Green Notebook from a quiet valley in Normandy

Down the road from the ruined abbey and the picturesque duck pond, not far from an old farm where I sometimes go to buy exquisite charcuterie, there is a house that flies the Red Bull Racing flag at all times.

One day I must stop off and say “Bonjour”, and find out why there is such passion for the team in such a un-Red Bull kind of place. Perhaps they are Max Verstappen fans, or maybe it is Dr Marko or Christian Horner who stirs the passion. I doubt (very much) that there are Mexicans in the neighbourhood.

I smile every time I pass by, which is quite often these days, as it is on the route I like to take to get to the airport. The road (eventually) links up to the old Roman road (known as the Chaussée Jules César), that runs as straight a die towards Paris, and Charles de Gaulle airport. I am taking this route three times in eight days: once returning from Baku, once going to Montreal and once on the way home from Canada.

Baku was (how can I put this politely?) dull. It’s a nice enough place, if you don’t look too closely, but it was incredibly quiet for the F1 weekend, perhaps because it came after three busy races in Miami, Barcelona and Monaco.

Admittedly, most of the locals cannot afford tickets, and in F1 only those who are really keen on the sport make the trip. It is not the kind of place where there is much in the way of B2B action, although the canapés in the Paddock Club probably make Monaco catering look good.

If they wanted to offer $10,000 as a reward for spotting a VIP they would probably have got away without having to pay, although Flavio Briatore (who passes for an ageing celebrity) was probably there somewhere, picking up his commission cheque (or cash) for having put the deal together originally. I didn’t see him on the grid, which is where such people like to be seen. In truth, the grid was like high noon in Hadleyville, New Mexico, except that Gary Cooper had (unsurprisingly) decided NOT to forsake his darling Grace Kelly on their wedding day. So it really was rather quiet.

Stefano Domenicali was walking around with FIA President Mohammed Ben Sulayem, without any celebs to shepherd around. It made me wonder what F1 is doing in Baku these days. In an era when F1 wants to put bums of seats and big parties, is Baku the place to be?

It is actually a really interesting place. It was the scene of the world’s first oil boom and although hydrocarbons are out of fashion these days, there is still plenty of the stuff to see in Baku. They have the pre-requisite silvery constructions that oil-rich places love, but there is old stuff too.

I concluded that Baku will need money to keep F1 interested, particularly at a time when the sport is heavily into “regionalisation”. Azerbaijan would fit into a notional calendar in April, perhaps on the way back from early season Asia-Pacific races, but it does not make a lot of sense in June.

Having Miami and Montreal in early May before the European season gets underway with Spain and Monaco (if a deal can be found for the latter) is much more logical. As Baku’s deal runs out after the next race, it is fair to say that the boot in this negotiation is firmly on the F1 foot. If Baku doesn’t want to play ball, it will lose the race. There is no negotiating position beyond cold hard cash. Still, Liberty Media seems to be interested from time to time in places with horse-choking wedges of greenbacks, even if they do not quite fit into the pristine world inhabited by the Securities and Exchange Commission (SEC). Although it doesn’t always seem that way, Formula 1 is listed on the NASDAQ in New York and so there always a risk that the regulators might deem it unfortunate to go to places that rate 128th on the Corruption Perceptions Index (CPI). Now that Russia is gone from the F1 calendar, Azerbaijan is Bottom of the Pops on the CPI.

F1 has done much of what Baku wanted (putting the place on the international map), but tourism numbers have been slow to recover since the pandemic and have not been helped by the war in Ukraine, which has effectively wiped out all visitors from Russia and Ukraine. Russia was previously the major source of visitors to Azerbaijan. Without the Russians, the grandstands in Baku were, um, well, pretty unfilled.

Baku was pondering an Olympic bid a few years ago but with the International Olympic Committee already having deals in place for Paris in 2024, Los Angeles in 2028 and Brisbane in 2032, there no possibility of the Games going to Azerbaijan until at least 2036, which is a long time in the future.

And there are small signs that Azerbaijan is lss interested than once it was. The infrastructure for F1 was left up for the whole of last year and is now suffering from wear and tear – and the current contract ends next year. So some fancy footwork may be required to get a new deal. F1 is in two minds about the future. Money is good, but…

Anyway, the FIA World Motor Sport Council will meet in the week after Montreal and we should not expect a 2023 calendar by then because there is too much under discussion. Stefano Domenicali flew off to South Africa after the race in Baku to talk about F1 going back to Africa, a dal that would probably help the F1 share price.

Baku hasn’t changed much since we first started visiting in 2016. It is a little more welcoming perhaps. I seem to recall that the first visit involved an immigration officer with all the charisma  and humour of Vladimir Putin’s country cousin. This year the immigration officer was efficient and charming… and very beautiful. She was, in fact, the perfect antidote to the gormless rubber-stampers of old.

