The FIA Prizegiving Gala took place in New Delhi, India, on Friday night. In addition the federation honoured various other parties, with Professor Sid Watkins being given the FIA Academy Gold Medal for Motor Sport. The Formula One Promotional Trophies for best Grand Prix of the year went to the new Indian Grand Prix and promoter Sameer Gaur; and the best TV coverage went to the British Broadcasting Corporation, represented at the event by Ben Gallop. The Bernie Ecclestone Trophy for the best-scoring national sporting association in F1 went to Germany’s DMSB, represented by Hermann Tomczyk. In addition to these there is an FIA Founding Members Heritage Cup, awarded to the Louwman Museum in Den Haag, and the Jacky Ickx Award for the Most Outstanding Official, which went to Spain’s André Mas.
The event was something of a showcase for India’s FIA delegate Vijay Mallya, owner of the Force India Team. But he was in the news in India for other reasons on Friday when the Kingfisher Airlines bank accounts were frozen by the government for non-payment of taxes. The airline is struggling with massive debt repayments and is in the news every day in India with the latest adventures. In recent months the company has pledged pretty much everything it has for loans of $1.2 billion, including its shares, its brand and even its office furniture. Also included is a luxury villa in Goa, two helicopters and a building in Mumbai. Mallya continues to try to find someone to pay operating costs and fuel.
joeblogsf1 
Perhaps Vijay should ask Flavio to help run his F1 team?
And a good time was had by all who had their expenses paid to attend!
Ben Gallop eh? Never heard of him, but just looked him up and apparently he is “Head of F1” for the BBC, so this was probably his first venture out of his office, in his ivory tower. Maybe I’m wrong but that tends to be the way the BBC works, which is why we get such gross ignorance in their funding decisions.
VJ seems to be struggling somewhat, can he run the team from debtor’s prison? Don’t tell me, the F1 team is in his wife’s name. 🙂 (An old Bernie trick which backfired when she divorced him)
No, his first venture out the ivory tower (iirc) was to the Hungarian Grand Prix to inform the F1 Team that they were splitting the following season with Sky. Why he couldn’t of called them all into his office in London before they left – saving the precious tax payers money. I doubt he went cattle class…
At some point it doesn’t matter if and how Force India is tangled with the airline… The employees and or public will point out how unacceptable it is that nothing is paid, but that Mallya still owns an F1 team…
This ain’t over till it’s over…
How long can Mallya remain in F1? I know he has sold a chunk in the team, but surely he will be forced to sell the rest. Is the beer business still profitable? It will have to be to prop up the air line, 1.2 Billion? That sounds like a lot, why doesn’t he just cut his losses and give up on the idea?!
Geez, how will Mallya’s money problems affect Force India? It that bad that all three of their drivers could potentially end up without a seat in 2012?
Please, someone who is out there, watch this and report back:
“Mumbai: Brand Equity on ET NOW this week brings to you a special episode focusing on the crisis-stuck Kingfisher Airlines and the popular song ‘Kolaveri Di’ that has become a rage on the web.
The show features top creative agencies – Lowe Lintas, Leo Burnett & BBDO to present their advertising to sketch advertising plans for Kingfisher Airlines which is going through a turbulent phase. The agencies battle it out and showcase their work to change the perception of the airline. The mission to salvage Kingfisher Airlines starts with the brainstorming session of Leo Burnett. The team designs a 360 degree approach with a theme of, “The Good times are back”. The episode invites the audience to vote for their chosen campaign & the winner gets selected based on the votes.”
My mind read that to me in Clive James’s voice.
Broadcast tonight and tomorrow: http://www.indiantelevision.com/release/y2k11/dec/decrel18.php
Oh, and the asset valuation was by Grant Thornton. Safe as a holiday home in Goa. Maybe. Ahem.
Of course, over here in Europe, we have the slightly trickier question of how the governments are going to repossess themselves . .
(straps tight, full combat dress, head down for incoming economic shrapnel)
you could say this is one helluva silly season. – j
I’ve been past Mallya’s luxury villa in Goa which had his yacht berthed out the back. It looks like a very nice house indeed.
Has he sold much more beer off the back of the airline?
