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Mercedes pullout rumours unfounded
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Darren Heath
Posted By: James Allen  |  29 Jun 2012   |  9:39 am GMT  |  48 comments

The fall out from Wednesday’s Gribkwosky verdict has many aspects and the stories from Germany about Mercedes threatening to pull out of the sport because it cannot be seen to be involved in corruption are worth dealing with briefly.

A story appeared yesterday in Handelsblatt, the German business paper, which claimed that Mercedes would have to withdraw from F1 if Bernie Ecclestone were to be indicted in relation to the conviction of Gerhard Gribkowksy, for tax evasion, bribery and breach of fiduciary trust.

Shareholders and Daimler officials were quoted as saying that it would be a breach of the company’s anti-corruption statutes to be involved in business with someone in that position and therefore the company would have to withdraw.

Mercedes has not come out with any robust statement on this, but behind the scenes the reality is that these voices of dissent about the company’s racing programme are always present and surface from time to time whenever there is an opportunity. We’ve seen it many times in the past and will do again in the future.

The company’s policy for many years has been that Mercedes is committed to motorsport, that it is part of its DNA as a motor manufacturer and that it is a central pillar of its marketing. That could change with future management teams, but for now, that’s how they see it and they invest in motorsport on that basis.

There are some internal figures and shareholders who disagree with this strategy, who believe that too much money is being wasted on F1 and motor sport, but who don’t have the power to change it, for the moment. So when they get the chance to say something negative about Mercedes in F1, they say it.

A couple of things are important to remember: Mercedes is no different from many other companies in F1 in its anti-corruption rules.

There is a series of hypotheticals here, facing many companies in the sport, about what might happen if Ecclestone were to be charged or convicted and then what would might happen if he continued to be the F1 chief executive in those circumstances.

Clearly it is possible in those circumstances that many companies, including Mercedes, could be required to review their position and it’s clearly possible that we may get to that point.

But it is also likely that, if that scenario were to unfold, the sport would take steps along the way to deal with events as they transpired.

A Mercedes spokesman told us, “Compliance is of central importance for Daimler. We immediately follow up indications of irregularities and should a conviction of corruption be reached, we would then evaluate that case.

“Our Formula 1 commitment is for the long term and an integral component of our company philosophy.”

So to say Mercedes is on the verge of a pull out, is to jump several stages down a hypothetical chain.

But as always, in F1 and in life, that is not to say that it can’t happen.

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48 Comments
  1. James Clayton says:

    If they stayed involved (as an engine supplier) through the Mosely farce, then I don’t see them pulling out over this!

    1. jay jacob says:

      Agreed.

      To add, a withdrawal from F1 due to Bernie’s transgressions would signal that F1 in its entirety is corrupted (i.e. FOM / FIA / Constructors / Drivers / Sponsors / Suppliers / Media / Fans / etc ) which is false.

      Bernie commercialized F1 but Bernie is NOT F1.

      The F1 fraternity will collectively rise above and beyond any one individual, and Bernie is no exception. If convicted, F1 shall swiftly sever all associations with him and accept nothing less; everyone knows this to be true.

      Mercedes may, on its own accord, decide what is best for its future and where F1 configures in that respect but they will not equate Bernie’s merits to that of F1.

      Mercedes’ withdrawal may happen, but not in this fashion.

  2. Kay says:

    “The company’s policy for many years has been that Mercedes is committed to motorsport, that it is part of its DNA as a motor manufacturer and that it is a central pillar of its marketing”

    That DNA is also part of Audi, BMW etc, but their ‘motorsport’ activities don’t limit to F1, as BMW demonstrated. They can do DTM or all sorts of things they want outside F1.

    Seems like only Ferrari and McLaren (being manufacturers) are 100% dedicated to F1. To other manufacturers, it’s nothing more than a promotional tool for their brand / products.

    1. Optimaximal says:

      You can even go as far as saying Ferrari & McLaren could easily survive if they moved to LMP or Sportscar/GT racing, as both now have products that could enter the latter and the former is only a development project away.

      1. F458 says:

        Yes but LMP OR GT racing is not F1 is it? It doesn’t have the same fanbase as F1, it is not shown on terrestrial TV (Yes I know not all of F1 is either, but 10 races are). When was the last time you heard people saying “did you see that GT race at the weekend?” I seriously doubt Ferrari or Mclaren would hold onto their current sponsors if they restricted themselves to these categories and the prize money is nowhere near to what they get in F1. Also a lot of McLaren/Ferrari customers like the F1 link to their road vehicles. This is the marketing factor that i am guessing Mercedes wants from F1.

