It has been clear for some time that Venezuela’s President Hugo Chavez was seriously ill, and trying to keep this information from the country’s population. He has now died at the age of 58, after 14 years in office. He has visited Cuba for medical treatment on several occasions and was too ill to take the oath of office in January. Vice-President Nicolas Maduro will take over but there must now be another election within a month and there are no guarantees that Chavez’s United Socialist Party will win.
All this is of interest on motor racing circles as Chavez has been a very active supporter of the country’s racing drivers, notably with funding for the likes of Pastor Maldonado, EJ Viso and Milka Duno with money coming from the state-owned PDVSA and its subsidiary Citgo, and from the national tourist authorities. There have always been critics who say that these sponsorships were not agreed with the necessary procedures and did not really serve the national interest. This latter argument is doubtful as Maldonado has become a key figure on Venezuelan sport and the next generation of rulers may well choose to go on funding his activities. The Williams team has a long-term rolling sponsorship deal with PDVSA which will be hard to break, but there is no doubt that Chavez’s death will create a little uncertainty in this respect.
joeblogsf1 
I guess it will be another reason for Williams to do well, and Maldonado to keep the winning but lose the crashing. Success will make it easier for all of them 🙂
I have a sneaking feeling that the next generation on leadership will ‘reveal’ Hugo to have been an enemy of the state as they attempt to create their version of history. Support for F1 might be high on their list of evidence. It’d be a pity….
If the new president/government in Venezuela decided to ask PDVSA to discontinue sending the cheques to Williams, Williams would have to be the world’s ultimate optimists to start legal proceedings to enforce the contract, in Venezuela, against a government owned company. As usual, the only winners would be the lawyers.
Wilson
They could and would enforce it against PdVSA in a foreign country… I think it is governed by a foreign law & contains an arbitration clause or is subject to a foreign court.
CITGO is registered in the US, Would that make any difference in where the contract would be enforced?
Yep
South American countries aren’t really noted for standing by their obligations, Argentina comes to mind.
Venezuela will still want to continue presenting itself as modern emerging nation with F1 as one of the mediums for that. I see no benefit to PDVSA or the government of Venezuela to want to change that after the death of Chavez. Hopefully the legacy of Chavez will be a positive one.
Those who do not think support for sport in Venezuela don not really serve the national interest, are all anti-Chavez politicians and activists, spitting out their politically motivated opinions.
Venezuela’s 45 years Olympic gold medal drought ended recently thanks to Chavez government support for sport. Venezuela now has its biggest chance in history to qualify for the football World Cup thanks to massive investment in infrastructure and Ministry of Sport increased budget for football at times in which the private sector advertising only amounts to investments in billboards and TV ads featuring semi naked women to sell their products.
The same can be said for state support for arts and music. What a waste of money! some say. But look at El Sistema music system that produced world renowned Director Gustavo Dudamel and have kept tens of thousands on the path to a responsible and productive adult life away from crime. That’s an $80 million a year state sponsored social project! Is it justified to spend that kind of money for “third world country” poor kids to learn to play violins in a Classical music orchestra? Many say NO! Those are the same that say Maldonado does not deserve monetary support to race in F1.
Indy car Racers Milka Duno, and especially EJ Viso gave great commercial visibility to PDVSA’s subsidiary CITGO in the US, where they retail Venezuelan gasoline and asphalt products. The budget assigned for them is / was significantly less than what PDVSA spent when CITGO sponsored non Venezuelan teams and or drivers in NASCAR. In the case of Viso, he happens to get CITGO on US TV a lot due to his decent pace in the Indy league.
In any case, for any politician to drop support for a famous and loved sport figure would be political suicide. In any country.
As a Venezuelan and F1 fan, I’m actually looking forward to seeing fellow countryman Jhonny Cecotto Jr win GP2 this year and advance to F1 in 2014. With PDVSA and Ministry of Sports support !
