Green Notebook from the Pearl Lounge

The piano is tinkling and there are finger sandwiches. The lights are pleasantly subdued. In the Middle East there is a love of all things gold, but the Pearl Lounge in the shiny Bahrain International Airport is all about understatement. It is a very peaceful way to begin a rather long journey home.

International travellers are used to things going wrong and so we adapt as necessary and get on with it. You can shout and scream, but you cannot put a cancelled plane back in the air. And so I head out to Dubai, where I will spend a night in an airport hotel (for which I am not paying) and I will be home by Tuesday evening. This is not perfect, but the thing that kills you fastest is stress and so I try to avoid it.

No matter how calm you are, however, there are always some things that raise the hackles. One of them is people who push into queues and justify it by saying “I’m in First Class”. This, they think, means that they can do as they please and that the rest of the world is beneath them.

In my experience, almost everyone travelling in First Class is being paid for by someone else, so I have no sympathy with them. I’m English, and as much as I try to rid myself of the habits of a lifetime, I am not happy when someone tries to queue-jump. “Excuse me, there are people here who have been waiting for a while,” is generally enough, but there are some who respond: “I’m in First Class”, which roughly translates as “F*ck off, smelly peasant”.

Well, you can buy First Class, but you cannot buy class.

The oik who tried this on me in Bahrain was obviously rather pleased with himself, with a blazer and an oh-so-elegant handkerchief, peeking out of the pocket. He was wearing trainers (probably rare ones) and had a camouflaged baseball cap, with a Mercedes badge. He was all about image and clearly thought he was so cool he could chill champagne just by looking at it. If he had been a white Anglo-Saxon protestant he would have looked like a member of the Afrika Korps.

The world of motor racing is filled with people who think that they have superhero powers because they were born rich, billionaires who imagine themselves to be intelligent because they surround themselves with people who only ever say what the billionaires want to hear. Being rich in an elegant fashion is a skill that few have mastered and a lot get horribly wrong, either by being loud and obnoxious or feigning humility badly. I don’t begrudge anyone money as long as they use it with grace.

Over the winter months one forgets about some of the dreadful people one can meet travelling – and in the world of Formula 1, but most folks are decent human beings and fun to be around. It was nice to be back in the F1 Paddock and catching up with one’s F1 pals, gossiping about what is happening, or what is about to happen? What happened to Gino? Why DID they fire Mattia? How are Pierre and Esteban getting on? One major talking point was Lance Stroll’s secret injury. This was a truly daft story.

Grand Prix drivers are public figures. It comes with the job. Most of them are paid a very considerable amount of money to represent global brands and everyone wants us to be interested and promote the products. I honestly don’t care what F1 drivers get up to in their own time, If they want to wear tutus and be accompanied everywhere by gentlemen in black suspender belts, that is their choice, but if it impacts on their ability to race or their performance on the race track then, as far as I am concerned, it is news. If they don’t like that, they should give up being famous and go and become troglodyte mechanics.

In the science of communication, anyone with half a brain knows that telling everyone that something is secret is by the fair the best way to keep things in the spotlight. There will be speculation (often without much foundation) as a result of trying to keep secrets, and keeping a lid on things usually fails. One can, of course, speculate that the need for secrecy is because Lance was doing something he ought not have been doing, but when Daddy is the team boss, the only fear in such revelations is insurance people because they don’t pay out on claims that ignore what the policies say.

Anyway, to a journalist a secret is a challenge and so I began looking into the billionaire’s boy’s bingle.

The accident occurred in the Spanish seaside resort of Malaga in the south of the country. Whether Lance fell off a bike or a motorbike (or slid on a banana skin) is not that important (unless you are in insurance). He obviously did himself a bit of a mischief because he took his private jet to Barcelona and was spotted at the Institut Català de Traumatologia i Medicina de l’Esport (ICATME) at the Hospital Universitari Dexeus, where he was probably treated by Dr Xavier Mir Bulló, a consultant in sports medicine, who is an expert in hand and elbow microsurgery. Mir is also head of the MotoGP medical team and so has some idea about motorsport. Stroll left the institute with some kind of bandage on his lower right arm. If he had sprained his wrist such a visit would not be required and so it is safe to say that he broke something. Drivers these days tend to get things bolted together to speed up recovery and deal with the pain involved using pills. Plates and screws will do the job nicely and you don’t need vast scars. The drawback is if you crash a second time, which can do serious additional damage. However, if the patient is willing to make the risk, the doctors don’t care, as long as the driver can turn the steering wheel (something which Lance was struggling with on occasion in practice). After the race, I might have been tempted to go to see him and congratulate him on a brave drive, but in the end I thought I would play along and keep the secret and say nothing.

