The future of Formula 1

Although the FIA has yet to make an official announcement about its plans for a new Formula 1 in 2013, it seems that negotiations are getting towards a solution, at least in relation to the technical rules and regulations for the cars. The federation is very keen for the sport to move away from the current gas-guzzling 2.4-litre normally-aspirated engines, towards a more defendable set of rules and regulations, which will address the problems of the current cars, produce better racing and fewer emissions. The latest word is that agreement is close on a plan for 1.6-litre 4-cylinder turbocharged units, with a limit of 3-bar boost pressure, compared to the maximum of 5.5-bar which was seen in the 1980s when horsepower figures went off the clock, topping at around 1,500 hp.
The restriction engines will produce around 650 hp, with an additional 150 hp being available for 30 seconds, using a KERS system to recover energy produced by the car. This is also aimed to lower fuel consumption considerably.

The plans for the chassis will see the wheel size increase to 18 inches and the reintroduction of a certain amount of ground-effect, with the resulting sidepods being used to increase lateral protection for the drivers. The suspensions and brakes are also expected to change and there is even talk of engines having stop-start mechanicisms to save fuel during pit stops.

The final set of rules are due to be published by the end of the year, after which the motor manufacturers of the world will have the opportunity to decide if they wish to be involved in F1 and can start to make the necessary investment in the course of 2011 and thus be ready to go racing in 2013.

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Virtual reality and F1

The ever-increasing costs of tickets to Formula 1 races are having an effect on the number of people in the grandstands – whether those involved wish to admit it or not. Race promoters do their best to draw in crowds, but the prices they are forced to ask – and the services that they can afford to offer – make it a difficult sell Formula 1 to the public, particularly in places where there is no obvious reason for a Grand Prix to be held. In such situations the local governments have tended to step in to pay the bills. They want the TV viewing world to imagine that they are glamorous locations and they imagine that “eyeballs” on TV will translate into tourism revenues. It works in some places, but not in all…

At the same time TV stations can justify large rights payments for sports property, as these enable them to pull in advertising dollars, but they do not want to broadcast matches which have empty grandstands, which have little atmosphere.

Down in Australia, they think they have an answer. Channel Nine recently revealed that it is considering a plan to repackage its Monday night AFL matches, so that the grandstands are filled with virtual spectators. They argue that using conjuring tricks to fill the empty seats with cheering fans is entirely acceptable as people do not go out on Monday nights.

The big question is whether or not sports fans want to be “conned” into thinking that the grandstands at sporting events are really full of cheering fans, or whether they do not care and are happy to sink into their couches and imagine an atmosphere that no longer exists…

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Food for thought

Some of you may have seen reports of a 60 mile traffic jam in China, which has been going on for nine days. Drivers have been getting caught in the jam since August 14 when construction projects began on the National Expressway 100, to the north-west of Beijing. This goes to the town of Zhangjiakou and then continues for 700 miles to Yinchuan. The jam, which is heading into the city, is expected to continue for another three weeks until the work is finished. The problems have been exacerbated by breakdowns and minor accidents which have meant that many drivers have spent hours at a standstill, amusing themselves by playing card games and other such activities. A large number of policemen have been sent to the area to make sure that everyone stays as calm as possible.

The Chinese government is currently unable to keep up with the infrastructure work needed to cope with the increase in traffic.

