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Archive for May, 2013

Fans who attend The Audience with Joe in Montreal (click here for more information) will benefit from a special deal at F1 Boutique Canada, which is located close to the Pub Saint Paul in the old town. All those attending will be given a special “VIP $10.00 OFF” voucher for any F1 merchandise at F1 Boutique Canada, an official licensed motorsports store. The store is also organising an outdoor fan-friendly event on both Friday and Saturday in league with the “Grand Prix de Montreal Fan Club” (http://www.facebook.com/gpmtlfanclub). This will feature the Red Bull Wiiings Girls and the Red Bull Live DJ Booth, with an “F1 drummer” Montreal artist set and many other “Bienvenue à Montréal” surprises. The events will run from 6pm to 11pm on both nights. For more information click on the logo below, or go to www.fb.com/f1boutiquecanada or
www.twitter.com/f1boutique

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The F1 Boutique Canada, is located at 28 St-Paul East, Vieux Montréal, H2Y1G3

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The FIA statement after the Monaco GP that suggested that Pirelli and Mercedes-Benz might not have had proper permission to go testing after Barcelona rang alarm bells on Sunday night in Monte Carlo. The original stories about illegal testing were clearly a storm in a teacup, but the FIA announcement that evening raised eyebrows.

Firstly, the FIA rarely does anything quickly when it comes to Formula 1 and the press release came out with such alacrity after the stewards ruling that it seemed decidedly out of character. The statement seems to have taken Mercedes and Pirelli rather by surprise as well, as they clearly thought that what they were doing was OK. There is, logically, no reason for either organisation to do anything to get themselves into trouble with the federation and while other teams may have squawked about the test that took place there was no obvious reason to suggest that any advantage had been gained. It was just another opportunity to squawk, just as Red Bull did after the Spanish GP.

So what on earth, if anything, was going on? An FIA Tribunal will examine the matter at some point in the next few weeks, although it will probably not happen before Canada. We will see in Montreal whether Mercedes has really made such a huge leap forward in terms of tyre performance, or whether the win in Monaco was more to do with the nature of the track than the tyres. It will still be hard to judge because teams make progress all the time, but if the cars fade in the race as they have at other tracks, then there will be indication.

The FIA says that while approval was given for the test, there are aspects of what happened that are questionable. There is no doubt that in the Sporting Regulations it says that teams are not allowed to test current cars during the season, except for a number of straight line aerodynamic tests and the Young Driver test. They are, however, allowed to run cars that are two years old or more. Pirelli says that in its contract, it is allowed to ask a team to supply a car for testing if there is a safety issue involved. There is an argument that this was required after some tyre failures in Bahrain, although Pirelli itself has said that safety was not compromised by the treads coming off. Ferrari did agree to do a test for Pirelli in Barcelona with a 2011 car driven by Pedro de la Rosa. Given that Pirelli says that old cars are not much use for testing 2013 tyres, it is an odd thing to have done, although it is always possible that Pirelli reached that conclusion during the Ferrari test. Whatever the case, plans were then made for Mercedes to do a three day test, between May 15 and 17 in Barcelona, using a 2013 car.

The tests were not announced because it seems that Pirelli was worried that any attempt to test would be met with the kind of uproar and bad publicity that was heard in Monaco on Sunday. It was a better idea to get the job done on the quiet and not have to deal with a storm of noise in the media. That argument makes a lot of sense.

The FIA is disputing that it agreed to the test that occurred, which suggests that Mercedes and Pirelli took advantage of the situation. However Pirelli argues that it did not inform Mercedes what tyres were being tested and that these were a combination of work that was useful for 2014 and in an effort to solve the problem of the tread coming off, as was seen in Bahrain. These tyres were likely to have been different constructions, profiles and compounds and as we have seen on many occasions this year the 2013 tyres behave very differently in different temperatures and so arguing that Mercedes will have gained an advantage is stretching the argument.

So it is fair to say that the problem is not about the tyres, but rather about how and why the test came about. The technical people at the FIA know that it is unlikely that Mercedes gained any advantage from the test, so if there is trouble it is for reasons other than those being stated by the rival teams.

