Lewis Hamilton turned up in Miami yesterday to watch the final race of the NASCAR Sprint Cup. He visited specifically to be present at Jeff Gordon’s last race. Also there for the event was Mario Andretti and a number of Indycar drivers, wanting to see the fun. Gordon was in the running for the championship, but that went to Kyle Busch, an odd situation given that he missed a third of the races because of leg injuries he suffered in Daytona. The system is such that anyone who won a race gained entry to what is known as The Chase, a knockout competition that leaves four drivers fighting for the title. The man with the most wins this season – Joey Logano – was not one of them. It’s a different world over there… In London Sebastian Vettel was the winner of the Race of Champions, another knockout competition, while in Bahrain Mark Webber finally won a World Championship, along with this Porsche team-mates Brendon Hartley and Timo Bernhard. The top finished second in the closing round of the World Endurance Championship but that was enough to secure the title.
Over in India it was a bad weekend for Vijay Mallya with the State Bank of India finally declaring Mallya and his United Breweries Holdings (UBH) to be “wilful defaulters”. This means that Mallya is no longer able to borrow any money. At the same time the Enforcement Directorate is reportedly set to launch a money laundering probe into Mallya and Kingfisher Airlines, adding to the string of legal actions that he is fighting. This week there is expected to be further bad news as the Diageo-owned United Spirits Ltd is due to have an annual general meeting in order to decide how to deal with Makkya, who owns a small percentage of the business but refuses to resign as chairman, despite Diageo demanding he stand down. The word is that Mallya will settle with Diageo, rather than being removed from office. Diageo want to get rid of him as quickly as possible as there has been a string of problems since they took over the business from him. Most of his outstanding shares are pledged to banks but Disgeo might take them over and then find settlements with the banks in order to get control of the business. There is also speculation that Diageo could take control of the Force India F1 team because of money that Mallya owes them. If that happens the team could be rebadged as Aston Martin, with Diageo sponsoring the cars and the budget being topped up with other sponsorships and TV money. If Diageo does not sponsor the team next year, it may be be difficult for Mallya to keep it going. There is a lot of enthusiasm for the team being branded as Aston Martin, as it will add to the glitz of F1. If Diageo does take over the team it would largely be to recoup value because of a debt that was not repaid. The company already sponsors F1 in various ways so will likely build up the team and then sell it for maximum profit. The value of F1 teams is likely to soar in the next five years by which time the structure of the sport will most likely be changed and the franchises will have more value. Taking over the team might not cost anything which would make it a solid business move for the firm.
joeblogsf1 
Joe I’m curious as to why the value of F1 teams is likely to soar?
It says it in the article. If the structure changes… I’m sure than you can work out how that might happen.
TV ratings have been on a long term decline so it’s not clear why the value of F1 teams would soar.
I think the key word is “franchises”.
“The value of F1 teams is likely to soar in the next five years by which time the structure of the sport will most likely be changed…”
What would cause the value of F1 teams to soar?
Fairer distribution of prize money? More F1 income going to the teams and less to the owners?
And a better image for the sport
Bernie shuffling off this mortal coil, and/or CVC getting fed up and selling to someone who actually believes a promoter’s job is to promote…
So, if Diageo take control of FI in lieu of outstanding debts the team will need a new Team Principal – any chance of one Mr G Lowden or perhaps Mr A Wurz (seeing as he’s turned down Manor) being offered the job, Joe?
Step by step…
I am looking forward to the second part of DT’s piece on Bob Fearnley. He seems far too pragmatic / down to earth guy to have survived this long on the pit lane.
I have a feeling he could see-off many contenders, unless the new owners believe that instant success can only be achieved by parachuting someone with zero team management experience into their organisation. That approach worked so well at Jaguar.
Bob Fearnley seems have to have done a pretty decent job of FI given some pretty heavy cash flow constraints, so would there be a need for change?
Mr Wurz could make an excellent Bond villain come to think of it. “Do you expect me to talk?” “No Mr Bond, I expect you to lose”.
Have you seen on the AER website that it says that they and Illien backed by Red Bull have expressed their interest in supplying the alternative engine?Presumably Adrian Newey will be asked to come up with an equivalency formula.