Thank you for that, M Sanchez. We forget what waste we truly indulge, and envy money spent on others. Strangely, the more-so when it’s not ou own money. As if we envy the source itself, some kind of mental deprivation, else we have come too far in this world to unreasonable expectation of entitlement. Pastor’s sponsorship is but a careless blip for any large company.
Our now HMRC, customs and revenue, issued a paper in about ’96 or so pointing out that spreadsheet errors accounted for, _on average_ 11 Million pounds error per company they surveyed, which was all above – I forget – but very small. I doubt now they would moan they were being overpaid, but they did once care, or someone did. (Maybe was later, but although Excel is enormously powerful as a tool, careful as you go. Maybe look at Quantrix, which is sadly very expensive, but solves many many problems you might be unaware of.)
No doubt we could find untold waste in any quarter of any economy.
I condemned Maldonado, but unexpectedly warmed to him after his “Mr Venezuela” interview, which I think was largely, and unfairly, ridiculed. I still cannot tell if it was a set up joke, or a kind of innocence, or the man failing to keep a straight face speaking given lines. But it went a long way to humanise someone I considered a thug.
Anyhow, you did something his sponsors should have done: point out the positive. Maybe consider it even a small tax on a entity to provide a little inspiration which, whilst not much, can make a lot of difference to those who have not much hope.
Question is: so why did no-one play that angle?
Or, did they simply feel they could only loose, against attitudes to oil majors?
And how long have you worked for the Venezuelan government?
Too empathetic a comment for a government gravy – train type!
“In the case of Viso, he happens to get CITGO on US TV a lot due to his decent pace in the Indy league.’ He gets CITGO exposure when he put’s it into the wall with expensive regularity. His current deal is that the sponsor pays for repairs. Many crew members shrug when he shunts knowing any overtime required back at the shop in Indy is money in their pockets. Dallara are on the #1 spot on the speed dial list. There are many good Venezuelan racers – pity you choose Viso as an example of ‘talent’.
he’s Andretti’s problem now.
There are stories that over recent years, profits from PDVSA have been channelled into populist infrastructure and social programs throughout Venezuela, to the benefit of Chavez’s support base, but at the expense of reinvesting in the company. The result is that PDVSA infrastructure is becoming run-down and Venezuela’s oil industry is under-developed, putting at risk future income streams for the benefit of the country.
In that environment and under a new government, it would seem likely that the use of PDVSA profits will come under the microscope with a view to pumping money back into oil assets rather than funding quite so many short-term pet projects. Money spent on sponsoring Maldonado would surely be hard to justify.
And as another poster mentioned, if PDVSA decided to stop sending the money to Williams, their chances of successfully suing the Venezuelan government would be seem miniscule.
Spoken like a true shareholder
Chavez party will have no problem winning the upcomming elections, what is doubtful is whether or not they will be able to stay in power and keep the country stable after that. If they won’t, the power balance in the entire region will change, and investments into F1 will probably be of minor importance.
I would wonder if depending on the type of contract Maldonado might even lose his drive if he does not come up with the agreed upon sum of money – Like was the case with Razzia. Although if Maldonado does a decent job and stays out of trouble I do not think he has that much to fear.
Changes in power can change anything , its really pot luck.
Just like funding for grand prix’s can appear or disappear – -funding for drivers depends whether the people in power see any value in motorsport.
BTW Joe – On a similar theme – Victorian premier Ballieu has just resigned
The new guy was the Minister for racing – but unfortunately that’s the equine variety 🙂
Is Maldonado likely to be concerned by this events, in terms of his race seat? I’m sure he’ll be upset by Chavez’s passing, after all, the man was instrumental in getting him to where he is
Venezuela has the highest proven oil reserves in the world (higher than Saudi).
The cash to F1 is hardly at risk.
How did Williams rate Bruno Senna in the end Joe? Obviously they thought Bottas was better, but if the money from Venezuela was to dry up would they look back at him, a different pay driver or at some pure talent (presumably with experience as they have a rookie in the sister car, so Kovi/Kobayashi etc).
You answered your own question
“there are no guarantees that Chavez’s United Socialist Party will win.”