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Merging Spanish teams

Spain has enjoyed much international sporting success of late with the victory in the recent World Cup soccer competition, Rafael Nadal’s second Wimbledon title and the country’s fifth consecutive win on the Tour de France, thanks to Alberto Contador (who follows in the footsteps of Oscar Pereiro and Carlos Sastre. In motorcycle racing Spaniards have done well in 250cc and 125cc racing with Dani Pedrosa, Jorge Lorenzo, Álvaro Bautista and Julián Simón. In Formula 1, of course, there is Fernando Alonso, the World Champion of 2005 and 2006, although he needs to reassert himself as a force to be reckoned with after a couple of poor years. While Spaniards love to cheer their sporting heroes, they also retain a strong sense of regional identity. The nationalist sentiments in the Basque Country and Catalonia are widely known, but there is also healthy competition between the other regions. This is highlighted by the rush of construction in recent years in the sphere of racing circuits, with Barcelona’s dominant position perhaps facing long-term challenges from new regional facilities. Valencia has landed itself a Grand Prix, albeit not a very successful one thus far, and already the folk from Mallorca are talking about challenging for that race in 2015. It is an interesting idea to build a circuit on the island which is famous for its holiday business. It would need investment of around $250 million to build a track and pay the required F1 fees. A site has been picked out on a huge old estate called Son Granada, which is across the main Autovía de Levante motorway from the only existing racing circuit on the island, which is called the Circuito Mallorca RennArena. It remains to be seen whether this will ever become a reality, but elsewhere in Spain there are new tracks that have been funded with regional government money, notably Motorland Aragón at Alcaniz; and the Circuito de Navarra, near Pamplona. There are believed to be others in the pipeline, including one near Madrid, where the regional government has plans to build a major new airport between the towns of Alamo and Navalcarnero. This project will apparently include a Formula 1 track, hotels and a golf course. The aim is to complete all the work by 2016. This is all part of a bid by Madrid for the 2020 Olympic Games.

Regional government money is also useful for motor racing operations such as HRT and Epsilon Euskadi. The former has substantial backing from the Murcia region, while the latter has had help building its F1-spec factory from the Basque government. HRT is struggling to survive in F1 and Epsilon Euskadi is having trouble finding the money to start its own project. It is not surprising, therefore, that Joan Villadelprat of Epsilon is trying to convince José Ramon Carabante, the boss of HRT, to form some kind of alliance that will give HRT a proper base, and Epsilon a chance to be in the sport. It all makes a lot of sense, despite the fact that the two regions involved are at opposite ends of the country.

We believe that there is a deal in place for HRT to use the Toyota TF110 as the basis of its 2011 car – which is why Pirelli had to use a 2009 car for its tyre testing – but this arrangement requires Jose Ramon Carabante to come up with a large amount of money. Epsilon Euskadi has the facilities to design and build a car and it might end up being a cheaper route for Carabante, although he would doubtless lose his funding from Murcia if he were to base the team in Vitoria-Gasteiz.

Logic is not always used when it comes to decision-making in F1, but it is not a bad idea for Carabante to consider a merger.

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UBS and Formula One

UBS and Formula One have announced a deal, which will see the Swiss financial institution becoming a Global Partner of F1 racing. The new partnership will be launched at the Singapore Grand Prix. The agreement follows what UBS called “a comprehensive evaluation” of the commercial benefits of all global sponsorship properties. The bank concludedthat F1 is a year round, highly visible, and popular sport with an especially strong presence in many of UBS’s key growth markets such as Asia, Middle East and Latin America. The long-term partnership will provide excellent branding and hospitality opportunities that fit with UBS’s global footprint and business strategy.

“UBS has been searching for a global sponsorship platform that has appeal to our clients, promotes our brand globally and makes good commercial sense,” says Oswald Grübel, UBS Group Chief Executive. “Our new partnership with one of the largest and most popular sporting organizations in the world will fulfil all these criteria, and it constitutes a key element of our newly launched branding activities. The global reach of F1 complements the many local activities we support.”

There is no doubt that UBS will have watched closely to see the success that has been made of the sport by HSBC, ING and Santander.

UBS is the world’s second largest manager of private wealth assets while also being the second largest financial institution in Europe, in terms of market capitalization and profitability. The bank was formed in 1998 when the Union Bank of Switzerland merged with the Swiss Bank Corporation. UBS is present in 50 countries and employs 64,000 people. It is a big retail banking operation in Switzerland. There are strong links with Singapore, as the Government of Singapore Investment Corporation is UBS’s largest shareholder. The bank suffered badly during the recent financial crisis and was helped out with funding from the Swiss government.

