Analysis: Alfa Romeo a good F1 hedge as Marchionne ramps up Ferrari rhetoric
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Posted By: James Allen  |  03 Dec 2017   |  7:45 am GMT  |  232 comments

Sergio Marchionne was a proud man yesterday to announce the partnership that brings Alfa Romeo back into Formula 1 after 30 years.

Initially he indicated it would be until 2020-21, and he reiterated his threat to pull Ferrari out of Formula 1 – and Sauber too – if Liberty Media and the FIA go down the wrong route with the sport’s regulations. He did so very consciously with both F1’s Chase Carey and FIA president Jean Todt sitting in the room.

Alfa back in the F1 game
The Alfa deal is good business for Marchionne; he first floated the idea of bringing the marque back into F1 in 2015 and subsequently had a good look at buying the Swiss team.

That co-incided with the flotation of Ferrari on the New York Stock Exchange and other important priorities and in the end Longbow Finance bought the team.

They have connections with Marcus Ericsson, which is why he retains his seat with the team alongside Charles Leclerc, who looks the most exciting driver to come through to F1 from F2 (formerly GP2) since Lewis Hamilton in 2007.

The deal that Marchionne has done with Sauber’s owners is far less costly and involved for FIAT than buying the team and as well as the marketing benefits, it provides a hedge against several ways things could go politically in F1 with Ferrari and Liberty Media. The sphere of influence has grown to three Ferrari teams, just as Mercedes also influences three teams in F1. Sauber would benefit enormously from the kinds of changes Carey would like to make to F1, but it now has a strong man steering the ship and it is less likely to lead to the ‘wrong’ outcome for the big players.

It works very well for both sides and this team surely now is Ferrari’s closest alliance, edging out Haas F1, which buys as much of its F1 technology from Ferrari as the rules allow, but which hasn’t played ball on drivers.

Marchionne can paint the Saubers red and white and dominate the branding of the car, supply latest spec engines and other technology and place his most promising drivers, with 23 year old Antonio Giovinazzi lined up as reserve and Friday practice driver, likely to convert that to a race seat for 2019.

“We will find space for him,” said Marchionne. Ericsson is on notice.

It’s more economical than buying Sauber – title sponsorship of a team at that level is probably of the order of £10-20 million with the engine supply thrown in. For 2018 the engines will be badged Ferrari but after that it will be reviewed.

Also part of the deal are the gearboxes and elements of the rear end of the car, similar to Force India’s deal with Mercedes.

What will be interesting will be what the media, commentators and fans will call the cars. Will they call them Saubers or Alfa Romeos? Benetton and more recently Red Bull were very clever with that, putting the consumer brand into the title of the cars so they get referred to constantly.

Either way, this makes perfect sense for FIAT and Ferrari and for Sauber.

Marchionne has done a lot lately to reinvent the Alfa Romeo brand on the road, with exciting models like the Giulia and the Stelvio and the F1 connection gives a youthful, sporty sheen to the brand.

Renewed threat to pull Ferrari out of F1

Marchionne underlined his threat about Ferrari quitting F1, after prospective engine regulations for post 2020 were announced a few weeks ago.

“The dialogue has started and will continue to evolve,” Marchionne said. “We have time until 2020 to find a solution which benefits Ferrari. The threat of Ferrari leaving Formula One is serious. The agreement with Sauber expires in 2020-2021, right when Ferrari could leave.

“We have to find a solution which is good for the sport but we also have to be clear on the things we can’t back down on.”

Mercedes also has a route out of the sport on the same basis and it’s not impossible to imagine one or both doing that.

The key for Chase Carey and Liberty Media is not to make Marchionne and his colleagues emotional about this situation. Carey has faced down many great captains of industry in the past and is underestimated by many in F1 who are still working out what he is made of.

Carey played the diplomatic card, standing in the Alfa museum and clearly getting the message, saying that he wants to simplify the competition, not to devalue it, with cheaper, noisier engines. The budget cap is another sticking point, which Marchionne considers impossible to police. And then there is Ferrari’s free $100m bonus every season, which was negotiated between former Chairman Luca di Montezemolo and Bernie Ecclestone.

Montezemolo has been largely airbrushed out of Ferrari’s history recently, but that was one deal that has a strong legacy.

What do you make of this Alfa Romeo story? How much of a boost is it for Sauber? Leave your comments in the section below

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1

I thought Ferrari had the Alfa Romeo logo on it for the last couple of seasons? So how can this be Alfa returning?