But, there are still lessons to be learned. The people in Baku are generally very friendly. The hotelier sent me a message warning that “the price of a taxi from the airport to the hotel is 10-15 AZN”. Sadly, I did not receive this (because it was too costly to turn on the roaming on my phone) and so I trusted the Taxi Desk in the Arrivals Hall where a dubious-looking individual assured me that 55 AZN was the going rate. Everyone got kinked. You can tell a lot about a country from its cab drivers…

Anyway, if Baku really wants to promote itself as an international tourist destination, it really does need to do something about the thieves who drive taxis. The hotel, of course, didn’t take credit cards and naturally the card was blocked after two identical transactions to get cash, because credit card companies assume that there is criminal activity if you try the same transaction too many times from a place like Baku. There is, you see, still a reputational problem…

Anyway, I could walk into the paddock from the hotel, so life was not too bad. The only problem was that nothing was happening.

The signing of Sergio Perez by Red Bull (announced after Monaco) meant that the focus in the F1 driver market has moved to the next most competitive teams. Barring upheavals, Mercedes, Ferrari and Red Bull are now settled for 2023. This means that the focus has shifted to McLaren, Alpine and Alfa Romeo. McLaren has Lando Norris under contract and Daniel Ricciardo should still be there, although his results have been very disappointing, for the second year running. Thus there is a possibility of change and the theory is that McLaren can have Colton Herta, an American, if he does well in F1 testing (which will soon begin). Is that realistic? Perhaps not. I can see Herta replacing Ricciardo in 2024 as the American still has so much to learn. 

Over at Alpine the signs are that the current two drivers will stay. Esteban Ocon has a contract and  the team is keen to keep Fernando Alonso. This means that Alpine must find Oscar Piastri a drive or risk losing him – which would not be very smart. I heard stories that Williams has done a deal with Piastri but, leaning against a wall in the paddock, I saw Mark Webber  (Piastri’s manager) talking in animated fashion to various people, which suggested that no deal is done. If it was done, Webber would have been somewhere else… Williams is the obvious spot for Oscar, but a deal must be done. It was interesting to note that Williams had very much a skeleton staff in Baku, with no sign of team principal Jost Capito, let alone the owners.

Haas might be interested in Oscar but the truth is that Ferrari has a say in the second Haas driver and as Mick Schumacher is not delivering the good, the word is that Haas will probably end up with Ferrari’s reserve driver Antonio Giovinazzi in 2023.

As for Alfa Romeo, no-one will wnat to drive there unless they can stop the cars breaking done. It is a really quick car but the results are less than impressive. In terms of speed, Alfa Romeo might be third in the championship nf the car workd properly.

So, the big story in Baku was that there wasn’t a big story, although the hyperbolic individuals in the F1 media decided to get excited about a possible salary cap. No-one seemed to know from where the story had come, which means that it was planted, but in truth it does make a lot of sense. Now that we have a budget cap (even if the top teams are whining about what they agreed), the exclusions make less and less sense. If you are slashing salaries inside a team, how can one justify going on paying vast sums to drivers and top people (these being excluded from the current cap)?

The fact that there is inflation and it is painful for the top teams is not that interesting, although one might ask the question about why no-one properly considered what impact inflation might have, presumably because there are not so many folk old enough to remember bad inflation in the world.

Anyway, there is an easy fix. Teams that are short of cash can simply turn off their wind tunnels for a few weeks… The purpose of the budget cap is to balance up spending and this is exactly what it is doing and the FIA and the smaller teams see no reason to change that because the big teams are having to pay more for their electricity.

No team is going to miss races.

Bringing everything under the budget cap is a good idea – and is already being used in any number of sports. What people in F1 miss is that there are many different ways to have a salary cap. And it does not mean that drivers will get less money. It is not an assault on their value, nor a restriction of free enterprise nor trade, it is simply a way for teams to better use their resources in a controlled fashion – which means that they will make more profits, and become more valuable.

What is needed is a step back from the F1 coal face. 

There are salary caps in the NFL, the NBA, the NHL, the MLS and many other smaller leagues in the US and in many other sports across the world. A salary cap merely restricts what a team can pay a player/driver. It does not restrict what a sponsor can pay. The only thing required to make it work is for the teams to give up the current practice of taking all the drivers’ marketing rights and all their time.

If they do that, which they must if there is to be a salary cap, then nothing is impossible and such an agreement would promote parity between the teams – and help control costs (and thus generate profit) even more. With a salary cap, each team has the same economic power to attract stars. Salary caps can be on a per-player basis, or as  total figure for all the players. It can be a combination of the two and it can also have different styles of cap, with hard caps resulting in punishment or fines and softer caps allowing teams to overspend on occasion, as long as they pay a “competitive balance tax” which means that they must contribute money to an industry growth fund if they overspend substantially. This discourages them to do so… while also providing funding that allows the sport to develop. Such restrictions are not necessarily only for drivers and might also include the highest-paid employees, so that a team might wish to invest more in engineers than in expensive drivers, as long as everything came in under the salary cap.