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Some thoughts before hitting the road

I am off back to Paris by road today and I thought, given the response to what happened at Hockenheim on Sunday, that it would be a good idea to take a step back from the nitty-gritty paint a view of the event with a rather broader brush. I have no doubt that there will be much analysis elsewhere of the technical issues involved. I could write about the duel of fastest laps between the Ferrari drivers in the final laps of the race, as each apparently tried to prove a point. Prior to the change of position on lap 49 Felipe Massa’s best lap was a 1m17.166s. Fernando Alonso’s was a 1m17.012s. The difference was not big enough to allow Alonso to overtake. He could not do it. After the changeover Alonso took his best lap time down to 1m16.770s on lap 51. Massa was clearly dispirited and dropped back towards Vettel, although it was clear that he had the pace to hold off Sebastian if that was what was required. Then towards the end of the race, Felipe seemed to revive and attack and the two Ferrari drivers traded fastest laps. On lap 65 Massa set a 1m16.182s, just slower than Alonso’s 1m16.103s. Alonso could manage only a 1m16.505s on the same lap. On lap 66 Alonso took his best down to 1m15.880s, Massa recorded a 1m16.097s. Vettel ended up trumping the pair of them on the very last lap, but he was clearly not really trying that hard in the final part of the race and set the fastest lap to amuse himself. Prior to that it seemed that he had accepted that track position meant that there was no point in pushing. If one cannot overtake there is not much point in taking unnecessary risks. He took the points. That was all the car was going to achieve. The numbers prove that Alonso was not really quicker than Massa, although that analysis may be skewed by the fact that the leader does not have to scorch away if it is not essential. The art is to win the race at the slowest possible pace, so as not to stress the car more than is absolutely necessary. The fact that Alonso made a lot of noise on the radio about how quick he was is neither here nor there. If he could overtake Massa, he should have done it. Clearly he could not. And when he was allowed to overtake he did not prove conclusively that he had the quicker car.

Long after the race was done and the penalty announced I sat down with the Ferrari press officer Luca Colajanni and we talked the whole thing through, without any emotion involved. From that it became clear that the problem is simply one of the way one looks at the sport. Sebastian Vettel was not a threat to the Ferrari 1-2. He might have been if the car had suddenly improved, but one should not be making such decisions based on ifs and buts. The evidence was that the Ferraris had Vettel under control and Sebastian’s pace suggests that he knew that.

The rancour between Ferrari and the fans is about a clash of philosophies. For the average fan what is important is not just that they watch a straight fight between two competitors, but that the sport itself is portrayed in a good light. Fans are passionate about the sport, about its traditions and they want to be able to say that they are proud of it when challenged by some ping-pong freak or a follower of synchronised swimming. The media may or may not be the representatives of the fans (the fans have no representation without the media) but what motivated the attacks on Alonso after the race was a mixture of two things: one was that many of the sport’s writers are passionate fans; the second was that for the professional journalists this represented a good story. Alonso’s responses to the questions indicated that he feels that all the F1 press are simply hacks looking for a front page lead. He needs to be educated to fully understand why it is that he is not as popular as perhaps he should be given the talents he has.

No real fan can be proud of a sport that allows things like the Ferrari switch at Hockenheim. It compounded the widely-held belief that F1 is a business rather than a sport.

Ferrari believes in certain sporting ideals, but the view is that F1 is a team sport and that the individual must therefore be subjugated for the good of the cause. The cause is to sell more Ferrari road cars, generate better profits for the company and maintain the F1 marketing “tool” by keeping the sponsors happy. One must therefore ask the question: Did Ferrari achieve these goals in Hockenheim? The team management obviously felt that giving Alonso more points than Massa was the right thing to do. One can see that argument. Massa started the race with 67 points and Alonso had 98. A victory for Massa and a failure to score by Alonso would have put the two very close in the championship. There are still eight of the 19 races remaining and so the World Championship remains wide open. Massa took the lead at the start after Vettel aggressively shoved Alonso towards the pitwall. This was the fault of neither driver. Things happen in races and the drivers have to accept them. That’s racing!