All of this is occurring against a backdrop of negotiations for a new tyre deal for 2014-2015-2016. Pirelli is making the point that it is a bit too late to change and that the teams need to agree to the financial deals on offer or the sport could find itself without a tyre supplier, if Pirelli decides to walk.

So the real question is whether or not it is too late for another tyre company to replace Pirelli.

Turn back the clock three years to May 2010 and there was a similar story going on. The sport had yet to agree whether to use Pirelli or Michelin. The French company’s offer was attractive, both technically and financially, but there was a political game going on in the background. Bernie Ecclestone wanted Pirelli, FIA President Jean Todt wanted Michelin. The question was really over who had the right to decide.

Was it a commercial matter or a sporting one?

In some championships the FIA asks for bids from suppliers, in others it leaves it up to the commercial rights holder. It is not clear who should decide. In 2010 the deal for 2011-2012-2013 went to Pirelli. The FIA accepted the situation after Michelin backed away from the negotiations. It was in many respects a victory for Ecclestone but the FIA had no choice but to accept the deal in the circumstances. The announcement was made on June 23 after the deal had been signed off by the World Motor Sport Council. In the press release at the time the FIA noted that “the sole supplier will undertake to strictly respect the sporting and technical regulations implemented by the FIA”. It was an odd statement. Now that there has been a glitch it sounds almost threatening.

Conspiracy theorists in F1 circles are now suggesting that the minor kerfuffle in Monaco has become something rather bigger, not because Mercedes gained any great advantage as rival teams are arguing, but rather because it has presented the FIA with an opportunity to reassert its power on the question of who decides on the technical partnerships of the Formula 1 World Championship. Both the FIA and FOM claim the right, but the outcome is more to do with who plays a better political game at the moment the deal is done.

If Pirelli was able to bang out the right kind of tyres in 2010-2011 despite the decision not being made until the World Council meeting in June, the same must be possible for Michelin in 2013-2014.

The other elements of this so-called scandal can be written off as being a sign of the disjointed nature of the sport at the moment, with the teams fighting over anything and everything because they are unhappy with one another about commercial deals struck and other political games played.

It will be interesting to see what happens next.

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You can read today that Formula 1 is in crisis, because there is not enough money about. That is true, but only up to a point. In reality there are two problems: the F1 teams cannot agree on how to stop spending, and not enough money being created by the sport is finding its way back into the business.

The first problem is really just a question of 11 Team Principals being unable to agree on a cost cap, so they go on spending, even if they cannot afford it, as though they are in some kind of 1970s nuclear arms race. It is plain stupid. This could be solved by the FIA instigating a financial regulation that required the agreement of more than 50 percent of the teams. Without a Concorde Agreement, the rule-making process is not set in stone and the federation can do as it pleases, within the limits of its own rules. However, the federation is incredibly cautious in all matters relating to F1 so it is hard to see any decisive action in the short term.

Last year a team with a budget of around $145 million (Williams F1) won a Grand Prix, fairly and squarely. The team had the technology and the prowess to beat bigger organisations which have budgets that climb to atmospheric figures, the biggest being $344 million if one counts the holding company of a team that claims to have a smaller budget. Winning should not be about who has the most money to throw at the competition, but rather who is the cleverest. In this respect, racing with a budget cap would be a far better advertisement for the best team, as it would have achieved success in the most cost-effective manner, which is of course attractive to modern car manufacturers who are always looking for ways to create cars at less cost.

The major teams today spend around $240 million apiece each year, which Williams proved last year is about $100 million more than you need to do the job. A cost cap would turn all the money being spent above the $145 million limit into profit for the big teams, adding value to their businesses and allowing them to expand into other sectors and by doing so create more stable enterprises. The smallest teams this year are running on budgets of $100 million, and, judging by the track action this year, this is enough to keep them within reach of Williams.