I don’t know Joe, I’ve heard vote rigging helped them last time…
It doesn’t make any difference for the point of the story, but constitutionally it is the head of the parliament, Diosdado Cabello who has to take over the reins of the country and call for elections within the next 30 days.
M Sanchez, how many current F1 drivers can you name who are directly funded by a nationalized company in their country? I don’t see the British government handing bucket loads of cash to McLaren to pay for Lewis Hamilton. He is there on merit.
The Maldonado situation is an anomaly, plain and simple. Don’t try to present it as normal.
I doubt the British Government will pay for Hamilton’s salary at Mercedes either (I got a bit 2012 there!)
The trouble for Venezuela is that Chavez used the US as a political tool to gain favour at home. This has worked against the people of Venezuela as trade with their rich neighbour has been muted. Venezuela’s oil is heavy oil and has a higher cost of production. But it does offer up products that a country like the US needs which could have made the operations of PDVSA more profitable. The other killer for PDVSA is that due to OPEC’s tightening of supply a lot of investment went into recovery technology. This has resulted in the shale gas revolution and the discovery of recoverable oil and gas all over the world. Whilst some still labour under the belief in “Peak Oil” and “Global Warming” the reality has always been that we still have not scratched the surface in recovering hydrocarbon fuels and any effect from back radiation and the so called “greenhouse effect” in keeping us warm is drowned in all the other natural forcing’s. So the likelihood is that when these new discoveries come on stream that countries like the US will be self-sufficient and even the UK it looks like we have 1500 years’ worth of Gas, and may well develop a gas to liquids industry to preserve energy density. Cheap energy by the way is a measure of economic activity.
And we’ll destroy the land in order to get it. Oh, what a lovely vision of the future.
Just read that the US has taken over from Saudi Arabia as the worlds largest oil producer. How times change.
Yes. Actually, I believe the US is now a net exporter of oil.
The Williams team has a long-term rolling sponsorship deal with PDVSA which will be hard to break…
Williams should really pray that chavismo will keep hold of power. As per the “hard to break” deal, art 25 of our constitution will suffice to send them packing if there’s ever a change of government.
Multinational oil corporations (some of whom are sponsors for Williams’s rival team) who were driven out of the South American nation under the previous regime will now back the opposition’s bid to gain power and modify policies to allow them back in the country. Political instability due instigated by corporate greed will raise its ugly head.
One sometimes wishes for the same type of instant policy/action decisions that Mr Chavez was famous for during his weekly tv shows. One could equate this with Cameron actually getting us out of the EU on a televised Wednesday whim.
A man who went off the rails later in life but did actually spread the wealth more evenly, though he did tend to nick it from foreign investors.
To some extent we always dismiss leaders of countries who are less well off than we, because they are less well off than we. “Look, see the poverty!”, and we have a industry built around such charitable pornography to satisfy our fragile selves. Ted Grundy, on his hit show “Neighbours”, (roughly) “It was successful because it made everyone feel good they could look down on someone.” . Bang after he sold the show for a fortune.
It’s plain sense that increasing wealth past a certain level has diminishing returns, but any change lower down the scale might be life changing.
We ridicule the cult of personality, but don’t really wonder what the man could have done to attain such a following. Must have been something useful, some time. I can’t say, I’ve next to no knowledge of the country, and I’m interested only why the man mattered to normal people, not the man himself.
oops, Reg Grundy, not Ted Grundy.
Neighbours was always good for watching top Australian tottie,
think Kylie & Natalie 😉
I’m . . . ahm . . . hmmm. . . think just maybe someone would rather I didn’t!
Then again, my recollection is rather poor. Upshot of having my front room as a office, kitchen as a conference / waiting room, was my then GF and would claim we were Neighbours fans (that cleared the room, it was delightful how snobbish everyone we knew then was, in a false hauture kinda way), sneakily excuse ourselves, and turn the volume up on the telly. Excellent programme. 🙂
“One could equate this with Cameron actually getting us out of the EU on a televised Wednesday whim.” – and you state that as a positive??