2

James – Any update on Haas-Maserati deal? Read SM is keen to bring in the brand as well to F1.

3

I’m tired of Marchionne’s rhetoric.
Let him pull Ferrari out. Sure Ferrari is a great team and they would be missed; but the idea that they can push the new owners of the sport wherever they like is a wrong; I dont expect that to happen.
Ferrari will not leave F1, wouldn’t it be easier if they just shut up and got on with building the car?

4

@ Kiwi G…If you had been the recipient of $100million per year for starting money and you were told that in all likelihood you were going to lose that, what would you do? Giggle and lie down with your legs in the air ? Whether or not they are entitled to it is not the point. It’s a different matter altogether as it reduces, by a substantial amount, funds flowing to the bottom line, where corporations either live or die.

5

This rebadging of Sauber is not going to add anything exciting to F1. We need new teams with money of their own to splash around, ie Audi, BMW, Porsche, Jaguar etc.

6

Trouble is the factory teams can and will just pull out if the going gets too tough. BMW, Jaguar (ford) Toyota all have a recent record of this. The sport does not need more entrants who will push smaller teams into bankruptcy and then bale out.

7

Happy to have Alfa back in F1 (even if only as a sponsor) but getting unhappy about the whole “B Team” situation.

If Teams want to finance B Teams and Junior drivers then that’s great. Good for them. But consign these B Teams to F2 where they belong.
No F1 team-owner should be allowed to have (or be perceived to have) any control over any other team or over any other team’s driver/s.

When we see an Alfa (Ferrari contracted) driver giving a tow to a A Team Ferrari driver : will that be okay ?
When we see an Alfa driver pulling out of the way for a Ferrari driver even before the blue flags are flashing : will that be okay ?

Is it allowed for the owner of Manchester United to have one his companies become primary sponsor of, say, Liverpool ? Or are there laws in place to stop such conflicts of interest from occurring ?

8

We seem to be missing some lines from Sergio and not reading between them :

November 4 – Marchionne – on pulling out of F1

“Like a million bucks, because I’d be working on an alternative strategy to try and replace it. A more rational one, too.” – Somehow most news organisations got hung up on – ‘Like a million bucks’ and ‘Sandbox’ – key take away. ‘An alternative strategy’

29 November – Toto Wolff – “If we do not see what Formula 1 stands for, then we have to ask ourselves the difficult question: not if but where do we want to operate in motor sport at the highest level?”

3 December – Marchionne – “The heart of Ferrari is technical development. If the direction is not this, then Ferrari will find other contexts to demonstrate its skill on track – and maybe at that time we will also be with Sauber.” – Missing also from the above article? But key – that’s three teams already + Haas + FI + Renault Teams only missing. Where there’s fire? The breakaway threat is coming to force Liberty to tow the line.

What will end up being:

Ferrari will get their way as will Mercedes (sorry but that’s just a fact) – Liberty are not foolish but to overnight half F’s value – their creditors will come a knocking (Mr.E steps in buys it back on the cheap?).

Ferrari and Merc don’t want to start a rival series – they don’t want to spend the money or have it or the expertise. But who could? Mr.E ? hmmmmm.

F1 will continue with Ferrari after 2020 but don’t kid yourself. They’ll get their way. Because if there is no Ferrari certain players will opt out – Tracks/Promoters, Rolex, Heineken. It’s critically important to the intrinsic value of the business. The only one blustering is Liberty – most to lose.

9

Good post! I had missed the Toto comment. I wonder why the press is focussing exclusively on Marchionne’s comments, when the other heavyweights are lined up right there with him…

10

@ Redline…..because it has now become a routine worthy of Fred and Ginger. One rarely moves without the other in a mirror image these days. The timing difference is there to add weight to the ‘thoughtful’ response and also to try and avoid the very issue of collaboration, seemingly too close for comfort. As for the emphasis on Cardiman’s comments i do see it as realistic simply because Mercedes leaving F1 is only a secondary blip to that of Ferrari, in the popular heritage stakes.As a headline which would have the greatest impact. ‘Mercedes leaves F1’ or ‘Ferrari leave F1.’I know what my reaction would be…..

11

Rather ironic that the Alpha Romeo sponsorship is indirectly made possible via the extra $100mil Ferrari gets paid.
Thus the Formula Group is actually paying for Alpha Romeo to be back in F1.