TV money should provide for everyone, including the 11th team in the Constructors Championship, in an equitable fashion. It is daft not to make allowances for the tail-ender because if there is no 11th team then it will mean that the bottom four or five teams can cruise along and take the money rather than worrying about dropping out. It is in everyone’s interest that the 11th team gets something to help it survive, but not enough money to make 11th an attractive place to be… and, of course, all the midfield teams face the prospect of ending up in P11 if they make one really bad car.

The same basic problem has existed in soccer for some years with ambitious team owners spending wild amounts of money to buy all the top talent and to build bigger stadiums to capitalise on their success. The result was that by 2009 UEFA concluded that around half of the 650 or so teams in Europe were in deficit and that their combined debts were around $1.6 billion. Today, four years later, that figure is reckoned to be closer to $11.5 billion.

In consequence UEFA developed the Financial Fair Play Rules (FFP) for teams that compete in its competitions, hoping that the domestic championships would also follow suit. Britain’s Football League has done that with its own version of the FFP with the aim to enable teams to break even and control salaries. The wages for the Premier League clubs are now limited to a percentage of the team’s turnover and to ensure that the teams comply there are transfer embargoes that will be applied. The rules that will begin in Britain next season will mean that Premier League clubs cannot make a loss in excess of $165 million across a three-season period, and even then only if the loss is guaranteed by the team owners; the financial projections are shown to the Premier League and if almost all of the loss is covered by injections of equity from the club owners. There are also restrictions on the amount of Premier League Central Funds that can be used to increase player wages. If a club exceeds this cap then additional wage cost must be funded by increased commercial revenues that the club itself made during the season in question.

It is not exactly a budget cap, but it is a smart way to solve the problem and one that the F1 teams would do well to look at. Perhaps someone should hire Richard Scudamore, the CEO of the Premier League, to fix this problem. He is in his mid-fifties, he’s trained as a lawyer, he has done some stonking deals during his career and dealt very effectively with a bunch of competitors who cannot see the wood for the trees. And he’s done the same job for 15 years and might like a change…

The second problem that needs to be addressed by F1 is that despite the huge commercial success there is not enough money coming back into the sport. It is rather out of kilter with the normal sport/promoter split of the earnings. The private equity people who control the Formula One group have already made vast fortunes out of their F1 investment, and now they want to strip out even more cash before they depart. They do not care a jot about the sport, nor about any damage they do while they are involved. Their sole aim is to extract money and all decisions are made based on what will produce maximum returns for them. Private equity companies exist to exploit, so one cannot blame them for doing what they do, but it would be best for the sport that this be stopped in the future. With a change of control mechanism in the 100-year commercial deal between the FIA and the Formula One group, it should be possible for the federation to insist that any new owner is less profit-oriented and gives more back to the sport. A renegotiation might thus be possible because CVC will want to protect what is left of its investment. If that does not happen then the commercial rights must either be bought by the interested parties, or they must be taken away from the current lessee and given to a more benevolent organisation, which is not going to be easy to achieve, unless there is a good legal reason to terminate the 100-year deal.

The plans to float the Formula One company are teetering (at best) and the uncertainty has led CVC Capital Partners to try to entice buyers with a $290 million dividend after the deal is done. In other words, if you buy shares you will get money back straight away. That is a pretty desperate step and an indication that the float is pretty unlikely to happen. It has achieved one aim, however, of putting a nominal value on the business and now it is a question of finding which investment firms will pay the most. The financial markets of the world are not peopled by idiots (for the most part) and investors are likely to be very wary. Perhaps there are some investors who are willing to take a risk on the commercial rights remaining with the Formula One group, but even they must consider what might happen if, for example, the situation in Munich gets any worse.

There have been signs for a while that the FIA is waiting for an opportunity to terminate the commercial agreement and create a new structure which will better serve the federation, providing money for club development around the world, road safety campaigns and assistance for talented youngsters to climb the racing ladder. The 100-year contract may have looked good 13 years ago (which is arguable), but today it looks like a very poor deal. There have been hints in recent weeks that there might be a second candidate in the FIA elections this autumn, but these have now faded away again as the problems in Munich are likely to reach a head before the FIA election.

