The departure of Luca Montezemolo from Ferrari is a move of gigantic proportions in the geopolitics of the sport – and it has a number of implications that may not seem obvious.
Back in the 1970s Montezemolo was the bright young boy at Ferrari and after putting Ferrari back on a winning path he went on to a glittering career in various Fiat-related companies and projects before being put in charge of Ferrari in 1991, after he had finished organising the 1990 World Cup competition. By then Enzo Ferrari was dead and the Ferrari company had lost its way in F1 terms. Fiat boss Gianni Agnelli decided that it was time for a change and brought back Montezemolo as Ferrari chairman and managing director. It was November 1991 and his brief was to sell more cars and to get the F1 team winning again. Remember that after 1983, Ferrari had not won a Constructors’ title, overshadowed by McLarens, Williamses and later by Benettons as well. At the time Ferrari sold 4,500 road cars a year and Montezemolo ramped this up to reach 7,000 by 2008. The company recently announced its intention to cap production at 7,000 vehicles a year in order to maintain the exclusivity of the Ferrari brand. This means that prices will go up. From the moment he took over the progress was positive but Agnelli still needed to be patient and it was not until 1999 that Montezemolo finally found the right formula with Jean Todt, Ross Brawn, Rory Byrne and Michael Schumacher. In the same period Montezemolo used Concorde Agreement negotiations to force Bernie Ecclestone to give Ferrari more money than the other teams. Ecclestone and Ferrari worked hand in glove – as long as the money kept coming. The legacy of that is that today Ferrari gets around $120 million a year before the prize money is decided upon. Some of the others have negotiated lesser deals but they are peanuts compared to Ferrari’s ransom. By 2000 Ferrari was dominant but did not do what Mercedes is currently doing and allow its drivers to fight. Michael Schumacher was the number one and if the second driver did not like it, it was tough. The success propelled Montezemolo to a job with Confindustria, the Italian employers association, and in 2005 he was appointed chairman of Fiat because the Agnelli family had lost a generation to illness and suicide and as the older group died off, the third generation was not yet ready. Instead the family turned to Montezemolo to be the chairman until the new boys were ready for the job. Luca would remain in the role until 2010 when John Elkann – by then 34 – took over. Montezemolo went back to running Ferrari, although he dabbled in politics, setting up the Italia Futura political movement and holding shares in various other businesses, in the furniture, cashmere and high-speed train sectors.
His major idea after the break-up of the winning team was to recreate the same success with Italians in key positions: thus Stefano Domenicali became team principal, Luca Marmorini headed the engine department and Aldo Costa ran the design team. It did not work and thus Ferrari drifted backwards as McLaren, Red Bull and Mercedes rose up to defeat them.
The disappearance of Montezemolo is not just about Ferrari, of course. Ferrari is a powerful force in F1 and while Luca was old school and happy to get what was best for Ferrari no matter what, the feeling today is that the sport is in danger of destroying itself with profligacy, and with a commercial rights holding organisation that strips money out of the sport in vast quantities, and which does next to nothing in terms of promotion or investment for the future. Thus the disappearance of Montezemolo, as with the disappearance of Max Mosley from the FIA, weakens the hold on the sport enjoyed by the Formula One group. People today don’t just agree to everything, and even Ferrari may now see the benefits of taking out the middle man and dividing up the revenues in a more traditional manner. Resistance may not be open, but it is growing. A new generation at Ferrari may understand that while Ferrari can go on doing what Montezemolo was doing and getting bigger and bigger payouts at each negotiation, the best long-term solution may not be this way. There are bound to be those who will argue that the time has come to get a better deal for everyone, while at the same time, trying to find ways to cut costs. When it comes to a spending competition Ferrari is only a big player when it is not against a Mercedes or a Honda. Thus, cost control becomes important. Time will tell whether this happens, but one thing is certain: of the three big players in F1 in the last 20 years, there is only one still standing. Max Mosley is gone; Luca Montezemolo has followed. The survivor, Bernie Ecclestone, is 84 in a few weeks. He has survived a bruising brush with the authorities in Germany and he must be wondering whether one day soon the risk-assessors at CVC Capital Partners will re-assess his value.
What a clever piece. 900 words ostensibly about Montezemolo but really about Ecclestone.
