With the the showcase Winter Olympics in Sochi out of the way, Russian President Vladimir Putin may feel that he is free to do as he pleases with regard to the West, but the current goings-on in the Ukraine could end up doing some serious damage to Russia’s ambitions in Formula 1 if the situation escalates further. For those who do not follow world news closely, the Crimean peninsula on the Black Sea – and specifically the city of of Sebastopol – is an important strategic location for Russia, which maintains a military base there. However in 1954 Soviet leader Nikita Khrushchev gave the Crimean peninsula to the Ukrainian people, at the time it was simply a symbolic gesture because the Ukraine was a member of the Union of Soviet Socialist Republics (USSR) and was ruled from Moscow. However when the Soviet Union collapsed in 1991 the Ukraine became independent and has remained so ever since, although Russia has exerted influence as Ukraine is dependent on its neighbour for energy supplies. Ukraine’s developing relationship with the European Union has raised some alarms in Russia in recent years. The overthrow last week of pro-Russian president Viktor Yanukovych would appear to be a serious threat to continued Russian influence in the country and this seems to be why the current crisis has developed. It is not in Russia’s interest (economically) to go to war but we will have to see what happens next.
From a Formula 1 point of view any conflict could have a serious impact on Russia’s F1 plans. If there is military action it will make it very difficult for the Formula 1 circus to go to Sochi next autumn.
Sochi has been a major factor in increasing Russian influence in F1 in recent years, notably with Marussia taking control of the Virgin F1 team. A deal with Sauber, believed to involved magnate Boris Rotenberg, seems to have fallen apart, but there is some kind of deal being done in relation to Lotus with the businessmen behind Yota Devices. In general, however, F1’s dealings with Russia have ended up being either short-lived or stillborn. An attempt to organise a Russian Grand Prix in Moscow some years ago ended, for example, when the Russian doing the negotiations was gunned down…
One of the earliest attempts was in 2005 when driver Eddie Irvine turned up at Monaco with liquor baron Roustam Tariko in tow. The duo talked over a period of two years about buying the Jordan, Minardi, Midland and Super Aguri teams. There were even discussions of a start-up team before the idea mysteriously faded away, presumably because money did not arrive.
Tariko’s name has popped up again in recent days in relation to Gerard Lopez. The current situation concerning Lotus’s ownership is rather complicated. Gerard Lopez says he is the owner but it is clear that the team is under the control of Scotsman Andy Ruhan. The only way that these facts can be combined is if Genii Capital’s shares had been pledged to Ruhan in exchange for loans to keep the team going. On paper Genii Capital would still be the owner, but Ruhan would be running the show. The latter does not seem to be overly interested in being a team owner and seems to have got involved because he saw a way to make money. His exit strategy would obviously involve the sale of shares. It is very hard to figure out exactly what is going on as last week Genii issued a six month option on around 10 percent of the business. The law firm JAG Shaw Baker, which was named in the documents, says it is not the buyer but was simply doing the paperwork for Genii.
In order to regain control of the team from Ruhan, Lopez needs money. Since Genii Capital took over the team four years ago, this is the one thing which has proved to be a problem. Financial juggling kept the business alive but there was no long-term solution. That seemed to have arrived last summer when a deal was announced with Quantum Motorsport but that was not completed and this seems to have led to Ruhan moving to protect his investment.
Lopez has connections in Russia, a notion underlined by the fact that not long after Genii took control of the team Putin appeared at the wheel of a Renault-branded F1 car (believed to have been an old Arrows) and there was some sponsorship from Lada. But any hope there might have been of a bigger deal faded away and it was not until recently that Yota Devices popped up on the car. If the rumours about Tariko are true there is a chance that Lopez could sort out the situation. Tariko seems to be something of a maverick, however, having ducked and weaved enough to be able to build up a liquor importation business during the rough-and-tumble years after the collapse of the Soviet Union. Failed joint ventures with Western firms led to him launching his own Russian Standard brand but this is still a tiddler in relation to giants like Diageo and Pernod Ricard. Along the way, Tariko took an odd route and diversified into banking, his goal seeming to be to build a global brand that could be involved in different businesses along the lines of Virgin or Vijay Mallya’s less successful Kingfisher. A move to F1 would make some sense in terms of marketing but it would be expensive and Tariko has recently taken on debt buying a Polish vodka company, which means he is now global number two in vodka sales, still behind Diageo, but ahead of Pernod Ricard.
Tariko’s finance empire has had a few scrapes along the way including a failed takeover by BNP Paribas that ended up in legal action after Tariko failed to comply with the commitments made.
Whether this is a deal that will impress Ruhan remains to be seen. The Scotsman is a very successful businessman and he may have some other ideas up his sleeve. We will see…