7 November 2019

Notebook from an autumnal forest

It doesn’t really matter where you are in the northern hemisphere, at this time of year the forests are spectacular. The leaves have turned a million different shades of greens, yellows, reds and brown, as the trees finish their year with a grand finale, the last blast before they shut down for their winter break. The days are getting shorter and cooler as Nature rolls ever onwards. For human folk it is traditionally a time of celebration and remembrance. A time to be thankful for all the good things that we have before the austerity of winter. It is the season of festivals and fireworks, when memories are made, to be remembered with a cosy nostalgia when one grows older.

It is the time of year when Formula 1 gets its champions, although in reality most of those involved with the teams are already looking ahead to next year, with designs completed and signed off and manufacturing beginning. Lewis Hamilton is World Champion for a sixth time and he deserves all the glory he gets. This was a tough one, where he had to dig deep.

The green notebook is coming to an end as well, slightly battered after 18 months in the field. A new one will take over in Brazil.

The big battles may be done but the last two races will be more than mere skirmishes. In the midfield a couple of places in the Constructors’ Championship can make a difference of $10 million in prize money, but the sport chooses not to talk about such things, for reasons that have long ago become obscure.

The chatter in Austin was dominated by two subjects: the new rules for 2021 and then later in the weekend the technical clarification from the FIA regarding the way in which the fuel flow meter can be used. It is clear that Red Bull’s inquiry to the FIA was designed to get a clear ruling on the subject because of suspicions about the Ferrari performance since Spa. Ferrari says that its drop-off in performance in the race in Austin was entirely coincidental, although pretty much everyone else seems to have made a connection between the clarification and the drop in performance. That doesn’t mean everyone is right, so we will be looking closely at the races in Brazil and Abu Dhabi to see if Ferrari is back where it has been, or whether the loss of performance is still there.

In the meantime, work is now switching to negotiations for the next commercial agreement, which will focus on how revenues are divided up and who will make decisions about what. These will still be based in the original commercial deal - known as the Concorde Agreement – which was replaced in 2013 by the so-called “Bilateral Agreements”, although these were essentially the same agreement with a number of individual arrangements with the different teams. Discussions over how the prize funds operate seem to be done and everyone seems to have accepted that Ferrari will still receive money as the Longest Standing Team (LST), although it will not be as much as was previously. A lot of chatter has been going on about other special payments, with everyone claiming that they should be rewarded for this and that. In the end, however, F1 owner Liberty Media is gradually trying to move towards a system which is more akin to the sports franchises seen in many American leagues. The logic is very simple as this system offers more stability and security for all concerned and will be more attractive to the kind of sports investors, who have no particular interest in motorsport but want to invest in the business of sport. Back in 2016 NASCAR adopted such a system, using “charters” which guaranteed revenues and rights. Formula 1 has had such rights and revenues but it is a clunky system which could use an overhaul to establish a better way of doing business. The current commercial contracts in Formula 1 run out at the end of 2020, so  there is another year before these need to be finalised. The next deal will be for another 10 years, taking the sport to 2030.

One whisper that we did hear in Austin was that Ferrari is keen to have a clause which blocks recent team principals from becoming executives within the Formula 1 group. This has been nicknamed the “Toto Wolff Clause” as the Mercedes team boss is believed to have had some discussions about a possible role with Liberty media in the future.

The other big news in the paddock was the merger between Groupe PSA (otherwise known as Peugeot-Citroen) and Fiat Chrysler Automobiles (FCA). The two firms intend to create a stronger company by having a better geographic footprint while saving billions in operating costs and investment. The deal was deemed necessary by FCA in order to meet European emissions goals in 2021 and 2025. The result is a company which will have six Peugeot nominees on the board, and five FCA executives. This means that there is an argument that this is a Peugeot takeover of Fiat, although FCA chairman, John Elkann, will become chairman of the new company. When the deal closes FCA shareholders will get a $6.1 billion premium.