When it looked like Lance was going to miss the Grand Prix, it struck me that the Bahrain weekend could end up being a real landmark in Formula 1 history, as the first race in the 73-year history of the sport when every driver on the grid was there because of talent alone, and not because of money. I don’t mean to be nasty to Lance, because he is a very decent driver and I appreciate his abilities, but I also know that he doesn’t have everything you need to be an F1 star. Most folks get a season or two to show their ability and then the dream is over and they end up being a test driver, trying to convince everyone that they might make a comeback. Occasionally one of them does, but second chances are as rare as lottery wins. There is no hiding the fact that Lance has survived in F1 only because his father has sorted things out for hm. And when they ran out of teams willing to take money, Stroll Sr bought a team. And so, at 24 years of age, Lance has been in F1 already for six full seasons and competed in 125 Grand Prix starts. Today, as far as I can tell, he is the only driver on the grid who is not there from talent alone. Yes, some of the drivers have rich or well-connected fathers, but the Norrises, Russells and the Sargeants were all chosen because of their ability. I am sure that one day soon we will get to the day when the whole grid is here from talent alone.

Now, Stroll fans will say that he finished sixth and I agree that this was a solid performance, but Fernando Alonso was third in the same car. Yes, Lance did have a problem that is a private matter, but if we could talk about it, it might have been seen as an heroic drive that could have convinced me that Lance deserves his place in F1. One can argue, of course, that Niki Lauda started out a pay-driver, which is entirely true, but he transitioned into becoming a multiple World Champion in his 171 races and so shrugged off the label. Would Aston Martin have scored four more points with a different driver in the second car? Probably.

Anyway, as we know, thanks to Cyndi Lauper, money changes everything and at the moment Formula 1 is awash with greenbacks. In the days before Bahrain, the F1 commercial rights holder announced the 2022 financial results of F1, and it was impressive reading: revenues jumped from $2.136 billion in 2021 to $2.573 billion in 2022, an increase of $437 million, or just over 20 percent. One might say that 2021 was impacted by the pandemic, but compared to the last comparable F1 season (2019) when revenues were $2.022 billion, it is still massive progress. The funny thing is that payments to the teams rose by only eight percent to $1.157 billion, which just goes to show that Chase Carey was cleverer than the teams as he got them all to accept a lower share of the profits if revenues went above a certain figure (I would guess that this would be $2 billion). The teams are now kicking themselves for having not thought this was possible, and giving Liberty Media what now looks like a very good deal. The most impressive thing is that the 2022 results were achieved without the Russian Grand Prix and the cancellation of the 2022 Chinese GP. Liberty was also able to use its money to pay down debt, with a drop of $641 million in overall debt in 2022, a 17.7 percent fall. The debt stood at $3.631 billion, but is now down to $2.990 billion.

China came up in conversation a few times during the Bahrain weekend. There has not been an F1 race in China since 2019, four years ago, and although the Chinese Grand Prix is expected to return to the calendar early next year, there are questions in Formula 1 circles about whether it is a place that F1 really needs to be. The current race contract is believed to run until the end of 2025, but the world has changed a great deal of late and China is no longer as desirable a destination as it was when F1 first visited in 2004. The pandemic highlighted just how much the world now relies on Chinese supply chains and the reaction to this has been to move things home. China’s aggressive attitudes to the West and its threats to Taiwan are alarming, as is its support of Russia over Ukraine. China has not become the vast market that the West hoped it would be, because the Chinese are now producing goods to meet their own demand and Western companies are wary of government interference. It is safer to switch to other more friendly countries. To put things into perspective the country’s trade surplus (the amount by which exports exceed imports) was $676 billion in 2021 and rose to $877 billion in 2022. The surplus would be even bigger if one excluded the large amounts of oil (albeit at discount prices) that China has bought from Russia. The Formula 1 group now has a lot of people who analyse risk and compliance and I cannot help by think that the Chinese GP could fall victim to this and that F1 focus in Asia will move to Korea, where a race in currently being planned in the country’s capital Seoul.

China is a big market for Cadillac and was probably part of the thinking behind the decision to enter F1, ostensibly with the planned Andretti Global team, but Cadillac is growing in a lot of global markets so the sport still makes sense. The word in the paddock (being peddled no doubt by those who want a shot at the deal) is that Cadillac will come to F1 with or without Andretti.  In order to get things moving in time for 2026 Cadillac will use “white-label” versions of Renault’s F1 power unit, although it could in theory simply re-badge the units, if Renault was happy with the idea. However, engines are complicated things these days, both technically and politically, because the internal combustion engine (ICE) is just a part of the power unit. One might even call it a component. These ICEs are highly-developed and increasingly difficult to improve, and the big gains that come these days are from the associated systems, so to say that an engine is unique to one manufacturer is becoming more complicated to justify. Ford is coming in with Red Bull and will do all the ancillaries and Cadillac seems to be planning the same with the Renault.

What Andretti needs to do therefore if it is win an entry is to prove that it can produce a competitive chassis and run a solid racing team. Elsewhere, the likes of McLaren or Williams are looking at Cadillac and thinking “Yummy, I can eat that…”

Having said that, it is in the interest of manufacturers to have their own teams, now that there is a budget cap and revenues are rising and teams can make a profit. 

