1%er
Well-Known Member
Is a storm brewing for Liberty Media
Now the sport moves on without Lauda. His incisive perspectives and oft-pithy comments will be sorely missed by all in the paddock. Another consequence is that Lauda was a 10 percent shareholder in the Mercedes team (parent Daimler have a ‘pull’ option on the stock after 2020) and it remains to be seen what happens to his voting rights in the interim. This uncertainty may be just one symptom of stormy weather ahead. The decision by the FIA to scrap the much-vaunted tender for a standard F1 gearbox is another. Last year a summit of all team bosses was held in Monaco on the Friday to discuss F1’s post-2020 transition. This year there was nary a team boss to be seen on the traditional ‘off-day’. It not as though the post-2021 technical and sporting regulations, revised governance process and commercial details are fully sorted, as delegates to the previous day’s FIA press conference made clear, yet rather surprisingly, the key F1 figures chose not to meet on Friday.
Whilst the FIA’s U-turn on the gearbox tender directly affects only a single, albeit major, component group, it highlights two crucial factors, obvious team influence in the post 2020 regulatory process, and cracks in Liberty’s standardisation strategy. The residual impact of the decision extends beyond a cluster of gears, the word in the paddock is a number of similar tenders will also shortly be withdrawn. The wrangling over the sport’s future has not descended into the bitter acrimony familiar from previous years. Many credit the relationship between Liberty CEO Chase Carey, Managing Director Ross Brawn and FIA President Jean Todt for the lack of major polemics in recent times.
What though, if this situation changes for whatever reason(s)? Carey turns 66 on 22nd November and is thus already at ‘normal’ retirement age, Brawn hits 65 the following day and 73-year-old Todt is in his final term, which expires at the end of 2021. Not unexpectedly, various sources confirmed in Monaco Ferrari will continue to receive its annual ‘long-standing team’ bonus, albeit reduced from the stratospheric sums it currently receives. Liberty’s justification is that a spend cap neuters any performance advantage Ferrari may derive via the bonus as the team would not be permitted to spend in excess of the cap. All well and good, but that logic presupposes that a cap of $200 million maximum will be imposed, and that restrictions on driver salaries etc are included. If not, we could be heading for the first $50m-per-year driver, who could clearly not be afforded by other teams.
Then there is the question of Ferrari’s historic veto over future regulation changes. After Ferrari team boss Mattia Binotto said in response to a question in Spain that the team was “hopeful [that] we can keep the same [veto] rights” and implied it would protect all teams against willy-nilly changes. Above all though, the retention of Ferrari’s veto is significant as it points to a further dilution of Liberty’s stated post-2020 objectives. Indeed, permitting Ferrari to retain such powers raises pertinent questions about the level of the much-vaunted budget, and whether it will even be introduced. What if Ferrari vetoes the concept of a budget cap in its entirety, as it did in 2009, when the FIA under Max Mosley planned to introduce a $40m cap? True, the threat was never carried through, but only because the issue was resolved (the FIA cap was eventually dropped), but the fact is that Ferrari commenced legal proceedings against the FIA in the Paris Court of the Grande Instance to block the proposed 2010 regulation changes. All these factors fall squarely under Liberty’s direct control, yet each has the potential to seriously disrupt F1’s grand post 2020 plans unless skilfully managed. There are, though, a number of further threats that fall outside Liberty’s jurisdiction, all of which are capable of unsettling even the best-laid plans, or possibly disrupting them totally. More recently Ferrari threatened to block proposed changes to the engine regulations, proving the veto is effectively ‘a loaded gun’, as Todt once called it. Imagine the state of post 2021 should Ferrari decide to veto some or even all the changes, F1 under those circumstances would be little different from what we presently suffer despite constant reassurances from Liberty that post 2020 F1 will be much changed.