My belief is that the alternative engine is an attempt to reduce the power of the manufacturers, or even upset them enough so that Mercedes, Renault and Honda eventually walk away with their tails down.
An intervention form the EU will probably mean that absolute power is retained by FOM, but with a supply of cheap engines then a revitalised Aston may have some real value.
Joe, an interesting story emerged in Austin over the weekend – Bobby Epstein, COTA chairman, now states there is not a contract between the circuit and the state of Texas for the tax-based financial contribution to the event – it’s done on basis of an annual application. I think we all had the impression of there being a 10-year contract, well, fantasy-land it seems. COTA continues to surprise, unfortunately.
All Government funding in the US, even multi-year agreements is subject to annual approval (or ‘appropriations’) as they call it. In practice normally the public authorities don’t default on those, and ensure the appropriations are approved, in order to keep their credit ratings – here no doubt the state is saying that COTA breached, getting them off the hook for the money.
“here no doubt the state is saying that COTA breached, getting them off the hook for the money”
No, this did not happen. Firstly, there is not a contract to breach. Secondly, they are not taking away the money. They have implemented a new formula for calculating economic impact, and as a result, reduced the amount of money COTA will receive.
Ahhhh. I see…
Where I live there is an organisation that assists those in need called ‘Give A Little’.
The Texas version must be something like ‘Give A Little Less’……
COTA built the track and promotes the F-1 race based on agreed tax-based financial contribution for ten years. To change the formula of how the contribution is calculated is a breach to the agreement. I assume some wonderful lawyers will make money and Texas will have to pay the full amount. Texas has not had a good track record winning these type of disagreements lately.
While the ownership of Formula One may change, there is no reason to believe the economic structure is going to change. The debt structure is not going to change absent a bankruptcy, and that’s not going to happen; the debt is locked. And the current equity owners, if they sell, are going to extract a valuation from the buyer(s) that is based on the existing cash flow profile (outlook) in perpetuity, i.e. based on the existing commercial terms between teams, promoters, and the commercial rights holders. No buyer is going to unilaterally hand over 20% of their economics to the teams, not after just writing a check to Bernie, CVC, et al for the net present value of that 20% of the economics.
Well, that is what I believe.
With all due respect – and I value your writing and your blog – what you believe (or I believe) does not matter. I am just presenting the reality of Formula One’s capital structure and the motivations of the debt and equity stakeholders.
+1 -You’re right Gary. A change of ownership does not necessarily equate to a change of economic structure, nor a significant increase in the value of the franchises. To suggest they will likely soar appears highly speculative at this stage.
Lewis Hamilton continues to impress me as a man with a lot of class. Going to Jeff Gordon’s final race in Homestead can only be recognized as a sign of respect for another champion and a great driver. For those too young to remember, Jackie Stewart was trying to get Jeff Gordon into F1 when he was a Sprint Car driver. Additionally, Lewis also knows how to have a good time. Recent memories of him having fun in the Caribbean with celebrities come to mind. He’s a great ambassador for the sport and deserves to be recognized as such. We are fortunate to have such a great World Champion. Hats off to Mr. Hamilton.
Wow Chris, where were you after Joe’s last column when Lewis was being slagged off! I agree by the way. Re Jeff Gordon, bearing in mind past failures importing drivers from across the pond better usually they stay over there where they are best appreciated don’t you think?
“Wow Chris, where were you after Joe’s last column when Lewis was being slagged off!”
Oh, there’s plenty of time left for that. Just let them get home have something to eat and look at story and comment, because they are certainly not going to let any praise of Lewis slide by. Come back in a few hours and you shall be rewarded.
