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What’s the next “win-win” for Formula 1?
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What’s the next “win-win” for Formula 1?
Posted By: James Allen  |  30 Nov 2009   |  7:42 pm GMT  |  41 comments

This has been the season of the “win-win” – deals which leave both sides feeling really good about themselves.

The F1 grid will have 13 teams next year (Darren Heath)

The F1 grid will have 13 teams next year (Darren Heath)


There is a lot of restructuring going on at the moment; the inevitable result of a season which has seen savage recession hit the sport, manufacturer withdrawals and the arrival of new teams.

We have had a spate of deals the principals have described as “win-win” lately; first Ron Dennis described the deal whereby Mercedes bought Brawn as a “win-win”, then Toto Wolff used the same term to describe his acquisition of a shareholding in Williams and at the weekend the mayor of Montreal said the deal which brought the Grand Prix back to his city was a “win-win”.

There are quite a few situations waiting to be resolved in F1 at the moment and a big deadline looming in the shape of the F1 commission meeting and the ensuing World Motor Sport Council meeting on December 11th. There will be some interesting announcements after that meeting, Jean Todt’s first as FIA president.

It is not obvious how the 13th entry situation will be resolved with a win for everyone. Toyota is facing a penalty charge of $150 million if it walks away from the sport, according to sources and its bill for laying off staff in Germany would be equally painful. So it is highly motivated to find a way of continuing its entry and leasing its facilities and its cars and engines to a race team. None of the FIA’s approved new teams have gone for the deal, but Serbian Stefan GP is looking closely at it. Although there appears to be some doubt about whether this is a genuine programme or a bit of mischief making behind the scenes.

If Toyota does find someone it can get a “win-win” together with, it will have to go through an approval process. Stefan GP had some uncomplimentary things to say about the FIA’s selection process, in particular the thorny issue of using Cosworth engines. Any partner will be looking for a deal with plenty of sweeteners, knowing that it is a cheaper option for Toyota than shutting the doors. But time is tight. Honda took almost three months to look at all options and do a deal with Ross Brawn. Toyota will have had just over a month from announcement of withdrawal to the World Council Meeting.

It is not true to say that the issue needs to be resolved by then, but the FIA is understood to be keen to get it resolved in that time frame. It is a delicate situation which needs to be resolved skilfully and it is the first major test of the Todt/Ecclestone regime. Nobody wants this to end up with legal actions, but the priority is to find a 13th team which is sustainable for the long term.

Giving Sauber the entry may well be the “win-win” for the team and the sport. Toyota may not see it that way, but they are leaving anyway.

Sauber’s acquisition of his old team from BMW last week means the end of Mario Thiessen as a figure in Formula 1. He is staying with BMW to oversee its motorsport programme. It is a career that ends therefore in disappointment, something which will not have escaped the attention of Frank Williams and Patrick Head, Theissen’s former partners in the BMW Williams team.

Another issue needing resolution next week is the British Grand Prix. Silverstone and Bernie Ecclestone have not looked like they have been heading for a “win-win”, but you never know.

Montreal’s new deal with Ecclestone points to an interesting route for promoters struggling to make the numbers. It is based on a revenue sharing agreement. The contribution from the local and state government is $15 million (£8.6 million) per year, with a promise of a 30 % share of the profits. This model has worked in Singapore, where the government shares some of the risk and benefits if the event is a success. It is also being tried in Germany. In Montreal there is every reason to expect a return on investment because the race is one of the best attended of the year, the stands are packed, even on a Friday. The way this deal breaks down is that the government pays Ecclestone’s race fee and the promoter, Octane, pays the cost of staging the race.

Revenue sharing is in vogue as a very post-credit crunch way of doing a deal when no-one is feeling too keen on taking risks. I was told recently that Silverstone is looking at all the options and I know that some government figures have got involved, but it’s still a hard deal to sell to the British taxpayer, who is already wondering how he is going to pay off the multi billion pound budget deficit caused by the credit crunch. But revenue sharing is an answer.

The BRDC changed its rules recently to allow it to work with backers willing to share the risk.