Prime amongst these are potential decisions at motor manufacturer boardroom level to withdraw from F1, as per F1’s mass 2008/9 walkout. True, this is a perennial threat, but Clause 2.1 of their respective bilateral agreements with Formula One World Championship Limited (now controlled by Liberty) locks the teams into participation only until the end of 2020. That is but 19 months away. There is increasing talk that Mercedes will exit after that date, potentially remaining as an engine supplier only given that all heavy development expenditure has been incurred over the past ten years, and the engine regulations will be relatively stable until at least 2025. Despite denials from Toto Wolff that he is considering an offer to join Liberty as CEO, with Carey staying on as chairman, such talk persisted in Monaco. One source was adamant talks are continuing, and brushed off Wolff’s denials saying: “Well, Toto needs tension in his negotiations with Liberty.”
Naturally, Mercedes has shot down such suggestions. This is to be expected, besides which the final decision may not yet have been taken given the changes taking place at the top. This Friday Dieter Zetsche, Chairman of the Daimler and CEO of Mercedes Passenger Car Division, officially steps down. His place will be taken by Ola Källenius, the first non-German and non-engineer to head the car company. The Swede was instrumental in devising the company’s e-mobility strategy, recently telling reporters “There’s no two ways about it, the world is going toward zero-emission in the long term. For us, in the next five to 10 years, battery electric vehicles play an absolutely crucial role to go there”, before confirming that he is seeking over £5 billion in cost savings from Mercedes by 2021. Källenius was the driving force behind 10 purely electric Mercedes-Benz models, the first of which was launched earlier this month. Will he pull the plug on F1 at the end of 2020? Particularly given the team’s sparkling run of successes, from which the only way is down. Not necessarily. But the point is he may well decide to do so, and that is a decision that lies outside of Liberty’s direct control. Consider the impact of such a move, particularly a worst-case scenario where the F1 engine programme is canned simultaneously, and Mercedes sinks its full motorsport resource into Formula E; what a fillip that would give the nascent series. (continued below)
Now the sport moves on without Lauda. His incisive perspectives and oft-pithy comments will be sorely missed by all in the paddock. Another consequence is that Lauda was a 10 percent shareholder in the Mercedes team (parent Daimler have a ‘pull’ option on the stock after 2020) and it remains to be seen what happens to his voting rights in the interim. This uncertainty may be just one symptom of stormy weather ahead. The decision by the FIA to scrap the much-vaunted tender for a standard F1 gearbox is another. Last year a summit of all team bosses was held in Monaco on the Friday to discuss F1’s post-2020 transition. This year there was nary a team boss to be seen on the traditional ‘off-day’. It not as though the post-2021 technical and sporting regulations, revised governance process and commercial details are fully sorted, as delegates to the previous day’s FIA press conference made clear, yet rather surprisingly, the key F1 figures chose not to meet on Friday.
Whilst the FIA’s U-turn on the gearbox tender directly affects only a single, albeit major, component group, it highlights two crucial factors, obvious team influence in the post 2020 regulatory process, and cracks in Liberty’s standardisation strategy. The residual impact of the decision extends beyond a cluster of gears, the word in the paddock is a number of similar tenders will also shortly be withdrawn. The wrangling over the sport’s future has not descended into the bitter acrimony familiar from previous years. Many credit the relationship between Liberty CEO Chase Carey, Managing Director Ross Brawn and FIA President Jean Todt for the lack of major polemics in recent times.
What though, if this situation changes for whatever reason(s)? Carey turns 66 on 22nd November and is thus already at ‘normal’ retirement age, Brawn hits 65 the following day and 73-year-old Todt is in his final term, which expires at the end of 2021. Not unexpectedly, various sources confirmed in Monaco Ferrari will continue to receive its annual ‘long-standing team’ bonus, albeit reduced from the stratospheric sums it currently receives. Liberty’s justification is that a spend cap neuters any performance advantage Ferrari may derive via the bonus as the team would not be permitted to spend in excess of the cap. All well and good, but that logic presupposes that a cap of $200 million maximum will be imposed, and that restrictions on driver salaries etc are included. If not, we could be heading for the first $50m-per-year driver, who could clearly not be afforded by other teams.