With regards to the new engine formula, perhaps the compromise is a standardized MGU-H or allow the engine manufacturers a choice, either to make their engines with only a MGU-K or both the MGU-H/K.

That way the current engine manufacturers have a choice to either optimize their current designs or pursue a different path to reaching 1000hp like the new entrants.
A bit of variety would be great.

12

The Italian football national side won’t travel to Russia next year — some years later, the Italians might even pull Ferrari out of F1 — well, go ahead, what else? We would only say arrivederci!

13

@Eunuch – and your point is what precisely?

14

Ferrari should make good on their quit threat and b****r off. Just like Red Bull should have when they were moaning that it was another team’s turn to be the fastest. I’ve been watching F1 for 30 years and couldn’t care less if the whining horses disappear. Any team that stands in the way of closer racing has no place in the sport and I sure as hell wouldn’t miss them. I want close racing and don’t give two hoots what badge is on the cars. They should all take a leaf out of Frank Williams’ book and just get on with the challenge rather than cry into their baby food.

15

Yes – would have been quite a season without Ferrari and RB….

16

Yes, apart from the LHFC, zero eyeballs.

17

Yes, other teams would be in their place. Fine by me. If teams can’t deal with life’s ups and downs, that’s a pity. Fear of rivals pushes teams harder. Special treatment breeds complacency. Level that playing field and see who’s really got what it takes.

18

@Peter – Other teams? What, like Caterham and Marussia?
Sorry, but that is cheap and meaningless rhetoric, that can’t be taken seriously.

19

I agree. If they can’t play on an even playing field, without outrageous bonus money, they can leave without any complaints from me. F1 should be about passionate drivers and car makers who live to race. Why should I care about anything else?

20

It seems to me that the only reason Marchione puts Alfa in F1 is to increase his influence and get stronger leverage in shaping up the post 2020 rules. Let’s hope this is not the case…
Other than that it’s good to have fresh blood in the ageing F1 product.

21

I think Ferrari are just Sauber rattling.

22

Very good!

23

I’ve seen less ferocious ‘sauber toothed tigers’ !!!

24

Is there value for Fiat in seeing Alfa Romeo squabbling at the back with Toro Rosso though?

25

Purely by accident we may see an interesting last c4 f1 season before we return to the glory days of checking the result on monday mornings

26

I dont get it 🙂 ?

27

Interesting to note that apparently at the Alpha Romeo museum where the Sauber tie in was announced Cardiman, AKA Marchionne , also made reference in his speech to the appalling intro by that Buffer chap at Liberty’s behest at COTA. Marchionne feels the same way about this as a few of us do and he made a comment that he didn’t want to see the NASCAR-isation of F1!!! …and that F1 has a more noble past. Well said Sergio…have a full Corona for that.

28

Sergio is a Barolo and Barbaresco man 😉

29

@ Redline…..my apologies for not picking up on your comment. By Corona, i was referring to the “full fat richly smelling tobacco leaves lovingly rolled on the thighs of generously proportioned Cuban ladies’ and not a Mexican beer!

30

@ Redline…yes, two different identities but created from the same ‘nebbiolo’ base. Is he Barolo or is he Barbaresco.

31

Both are from Piemonte – the spiritual heartland of FCA.
Marchionne himself though is of Abruzzese origins – so in vinicultural terms he is probably a Montepulciano d’Abruzzo

32

@ Redline…well partly correct but he does have mixed parentage and i don’t quite know whether he can claim ‘Abruzzi’ heritage resulting from his genealogy. Given that fact, then the ‘Plavic Mali’ or it’s modern day derivative ‘Zinfandel’ would play nicely into his vinicultural shadow.

33

back to the drawing board – that’s a bad livery. totally uninspiring.

re f1 engines. bring anything you like as long as its @1000hp.

34

and no MGU-H.

35

That shiny red color! Really nice. Other than that it doesn’t look like this bodes well for the privateers.

36

“Marchionne has done a lot lately to reinvent the Alfa Romeo brand on the road, with exciting models like the Giulia and the Stelvio and the F1 connection gives a youthful, sporty sheen to the brand.”

Unfortunately, while Alfa is on the upswing, Fiat has never been rated as higher than Below Average in reliability in the US since their re-introduction. I think Sergio should spend less time at Ferrari and Alfa and more time at Fiat…

37

“For 2018 the engines will be badged Ferrari but after that it will be reviewed.” – What does that mean?