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41 Comments
  1. jw1980 says:

    James,

    you don’t sound very optimistic about the chances of the British GP taking place.
    From what I have been reading lately on other respected websites such as BBC Sport a deal is close.
    Surely it’s in the interests of the sport to maintain the British GP even if it’s not so profitable to Ecclestone right now?
    It’s my belief that some of the newer GPs will disappear once their contracts are run. China was complaining last year about the cost of a GP. That will be the main story at next year’s event as well. Turkey’s days are numbered as well surely? Look waht’s happening in Dubai right now. Does that frighten possible Abu Dhabi investors.
    I have read that Ecclestone wanted to keep the German GP because of the history and therefore did a deal. Surely Britain has far more history since 1950?
    Never mind who the 13th team will be the survival of the British GP is much more important.

    1. James Allen says:

      No you misread me, I am optimistic. It has to happen. How could you have two consecutive British world champions and then the following year have no British GP???

    2. Tom - Australia says:

      Abu Dhabi and Dubai are in very different situations.

      10 years from now it will only be Abu Dhabi that people talk about.

      1. rpaco says:

        Dubai has a slight negative equity problem, but Abu Dhabi is helping bail them out. Still it seems they shifted one hell of a lot of sand and made a lot of new islands which will never be sold. Unless of course they go into the solar power business. (But a b**er to keep all those mirrors clean, still you don’t need a lot mirrors really, mostly just pipes.)

    3. On the contrary James,
      The British and German Grand Prix both started the same year – 1926 – and Brooklands and AV’S respectively.
      Their histories are as equal as as great as each other.

  2. Rudy Pyatt says:

    Revenue sharing in the sense of the Canadian GP deal cannot and will not happen in the UK or US; it is politically untenable. As much as Bernie and others like to compare F1 to the Olympics, the analogy is inapt, and in any event, unconvincing for those not already in that camp.

    No, the more relevant revenue sharing model is that used in American sports leagues, major League Baseball in particular, though also in the NFL and NBA. EVERY franchise gets an EQUAL share of overall revenue – TV money, rights fees, etc. – that the league brings in. How each team chooses to spend that money is up to them. I’ll try to post a link detailing these systems, but the point is that it will bring financial stability to all of the teams, a win-win situation.

    Bernie may not want this, but the long-term health of the sport means he has to squarely face the question.

  3. rpaco says:

    We all know that each deal is a Win for Bernie, he looses the UK and gets Canada, maybe the year after, Long Beach as well. He doesn’t need the UK.
    However if there is an opportunity to buy some rights at a knocked down price Bernie will be there first in the queue or inside already (famous line from the goon show: Milligan as doorman: “They burst though by putting money in me hand”) No doubt Bernie has a man on a dustbin peering in the windows of the Donington administrators, ready to be first in at the right price. (No flies on Bernie, he does his homework, though by now it must all be instinctive)

    Quite apart from selling us down the river to Van Humpy’s mob, the approx 3 Trillion of advance debt our wonderful government has committed us and our children and grandchildren to, doesn’t leave a lot in the kitty for sport. If it bought them breakfast and smacked them round the head with a wet haddock, such a government could not wake up and recognise an opportunity to make money legitimately, having been blinkered for years by signing too many open ended contracts with cost escalators built in. If they had even heard of “best price” and “penalty” clauses we would be a lot better off. So basically no, no hope for Silverstone from the government.
    One is minded of a the Film Brewster’s millions and can only surmise that G Brown has been promised untold riches if he first spends in advance every penny we have and will have for the next twenty years. (Ironically it actually worked for Blair who is now amongst the super rich)

  4. Jameson says:

    The next “win-win” would be for Bernie and CVC Capital to leave the sport to people who care for more than just profit and loss statements.

    1. faq says:

      this would also apply to the british gp people who demand more money and more this that while other circuits get lesser deals.

  5. Werewolf says:

    Is Toyota’s entry in F1 saleable separately from the team. In other words, could Sauber secure its place on the grid with such a purchase? This would, of course, leave Toyota in the same position as BMW.

    As for the British taxpayer and his/her disgruntlement at the bill for the banking disaster, sorry credit crunch, a minority shareholding that could bring revenue might be defendable, especially if Ecclestone’s comparitive figures with the cost of the Olympics are correct.

    I have to say I am not comfortable with publicly funding something as cash intensive as F1 – even if too much of the cash goes to the wrong places – but fear of losing the British GP is becoming increasingly palpable!

    1. rpaco says:

      ” It amazes me how people like RD and FW can build such tremendous companies while agreeing to one of the worst sporting contracts in terms of revenue sharing.”
      Sorry wolfie (you’re not from Tooting by any chance?) There is no one in government who is capable of either understanding the concept or doing a deal.