The F1 drivers argued in Baku that people will not invest in youngsters if there is no return on the investment. This was clever but was ultimately poppycock.  Teams will be looking even harder for the best youngsters because they will ultimately cost them less than paying for the stars. Thus one can argue that there will be MORE incentive to promote youngsters than is the case today.

The key is that the stars can mal money from endorsements and so investors who put money into youngsters will still get their share of the overall returns. They will not go hungry. Ths days driver may not be keen to run their own commercial operations but they can afford to pay people to do so, rather than relying on the teams.  Drivers can thus earn a lot and if they want more than the salary cap allows them, they can work a little harder to get it. It is actually more of a free market than is currently the case… So what it really means is that that there would be a realignment of the money flows, rather than a loss of revenue. It will add more value to the teams because they will have to pay out less, but it will not impact on sponsorship revenues, as long as the sport remains popular…

It may seem an odd thing to say but I think that F1 “franchises” are still under-valued. Yes, it might cost $700 million to buy an F1 team when two years ago one could pick up a team for $200 million, but things have changed. The budget cap and increasing revenues in the sport have made it more attractive and now the big guns of sports business are turning towards F1 because thanks to Liberty Media, they now understand the business model. In the days of Bernie Ecclestone, F1 teams were money pits into which owners threw their money, in order to become famous.

Today, they can still get to be famous but they can make money too. So the sport ticks a lot more boxes than it used to do. If you look around global sport there are some impressive deals being done. But it is a game only for the super-rich. The other day Rob Walton agreed to pay $4.65 billion to acquire the Denver Broncos, an NFL team. It is most expensive purchase ever of a sporting franchise. The fact that Walton and his family are worth $200 billion or more (thanks to Walmart) is not a big issue, but it is worth noting that he was a car collection worth $200 million and as even been known to race his own cars.

Walton’s deal beat the recent sale of Chelsea for a similar kind of number. The buyers were Todd Boehly, who owns three sports teams in Los Angeles: the LA Dodgers, the LA Lakers and the LA Sparks. What is less known is that Boehly is a partner in a number of businesses (including Chelsea) with another investor called Mark Walter, co-founder and CEO of Guggenheim Capital, and that Walter is the man behind Michael Andretti’s bid to buy an F1 team.

No-one wants to sell their teams for the kind of money that Walter & Co want to pay (this is because they were not as quick on their feet as Dorilton Capital and Lawrence Stroll (who picked up teams cheaply before other realised that the sport was going in the right direction). So today, investors either have to bite the bullet and pay to acquire a team, or they have to  somehow convince the sport that it needs new teams (which it really does not). Still, the Haas model – of buying in as much as possible – is a good one to get a nw team going. The problem is that there are not many Dallaras out there. Finding a partner to manufacture cars is key to success because trying to build up composite departments is REALLY expensive. Thus I was interested to see a deal between Lamborghini and Ligier in relation to LMDh chassis.

You might say: ‘What has this got to do with F1?” apart from the fact that there was once a Ligier-Lamborghini F1 car, but if you start digging you soon find that Ligier these days is a very impressive business. It is one of the four firms that were selected to build chassis for LMDh sports cars.

What is interesting is that Ligier’s parent company is called Everspeed, which is owned by French businessman Jacques Nicolet. The group also owns HP Composites, an Italian firm, which has more than 20 years of experience building composite chassis for motorsports and for road cars. It has done work for Audi, Ferrari, Bugatti, Porsche, Lamborghini, Minardi and some of the Italian motorcycle firms as well. To put it into perspective, when Dallara decided to build its own road cars, HP Composites did a deal to manufacture the chassis… So watch out for Ligier if F1 agrees to allow new teams. It may not be a team like before, but it could be a sub-contractor like Dallara is for Haas. 

Anyway, even if F1 was not big in Baku this year, the sport continues to gain traction in the world and Lewis Hamilton’s involvement in a movie project with Brad Pitt and Apple Original Films sounds interesting. Th only thing that alarms slightly is that Pitt is now 58 years old and although he obviously treats his body like a temple, age is age.  The script, it seems, is alsl about a driver who comes out of retirement to compete alongside a rookie driver. This means that Brad is a good 20 years older than the average F1 comeback merchant… One should perhaps remember at this point that Sylvester Stallone once made a movie along similar lines. He was 54 at the time. The movie, which ended up being about IndyCars because F1 realised it was not a good idea, was called Driven, although in the racing world it is now known as Drivel., and lives up to its name in spectacular fashion.

The problem with making fiction-based movie about racing is that reality is always stranger than fiction and so fiction is never convincing. Unless it is completely bonkers. It is also worth noting that the biggest movie about racing in recent years has been a cartoon called Turbo, which is about a snail who wins the Indy 500. If you kids or grandkids, you will probably already know it. If you don’t, check it out. It’s brilliant. Rubbish, but brilliant…

Right, I must stop now, as I need to work on a film script called “Escargot” –  a snail that wants to win Monaco. I should be able to bang something out before I head off to Canada.

And, in the worst case scenario, here in France, one can always add a little garlic and some parsley and eat the star…