38

I take that to mean that by then the way forward will be clearer and new engine agreements, in principle, should be locked in allowing Ferrari to re assess. In that re assessment will be the decision as to who will manufacture the ‘new ‘engines. If they are simplified then maybe Alpha will build their own like Ferrari may build their own using certain complimentary items but maintaining a significant difference for individual brand identity in 2021.

39

So this is a 1-year agreement with Ferrari. Meaning Haas and Sauber will only for sure have equal engines for one year. Just trying to get a lay of the land as an American and Haas hopeful.
“Kenneth, what is the frequency?”. . I will try not to ask that anymore. I just like the sound of it. That was an iconic situation where a homeless crazy shouted the question to one of our high profile tv anchors on the streets of New York City. Tv anchor’s name was not Kenneth. Tv anchor was fired and dishonored for reporting false news, at a later date, on another subject. An early example of Fake News.

40

@ Gene Herbert No, it’s apparently a three year deal but by the endn of ’18 the new R & R will have to be firmed up. That means all major hook ups re associated teams will need to be set in [virtual] concrete in order to be on the grid in ’21.

41

I think its very good that Alpha is back.

The bad news? BE cleaned up. He sure got his money. The debt Liberty has is pretty high. They may know what they are doing or they may not. After seeing the new logo more on the internet on different devices it fits better. The old one looked great but it’s taller than it is wide. The new one is not very tall and it is wide. So even though I really hated it; it’s growing on me. I can see a lot more places it can be put.

Now the big one? Everyone knows F1 needs Ferrari and Ferrari needs F1 but which one needs the other most? I think Ferrari will have a lot of leverage over Liberty.

You all probably don’t want to know anything else. Just follow the money. Both are public companies and just fact check them.

Maybe the rules don’t need to keep changing because every time they get changed the mid pack is farther from the front. The tires don’t need to change all of the time either.

IMO the midfield guys should be able to win one occasionally. Maybe seebee is right if they do change the engine, just grab an old rule book and put a V10 in there however even just getting rid of the dreaded MGU-H means it might as well be a new engine. F1 just be road relevant anymore. The engine formula is so messed up now because it is way too complicated.

Everyone complains about the logo and the sound, crap tracks, etc….but I think the amount of time between the front runners and the midfield is what needs to change most. Ferrari also seem to have the need to win a WDC or WCC every ten years.

The good news Ferrari and SM are saying talks are ongoing. This his happened the last few times but this time BE ain’t the guy doing it but Liberty did hire Ross Brawn. He should be able to come up with something.

42

Agree completely with closing the gap up in the midfield. I remember the excitement in 2012 (I believe it was) where for the first half of the season you didn’t know who was going to win the race. Was it something like 7 or 8 different winners consecutively?? Regarding the relevance of F1 cars to road cars, i personally think the less they have in common the better. Its the imaginative, performance enhancing engineering innovations that you DON’T find on you road car that capture your interest and set formula one apart. There was a time when certain manufacturers sold road cars to fund there passion and desire to go racing, not the bloody other way round.
I’m a technician for a ‘prestige’ motor company and I spend a lot of my time carrying out brain numbing hybrid health checks. Last week we had a 5.0L V8 come into the workshop (which our eco friendly company also produces) and there was literally a que to take it out on road test. I think that says it all! I think that sebee guy is right in saying that these hybrids wont be around for long so why ruin our sport with the expensive pursuit of developing them. How many people specifically watch F1 because of there passion or interest in hybrids? I bet not many. Now I wonder how many people have lost interest or stopped watching F1 during the time of this PU era?
The changes required to get F1 back on track are simple. Unfortunately the politics aren’t. I know it’s the ultimate capalist’ playground but the paddock could do with a little helping of community spirit right now.

43

Nice livery, but where’s the halo?

44

Given that the fabled Alfa 158/159 Alfetta won the first two F1 championships with a supercharged 1.5 litre engine, I suppose Alfa’s return brings things full circle given the current rules. But that echo of history doesn’t get the hard part out of the way.

The hard part being that since the turbo era came in with Renault in the late ‘70s, F1 has been a manufacturers playground in which costs have increased by orders of magnitude. Indeed Renault introduced turbochargers to F1 way late in the racing game (Bobby Unser won Indy with an Eagle Offy turbo in 1968; by 1973, the DOHC 2.65 litre Offy was producing almost 1000bhp. Roger Penske, Mark Donahue, and the Porsche 917/10 brought similar power to the Can Am four years later) and went on to introduce pneumatic valve actuation – and, decades later, pushed hard for the turbo hybrids. All three of these technologies, alone and now in combination, have taken F1 from (essentially) an expensive sport to an astronomically expensive marketing exercise for auto manufacturers.

