Notebook from Bonneville

There are quite a few Bonnevilles in the world, which isn’t really a great surprise as the name comes from the French for “good town”. And there have been a few of those over time.

The famous Bonneville is a salt flat in Utah, where land speed records have long been attempted. But my Bonneville is a small town which sits on the flat land that makes up the Arve valley, between the Swiss Alps and the French Alps, on the road from Geneva to Chamonix (or more importantly, the Mont Blanc tunnel).

Bonneville is sometimes called the gateway to the Alps and is a pretty enough spot. It certainly impressed the English Romantic landscape painter William Turner, who arrived there in the summer of 1802, en route to Italy on his first Continental tour. He was 27 at the time and was sufficiently impressed to sketch it and then paint it again and again in the years that followed (a man has to eat…) for his wealthy clients.

I was there, as you can imagine, on my road home from Imola. The Emilia Romagna GP weekend was a little odd, not least because the place was truly sad without fans. It looked much worse than other venues in this respect. Imola, for me at least, was always about thousands of Italian fans, cheering on Ferrari.

It was strange too because we didn’t really know what to expect afterwards as the Covid-19 lockdowns were happening during the race weekend and we really had no idea about the future. It was living from day to day.

It was, of course, a short meeting with only two days of action, which was dressed up as being an experiment but was done simply because F1 couldn’t get all its stuff from Portugal to Italy in the time available. The two-day format was annoying in that it meant three Covid tests in three days: one as the pre-event test, the second, thanks to the what is now known as the Lance Stroll rule, which means everyone must test within 24 hours of arriving at a race and then on Saturday I took another in order to have a piece of paper showing that I had tested negative within 72 hours of my trip home across locked-down France.

As luck would have it, I found myself in the same as three others from the “F1 media bubble”, which meant that I was able to eat dinner with others for the first time since Silverstone. One forgets the pleasures of being able to socialise. Perhaps things could be better organised but you never know who is going to turn up for which races and as there are only 50 people in the bubble (journalists and photographers combined) and we tend to stay in different places (hotels, Airbnbs etc) it is rare to be in the place. Restaurants in Italy were shut at 6pm for sit-down dining, but hotels were allowed to feed their guests – which was very good news.

I set off on Monday morning in the fog – which is not unusual at this time of year in the region – but things were sunnier by the time I reached Modena. I had decided that I would try to get home in a day, to avoid having to look for hotels/food on Monday night. The journey home was 775 miles, but I had done the same distance the day after the Portuguese GP, so that didn’t seemed impossible. But it was always going to be a long day.

On the way home from the Tuscan GP I followed much the same route, with just over 300 miles up to the Mont Blanc tunnel and 450 to get home from there. After Mugello I stopped for the night in Burgundy, this time I went for home. And Bonneville was en route, after the descent from Mont Blanc and before reaching Geneva (but not going into Switzerland) and the Vuache mountains, which are followed by a spectacular bit of road through the Jura mountain range until you reach flat-land France on the run towards Bourg-en-Bresse.

I arrived home after 13 hours on the road – being well-behaved because I have a French driving licence…

This gave me plenty of time to consider the Imola weekend. There was a spike of interest for those who like screaming headlines when Lewis Hamilton said that he didn’t know what was happening next year, but Toto Wolff soon put this into perspective, saying that after the release and joy of winning championships everyone says weird things and that he fully expected that he and Lewis would be going on next year, trying to set new records.

The most interesting thing about Imola for me was not the announcements that were made but rather things that happened which seem odd when you stop to think about them.

The presence of Greg Maffei, the boss of Liberty Media in Portugal was bizarre. Maffei is not a racing fan and has come to very few races in the last three years. I told he’s a basketball nut (although I cannot verify it) but his primary interest is making money, which he does very well. Appearing at a non-major Grand Prix is a bit out of character. And at a time when the pandemic is running riot. One can speculate that this was something he did for meetings, but the major F1 deliberations are over and in any case Maffei is not required for these. Chase Carey is the man who signs things.

So what has Maffei been doing?