      2. CTP says:

        but if ferrari and mclaren jumped ship to LMP/GT, LMP/GT would then be the [premier motor racing series, wouldn’t it…

      3. Optimaximal says:

        Which is in a way my point. If McLaren & Ferrari left, would there be any interest in the remaining series?

        After all, this was the key thinking behind the ‘breakaway’ Ferrari constantly threaten.

        There’s the F1 link, yes, but GT & LMP is more technically relevant as a whole to a road car business. It would also save a lot of pennies for both divisions, as it’s easier to sell GT cars with electric windows & carpets than blag ‘F1-derived technology because it has a flexible front splitter’

      4. F458 says:

        “but if ferrari and mclaren jumped ship to LMP/GT, LMP/GT would then be the [premier motor racing series, wouldn’t it…”

        Do you think that Ferrari/Mclaren would even contemplate this? F1 has been the pinnacle of motorsport for over 60 years and suddenly Ferrari/McLaren are going to go to LMP/GT and rival it? Two teams no matter how big they are don’t make F1. Anyway Ferrari only ever said they they would form a rival single-seater series in their breakaway threat nothing to do with LMP/GT…

      5. markdartj says:

        Never in my life has anyone ask me about “the F-1 race last weekend”.

      6. J Richardson says:

        Is this food for thought, but if a salary cap came into Formula One then is it consevable that both Mclaren and Ferrari could run say a Le Mans LMP1 or GT cars along side the F1 projects to help spend their money and gain even more technology for the use on road cars?

    2. Andrew Carter says:

      Mercedes already race in the DTM as well as GT3, along with McLaren and Ferrari, who laso race in LMGTE and won their class at Le Mans a couple weeks ago with a works supported car. It’s only the rest of the grid thats involved completely with F1, and even then some of them have businees ventures out side of racing (Williams Hybrid for instance).

    3. KGBVD says:

      Ferrari and McLaren make money selling cars based on their F1 brands. Both made their brands IN F1.

      F1 is a promotional took for everyone and no one is married to it (Enzo even made a Ferrari IndyCar to show the FIA/FISA that Ferrari didn’t need F1).

      Today in F1 you are either a manufacture or corporation promoting your brand, or you are a venture capitalist promoting other people’s brands. The only one going against that grain is Williams, but now even they’ve diversified.

  3. JR says:

    Surely it cuts both ways.

    If Mercedes thought it prudent to leave F1 because of a bribery scandal, then surely the FIA might have decided not to grant Mercedes the right to race in F1, due to Mercedes’ parent company carrying out 10 years of systematic bribery of government officials from 22 different countries.

    And receiving US$185 million in fines when they were caught.

    Mercedes certainly don’t have the moral high ground.

    1. Sebee says:

      JR,

      You nailed it.

      And you’re being kind to keep it to recent events. If you go back further there are more examples which are probably even more damaging.

      Mercedes ain’t going anywhere. It’s differentiating from BMW and VW group by being in F1 and it sees it as an advantage to it’s brand to be next to Ferrari.

      Personally, I’m glad they are putting back some of the crazy margins they are making on their cars back into something I can enjoy.

    2. Krakinho says:

      I was going to say the same, but you were quicker.
      My country (Croatia) was also involved in the same scandal.
      Of course it surfaced only after US investigators published it. No one here would do anything to dig it out (along with many, many, many other cases).
      As far as I remember, no one was charged (of course) here for it.

      Cheers

    3. Sebee says:

      JR,

      Turns out Mercedes is doing all it can to keep this bribe thing going. Looks like Bernie will have to give Mercedes a board seat after all, now that they got this lovely early christmas present in form of negotiating leverage.

      It pays to stretch out negotiations and sign only last minute.

  4. thejudge13 says:

    If BE is indicted on bribery and corruption charges by the German prosectutors this will be an 18 month long saga.

    FOM will need to decide whether it wants the continual negative publicity over its Chief Exec or whether as most organisations would do – sideline him whilst the matter procedes.

    This will then create no conflict for any F1 particpants with anti corruption statutes.

    The world and BE are one day to find out, F1 will survive without its mecurial vertically challenged wizard.

    1. KGBVD says:

      Nope, Bernie is a genius. He has created an astronomical return on his masters’ investments and will be around as long as he continues to line their coffers.

      Never look a gift horse in the mouth, esp if it’s called Bernie.

      1. Quercus says:

        I’ll agree, Bernie is clever. But it strikes me that with the move to Sky he’s sacrificing long-term exposure — and thus the further development of F1, in exchange for short-term maximisation of his personal profit.

        So he’s not altruistic and he knows he’s not going to be around much longer.