For the moment the teams are not doing anything about this. The biggest teams have been pacified with larger payments from the Commercial Rights Holder, which means that it is not in their interest to rock the boat too much. However, everyone knows that F1 with only four teams is not a sensible option and the idea of customer cars is just padding the grid and disguising the problem. There need to be changes in the deals for the smaller teams, but all this is only possible if an earthquake occurs.

The key question therefore is whether or not there will be an earthquake.

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It is still very early in the process, but there is clearly a big push going on to make Bahrain the opening race of the 2014 season, at least if Melbourne does not rapidly agree to a new contract from 2016 onwards. Melbourne has played host to the first race of the season on most occasions since 1996, although in 2006 Bahrain managed to get the gig and Melbourne was pushed back to being the third race. The attendance in Albert Park suffered significantly and the remarks made when the Grand Prix was reinstated as the first race in 2007 were telling.

“Securing pole position as the first race of the year is important for Victoria because it always receives extra global attention and media coverage,” said the then Tourism and Major Events Minister John Pandazopoulos. “This is a great result for Australia’s sporting and events capital.”

Australian Grand Prix Corporation Chairman, Mr Ronald Walker, echoed the Minister’s sentiment and said the decision to award Melbourne the first race of the season reinforced the city’s reputation as the premier event on the global F1 circuit.

“To be reinstated as the Championship’s opening race is great news for the people of Australia,” he said. “There is much status afforded to the host city of the first event on the F1 calendar and this is nothing short of a splendid outcome for Melbourne.”

Three years after that, however, Melbourne was pushed back to being the second race again with FOM arguing that starting in Bahrain was more sensible in terms of TV viewing figures and the teams seeing the logic in sending their equipment out to Bahrain and then on to Australia.

In general, however, such date changes seem to be linked to contract negotiations and with Melbourne currently discussing the next deal from 2016-2020, with an option to extend to 2025, it is no great surprise that pressure in being applied.

The teams want to go testing at the start of 2014 in Bahrain or Abu Dhabi so that they can see their new machinery in action in warm conditions. This is important as the new engine rules and new tyres need to be assessed in sensible conditions. They are also keen that these tests are done relatively close to home so that modifications can be made more easily. There is no reason why there cannot be a warm weather test in the Middle East in February (except the cost) with the cars then going on to Australia and returning to Europe later after races in Australia, Malaysia, China and Bahrain. These days the cars spend very little time in the factories and much of the modification work is done at the race tracks, with new parts being flown out when needed.

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I was on the way back from Monaco today, on the high-speed train from Nice to Paris, and I had time to read through some of the paperwork that I collected during the weekend. One of the things was the Media Kit, given to all accredited journalists. I cannot say I read this stuff regularly because it tends to be rather samey, with potted bios of the drivers, results, previous winners and that sort of thing. However in the Monaco version there were some really interesting numbers about the event. The track is 3.34 km in length (2.07 miles). In order to make this safe there are 23 kilometres of steel barrier, which is three rails deep in most places. In addition there was 700 metres of the Tecpro plastic barriers that are so effective at stopping errant cars. This was shown very clearly with Pastor Maldonado’s large accident at Tabac during the race. The Automobile Club de Monaco uses no less than 20,000 sq.m of wire fencing to protect the spectators and to close off different areas. There are 1,100 tons of grandstand that is moved in and out each year, while the trackside safety equipment included 3,000 tyres to create tyre barriers. There were 39 CCTV cameras to watch every inch of the race track, 220 walkie-talkies for the organisers to use, working on nine different radio networks. There were a total of 650 marshals at the 43 different posts around the track. There were nine cranes to remove damaged cars quickly, while there were 120 professional firemen on scene in case of accidents with more than 500 fire extinguishers and no fewer than 10 intervention vehicles.

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Monaco2013

Direct from the paddock in Monaco, GrandPrix+ magazine is the sport’s fastest electronic magazine, available all over the world, just hours after each race has finished. It is not written by enthusiastic amateurs, like so much on the Web, but rather by experienced professional Formula 1 reporters with credentials and contacts in the F1 world. Plus some of the best photographers in action today.

It is the real thing, for an unreal price.

