Implications

It is too early to say with any certainty what the Russian attack on Ukraine will mean for Formula 1.

In time of war sport is no longer an important business, but since the F1 World Championship began in 1950, wars have had little impact on the sport because, thankfully, they have tended to be localized conflicts in places where the sport has had little or no presence. If the current conflict remains regional, the impact could be negligible.

But the way of war has changed and today, economic warfare is more important than tanks and guns. The concept of “absolute war” as defined by the Prussian military theorist General Carl von Clausewitz used to mean blanket bombing of cities, railways and industrial targets, but today it means depriving the enemy of ways to operate. It is all very well to have huge natural resources: oil and gas wells, mines and vast agricultural resources but one needs to be able to sell these to keep the economy solid. Oil and gas account for more than 60 percent of Russia’s exports. About 40 percent of the federal budget revenues came from oil and gas. This morning as the news of the invasion broke, the Russian rouble fell to record lows, as investors dumped the currency and moved their money to safer places. Thus buying foreign goods is suddenly much more expensive for the Russians and that has sparked fears of a financial crisis. Wars are expensive.

The problem with sanctions is that they impact both the seller and the buyer, as without the commodity, the buyer need to look elsewhere and this raises prices.

Nonetheless Russia’s attack has taken many analysts by surprise. Russia does not want to get into the expensive kind of messes that America has involved itself in over the years in Vietnam, Iraq and Afghanistan. Older Russians will remember what a drain its war in Afghanistan was between 1979 and 1988, not just financially but also when it came to Russia’s morale and its self-confidence.

If Russia’s invasion succeeds – which is highly likely – there will then be a need for the invaders to govern the country to keep the peace. The ease with which this will be done is largely dependent on the level of support for the Russians. Life may become easier in the pro-Russian areas, but if there is support for resistance, then there will be resistance. Violent suppression of resistance movements is counter-productive because it often leads to more moderate people becoming active against the occupier. Fear only works for a while. A Ukraine resistance probably supported by the West, will require Russia to spend money to police the country and it will cost Russian lives. In time this would undermine Putin’s popularity at home.

The impact of the invasion on F1 in an immediate sense will largely depend on the decisions made in the West with regard to sanctions. If American companies are no longer allowed to do business with Russian firms (or firms that have links with Putin and his entourage) then the Russian GP may have to be cancelled. It will not really be missed. F1 may never go to Saint Petersburg as was the plan in 2023.

The Haas F1 team may have problems as a big percentage of its funding comes from the Russian firm Uralkali. In addition, if there are restrictions on the movement of Russian citizens, Nikita Mazepin’s career as an F1 driver could easily go up in smoke. The conflict is certainly an uncomfortable development for Haas as an American team racing in a car with obviously Russian-themed livery is not a great situation. However, if Mazepin was not there, someone else would step in and money would likely be found. F1 is on an upward path at the moment.

One can only feel sorry if these things happen but if a Russian leader thinks it is best for his country to act as Putin has done, then the country must deal with the implications of his actions.

28 thoughts on “Implications

  1. I’m not sure too many will lament the loss seeing the Mazepins booted out of F1, if it comes to that. I would imagine there’s more than a small number of fans who would actively WANT this to happen.

    Gene Haas should take back control and secure American sponsorship. If what we read about the Andrettis comes to fruition then F1 will be in bright uncharted territories what with Netflix and two US teams on the grid.

  2. If indeed Haas have financial problems could this be solved by Andretti buying the team on the cheap and then install a US F1 driver to replace Mazepin? Sochi like Barcelona would not be missed. It’s an utterly boring race that impacts on the F1 show. The only problem I see for F1 would be flying people and resources in or near Ukrainian airspace. Let our stupid and inept politicians deal with this crisis (it’s a problem they’ve created) and let F1 can carry on as normal.

    1. Disagree about Barcelona being missed .it is easy and affordable to attend unlike Sochi. As for being a boring race, well so many other races are as well

      1. The trouble with Barcelona is the testing that goes on there. It’s a known quantity for the team with that data over the years. Barcelona needs a major upgrade to stay on the calendar. Yes, it’s nearby to visit but I’d much prefer to have the Portuguese GP. I think with the calendar the way it is there are going to be some circuits that should be looking over their shoulder if they can’t put on a decent show. Formula One is also entertainment as well as a sport.

  3. Perhaps this could create an opening for Michael Andretti and Colton Herta at Haas. If so, at least one good thing could come from this.

    1. I thought this also. Gene didnt want to sell but I think another harsh unproductive season could soften that stance. Better start for Andretti to buy a going concern and expand it than start from scratch. And Haas could still be involved as a source of component manufacture?

  4. Good summary, Joe. Just the facts clearly stated..

    While this will not look good for Hass or Sochi this morning, the bigger picture probably depends on “events” (such as the unresolved issue of Flight. MAS17) and may well be affected.

    The relationship between Russians and Ukrainians is extremely complex, Both are capable of great sacrifice for a cause, which may make economic sanctions less effective than the textbooks imply. It would be easy for this situation to escalate. That we live in more uncertain times than last week is not good for anyone, including the business of sport.

  5. What was crazy about this (amongst other things), was watching the RORC Caribbean yacht race via trackers as you do when watching ocean racing. Skorpios a 125 foot monohull racing yacht that is owned by a Russian, was in the race and during the race they changed the flag of their ship from Russian to Monaco. It does make one wonder if the people in the know in Russia are thinking, this is getting real and their assets could be frozen.