The piece’s ‘cleverness’ is about highlighting the fact that money alone can’t guarantee future success – whether spending it furiously or desperately hanging onto it.
F1’s survival will primarily depend on ingenuity and imagination.
900 words about how ldm provided Bernie with power. Really Bernie’s grip is already lost, just a matter of time. CVC may may be emboldened to toss him but what if they thought ldm was the replacement?
Simon; I think you missed a lot here if you only keyed in on Bernie in this article.
Another boring hater reply . As has been said before go read something else then .
I’m sorry if you thought I was being sarcastic. It was a genuine comment. I thought it a good and clever article, I think the vast majority of what Joe writes is, I was just being a smartarse and saying “I see what you’ve done there”.
It reads as genuine.
I’d say a piece about the future of F1, and quite hopeful. CVC have a lot of power, but what they think they ‘own’ should have the collective brain to set themselves free. The CVC/BE/Ferrari co-operation has looked like it is strangling sport for some time. CVC’s motivation is clear and I don’t think Bernie can adapt to a new mission (promote the sport for it’s own benefit). Ferrari’s selfish behaviour is long standing, I hope new personnel will be smarter and more F1 oriented, but I haven’t heard anything from them which would suggest that they are.
I hope Joe has.
I thought it read like 900 words about implications that didn’t mention many implications.
Not worthy of comment then…
Well, I agree with him. Moderation in headlining isn’t one of your strong suits, to be honest. Of course, in a click count based market that’s understandable.
“Max Mosley is gone: Luca Montezemolo has followed.
Montezemolo can be credited with building Ferrari back up. Mosley essentially gave away F1’s commercial rights for nothing and if anyone is responsible for F1’s demise – it’s him.
The most thoughtful commentary on the news from Ferrari that I have come across. Thank you.
Someone simply needs to grow some balls for the greater good of the sport. You like your history Joe – has anyones reign of power at any period in history been infinite, or have all reigns at some stage or another come to an end?
Combine that with Ron Dennis comment that the sport must reinvent itself to remain popular – about f*cking time I say.
The average fan couldn’t give a toss about CVC, yet the direction and strategy of the sport serves their interests before the sport. I wouldn’t mind seeing words like “going concern” and “driver hired on merit” a bit more frequently.
Too much to ask?
Let’s imagine Bernie leaves without being dead. Would that be enough for you to do your Bernie book, or it will it have to wait until he’s gone-gone?
(We all know there’s one in you…)
Why would CVC want to remove the goose that lays its golden eggs?
It seems logical for Luca to be Bernie’s successor…
If only all other journalists, regardless of their speciality, would be so searching, thorough and be prepared to ask awkward questions on not just the surface issues but mainly those behind the front, as this piece does.
FIAT is no longer just FIAT, it’s FCA (FIAT Chrystler Automobiles) now, with Marchionne as a leader.
As a consequence of the acquisition of Chrystler, the Italians have debts to pay. Ferrari has been generating huge profits for decades now, they have a lot of resources and cash.
(This could explain the lack of investmentes in structures at Maranello in the recent years.)
Also Marchionne is floating FCA in New York and Ferrari’s current strenghts are extremely positive for them.
That’s how I see it
That’s how Joe saw it on Tuesday too, the day before the announcement.🙂
very well said… as usual…😉
-jp-
The vetos that Luca had, over rules they did not like and over Bernie’s successor, were they his, or do they remain at Ferrari? (Mind you, half the world seems to have a veto over Bernie’s successor.)
What I believe the Chinese call “Interesting times”!
I am confused, Sergio Marchione was Fiat Chrysler Auto Group chairman is that correct?
Ferrari is just one of the FCGA companies ie a subsidiary of Fiat. Like Alfa Romeo and Lancia.
Why does a chairman of the whole shooting match drop down a level to be chairman of a subsidiary company? Or is he also remaining head of FCAG?
And what about John Elkann? Is he still there?
Marchione is the CEO of FCA – Fiat Chrysler Automobiles and, now, Chairman of Ferrari S.p.a. John Elkann is the Chairman of FCA Ltd.
Fascinating writing – thanks Joe!!
Sergio Marchionne is clearly the man of the moment. He has grandiosely defeated Montezemolo and will now take his place. The question is, will the duo of Marchionne/Mattiacci start to bring about changes to F1 to try to make everybody happy or will they continue the lucrative tradition of making deals with Bernie for the enrichment of themselves?