The obvious conclusion is that he is doing something with regard to selling the business. The Covid-19 pandemic has demolished the projected return on investment of Formula 1 and so it will now take a lot longer (and we don’t know how long) for Liberty Media to cash in more on the deal it did. To a large extent it has got much of its own money back by selling off shares but like all such companies it wants more.

The value of companies is never easy to determine but market capitalisation is an important measure. This is based on the share price multiplied by the number of shares outstanding. The current market cap of F1 is $7.7billion. It was only $2.5 billion in February 2017 when Liberty took over the business from CVC Capital and removed Bernie Ecclestone as the CEO. The market cap jumped to $6.6 billion in just a few days but then stabilised and topped out at $10.6 billion in January this year. The onset of Covid-19 dropped it back to $4.1 billion but it has since climbed up again to $8.6 billion – although the signing of the new Concorde Agreement in August had far less impact than one might have predicted – and the cap has fallen back since then. I’ve been hearing for some weeks that Liberty has been sniffing around quietly for a buyer to take the business off its hands. Whatever the price it will still have made a profit, but the potential for growth is not there at the moment and it is impossible to predict where things will go in the future.

It is easy to say that these are difficult times but in F1 the constant pursuit of what might happen tomorrow is more important than the realities of today. In some ways this is a strength but at other times F1 does not see the obvious. Race promoters are struggling and the days of them paying out huge fees to host races are for the moment a thing of the past.

F1 is busy talking about starting the 2021 season in Australia and having a 23-race calendar. I cannot help but think that the extra date is the Cloud Cuckoo Land GP at the Utopia Raceway on the island of Atlantis, such is the unrealistic nature of the calendar that is being bandied around. Of course, they haven’t published it yet, which is a good idea because it is most unwise to plan anything more than a few weeks in advance (he writes, thinking that he must try to find a seat on a plane to Turkey).

Why do I think this way? Well, in the last few days we have seen the cancellation of the Bathurst 12 Hours, scheduled for the weekend of January 31–February 2 next year. This is a big event and the opening round of the Intercontinental GT Challenge. It attracted 43,111 people across the three days in early 2020.

And then there is the Adelaide 500, which has attracted as many as 297,000 over four days. Not far short of the Grand Prix crowd in Melbourne. The race has not only been axed for 2021, but the South Australia’s Tourism Commission has killed the entire event and will not renew its contract with Supercars. The SATC said that it was impossible to recoup the costs of the event during the pandemic.

“Due to the high level of uncertainty around the ability of the event to proceed in 2021, the likely impact on the event for both the consumer and commercial market, and the long-term decline in our core motorsport fan, a decision has been made that it will not be possible to hold the race next year, and to not seek a contract for future years,” it said. “At the end of the day, with the current set of circumstances we are not in a position to deliver a sustainable, successful future for the event for next year and beyond. We have a terrific world-class motor racing facility at The Bend. We are very fortunate to have had significant private investment in that circuit, and we already know the motoring faithful are keen to support ongoing races there.”

That is a very big “ouch” for Australian motorsport. Are there F1 tracks with the same problem? It is certainly worth considering.

I was also somewhat surprised to see Gene Haas on the grid in Imola. Perhaps he was there to sign some contracts, relating to engine and chassis supply and drivers: Ferrari, Nikita Mazepin and Mick Schumacher, if you’re interested. It must have been important because over in the US Gene’s NASCAR team – Stewart Haas Racing – was at the final cut-off race for the NASCAR Cup with only four drivers going through. For those who are unfamiliar with the NASCAR playoff knockout system, there are only four championship contenders left at the final race: only they can win the title and so it is basically whoever finishes ahead, even if they cannot win the race itself. It is a pretty random thing, but it works because you can always guarantee a four-way title fight. Before last weekend Haas was looking a strong contender for the title, with his lead driver – Kevin Harvick – having won nine victories this year. His closest challenger in terms of race wins was Toyota’s Denny Hamlin with seven. No-one else had more than four.

So it was an important moment for Gene – and yet he chose to be in Imola instead. As it turned out Harvick was knocked out and so Stewart Haas Racing goes into the finale without a driver in contention for the title. Harvick could win a 10th victory but it wouldn’t win him the title. Strange, but true. Whatever happens the champion will have fewer victories than Harvick.