  6. Andy says:

    I honestly would like to see the places given to sauber. A known entity with a history in the sport.

    Toyota won’t be missed but for the staff clearly we’d hope they find something with another team.

    James, which team do you see as having a lack of experienced heads from f1 out of the new teams. There are a lot of experienced f1 guys coming in in a lot of the teams, but presumably not all are proven in f1

  7. Peter says:

    The news that Montreal is back is the best news for years and the best thing is that it’s future looked secure.

    Off topic James, when is your signed book gonna be on sale till if you order through the website?

    1. James Allen says:

      Until it runs out. Should be okay until Xmas.

  8. Zami says:

    I don’t agree with Bernie in most cases. But from a business point of view he is right about the British Gp. I have just started my blog yesterday. As a huge F1 fan I just want fair racing & big teams on track. Toyta & BMW are in big teams. It is good to have new teams up to some extent. Some teams are just happy to on the grid. I posted an article about James Allen’s comment on Michael Schumacher’s comeback on my blog. As far as win win goes I will do everything i possibly can to have Michael Schumacher back to give F1 a boost that is in need more than ever. Just like the return of Montreal. I am really tired of so many changes made every year. Testing ban is the biggest blunder and god forbid F1 isn’t gonna survive if Jean Todt doesn’t doesn’t change the way things are going. So ‘win win’ really doesn’t matter from a fan point of view. We expect toe to toe racing between 2/3 top teams. I hope Jean Todt makes it happen.

  9. Charles says:

    This is off-topic but I hope you can answer this question. In regards to Toro Rosso: as far as I know they are staying under Red Bull ownership but will have to build their own chassis for 2010. Is this the case? Thanks.

      1. MaxB says:

        How about this then?

        Ferrari purchases the Toyota design and entry to field a B-Team with its own car design, but with a Ferrari engine, of course.

        - It would mean Ferrari could have four cars to develop all important fuel-efficiency in the years to come – handy with very limited testing.
        - Ferrari / FIA / Ecclestone have a drive for Schumi, which makes total commercial sense for everyone involved.
        - MSC (or would it be SCH?) would be able to drive without having to untangle himself from his Shell and other contracts whilst being faithful to the prancing horse. He also can have a less threatening team-mate than the lot that is hanging around at the Ferrari and Mercedes garages these days.
        - The FIA doesn’t have to worry about due-diligence on a team if Ferrari is running it, and has an easy way out of the currently awkward Toyota-Sauber-Stefan situation.
        - Ferrai would snatch Schuey out of Mercedes’ grasp once more. That alone should motivate Montezemolo.

  10. Trent says:

    In my opinion what’s not a win is the tyre situation. Being a monopoly supplier is not a good promotional vehicle, at least not compared to winning a tyre war. The current situation of no interested party to supplier tyres is no surprise at all.

    Tyre wars add an extra dimension to the racing and give the essential performance variations during the course of a race that are needed to facilitate some overtaking. I never understood why Bridgestone reduced the performance gap between the two compounds during the course of 2009 – it’s exactly what would make overtaking even harder.

    James – any news on potential replacements for Bridgestone?

    1. James Allen says:

      You keep hearing names like Kumho and Yokohama, but nothing concrete yet. Michelin now has new management. They would be my 1st choice

      1. Rich C says:

        How about *Hoosier tires!!? Now *that would be a coup! LOL I can see it now…

        Of course we’d have to esplain how to pronounce it and what it meant and where they are and so forth and so forth and doobey doobey doo…

        er… oh, excuse me, i got carried away there…

    2. rpaco says:

      The performance gap was reduced because previously it was too wide. If a car was set up for one type of tyre it was useless on the other. Since both types had to be used during the race it mean that teams were always cursing one or the other spec of tyre. Reducing the gap has made it possible (in most cases) to design a suspension/wing system which can cover both types within (during race) the allowed flap and wing adjustment. Neither is perfect, some will always suit some cars better than their competitors.

      1. Trent says:

        “If a car was set up for one type of tyre it was useless on the other” – that’s exactly what we needed! I think the racing was in general better at the start of the year than the end, with perhaps the exception of an exciting Brazilian Grand Prix. Maybe the tyres were key in that situation.