    1. I’d bet that those in ‘the know’ have been making their plans for a while now. They might not have been able to divest themselves of their high-end property portfolios, but I’d be very surprised if there’s much in the way of liquid assets still at large within western banks

  6. It seems almost certain that the Russian GP will be cancelled. Difficult to see how Mazepin can continue. What I don’t understand is why Andretti is keen on launching his own team when Gene Haas was reportedly ambivalent about continuing. Wouldn’t it make more sense for Andretti to partner with Haas, especially if Haas loses the Mazepin money? Or is there some other reason Andretti and Haas don’t want to partner up?

  7. Hi Joe, I have been reading your blog for a long time and respect your views even though I don’t agree with all of them. I’m disgusted how large sports such as football and F1 chase the $ in countries such as Qatar, Bahrain, Saudia Arabia and Russia. There are real, honest hard working people in these countries dying for their beliefs or they are repressed, or under the most atrocious working conditions to facilitate white elephant projects and unable to stand up to the leaders in these countries. F1 thinks it is more important than it is. You think you make a difference and are important. But you make no difference to important causes. F1 makes token gestures, of knees and videos . It will be very interesting to see what F1 will do here. They should call it now and cancel it.

    1. Just like they turned a blind eye to South Africa until the South African government made it impossible to stay by executing prisoners on the Thursday before the 1985 race.

      In the buccaneer days of BCE, you can see how these races developed as he chased the $ for himself and then CVC. I really expected a change in approach after Liberty, but they seem less caring that even BCE.

      It seems money talks 🐂💩 walks is so true.

      Apparently Seb Vettell says he won’t race in Russia.

    2. I agree. This chasing money and ignoring these tin pot petro dollar dictators vanity projects and human right abuses is beyond belief. Solution any country that does not have free and democratic elections, F1 or any sporting code, should not take place.

  8. Dear Jo,

    As usual very accurate and wise, well done mate, it will be interesting to see how the West is going to respond with Web based weaponisation and measures.

  9. As rightly stated, this all largely depends on financial sanctions.

    Haas has an immediate problem if Mazepin is unable to fund the team (Schalke in German Football already has an issue with their Gasprom sponsorship) although I suspect the year’s budget has already been paid with regards the bulk of the money from the Russian sponsors – it’s not like the invasion and the international response is a complete surprise. I also wonder if the ‘other’ Russian sponsorship has risk (Kaspersky as one example) will be an issue.

    September is a long time away yet, so there is no point cancelling the Grand Prix at this stage – it could be a carrot to encourage a Russian withdrawal for instance.

    I think the Champions League final and even closer Poland and Russia’s World Cup play-off are the more pressing international sporting concerns for the next few weeks.

    1. ‘It could be a carrot to encourage a Russian withdrawal for instance’. I really can’t believe the naivety of that comment.

      Mr Putin, if you don’t withdraw your troops we will have to cancel the race. No, please don’t do that, I’ll withdraw the troops.

      You really think F1 is that important and has that much influence!

      Unbelievable.

  10. After today’s invasion, the FIA should immediately cancel the Russian Grand Prix. They don’t have a choice. As I write this reply on my iPhone, pop up news bulletins are talking of Ukrainian casualties. By running the race the FIA would be supporting the invasion. Canceling the Russian GP should be made swiftly and decisively.

  11. When a UN permanent member makes such an aggressive move, the world needs to wake-up and smell the coffee.

    F1 should be taking the lead, not waiting to see how events turn out.

    Putin has had 8-years to plan for how to cope with sanctions from the West, China is a very willing trading partner and has aspirations of its own regarding Taiwan.

    Speculation about the future of Haas and Mazepin seems somewhat trivial in comparison to the atrocity that is actually taking place.

  12. F1 needs to immediately cancel the Russian GP and freeze all Russian monies involved in F1 – at least SebVet has the courage to make an immediate statement…

  13. I do wonder where this leaves Haas. Uralkali’s owners have been sanctioned by the US before, after the 2014 Crimea invasion. And, if other F1 sponsorship contracts I’ve seen are anything to go by, the payments won’t be particularly front-loaded either.

    Of course the Sochi race shouldn’t happen, but then it shouldn’t have happened at any stage since 2014 and Putin shooting down a commercial airliner. On a sporting basis, I hope it doesn’t happen; at least when F1 last raced around a car park it was in Las Vegas.

    1. I do not believe hthat Uralkali has been sanctioned. There are other firms in F1 that have been (SMP) but I do not believe Uralkali is one of them.

  14. I despair for this world we all live in. Putin is showing that being an autocrat actually works, to the extent that the Western World has really no idea of how to react to his actions. Our collective governments have dithered for an eternity over what was plainly going to happen. We need hard and fast and policed sanctions that work. Nothing comes out of or goes into Russia. The people of Russia will be the ones impacted upon but then they are the only ones that can effect change. Failing that, go find Jack Reacher.

  15. Reading the first part of your article, it is almost a waste that you spend your journalistic talent on F1 only (or mostly). That’s a fine and succinct analysis of the field of play around the Ukraine crisis which I have not seen anywhere else in the press. Thanks!

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