The way F1 is run reminds me of the psychology test they do on children where they say you can have 1 sweet now or 5 if you wait a while, inevitably the children are too excited and take the first option.
If anybody at the top of F1 actually had some vision and future planning they should surely see that some investment now would reap huge rewards in the future.
Apparently Walter Mischel, the professor who became famous for the marshmallow test, only has told one of the children what their scores were, of who participated originally. The man was in his forties, on his death bed due to cancer, and it was his last request. The answer? “He did okay”… I know I get that quote wrong, but that was the gist of it. Heck, I almost hope that was what the answer was, for if it were me, i’d giggle myself to all the way…
Mischel, a refugee, in his .. I just looked it up, so 84, is going good, is a workaholic of some degree. Something like a book a year, a peer reviewed paper every couple of weeks…. the Gods only know if he’d survive contact with F1… or vice versa… but I think he must be blessed with some marshmallow immunity in general…
Re: Ecclestone, is much known about his succession plan? Not wanting to sound like a smartass, but 84 is well within that age range where you simply don’t wake up tomorrow.
I see it as coming down to the future of the sport. Does anyone else think that Bernie may be channeling Louis XV? After Bernie, “le deluge”? Too much ‘taking money out’, not enough ‘spreading it around’ gives one to wonder…
I think Bernie put it in perspective in saying it’s similar to the death of Enzo Ferrari. He will be missed even if his efforts to remould Ferrari as an Italian team came to nothing. That limited the teams true potential IMHO and now they are in position of having to start over. This kind of change resonates throughout organisations and a feeling of loss and lack of direction will permeate throughout the team in the short term at least.
The solution however will be interesting and is potentially exciting. As a Ferrari fan I would like to see Ross Brawn take over and I believe he is one of the few who can turn the situation around in the shortest time possible. His appointment alone would instill immediate confidence and there are a few people in other teams, mainly Mercedes who are probably having a quick look at the small print in their contracts. Of course this is only speculation and a bit of wishful thinking but running Ferrari is probably one of the few jobs that would interest Ross who was a victim of De Montezemelo’s attempt to create a truly national team. It would not only be Ferrari that would benefit from Ross’s return either, the whole sport would be boosted by such a move IMHO. For now though it’s just ciao bello Luca and best wishes for the future. F1 just became a little boring.
A mate of mine (who as far as I know isn’t into F1):
‘Bernie Eccelstone is a weird looking one eh? A funny little fella with that whole Andy Warhol / Karl Lagerfeld thing going on and so rich no one dare say anything. If he worked at Tesco he would only be allowed on the trollies.’
My guess is that Bernie got on owing to his brain and ability with the gab, rather than his looks.
I have heard many stories about Bernie the bad guy, and about Bernie the generous soul who gave money to an old mate.
There is Bernie who doesn’t give a toss about the soul of F1, and there’s another who bought back his old Connaughts and payed for the restoration of many racers.
Bernie is a complicated man.
Hi Joe, I really like to read your articles although I don’t always agree. What I like about you, is the fact that you are trying to be neutral. You don’t always succeed, but who does? Formula 1 is so complicated, loaded with political movements, that it’s too difficult to follow. Even for guys like you.
About di Montezemolo, your are right to say that this man has taken Ferrari to the top level. This Italian made some pretty good décisions, but all’s not well. He made a superb move to engage Jean Todt, but it is the Frenchman who took Ferrari to unknown heights, not di Montezemolo. Because he was too jealous, he even decided to get rid of Jean Todt and make an all Italian team. That was the biggest mistake di Montezemolo could do. We have seen what happened, thanks to the so-called ‘spaghetti-mentality’…
So, without knowing the internal kitchen of Ferrari and Fiat, it is perhaps the best decision to get rid of di Montezemolo. Now they just have to find some other decision-makers to make Ferrari F1 winning again. But they can’t be Italian, that’s for sure…
A belgian bloke, living in the South of France.
The dicision to get rid of LCDM had nothing to do with F1 I am afraid
No one could spend three decades in the top F1 hierarchy without making a few wrong decisions and probably Luca made a great many of those. But I am saddened by his departure. He was probably the “grandest” of all the F1 characters, with a theatrical style and panache that Bernie and Ron Dennis, and a small number of others, just didn’t have to the same degree.