Sign up for GP+ and you get 21 magazines this year, plus the 22 issues from 2012, creating an instant F1 library that you can keep in your own computer or tablet.

It costs just £29.99…

In this issue there is all that you need to know about Monaco in 2013. GP+ is designed as a journal of record so that if you read it again in five years from now you will have the whole story, not just bits and pieces that add to what you have seen on TV.

We have a full report on both qualifying and the race. There are some strong opinions and fascinating features to broaden your knowledge of F1:

– What is going on with the F1 tyres?

– Is Bernie Ecclestone in trouble?

– The art of the Monaco Grand Prix

– The story of Eddie Sachs, the Clown Prince of Indianapolis

– The inside story on Honda’s return to F1

Give it a try. You will not be sorry!

To sign up, go to www.grandprixplus.com.

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Protests in Monaco

After the Monaco Grand Prix Infiniti Red Bull Racing and Ferrari (but not others) lodged a protest against Mercedes AMG Petronas alleging that the team breached the Formula 1 Sporting Regulations by conducting track testing using a 2013 car on May 15-16-17 in Barcelona. It remains to be seen whether the Stewards feel that the protest relates to the Monaco GP itself, or whether it must be treated as a separate issue. The team says that it was testing on behalf of Pirelli, which asked it to conduct the testing and that the FIA examined the request and agreed that it was acceptable to go ahead in those circumstances.

The stewards at Monaco are Sweden’s Lars Osterlind, Mexico’s Jose Abed. Monaco’s Christian Calmes and driver steward Tom Kristensen of Denmark.

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This being Formula 1 one sometimes forgets that listed companies have to do a bit more paperwork than others so it seems that the Williams-Mercedes deal will not be announced until the end of next week, which will give the company time to go through all the necessary regulatory filings in Germany.

Renault has now confirmed that Toro Rosso is joining its clan and that Red Bull will continue to use Renault-badged engines in 2014. Carlos Ghosn said that the company needs three teams in 2014 and that a third deal will be announced shortly. This is the Caterham deal, the two companies being tied together by an industrial alliance.

The big question mark therefore is over the supply of engines to Lotus. It is logical for both sides to continue with the arrangement but there is some quibbling going on over money as the Renault price tag of $26 million is a little steep. It is believed that Bernie Ecclestone is helping to nudge Renault towards a deal by suggesting that it would be a good idea for the manufacturer to take a stake in the team and thus get more Renault branding and give the team its engines at a reduced rate (or even for free). In return Renault would be able to have its own motorhome in the F1 Paddock and other benefits that come for those who are more than just suppliers.

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There is a storm in a teacup in Monaco this morning over a tyre test that took place in Barcelona after the Spanish GP, involving Mercedes. The team ran both Nico Rosberg and Lewis Hamilton and 1,000km were run as Pirelli tired to do some development work. The team was not aware of what tyres were being used. I understand that Mercedes checked with the FIA before agreeing to the test, and was given the go-ahead as Pirelli’s deal allows for testing but the tyre company does not currently have a suitable chassis and so is allowed to ask teams to help. There will be other tests as well with other teams as the season progresses, but it seems that Red Bull is making a fuss because it was not doing the testing…

It is very clear that Pirelli needs to do development work both for 2013 and 2014 tyres but it does not have a car to use that is sufficiently up-to-date to be useful. The only answer therefore is to use the teams because they cannot ever agree to allow Pirelli to use one chassis or another.

Thus it seems there is less of a story than the gabbling in the paddock suggests.

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Williams and Mercedes

17.30 Monaco Paddock. Down at the Williams motorhome members of the media are listening to chief race engineer Xevi Pujolar talking about the team’s adventures in qualifying. Very quietly, Niki Lauda (chairman of Mercedes AMG Petronas), Andy Cowell (managing director of Mercedes High Performance Powertrains) and Prof. Dr. Thomas Weber (the Daimler AG board member for Research & Development), all in Mercedes gear, sidle as casually as possible into the motorhome and disappear into the offices… They emerge a few moments later.

The team’s new engine supply deal for 2014, 2015 and 2016 is done.

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