I’ve always found the PDVSA money slightly odious, when one considers Chavez’s lack of respect for property rights, as well as alleged election-rigging and other human rights violations. It’s not a reflection of anything against Maldonado (or Ernesto Viso, or Milka Duno). Human Rights Watch referred to his rule as displaying a “dramatic concentration of power and open disregard for basic human rights guarantees.” I suppose one make’s one’s compromises and teams take the money, but the issue is still there. Unstated perhaps, usually framed in the context of how the sponsorship money could be spent on other national priorities.
” El Sistema music system that produced world renowned Director Gustavo Dudamel and have kept tens of thousands on the path to a responsible and productive adult life away from crime.”
Mr Sanchez
El Sistema fue creado en 1974 under the presidency of Carlos Andres Perez ( I was there in the inaugural concert playing in the orchestra). A long time before chavez.
And in reference to Williams F1 and PDVSA, it would be really bad news for them if a government other the chavistas takes office.
The contracts that were signed with Williams were not approved by the National Assembly. This fact makes them invalid. On the other hand for Williams the contracts are valid because they didn’t have to know about the Venezuelan procedures.
(I can be corrected in this one).
Williams should try to get new sponsors in line. Just in case. Maldonado has been erratic but talented and I think he deserves to be in F1, OTOH Viso and Dunno are nothing to write home about. Just a waste of money.
You can argue that they are promoting tourism in Venezuela, a country that has an average of 100 people killed every weekend and frequent power black outs. Not an ideal place to visit.
I just came back from Caracas and night life is practically non existent. People don’t dare to leave home after dark. It’s too dangerous.
I am a Williams fan since the Mansell era and I really want them to stay in business for as long as there is a Formula 1, but I am Venezuelan and don’t agree with the way that chavez and his gang gave away venezuelan people’s money without the proper procedures.
As they say. Let’s wait and see
Sorry for my English.
Joe – when that famous invoice was leaked (last year?), was it for full payment up front? I’m guessing Mr Parr and his colleagues would have taken regime change into account when they negotiated the contract.
If a government nationalises an oil company, what does the original owner get? A pittance many years later. F1 teams need money on a daily basis and struggle to survive without it.
Fidel Castro, Pastor Maldonado, Che Guevara and Hugo Chavez have all contributed in bringing that region of the globe to the worlds attention.
Hugo Chavez was a man of the people, caring for the poor and supporting sports, he made us all aware of Venezuela today. After all who can remember Venezuela’s previous presidents?
South America has a reputation of providing the very best racing drivers. It’s all to do with their Latin blood, salsa dancing and the rhythm of the racing lap.
PDVSA sells petrol in Venezuela cheaper than bottled water. He does not tax it so that the population has to decided, eat or fill your car.
Chavez has never sent his armed forces into another country to change a goverment and kill thousands of innocent men, women or children.
Chavez has never lied to the UN in New York far from it he told the truth about B*sh.
Chavez tried to unite South America and share its resources with its population.
Chavez was elected and spoke for the poor and tried to help the poor with fixed prices on fodd products, no gouging or profiteering.
If he spent a bit of money on sponsorship which promoted his country all good and better than spending money on bombs and killing.
Chavez was a breath of fresh air in the land of world politics and not afraid to stand up to the worlds bully nations.
As along as he had oil they wanted it cheaply.
I for one worked in the oil industry and in Venezuela will miss his unique ways.
To many times I saw the wealth of a country stripped out by the foregin owners and corrupt politicians
PDVSA will continue with Williams sponsorship.
But where is the value of the sponsorship for the company? You don’t pull into a PDVSA station and buy fuel, do you? It makes no sense. Cover the car with the word “Venezuela” and then it is justifiable if the right processes have been done. However that is up to Venezuelans. If they think it is right for their politicians to make unilateral decisions with THEIR money then that is up to them. I am not sure if the Chaves successors will be able to do that.
this is funny from a man who constantly lobbies for governments to pay bernies ridiculous fees for hosting a grand prix. people condemning chavez and his politics should maybe read an unbiased analysis of his economic track record: http://www.cepr.net/documents/publications/venezuela-2012-09.pdf
besides, there are many more companies than pdvsa in f1 who do not cater to the average consumer and still have their name on f1 cars because they think that it makes sense for them. the german government sponsors countless athletes and can hardly be considered socialist or authocratic and i’m sure you can find many other western governments doing the same, where is the difference to investing money into maldonado?