I missed that with Lewis being slagged off? That’s a pity. I mean we had Vettel 4 years as champion and not getting any attention to the sport with his time away from the track. I think he crawls under a rock between races. Lewis brings attention to the sport in his off time activities and it’s good attention. Every time people see him in the news, it’s an advertisement for F1. Lewis doesn’t embarrass the sport either. Lewis puts a good face to F1. Going to Jeff Gordon’s last race just permeates with class and respect. Then with the girls in the Caribbean and Monte Carlo shows he knows how to have fun too. He’s a good image for F1 and if people feel the need to scoff at him, perhaps it’s because they never had the gumption to get into a go cart when they were a little kid and stick with it, as Lewis did. I wish I did, but unlike them, I’m not jealous. Lewis is a good guy and a great face for F1. It’s also funny because he has a sincere innocence about himself, which is rare on the grid as a whole, particularly with his teammate Nicholas Rosberg, who will resort to antics that are not too becoming when pressed.
I think the inherent problem is that F1 does a terrible job at promoting itself. Sure, the drivers could also help it, but generally speaking FOM would need to shout “Look at him! He’s a 3/4-time world champion and he’s coming to your country and the TV screens everywhere.”
That doesn’t really happen, though.
Never the twain shall meet these days. You can’t blame Nico for being grumpy when Dad used to fly you and your world champion team mate around in his youth!
Jealousy – difficult to reason with, best not to bother.
I do wonder if there is a post-F1 career for Hamilton in NASCAR. After all, he spends most of his down time in the States these days and did seem to enjoy his car-swap with Tony Stewart at the Glen a few years ago….just a thought!
I wouldn’t be surprised or would he do a Mark Webber?
I’d sooner see Fernando Alonso turn to sportscars.
I’d rather he got a decent F1 car first!
Diageo’s results are not very good so I doubt it very much that a PLC under scrutiny is going to take on an F1 team. It costs money to compete in F1 (unless you are called Ferrari) and this is irrespective of fairer distribution of prize and TV money, not something shareholders will want to see . I also suspect the team will have a very large amount of debt outstanding due to VJ’s (and Sahara) issues. Sadly, it might even be hard to find any buyer currently (apart from another mad billionaire), as there is very little clarity around future governance, sporting regulations and commercial rights, a complete an utter gamble in other words.
If it is the only way to claw back some money, I do not see why this is not a good thing. Better than writing off the money that Mallya owes them
When was the last time an F1 team was sold for a profit?
Stewart GP?
[OT] Joe, any word on whether Mike Gascoyne is on his way back to Enstone, as some are claiming?
I’m hoping that this is an entirely false rumour being spread by Mike Gascoyne…
I don’t see it myself
Thank you. I hope you’re right.
Bob Bell seems a perfectly good candidate to me…
“The Chase” is certainly not a hit with most NASCAR fans. While it still has a license to print money, the Series is losing plenty of fans every year due to the over commercialization and lack of respect for the long time fans.
“the series is losing plenty of fans every year due to the over commercialization and lack of respect for the long time fans”
Now where have I heard that before?
Incidentally, if we took NASCAR’s current Chase system and down-scaled its 16 (4×4) drivers winnowed over 10 (3×3, +1) races for F1 — say 9 (3×3) drivers over 5 (2×2, +1) races — but otherwise retained F1’s current point system, and all else being equal:
* drawing the line at Suzuka we’d have had the same 8 qualifying as are the top 8 in points now after Brazil, plus Grosjean;
* after Austin, Ricciardo, Bottas, and Grosjean would have been eliminated;
* after Interlagos, Massa (with or without his DSQ) would go and, after retirements in Mexico, 3rd place would not have been enough for either Ferrari driver to get through to the final (though 2nd place would have);
* leaving us our three driver showdown at Abu Dhabi comprising: Rosberg, Hamilton, and …Kvyat.
Write your own headlines for a dramatic, or anti-climatic, finale.
PS Well done Porsche and Mark W.
Did you see that race? It was nail biting stuff, great for viewing! Nothing certain about the championship until the last couple of rounds. Mark was doing very well, in a car that was failing him at the worst possible moment.
The only thing I missed was an audience, attention to this race was even lower than F1. It must be a bummer for the drivers and teams to race at such a high level (and have the experience of huge crowds in Le Mans, Spa, etc) and then have virtually no-ons watch them do it…
Well, well, well, and suddenly the (GMM) headlines are now reading “Mallya hints retirement could be looming”… can’t think why, Joe…