John (other John)
Good point, but why bother doing business with Kingfisher when they won’t pay you!
rpaco,
the debtor’s prison on the Strand and Fleet was notorious for accommodating their prisoners. Nice racket for the governor: more they spent on wine and wenches, longer they had to stay there and pay the vig. Obviously, we get prisons wrong on so many levels these days. But can it beat the cruelty bestowed on those who live by pure fantasy . .
Are you sure the team isn’t in Bernie’s name . . . i mean Bernie’s wife’s name .. i mean . .
MDHayes – don’t you think that three drivers without a drive next year pales into insignificance compared to the hardship that will be felt by Mallya’s creditors??
Get real mate.
I forgot to add that therefore the punishment was gout, cirrhosis and syphilis, and thence, death. A fitting end born out, just as their crime of debt, by their complicity with the pursuit of ill considered gain. Rather Gilbertian. (or vice versa)
brett sinclair,
indeed, good point. What would Bernie do?
but better, i found the quote I was after:
“[…] the Fleet
Presents her tattered sons in Luxury’s cause;”
http://www.british-history.ac.uk/report.aspx?compid=45111
all best – j
$50 VJM wont be going to the paddocks in 2012
pretty ironic that the guy who introduced F1 to India is disappearing soon after F1 actually came to India
I think we can safely say that by the start of the new season, this team will be under a different ownership structure. The problem for them right now is getting & finding a group of new sponsors, which takes time to bed in.
They might take a short cut and go for a couple of “pay” drivers instead of what they have on their books.
The UK drinks business he owns, has some extremely heavy charges on it, so if you’re in the market to pick up a few well known brands on the cheap, then hold on for a few weeks and they could be yours.
The current betting form guide has him as one of the first big players in India to go down.
So F1 loses another “character” from the paddock. Not sure who actually benefits from that?
@rpaco – Since Ben Gallop is now going to be Head of Half of F1 for the BBC, no doubt his salary will be halved also?
John (other John)
Being in debt does not have the stigma it used to have and it’s not just households, banks and businesseswho suffer debt but developed countries as well.
What would Bernie do? Well perhaps cast iron personal guarantees would be one way forward, although people can wriggle out of these with bankruptcy.
The best way is to have the money underwritten by a government.
Now that’s a good deal!
Hi Brett,
agreed, entry level MBA texts introduce Modigliani and Miller. Debt is great, optimal leverage and all that. In a stable or stabilized interest rate environment. Amusingly much of the body of work, by many people involved, was coming out as rates started their run to 22%. Instead of wondering if that was a correction, it was corrected.
So the guys holding the notes simply figured they held more risk (the c.p. equity – debt equivalency not holding) and wanted more. Gross simplification and sidetrack over. (though debt is forced upon far too many normal people by far, so in the consumer sphere it’s a whole other propaganda machine. No way getting into the IMF / fx / trade balance side of things on a nice quiet Sunday.)
However great childhood dream jello gobs of debt are getting a bad name again. Not for the obvious reasons. I knew of this before, but never had an inkling as to the scale (and for once i am pleased i am very certainly not alone): look up “rehypothecation”. Nigh infinite recycling of debt as a balance sheet asset, and it seems a critical factor why banks cannot lend.
What i mean, is times are changing, again.
Oft repeated, and likely inaccurate but almost certainly in his MO, a quote from Mike Milken, “Miss one payment and i take your company away.” Bernie knows a thing or two about credit. Just reading Susan Watkins’s book, and the (admittedly scant) descriptions of his motorcycle and car trading days are good fun. Do you accept a personal guarantee from someone who might not have any assets? Some types have a habit of buying personal things with company money (tut tut, that house in Goa, but wow is this the most common cause of small business failure i see) and presumably family home is in trust. So, it’s just as likely “Miss one payment and I take your team away”. Or maybe just the right to insist on minor changes, like voting. Let’s say I was lending to VJM on those terms, does not that vote alone have intrinsic value?
So many things are a debt. Publisher sells me a future ad slot, well that’s a debt until they print. So on and so on. If you’ve never read anything much about Mike Milken, he actually understood the stuff. Didn’t take long for his rivals to shut him down and rename junk to high yield. Absolutely as happened at the end of Drexel era market top, there are insufficient people with the skill to understand the deals. Not sure I count VJM or those around him in that number.