Then there is the question of Ferrari’s historic veto over future regulation changes. After Ferrari team boss Mattia Binotto said in response to a question in Spain that the team was “hopeful [that] we can keep the same [veto] rights” and implied it would protect all teams against willy-nilly changes. Above all though, the retention of Ferrari’s veto is significant as it points to a further dilution of Liberty’s stated post-2020 objectives. Indeed, permitting Ferrari to retain such powers raises pertinent questions about the level of the much-vaunted budget, and whether it will even be introduced. What if Ferrari vetoes the concept of a budget cap in its entirety, as it did in 2009, when the FIA under Max Mosley planned to introduce a $40m cap? True, the threat was never carried through, but only because the issue was resolved (the FIA cap was eventually dropped), but the fact is that Ferrari commenced legal proceedings against the FIA in the Paris Court of the Grande Instance to block the proposed 2010 regulation changes. All these factors fall squarely under Liberty’s direct control, yet each has the potential to seriously disrupt F1’s grand post 2020 plans unless skilfully managed. There are, though, a number of further threats that fall outside Liberty’s jurisdiction, all of which are capable of unsettling even the best-laid plans, or possibly disrupting them totally. More recently Ferrari threatened to block proposed changes to the engine regulations, proving the veto is effectively ‘a loaded gun’, as Todt once called it. Imagine the state of post 2021 should Ferrari decide to veto some or even all the changes, F1 under those circumstances would be little different from what we presently suffer despite constant reassurances from Liberty that post 2020 F1 will be much changed.
Prime amongst these are potential decisions at motor manufacturer boardroom level to withdraw from F1, as per F1’s mass 2008/9 walkout. True, this is a perennial threat, but Clause 2.1 of their respective bilateral agreements with Formula One World Championship Limited (now controlled by Liberty) locks the teams into participation only until the end of 2020. That is but 19 months away. There is increasing talk that Mercedes will exit after that date, potentially remaining as an engine supplier only given that all heavy development expenditure has been incurred over the past ten years, and the engine regulations will be relatively stable until at least 2025. Despite denials from Toto Wolff that he is considering an offer to join Liberty as CEO, with Carey staying on as chairman, such talk persisted in Monaco. One source was adamant talks are continuing, and brushed off Wolff’s denials saying: “Well, Toto needs tension in his negotiations with Liberty.”
Naturally, Mercedes has shot down such suggestions. This is to be expected, besides which the final decision may not yet have been taken given the changes taking place at the top. This Friday Dieter Zetsche, Chairman of the Daimler and CEO of Mercedes Passenger Car Division, officially steps down. His place will be taken by Ola Källenius, the first non-German and non-engineer to head the car company. The Swede was instrumental in devising the company’s e-mobility strategy, recently telling reporters “There’s no two ways about it, the world is going toward zero-emission in the long term. For us, in the next five to 10 years, battery electric vehicles play an absolutely crucial role to go there”, before confirming that he is seeking over £5 billion in cost savings from Mercedes by 2021. Källenius was the driving force behind 10 purely electric Mercedes-Benz models, the first of which was launched earlier this month. Will he pull the plug on F1 at the end of 2020? Particularly given the team’s sparkling run of successes, from which the only way is down. Not necessarily. But the point is he may well decide to do so, and that is a decision that lies outside of Liberty’s direct control. Consider the impact of such a move, particularly a worst-case scenario where the F1 engine programme is canned simultaneously, and Mercedes sinks its full motorsport resource into Formula E; what a fillip that would give the nascent series. (continued below)
Mercedes has won six out of six races at the start of this 2019 season, and has both drivers have been on the podium for every grand prix this season, so an upgrade isn't going to please Ferrari or Red Bull. Hamilton told reporters "A lot of analysis will be made, particularly towards trying to understand the tyres better and deliver better in terms of our processes, and on my side, (I am) trying to work even better with my engineers to try and extract more from my car. That means Bono (Peter Bonnington, Hamilton's race engineer) and Marcus (Dudley, performance engineer) and a lot of the engineers trying to extract more information from the energy recovery system, and positioning the information in the right way so I can deliver more from this car. I know the guys back at the factory are working on developments. We will probably have a new engine by the next race, so the car will continue to move forward as we will".