We do not know much, for the moment, about applications for the two available entries, but the word is that Andretti Global, Hitech and the Mumbai Falcons/Prema are applying, but there is still the possibility of similar moves from manufacturers Honda and Porsche as well.

There is talk in the paddock of the so-called anti-dilution fee being raised in 2026 from the current $200 million to $600 million. It would probably be wisest for F1 to try to get rid of the two currently unused entries and create a more conventional franchise system, but there are problems with this because of the EU’s competition regulations. The anti-dilution fund is fine because it does what it says on the tin. It compensates for money that the existing teams would lose if the prize fund was divided by 12, rather than by 10. If you take the prize fund to be, say, $1 billion then a tenth of that is $100 million and if the total is divided by 12, the number drops to $83.3 million, thus it means a loss per team per year of $17 million. It is not that simple because the prize money is divided in an unequal way (based on results and historical status) but it gives you the idea. The current $200 million fee is thus $20 million per team, to cover the missing $17 million. The argument that the fee should be tripled is based on the idea that teams used to have to wait three years to get full benefits and so the anti-dilution fund should cover three years. This is a pretty dubious argument and the EU might think that the anti-dilution justification disappears after one year and the gain would then be profit and thus an anti-competitive barrier to entry.

Back in 2001 the FIA gave assurances to the EU Competition Department that it would not use its rules to enrich participants and so it cannot wipe out the two troublesome entries because that would mean teams would have more value thanks to a regulation change… In theory, however, the FIA might go back to the EU and explain that the sport would be better off with a proper franchise system, which would mean no need to regulate anything. The US sport franchise system works very well and is less troublesome than the European promotion and relegation model. The closed competition model ensures that all teams are properly funded all the time and that there is no arguing over money and the focus remains on the sport itself.  Franchised sports do not have to renegotiate commercial arrangements every few years, a system that is very disruptive, as has been seen by Concorde Agreement negotiations in the course of the last 40 years. Change of ownership is possible only by transactions and that would mean that the value of each entry and of the commercial rights holder would rise.

There is still work being done to make F1 more cost-effective and efficient and the calendar is again under the microscope. The word is that in 2024 the schedule will make more sense with the first race in Saudi Arabia (probably after a Bahrain test). The circus would then fly to Australia and kick around in Asia in April (possibly in Japan and China, back-to-back). It would drop in to Bahrain on the way back to Europe. After that there would be a North American swing, involving Miami and F1 would like to see Canada move to May. The folks in Montreal do not want that, but sticking to their guns with a date in June creates a wasted transatlantic trip for F1, which is not very green, and so the pressure is on Canada to shift. Europe will get sorted so that we don’t do the criss-cross journeys seen in July in recent years. Hungary and Austria will be put together, without a race in the west between them.

The logical thing in the autumn (which does not mean it will happen) is to have Azerbaijan on the way to Singapore (Korea could fit in here in the future) and then the four races in the Americas (Austin, Mexico, Brazil and Vegas) all in one swing. That leaves the end of the year featuring Qatar and Abu Dhabi. Right now, there seems little chance of anything happening in South Africa, but Africa remains a desired destination.

There are sundry other rumours of events in Madrid, Panama City and so on, but they are all still on the drawing board. A Madrid race makes sense given Spanish politics and Carlos Sainz being from the city and this probably explains why Barcelona is changing its chicane this year to try to produce a more interesting race.

Mercedes is making some changes following the departure to Wiliams of James Vowles, with Red Bull Racing’s former HR director and Chief Operating Officer Jayne Poole popping up and former racer Jerome d’Ambrosio expected to take a role shortly. He was in Bahrain but not in team uniform. He was previously working with Susie Wolff in the Venturi Formula E team before it was taken over by Maserati.  Susie, by the way, has a new role as managing director of the Formula 1 academy, the new series designed to help young female drivers to be prepared to race in the major FIA series.

The only other thing of late is some F1 interest in football (of the soccer variety) with Liberty Media rumoured to be considering a bid to acquire a minority stake in Liverpool Football Club, while F1 has signed a 15-year strategic partnership with Premier League football club Tottenham Hotspur, which will see the construction of an electric karting facility in space beneath the south grandstand at White Hart Lane, to create new young fans.

In the shorter term, however, the sport needs to figure out what to do this year as the Red Bull RB19s were completely dominant in Bahrain. One cannot rely on Fernando Alonso to beat them unless they fall over one another, and Ferrari and Mercedes looked rather lacklustre. Alpine and McLaren looked less able to do much.

There is a lesson here somewhere for the teams who stirred the trouble last year over the budget cap issue. If you upset your rivals by what they consider to be underhand measures, it makes them angry and they work harder and with more focus to humiliate the people who humiliated them (off-track) in 2022. Not respecting people can come back and bite you…

Ask the queue-jumper in the Mercedes hat.