Also, presumably, since VJM provided finance top FI via his brewing outfit, someone else now controls that part already. Or else MAC clauses are triggered, the same kind he would include to play dog in manger can backfire, or the custodian is still sussing out who does. Still expect him to be seen in the paddock, wrong signal not to.
. . .
nice one on the reply nesting, Joe. Might be a little better with a smaller font, as i guess a few replies might start either increasing page width or squidge the paras a little narrow.
Despite all the talks, the Kingfisher will continue to fly. For, banks in India — both public and private — have stakes in the airline. Kingfisher crashes and the banks lose their bucks. They won’t let that happen. The banking sector with their enormous clout in the government will ensure that a nice and covert bailout package is ready for VJM (of course, will the taxpayers’ money).
Plus, a host of politicians, including some prominent ones in the government, are best buddies with the king of bling. As long as they are relevant, so will VJM.
And, beer in India still means Kingfisher. It’s the largest and the most popular beer brand and VJM’s most profitable venture, which WON’T slip into the red as long as Indians go on drinking.
netdhaba,
All well good, but who is going to pay the bills?
“the best TV coverage went to the British Broadcasting Corporation” …. how ironic …..
I’ve heard that at the end of the 2012 season the BBC will win ” es T C v ra e” whilst Sky will win “Best TV Coverage”.
I seem to remember Mallya had trouble paying bills on time even when he was larging it up lavishly. How he has turned a multi Billion $ business into a pile of rubble is far more impressive than one of his parties or boats.
John (other John)
Good point. Is there any mileage in a formula one team secretly buying controlling shares in Force India in order to gain their vote?
India is one of the BRIC nations and is on the up. Can’t understand why the Indian government doesn’t invest in the team, after all it’s promoting India.
But Really I’m, Confused Seriously . .
Brazil: the Real
Russia: COCOM impex deals
India: pig iron and borders.
SA: Apartheid busting.
China: Nixon, and an amusing opera.
Is this on the up, or hang on – what did they sell you?
We Didn’t Star The Fire. etc. etc.
best from me – j
Sorry I was so obtuse. Poor illustration of my cynicism. Please take it to mean we’re just skidding – pants – on – ground first dip of a cycle. (Mama, it huuuurts!)
I mean this BRICS things was so much hot air, which i took to be obvious (though i’ll keep the B in BRICS, if too strong a currency, or silly levies, doesn’t floor them) and so i thought of a certain person . . equally as i thought holding any potential swing vote about the paddock would be immensely useful about now. I just don’t think VJM holds that vote, and not even sure if he did before. Think about it, he hocked everything else. I just re-read my last sentence, with a hint of my dad’s disdain added, and it about sums up my view of the man.
@Joe: We, the taxpayers of India, will ‘proudly’ foot VJM’s bills. That’s how we have been milked for ages by unscrupulous governments. No questions asked. The 2010 Commonwealth Games is a glaring example of that…
Or the taxpayers of somewhere else whose bailbank wrote CDS against the notes. But agree, India would be flaming awesome to reckon with, if good governance ever caught on. (same with anywhere else, but we’ve no natural growth to tap any more)
. .
Sudden thought about this on the never Sahara deal: what say you know something is going down, and you construct a sale, right in the teeth of technical insolvency? Saved, it seems. But what if the deal is just to bring someone in to hang on until you fiddle your way out? Meanwhile you’re covered for arms length issues, and can point to no longer holding theoretical control (quietly, to the banks, not in public) so it’s not made part of a composition of creditors . . . Hmmmmm . . . . pure spec of course, but this man makes me think all sorts of things.
Vijay Mallya is not going to be bankrupt. It is pure business, whatever is happening is pre-planned or atleast he has an exit plan from Airline business. I see no impact at Force India team.
Bernie looks like a little kid in the front of that picture.
Oh, there’s this internet thing, I forgot, well the blessed Save VJM adland pitch is here:
http://economictimes.indiatimes.com/et-now/brand-equity/brainstorming-leo-burnett-on-vijay-mallya/videoshow/11059056.cms
relevant screencap:
Forgive me, but i love watching how lame agencies can be . .
Not to slag off the whole of Adland, here’s some boys who know how to pitch: http://www.forbes.com/sites/onmarketing/2011/12/14/the-real-story-behind-apples-think-different-campaign/