  5. Andrew Kirk says:

    Hi James how do you see the driver front playing out there? Schumacher getting on the podium along with his performances certainly helped his cause tho he is not getting any younger.

    1. Kay says:

      Not James here but I reckon he’ll only be where Brawn is. The pair worked together for a long long time, this mutual trust and bond isn’t easily replaceable so I’d put my money on MSC staying put at Merc AMG F1 (if he chooses to continue racing that is).

      1. James Clayton says:

        Will Brawn even stay on next year? He said his only two remaining ambitions were to see Rosberg win a race and see Schumacher on the podium again.

        He’s had those already this year.

      2. Martin says:

        I think Brawn said wanted to see Nico win his first race and Michael his 92nd.

        There’s a fundamental difference in what Brawn brings to Newey. Brawn helps create a system that will work over a long period provided no one else tears it up, although Brawn works to motivate staff. Newey is leading a design team, so he sets a direction for people such as Rob Marshall, the chief aerodynamicist, to follow.

        What this means is that Mercedes should keep making good cars even after Brawn goes, while Red Bull benefits from Newey’s direct input and when he goes he will need to be imediately replaced.

  6. Matt W says:

    I wonder if Mercedes jumped a bit too early from Mclaren to take over Brawn. I think they saw a relatively cheap way to buy what they thought was a front running team, but have now realised the cost and effort involved and are having second thoughts.

    It seems the problems that the team faced as Honda and BAR still seem to exist and I cannot help but wonder if there is something in the DNA of the team that really needs changing to bring them to where they want to be.

    Either way, F1 courted the manufacturers in the 90s and got stung with the recession and the mass exodus of teams in the 00s. F1 needs to remember the teams like Sauber, Williams, Ferrari and Mclaren and they commitment they have shown. I feel it is high time for that “special payment” Ferrari recieve to be divided up amongst the other long term members of the grid.

    1. Dom Jones says:

      I agree with your first paragraph, and would also apply it to Schumacher. When he made his decision to come back at the end of 2009, Brawn had had a great car which was dominant for half the year and had produced a world champion. Then Mercedes were to take over the team. I bet Schumi thought he was going to walk into a team with at least a shot at the championship. Didn’t quite end up that way.

    2. Justin says:

      McLaren, Williams, Lotus, and Sauber, all get “special payments” besides their actual finishing place prize money too. It’s some dollar amount base on how long you’ve been in the sport and your “historical significance” or something. Granted Ferrari receive slightly more of this money than the others, like 30 mil to McLaren’s 25 (figures not exact), but it’s not like they’re the only ones who have side deals to get extra money.

      1. James Allen says:

        It’s nothing like that – Ferrari get a lot more

      2. The Conspiracists says:

        I suspect if Ferrari didn’t get it’s lions share of the money it wouldn’t actually be able to afford F1.

    3. JCA says:

      We must remember the auto industry ia very low margin. Peugot pulled out of Le Man becouse thay are fighting for their survival against Kia and Huyndai and the like.

    4. hero_was_senna says:

      IIRC, Mercedes bought the Brawn team because of Mclaren’s $100,000,000 fine and Spygate scandal of 2007.
      They were not happy being implicated in Mclarens mess.

      1. Cliff says:

        Spygate had very little to do with the purchase of Brawn. Norbert Haug has gone on record stating McLaren’s wish to build a rival car to their own cars did not sit well with Mercedes. He went on to say that it was not Mercedes’s choice or wish to end the partnership. You can read more in F1 Racing magazine

  7. Tornillo Amarillo says:

    Ah ok, great article, clear, thanks.

  8. madmax says:

    Thanks for shedding some light on that. Makes a lot more sense now.

  9. ACr says:

    I understand that Merc are different with regards to anti-corruption. Part of a court agreement a while ago was agreeing to a special set of policies, which do not apply to other companies.

    The odd part then, is why they ever entered F1 in the first place. [mod]

  10. Nil says:

    The staged crash in Singapore ’08 was worse for the image of all companies involved with F1. And Mercedes entered the sport as a manufacturer a year from then.

  11. Chris says:

    Lets be frank and honest, unless Mercedes start taking reguler wins with a championship challenge to boot, then they will look for an exit stratergy. As a manfacture with a primary objective to sell cars, I can honestly say I don’t blame them. I’m sadder when we loose genuine teams, such as Jordan for example. Theres been enough evidence over the last 10 years that manufactures enter F1, blow lots of money, and don’t get value. Renault is the only exception to the rule.