I have not condemned anyone. I don’t see why you are getting your knickers in a twist.
of course you have. like it or not, i’m just calling hypocrisy when i see it.
Well, you see it wrong. And if you don’t like this blog you do not have to come back.
Joe you are right on the money. Except that a new non chavist government may continue with Williams sponsorship. We have a huge F1 fan base in Venezuela and Pastor job has been decent to good so far. He won a Grand Prix what it is not an easy task and maybe he can develop himself into a consistent front runner .
One of the things that CITGO did was to provide heating oil to low income families in the Northeast United States for free or at low cost.
A bid by Malaysian low-cost carrier, AirAsia, to set up an airline in India has won approval from the Indian government.
It would be the first foreign company to try to capture the rising demand in India’s aviation sector.
AirAsia India would be a joint venture with the well-known Tata Group, based in Chennai in South India.
I agree with Joe, what possible value to the Venezuelan people and PDVSA has the sponsorship of Williams conferred. Promoting Venezuelan tourism – don’t make me laugh.
We ended up with a spare week in the Barbados last year due to a booking error, when visiting my wife’s sister. I looked around for somewhere nearby which we had not visited and lighted on Venezuela. I phoned a friend, who I knew prior to his retirement had been the director of an international bank, based in Caracas. He asked if I was totally mad. He said that in the last 10 years, Caracas has become the wild west and tourists are a prime target. The chances of being mugged between the airport and downtown are as high as 30% and the mugging is often done by or with the tacit assistance of the police.
With the country and tourism in this state, is there any logic to the sponsorship of an F1 driver. I just don’t see it. The sponsorship of the Simon Bolivar orchestra and el sistema is a totally different thing, with obvious and widespread benefits.
Wilson
PDVSA is a classic example of what I have heard described as a “vanity” sponsorship. It only exists because somebody somewhere in the Venezuelan government decided that funding Venezuelan drivers was a good idea. As has been pointed out, PDVSA is really a holding company, with little in the way of direct consumer brand equity. This is very similar to the Beatrice sponsorship that Carl Haas negotiated for his F1 team in the 1980’s. Beatrice at the time was purely a holding company, with no brand equity – the brand equity was in the hundreds of brands that it owned via its corporate portfolio. From a consumer marketing perspective, the sponsorship made no sense. It turned out that it was a deal arranged between Beatrice CEO James Dutt and Haas, and when Dutt left Beatrice, the sponsorship was swiftly terminated.
Right now in F1, Ferrari is getting a lot of money from another “vanity” sponsorship from Banco Santander. The CEO of Santander is a huge motor racing fan, often seen in the Ferrari garage on Grand Prix weekends. If he is replaced, I would not be surprised if that deal is re-evaluated by Santander.
Good article on Chavez here – http://www.guardian.co.uk/commentisfree/2013/mar/06/chavez-continue-inspire-but-not-europe Neither hero nor villain, but a complex mixture of the two…
It would be a shame if Maldonado’s career is derailed, because he’s shown signs of being seriously quick – depending on what one thinks of the benchmark set by his team mates – if he can ever learn to keep it on the road…
One thing that’s been touched on briefly in an earlier post is whether the payments can continue to Williams. PDVSA itself has significant cash flow problems and it’s believed they are often 12 months in arrears in paying invoices from contractors supporting their oil production efforts. With the likelyhood of Madura’s government needing to fund more populist programmes to maintain its presence, the question is how long will the Williams sponsorship remian sufficiently populist to be maintained?
What do you expect from a communist dictatorship? The little man demonizes then nationalizes companies and finds he has nobody with expertise to run them. Long live a free a Venezuela.