F1 was in this pickle at its outset: Faced with the costs of staying ahead of Ferrari, Alfa pulled out. Faced with the fact that only Ferrari seemed to have aced the original 1.5/4.5 Formula (BRM at that point having prefigured Honda and Renault’s recent experience), the rules were radically simplified: The World Championship ran to F2 regs in 1952 and 1953.

We could use such radical simplification again right now, and for the same reasons: Cost and complexity are anathema to broader participation and to racing spectacle. And there’s nothing wrong with doing so on a “take it or leave it basis.” This too has precedent: British interests were far more vociferous upon 1958 announcement of the 1961 Formula. Given that this was based directly on then-existing F2 rules for 1.5 litre I supercharged engines; given that Lotus and Cooper, especially, were competing with what amounted to F2 hot rods, that reaction seems incomprehensible in hindsight. The Formula was in fact tailored perfectly to the strengths of these garagistas. And history shows that F1 cemented itself as predominantly British enterprise during that era. And history also shows that they got that way when the CSI (FIA) told them, these are the rules. Take it or leave it.

Note that a breakaway series, the Intercontinental Formula, did commence during 1961. It sputtered out quickly.

(For the definitive discussion of the 1.5 litre F1 and the political wrangling leading up to it, see Mark Whitelock’s outstanding book, https://www.amazon.com/2-litre-Grand-Prix-Racing-Power/dp/184584016X)

I think we are simply going through a combination of what happened in 1951 and 1958: Costs and complexity have strangled competitiveness (as at the end of ‘51); and major players are upset about the new formula (Whitelock quotes an Autosport editorial to the effect that the 1961 rules would allow Grand Prix racing to degenerate into an unimportant contest carrying no prestige whatsoever. Less colorful than Marchionne’s “sandbox” metaphor, perhaps, but the sentiments? Identical).

As in 1961, the FIA (and FOM) should stand firm.

45

@ Rudy Pyatt…great post. I enjoyed reading that. I would hope that liberty stay strong in their attempts to introduce more competitive engines. As i said earlier, their will be some serious ‘blinking’ along the way. How will it end?

46

I’ll second that. Great post! It’s funny how history repeats itself, going through the same cycles. I wouldn’t want to lose Ferrari from formula 1 but I think the prestige card holds less weight than people think. There could be a backlash regarding viewing figures initially but ultimately, if F1 cars were still breaking track records each year regardless of the teams involved it would still be THE fastest form of 4 wheel circuit racing. Still the pinnacle. And with drivers like Lewis, Max, Ricciardo and Alonso etc all battling it out with closer machinery the spectacle itself would keep the sport alive. Look at rallycross. A simple, rough and ready form of motorsport that’s drawing in the new younger generation of fans due to good marketing and simple entertaining racing. I think the drivers hold the most weight. Hold your hand up if you’re a Mercedes fan?…. now honestly, would it still be held up if Lewis had a pair of ferrari overalls on in 2019? I reckon not for most of you guys. In England, Renaults are known for being cheap French cars with dodgy electrics. No prestige whatsoever (despite there decades of success in motorsport). When Ferrari and Merc were getting their behinds kicked by a fizzy drinks company, I bet the wealthy were still shopping for AMG’s and 458’s etc. I’m sceptical about how powerful f1 actually is as a marketing tool.

47

Charles Leclerc, who looks the most exciting driver to come through to F1 from F2 (formerly GP2) since Lewis Hamilton in 2007

I thought, it was Mr.Stoffel.

48

James, how does this deal with Alfa Romeo compare with BMW deal that Sauber had 10 years ago?

49

Ferrari will likely leave

– they don’t need F1 that much, apart from McLaren none of their competitors are in F1 (e.g. Lamborghini, bugatti, Aston Martin, …)

– in the bernie E model of F1, designed to trade on the past and appeal to oligarchs, Ferrari was essential to FOM, hence the $100m sweetener. In the liberty era, which I think will be more designed to appeal to the young and more normal people, Ferrari are less essential – so I’m not sure the two sides will find a solution that suits both. Or actually that solution might be Alfa Romeo, a brand you can aspire to owning without being a celebrity or villain.

50

Interesting angle… seems quite plausible.

51

a bit sad to see the big teams take hostage of the small midfield teams, which really need a more equal revenue distribution.

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