The Ferrari argument is that if the team is to have any chance of winning the title this year it is best not to have the drivers splitting the available points between them. Colajanni argued that Massa will be paid back for what he did when – and if – the circumstances allow it. Ferrari’s attitude is really just an attempt to bring order to the chaos of life and control as many elements as possible. But what happens, say, if Alonso slips on a banana skin and breaks his leg? Massa will be less able to offer a challenge because he has been disadvantaged with the Hockenheim manoeuvre. I think it is fair to say that by asking Massa to do what is best for the team, Ferrari is putting all of its eggs in one basket. It may work out and Fernando may sweep to a third title. The theory goes that people will then buy Ferrari road cars and other paraphernalia as a result of his triumph.

Hmmmm…

I would argue (and did) that what drives sports fans to spend their money on luxuries such as team memorabilia and very fast cars is not the result, but rather the way results are achieved. They will spend more if they feel an engagement with the team. If it makes them feel good.

There are two ways of winning: one can win in a functional sense and one can win in style. This is why I believe Massa is more popular than Alonso, because while Fernando has had all manner of scrapes and question marks during his F1 career, the drive to win has always been a functional one. Winning was the goal and the route taken to get there was not important to him. Massa, on the other hand, has shown that one can be a champion without actually being the World Champion. He showed that in Brazil in 2008. The hard-bitten F1 folks would argue that losing with grace is still losing, but they miss the point that one can win in defeat and lose in victory. What Massa did on Sunday is going to hurt his image in Brazil a great deal, just as Rubens Barrichello was badly damaged by helping Ferrari (and by extension Michael Schumacher) in the old days. Felipe made a huge sacrifice on Sunday and one wonders whether it really will be repaid.

On the other side of the coin, Ferrari blew a great opportunity on Sunday. It would have been the perfect human interest story to have Massa win a race a year to the day after he was nearly killed in Hungary. It would have been a fairytale, and people like fairytales. They like happy endings. This is why film makers for generations have used them. They sell. They make people feel warm and wonderful.

Ferrari’s choice to go down the pragmatic route rather than indulge in a little romance is a sign that the firm is run by people who do what is best for the company, put who at the same time put Ferrari before the sport as a whole. Jean Todt was like that when he was running things at Maranello, but he now has a new job and he has a different attitude. His job now is to protect the sport and I feel that Ferrari’s punishment is not over yet. If one is given a job, one does the best one possibly can in that role. Alonso said that himself on Sunday. So Ferrari should expect Todt to do his FIA job as it should be done.

I have long believed that several of the other top teams have a better understanding than Ferrari of why it is important to always put the sport first. Pull back a little more and one might conclude that the problem is that sporting values and money are impossible bedmates. There is not much that can be done about that. They need one another and so are stuck in a marriage that is not always plain sailing.

The same problem is being seen everywhere in F1. Some believe that F1 is there in order to generate the maximum profits for them. This works as long as they get away with it, but it does not work for the sport. If ever one needed evidence of this one had only to go to Hockenheim. There are six German drivers in F1 today. Vettel is battling for the World Championship, admittedly Michael Schumacher is a shadow of his former self, but one would expect the grandstands to be full all the time. The official crowd figures were little short of disastrous. Two years ago the three-day crowd figure was 240,000, with 115,000 fans present on race day. This year the three-day total was 165,000, with race day boasting just 65,000. And this with six Germans on the grid. The problem is that the tickets are simply too expensive because the businessmen are squeezing the sport too much…

Business and sport at odds as ever…

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Gossip from the Hockenheim paddock

There is little in the way of interesting chatter at Hockenheim, although there have been rumblings about several teams having financial troubles. The latest whispers suggest that Renault F1 has a bit of a cash-flow crisis, as sponsorship money is due to arrive in the autumn, but more cash is needed right now. The team would like to get its hands on its TV rights money but, as some of the other teams are pointing out, the operation counts a bank amongst its sponsors: a bank that is owned by Renault. A look at the cars reveals a company called DIAC. This was founded by Louis Renault himself back in 1924 and stands for Diffusion Industrielle et Automobile par le Crédit, in order to provide credit for Renault car buyers. It has been a part of the another company called RCI Banque since 2002. RCI, incidentally, stands for Renault Crédit International. This organization finances sales of all the Renault and Nissan brands in 39 countries, so it has a few quid. This presumably means that it could loan the team some money…