    1. Ron W says:

      Does an F1 World Championship win sell cars??? I honestly don’t think it does. Almost nothing in an F1 car finds it’s way onto a road car either and hasn’t for years. Worse, Mercedes are known as a Luxury brand, not a Sports brand like Ferrari. My boss keeps going on how he splashed out sixty thousand pounds on a Merc, yet he hasn’t the first clue about F1 or even that Mercedes have a team! I’m sure you’ll agree, this isn’t an isolated case… If I was on the Merc board, i’d pull F1, continue with DTM, and put a viral video together about entering a road going production Merc, with roll cage/extinguisher etc etc, into 2013 Le Mans and finishing.

  12. Falida says:

    Mercedes AMG F1 is a great team and it will manage to bounce back despite rumors in the paddock : http://www.wallpapersf1.com/Mercedes?wallpaper=998

  13. William Wilgus says:

    If any entity or individual should withdraw from F-1 due to the Gribkwosky verdict, it is Bernie himself. As a matter of fact, there’s no ‘if’ about it: Bernie should disappear from F-1. After all, he’s the one who paid [mod]!

  14. Onko says:

    In view of the verdict of German Court, the
    resolve to the purchase by the CVC of F1 is
    still in question,has it been purchased in
    true legal spirit.
    As for the rest no problem,Bernie takes a
    well deserved rest much sooner then he
    anticipated.

  15. val from montreal says:

    Mercedes as a TEAM are in my opionion not in F1 for the long run …. I see them exiting the championship within a couple of years , that’s if real results dont come their way … But , the flip-side of that coin is how van they achieve REAL results if they are not willing to invest more cash and ressources like their rivals Ferrari and McLaren …

    Mercedes seem they want the cake and eat it too !

  16. Franco says:

    It seems this is just another story to fill the newspapers during the week when there is no F1 action.
    All companies need to justify their spend to the shareholders and outline the return on investment. Although there is no smoke without fire so maybe them pulling out may be true especially as the concorde agreement hasn’t be signed.
    With F1 now slowly moving away from Europe and with races coming up in the US I think Meecedez will continue but if they dont start winning obviously it will be difficult for them to justify their continuation.

  17. kp says:

    If there is the merest hint of corruption at a high level, meaning BE, Mercedes will be out. Out quicker than you can say Bernie Ecclestone.

    CVC’s investment in and now disinvestment from Delta Topco has a whiff of curiosity about it. As does a any planned F1 flotation in Singapore.

    Be warned!

  18. Elie says:

    People have to appreciate that Mercedes ARE spending a fortune in F1. They supply half the engines to the teams and that’s not nickel and dimes stuff ! I certainly don’t think they will exit quickly with the recent recruiting of top notch people and investment in their facilities and new engine program over the last 12 months. What I think the deal breaker will be is if they don’t see an appreciable return on their investment – mainly the FIA giving them a bigger slice of the earnings / prestige . Okay I too don’t believe Mercedes deserve a big equity stake in F1 just yet but this time next year they will certainly want to be up their with Mclaren and Ferrari.

    More over if Bernie is still “calling the shots” and pulling strings after this saga- why would any team want a bar of it.?? I understand that Ferrari and Mclaren can invest on their own racing formulas but what makes F1 is the other teams too , Saubers, Jordan and alike. What Will happen if common sense prevails is that F1 gets new management over the next few years that is more transparent especially if F1 is floated.

  19. ETM says:

    I MB was to get out it would be because they want to get out and are looking for an excuse, not for any real moral obligation.

    1. AndrewM says:

      Thats what i think! Mercedes i feel are looking for a way to get out of F1…

      I dont get what the delay is in signing this new agreement with Bernie if there commited to F1. Bernie wont offer anymore money than what hes currently offering them

  20. Bruno says:

    Well, it ‘appears’ that firstly there was Maxwell, then Murdoch and now Ecclestone ?

    Maybe there is no such thing as smoke without fire – who knows ?

  21. Adrian Newey Jnr says:

    A couple of points:
    1. I don’t think Schumi expected to waltz onto the podium straight away. He signed for 3 years knowing it was a journey, like in the Ferrari days. Ross would also have given him an adequate picture of the situation. Plus Schumi would have been able to see that Brawn were slipping in the 2nd half of the season, understanding why they were losing their competitiveness.

    2. I think Mercedes will stay in for the long haul. However, I think they will morph their involvment along the best value for money. That might change from being a team owner to an engine supplier. Renault has shown how to do this best.

    I don’t think Mercedes care if they win the WDC. Yes that would be a benefit, but just being there is the key marketing attraction. They would know that they can’t win every year. After all, they didn’t walk away from McLaren because they weren’t winning. They did so to have more control over their own destiny rather than have Ron dictate terms.

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