a ditty on what is known as DORA: http://www.statewatch.org/news/2003/jun/23bcivil.htm
and that in turn has origins in Serb separatist bombings in London, which Joseph Conrad made a pretty good novel about.
I loved your Hamilton commentary. I’ve read other books by Chernow. (ouch i forget who suggested that, but thanks also) and rate his writing.
Maybe i just feel a little put upon, a enclosed english type, which is funny because whilst i was generally voted in jest,”most english” in my class, i’m a mongrel immigrant mix, with a whack load of mittel europ. Hamilton seems not alone in being (having been) a man conflicted by his origins, or attitudes. Finance geek, but not quite. Miscegenation works, intellectually, spiritually, or genetically.
I just reckon there is big business, and big business, and what we need are men of steel and morals. Hamilton sounds a good model. Wall St. simply needs to man up. Actually, everyone has to. Rather, the lack of network links, when big business is artificially aggregated, takes away the interactions which promote this kind of human thinking. Group think, or the failure of the conglomerate (Geneen, and the end of Matrix Management) or just lackadaisicality on all our parts.
Relevant paper: http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf
I nearly plonked down a fortune to have their source database, three weeks ago, then i found out i can access it in the British Library. I actually disagree with that paper, too much ceteris paribus on the primary assumptions. Graph theory is not always the be all and end all.
I like this man’s attitude, Ray Dalio, and i had never heard his voice before, so this was something i felt was very well delivered: http://www.charlierose.com/view/interview/11957
I try to be curious, rather than biased, and note my biases for safety. Don’t know if that actually works, but it might do for now.
best from me,
– john