There is also a fair bit of chat about Monaco and how the race really should pay F1 more money than it does. This is not surprising given that the people in charge of the sport these days do not care about anything other than cash and have no respect at all for the traditions of the sport. There are some who say that F1 will be fine without Monaco and others who are aghast at the thought of removing one of the pillars of the sport, the one race that gives F1 glamour. There is, of course, a negotiation going on and both F1 and Monaco understand that it would be detrimental to both if there was not a Monaco Grand Prix. In all probability a compromise will be found and all the sabre-rattling will stop. This would be good. F1 loves to do its dirty washing in public and the people in charge seem to be quite happy to bet the farm to win a few extra nickels. That is fine if the only reason for existence is to squeeze every single penny from the sport, but one would hope that there are some folk out there who understand that this is not what it is all about. The only reason that more money is needed is to pay off a bunch of bankers who care nothing for the sport. One can only hope that in the fullness of time the teams and the FIA can find a way to get rid of those who have no passion for the sport. Banks exist to loan money and there is no reason that a commercial bank cannot provide a funding package to buy out the financiers who are currently involved in order to create a structure which will better serve the sport in the years ahead.

Elsewhere it is being reported that the HRT team has a deal with Toyota Motorsport for a supply of chassis for the future. This is a sensible move. However, there are a number of points which should be mentioned. Firstly, in order for such a deal to go ahead, the owners of HRT need to make the necessary payments stipulated in any agreement; and secondly Toyota needs to have the people on staff capable of not only building chassis, but also developing them in the future. With HRT drivers trading places (quite literally) and the Spanish owners apparently unable to come up with cash by other means the existence of any such arrangement must be regarded with caution.

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Goings-on in recent days

I have been having a couple of days off to enjoy the French national holiday – Bastille Day – and some firework displays, a picnic and a pleasant lunch with friends up near the coast. The Internet stopped working for a while anyway… Back to the F1 world and I find that little has really changed. Tavo Hellmund has not announced where the land is for the circuit that he is going to build for the United States Grand Prix. He said he would. Still, he has made the right noises about being confident and blah, blah, blah. Just like Simon Gillette at Donington Park did. The proof of the pudding is in the eating and Tavo needs to come up with something a little more solid if people are to believe the whole thing is going to happen. He may feel that it does not matter whether people believe it or not and I presume that he is keeping things quiet to get as far into the planning permit process as possible without alerting the local residents to the fact that he is building a racing track.

Bernie Ecclestone has been spoon-feeding tame media – who think that writing down his every utterance makes them players in F1′s inner circle – and has planted the suggestion that there might be need for an independent rule-making body for the sport. This is clearly a dig at the FIA, which – lest we forget – is already the independent rule-making body for the sport. This is a fairly transparent manoeuvre. Bernie knows that in a few months from now the negotiations for the next Concorde Agreement must begin and he understands that this is going to be a huge challenge for him as the teams and the FIA are now in a situation where there are natural allies, as the commercial rights holders (CVC Capital Partners), whom he represents, are not going to get the same kind of terms from the teams as they have managed in the past. Taking 50% of the profits of the sport has been a great bonus for these folk but they have to face up to the reality that the future number will have to be more like 15%. The game now is to try to split the teams and undermine the federation. The problem is that after years of this sort of thing the teams have learned that being divided is to be conquered. In the old days Ecclestone had Max Mosley in the Place de la Concorde and so had a pretty solid alliance against the teams. This is no longer the case.

It will be fun to watch the negotiations, but hopefully this time they will not lead the usual brinksmanship. The wisest route forward would be for CVC to either take the money and run, selling the rights to someone with a less aggressive need to make profits and then the teams will get more, the FIA will get more, the commercial rights holders Will be amply rewarded (rather than overly rewarded) and the sport as a whole will benefit from more money staying in it and stability.