F1 without him is like NY without Central Station.
Look up and down the paddock and, that small handful of old timers apart, all around are folks with all the charisma of a Heikki Kovaleinen or Paul de Resta [and they are by no means the least interesting characters, in fairness].
I guess there can’t be a role for him at the FIA……….pity.
I’m sure Montezemolo was seen as a hindrance to Ferrari’s plans for their team.
Which equates to their plans far more widely.
So, old guard dispatched, the question is, what do FIAT – Chrysler want?
Where is half their name from?
(and their heir, future CEO, present CEO and team manager…)
What has Bernie consistently managed to fluff up, one way or the other?
No point saying what was obvious form the start. What will be interesting, as Joe points out, is all the consequential effects. (re Simon’s comment, above, it’s about Montezemelo, it’s about Bernie, the two were almost inextricable, that’s the whole point of the article)Finally there maybe some actual news. You’d think there’s been plenty already, the sheer volume of rumor and gossip “reporting”. But, really, I think it boils down to a very simple wish.
This could become very interesting, because maybe it is only Ferrari, who can wield the influence required, to get this sport using the old grey matter. Nobody likes who gets such subsidies and manner of privilege, real or imaginary. But who will not think to gently realign, carefully, mind you, when the impetus comes?
I also think Ferrari will be too busy to want driver changes. Equally keen to retain so prominent a driver as Alonso. He is primus inter pares, commands as much attention as the WDC leaders… There’s no way he can want for more changes, is there, if change is the obstacle to a faster car? Unless they can get Lewis, for a good price. I keep forgetting there is quite a money shuffle required, if you move around the likes of Kimi and Lewis. (and sensitivity to relative pay, the other side of the garage). I tend to think, when my logic “feels too strong”, that I have missed something, and I shall have, inevitably. But I hold to ALO – HAM, and that’s that, at my hypothetical peril. My wilder thoughts are about JEV getting a good drive..
It seems you feel change is in the air on a far bigger level than just Ferrari …… Whooppee !! the racing may not get better but the general level of Team / Sponsor / Marketing and overall Series security may be increased with some new brooms and some updates to the 21st Century whereas, truthfully we as still using a 1980 model. It’s just when now ?????
History’s right, although you should have mentioned Paolo Martinelli there as well. But analysis looks rather like a wishful thinking. Ferrari working on a better deal for everyone, cutting down on their own interests. Yeah, right…🙂
Hi joe,
this is off topic
LdM was voicing for lifting of engine freeze considering the lack of performance from the Ferrari engine this year. Lately this has been echoed by both Renault and Mercedes. Are there any chance of engine freeze rule for a season being relaxed?
They are allowed to change certain things each year, its in appendix 4 of the tech regs. Each “item” has a points (weighting) value for instance: Crankshaft =2 Total weighed items in the Power Unit = 66 out of which 32 may be modified for 2015. 25 for 2016 etc etc. But only parts which are not frozen may be modified. Each year the percentage of frozen items gets greater. For 2015 it 8% for 2016 and 2017 it is 23%, then 35% for 2018 then a jump to 95% in 2019.
Luca wanted to go way beyond this as the Ferrari PU design needs many mods to make it a good-un. (Probably one of those where the engineers would rather start again form scratch, having now learned a great deal, but they are not allowed to)
I see the Italian press is reporting that LDM will get a severance deal of 27 million euros, including 13 million as a one off payment for him agreeing not to do anything in competition with Ferrari/Fiat/etc. He must be crying all the way to the bank.
It has also been ‘suggested’ he might be ‘relishing the challenge’ of being the boss of Alitalia and doing the same for them as he did for Ferrari!
“doing the same for them as he did for Ferrari”
you mean selling luxury airplanes? Obviously kidding but Alitalia is a completely different business with different things going on internally. I am really curious how LCDM will handle all that comlicated network of trade unions at the company
His dismissal had nothing to do with the F1 team:
http://www.bloomberg.com/news/2014-09-11/ferrari-to-boost-production-to-keep-pace-with-super-rich.html
That’s what everyone in Italy is saying – nothing at all. It-s been a behind-the-scenes power struggle of two senior figures with completely different visions.