The merged companies will have a big portfolio of brands: Peugeot, Citroen, DS, Opel, Vauxhall, Fiat, Chrysler, Ram, Abarth, Jeep, Dodge, Alfa Romeo, Lancia and Maserati. It remains to be seen whether all of these brands can survive after the merger, with some of them in serious difficulties. Chrysler, for example, has only one car model, with three different types of minivan; Lancia has only one model, the Ypsilon which is sold only in its home market of Italy. This however has outsold Alfa Romeo models thus far this year, while Maserati is also suffering from a fall in sales.

The new deal could, obviously, impact on the Alfa Romeo sponsorship of Sauber in Formula 1, although this is not necessarily a negative impact as Peugeot boss Carlos Tavares might see the value in the new company having a presence in F1, although the brand might change. He might also consider the sponsorship of Sauber to be the wrong model for a big player in the industry. For the moment it is too early to say. Having said that, the poor performance of the team is not going to help matters.

The team confirmed on Monday that Antonio Giovinazzi will be staying for another season, which closes the door for Nico Hulkenberg. The latest rumour has linked him to a drive in DTM with BMW, but he has denied that this is the plan. One presumes that this is a fall-back position until all F1 opportunities are finally exhausted. With it being virtually certain that the second Williams drive will go to Nicholas Latifi, The Hulk’s only real chance is a reserve driver job, which might lead to a return to racing in 2021.

On the same day as Giovinazzi was announced, there came the news that Roger Penske is buying not only Indianapolis Motor Speedway, but also IndyCar and IMS Productions, which creates content for the series. This is a big deal in the United States and, inevitably, has led to suggestions that this could lead to F1 returning to Indianapolis.

“Can we run a 24-hour race here? Can we run a Formula 1 race here? What are the things we can do?” Penske said at the announcement of the sale. “This is a great asset. So I look at all of these across the board to see what can we do.”

This news was not in the notebook itself because it came on the Monday, but it is worth considering given the context.

Earlier in the week, F1 had run a successful street festival on Hollywood Boulevard, but had suffered a setback with the Board of County Commissioners of Miami-Dade County in Florida voting to create a number of bureaucratic hurdles for the Hard Rock Stadium Formula 1 project in Miami Gardens. The votes are expected to be vetoed by the Miami-Dade mayor, who is a supporter of the F1 project. Clearly, F1 needs to do more to educate and win over the locals (principally the politicians) as some of the arguments heard in the meeting were completely daft and highlighted just how little the people involved know about F1.

Elsewhere, the word from Brazil is that the Brazilian GP will switch to Rio de Janeiro in 2021. The funding for the new race track in Rio is in place and construction work is expected to begin as soon as the track gets its final planning permissions. The likelihood of a race in Argentina has effectively disappeared with the defeat of President Mauricio Macri in recent elections.

F1 had a good weekend in Austin with at least two new deals signed. There is a new trackside advertising deal with Caterpillar Inc, often known as CAT, world’s largest construction equipment manufacturer, and there is a new deal with Codemasters Studios. The interesting thing about the deal is that Codemasters already had a deal for a couple more years but seems to have agreed to a renegotiation in order to secure the contract in the face of opposition from other video gaming companies. The new deal runs from 2021 to 2025, with an option to continue in 2026 and 2027.

Elsewhere, despite rumours that Renault may quit F1, the team is continuing to build up its technical capabilities, with the hiring of Pat Fry and Dirk de Beer. Oddly, Fry doesn’t yet have a job title, which suggests that the team is looking for a way to integrate him into the structure, without disrupting the existing people. De Beer, on the other hand, becomes head of aerodynamics, replacing Peter Machin.

Over the weekend, Racing Point also received its planning permission for the construction of a huge new factory adjacent to the current facility. Work will begin on the new facility in February.

Finally, the one element of the new sporting package which has not gone down well is the idea of increasing the calendar to 25 events and reducing the race meetings to three days. The primary victims of the latter change will be the race promoters, who will be paying the same for less, unless F1 can increase its plans for week-long F1-related festivals in the host cities. The other victims will be the media, which will get less access to F1 people as Thursdays were used a lot for media work.

Teams are still sceptical about having more races… even if they pay extra money – because of the strains that a bigger calendar will place on the staff…

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