I have long believed that the best solution is for all the parties involved to establish some kind of trust to look after the commercial matters and keep the money-grabbers out. Whether that can be negotiated is another matter, but with a strong FOTA, allied to the FIA this is entirely possible.

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No ART, no money

ART Grand Prix has withdrawn its application for an entry in the FIA Formula 1 World Championship. The team said that the decision had been taken because it could not find the necessary financial and technical partners for the project.

“The team has been working for several months on this ambitious project that they had undertaken with determination and lucidity,” a statement said. “ART Grand Prix has forged strong bonds with several technical and financial partners but with unfavourable economic conditions they could not gather the necessary guarantees to ensure the stability of the project in the long term. Therefore, the company will have to postpone its project until a later date.”

This surprising turn of events means that the field is open for the other bidders. It remains to be seen if anyone has sufficient support to embark on such a programme.

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FOTA reveals its own carbon emissions programme

The Formula One Teams Association (FOTA) has announced that Formula One has inaugurated a comprehensive and externally audited carbon emissions reduction programme. This is in addition to steps being taken by the FIA to reduce the carbon footprint of the sport.

FOTA commissioned the environmental research analysis organisation Trucost to research and analyse the full range of activities performed by and within F1 teams and their suppliers, and to advise on measures that could be taken to reduce carbon emissions now and in the future. Trucost’s research and analysis shows that the carbon emissions caused by the testing and racing of F1 cars is a small proportion of the total carbon emissions generated by the sport as a whole, if one encompasses the whole F1 supply chain.

Formula 1 cars have traditionally provided an exciting and productive development platform for new automotive technologies. Many of these have been introduced into consumer production cars, F1 has played a role in developing turbocharging, fuel injection, variable valve timing and kinetic energy recovery systems. It is FOTA’s desire and intention to work with the FIA to continue to pioneer technologies that are appropriate to the challenges faced by society today and in the future, and that are applicable to products that will benefit mankind in the longer term.

Modern F1 is and must continue to be all about efficiency – and, whilst F1 cars are and must continue to be very fast and very exciting, it is also necessary and desirable that their engines and powertrains be as efficient as possible. With that in mind, working closely with the FIA, FOTA has committed to working to develop new F1 engine and powertrain regulations that will require all entrants from 2013 onwards to incorporate technologies designed to enhance fuel efficiency. At the same time, revisions to F1’s sporting regulations will enhance and incentivise the competitive benefit of further reducing fuel consumption.

“The good news is that, in conjunction with the FIA’s and FOTA’s recent successful efforts to improve efficiencies and restrict resources applied to F1, it has already been possible to reduce F1’s total carbon emissions,” says Martin Whitmarsh, the chairman of FOTA. “Moreover, building on what we have already achieved, and extrapolating what is now being planned, we anticipate that by 2012 F1 will have reduced its total carbon emissions by 12.4% compared with 2009. With the support of all its member teams, FOTA has committed to the continuation of this programme, and has undertaken to maintain continuous and independent analysis and assessment in order to ensure that these carbon emissions reduction targets are met or bettered, and to investigate where further carbon emissions reduction opportunities may exist. Measurement and management, in other words. In addition, the FIA and FOTA are already working together to tailor the 2013 technical regulations to ensuring that all engines and powertrains used in F1 by that date will showcase, and provide a platform for the ongoing development of, technologies designed to enhance fuel efficiency. This is a very exciting time for F1 and I am delighted that our sport has been able to take a global environmental lead in this way.”

Simon Thomas, Chief Executive of Trucost, says, “Formula 1 is fundamentally about efficiency – how to squeeze performance within the restrictions of physics and the rules. There is a growing need to transition from fossil fuel dependency to an economy that is more carbon efficient. In keeping with this trend, the F1 teams have collectively made a firm commitment to reducing greenhouse gas emissions in a significant way. This is consistent with F1’s position as a leader in technological innovation and illustrates what can be achieved by organisations not traditionally associated with the environmental agenda. We also believe that the engineering excellence that exists within F1 will have a part to play in the inevitable shift to more carbon efficient transportation”

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