Still, I cannot help but feel that there must have been something pretty important going on for Gene to miss the NASCAR race.

Elsewhere the news was largely as expected although I was surprised by Williams’s decision to not replace Russell. This is not to say that I don’t rate George. I think he’s very talented and is making the Williams look good. George thoroughly deserves to be where he is, but there is the question of funding. I know Williams has banged on and on about Russell and Nicholas Latifi having contracts for next year. This is true but the team didn’t mention that it had to pick up an option to continue with Russell. The option date was the end of October, which is why there was speculation in the days leading up to that. I’m not sure about Latifi, but the concept is very different as he brings a sizeable pile of sponsorship (rumoured to be at least $7 million and possibly as much as $10 million). This Williams cannot afford to lose.

Sergio Perez has a sizeable pile of money behind him – and impressive talent as well. Russell’s deal with Williams seems to involve a discount on Mercedes engines and technology but I doubt this is more than $5 million (probably not even that much). And Perez has about $7 million but might squeeze that up to $10 million, if the Mexican took a cut in salary. So the logic was that with Perez the team would get up to $5 million more than with Russell.

Given that there will be a hole in the budget next year caused by the drop in prize money of, something in the region of $20 million (give or take) one can see the problem. But dumping Russell would do two other things: it would annoy Mercedes and it would greatly upset the vocal British press. The Williams brand is all about being British and so dumping George was not wise. And obviously Perez’s extra money was not enough to make it worthwhile.

This means that the team still has to find the money to fill the budgetary hole, or make cutbacks to reduce spending. It still has a loan with HSBC and that might prevent it selling old cars, which it had been going before the loan.

So, we shall see, but obviously the mysterious Dorilton company which now owns Williams is comfortable to cover the costs involved – if necessary. Who knows? Perhaps they will put the squeeze on Latifi and get some more money from him as his performances currently do not really warrant the seat.

The power of money is not new in Formula 1 but very often these things are cleverly disguised. I was fascinated by the announcement that Mercedes-Benz has agreed to increase its shareholding in Aston Martin in the Aston Martin road car company to 20 percent. A lot of F1 folk assume that Mercedes is chucking in money for the privilege but that’s not true at all. If you wade through the paperwork you find that Mercedes used to have a five percent share, but this was diluted by all the refinancing that has gone on since Lawrence Stroll bought control of the business. I am told that Mercedes also had a clause in the deal that gave them a veto on changes of ownership.

However, the increase to 20 percent ownership is not at all what it appears to be. Mercedes is not paying anything and has been given the shares in exchange for expanding the existing supply deal, giving Aston Martin more access to important Mercedes technology, including hybrid and electric drive systems. Having the credibility of Mercedes is useful but the money that has been raised in this new refinancing – $163 million – comes from new investors Permian Investment Partners, a New York hedge fund, which has put in $33.3 million and Zelon Holdings, a mysterious family office, has lobbed in $30 million. In addition, Lawrence Stroll’s Yew Tree Overseas Ltd has put in another $20 million, with other investors injecting the remaining $41.6 million. The company used the same refinancing announcement to reveal that it is going to raise nearly $1 billion in senior secured notes (basically loans), with the money being used to get rid of earlier loans, settle a few bills and to keep the company going. The pandemic is making it difficult to sell cars and the company’s balance sheet this year is not pretty, although the aim remains to push up sales to 10,000 a year with revenues of $2.5 billion and profits to $650 million a 2024 or 2025.

Much depends on the success of the DBX, the Aston Martin SUV. The F1 programme next year follows Ferrari’s strategy of doing all one’s advertising in the sport and not spending on other forms of advertising, although I am sure that the company will keep its relationship with James Bond as well….

I presume that all is now going ahead with Turkey although I am not entirely sure how all of this is being achieved under lockdowns. These are complicated times.

Sadly, the last four races will be done without my trusty car, which has carried me to all races thus far, bar Russia. Let’s see if the airlines are as reliable as good old-fashioned Japanese engineering…