        The cars need to be evenly matched over the course of a race, without being evenly matched on any given lap. The cars were amazingly close in qualifying this year, but it clearly doesn’t translate to wheel-to-wheel action on the track.

  11. Mike Wessel says:

    James,
    Though Toyota is leaving F1 and will be penalized accordingly. Does it still have the right to hold the 13th spot. Does the FIA not hold the licence and can give it out to whom it sees fit?
    Great Blog, you need to give us more though, haha!

  12. Malcolm says:

    Two things:

    1) I doubt the Toyota staff will be going to other teams in F1. It sounds like most of the positions are already filled, if not over-full, since most teams need to cut back positions to meet the new limits (250, right?). If Toyota is keeping their facilities, perhaps they are looking into other forms of motorsport, where their staff might be employed?

    2) If Mario Thiessen saw it beneficial to stay with BMW Motorsport, it begs the question what BMW might have in their long term forecast, motorsport-wise. I think I heard DTM somewhere… or maybe a Le Mans return?

  13. Rich C says:

    The next win/win? – JB wins 2010 championship, Lewis 2nd, McLaren Wins championship.

    1. John F says:

      One of those would loose however – big times …

  14. Charan says:

    Naturally, I’m very pleased to see the Canadian event back on this year. The summer just doesn’t seem the same without it. It truly has to be one of the best events of the calender. I would encourage everyone to visit it at least once in their life!
    I can appreciate the sentiment of being opposed to government subsidies for any sporting event. Any event should ideally stand on the basis of its own ability to generate TV and gate revenue. However, most sports receive indirect government subsidies for stadium construction. Surely, the British government should provide something for Silverstone to undergo infrastructure upgrades.

    Ultimately, MB’s decision to brand their team as Grand Prix and not F1 says alot about their long term intentions. I don’t have an MBA, but it appears unreasonable to me to give away 50% of the revenue to an administrator of a sport (5% is reasonable). It amazes me how people like RD and FW can build such tremendous companies while agreeing to one of the worst sporting contracts in terms of revenue sharing. Anyways, we should all enjoy the peace and racing for the next 3 years before the expiration of the current Concorde agreement.
    Also James, you should now refer to McLaren as a manufacturer.

    1. Rich C says:

      >> … it appears unreasonable to me to give away 50% of the revenue to an administrator …

      Perhaps to an administrator, but not to the guy that ‘owns’ it. Like other racing series such as IRL and NASCAR it is ‘owned’ by one man or group. That means *he is giving *them 50%, not the other way round.

      Champcars was different in that the teams owned it, but we see how good a business plan *that was – sorta like FOTA’s idea for a breakaway series.

  15. Zami says:

    hey james, it is completely off topic. but i just found some links reporting that FIA is trying to ban Martin Brundle. How much truth into this story & what’s your view in this story?

    1. James Allen says:

      What for? Are they from a few years ago?

  16. Tom Adams says:

    Hey James..
    Asked you about Villeneuve to Lotus F1 yesterday…
    Sorry another quick question- you mentioned Tony hadnt mentioned JV in your talks.. i find this really surprising considering Jacques has been spotted at the Lotus F1 team HQ last week…
    Are we to assume that JV is more interested in the seat than the team is in him?
    All the media coverage looked like he had a good shot at the seat.
    Im a fan of Jacques, would be cool to see him have another crack at it.
    What do you think his chances of returning to F1 in 2010?
    Cheers..

    1. James Allen says:

      They want experience, but they would also dearly love an Asian angle. Kobayashi is apparently linked with Renault and Panasonic.

  17. Kimi4Life says:

    The next “win-win” is Kimi staying in F1 definitely. James, do you have and inside information, are Robertson’s talking to Mercedes?

  18. rpaco says:

    ” It amazes me how people like RD and FW can build such tremendous companies while agreeing to one of the worst sporting contracts in terms of revenue sharing.”

    I reckon Bernie hypnotises them! ;-) He certainly did the FIA, when he “bought” the rights to everything for hardly anything at all.

    1. Brace says:

      I still can’t believe how that deal went through. I mean, it’s totally bad for FIA and if Max were the president of a company he would have been fired that same day, or he wouldn’t have even been allowed to go through with it.

  19. AlejoB says:

    Why Toyota’s penalty it’s so high?? $150 millions?? wow

  20. rpaco says:

    Looks like no-win no-win in France despite their two world class tracks.

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