The Fischer man

At the end of November last year all the Formula 1 team principals who mattered gathered in a chilly Geneva to be given a presentation by a company called GPWC Holding NV, which said it was planning to start a new "Grand Prix World Championship" in 2008. The team bosses were told that the car manufacturers were behind the idea.

According to The Mole's sources, the GPWC was offering teams around 85% of all revenues generated by the new series. This was a much better deal than they have at the moment with SLEC, which keeps about 65% of its revenues and allows Allsport Management to take all the trackside advertising and VIP hospitality revenue.

The numbers impressed the team bosses but no-one really believed that GPWC was anything more than a bargaining chip in negotiations between the owners of SLEC and the teams.

It was only when it became clear that Ferrari was on the side of the GPWC that people began to worry. Ferrari is the corner stone of modern Formula 1 and despite the delusions of other team bosses no-one gives a damn about their organisations. It is all egotistical folly.

The key to the whole future of the sport was thus Ferrari and when Ferrari boss Luca di Montezemolo was quoting as saying that Ferrari was willing to put up with Bernie Ecclestone's "greed" because of what Ecclestone had done for the sport but that it was not willing to do the same for a German media company called Kirch, the writing was on the wall.

The issue never actually came up because Kirch soon went to the wall and Formula 1 entered a confusing phase in which no-one was quite sure who owned what as the company was being claimed by the banks which had loaned Kirch money for the purchase. In April GPWC confirmed that it have been approached by the banks and asked if it was interested in buying SLEC. The GPWC said that it would examine any proposal made by the banks "provided that it is consistent with the GPWC's objectives". The Mole took this to mean no.

There was a flurry of GPWC activity at Imola and then things went quiet again. Total secrecy descended on negotiations. But The Mole's men on the inside reported that there was a man called Thomas R Fischer, who was playing an important role.

Fischer is a banker and at 54 has had a good career, rising through the banking world to become Chief Risk Officer and Chief Operating Officer of the giant Deutsche Bank. In this role he was also on the board of directors of a variety of different companies including Audi AG. When it became clear last year that Deutsche Bank would have a new chairman Fischer was in the running but the job went to his rival Josef Ackermann and that spelled the end for Fischer at Deutsche Bank. He left in January and in May was appointed a consultant by Bayern LB (the Bavarian state bank which is also sometimes called Bayerische Landesbank) with the task of sorting out the Formula 1 problem. Bayern LB, Lehman Brothers and JP Morgan, the banks that had loaned the money to Kirch, first had to win control of the commercial side of the sport. This they did and a new board of directors of SLEC was put in place, including a lot of bankers and one or two of Bernie Ecclestone's nominees.

While he was doing this Fischer was also going after the big deal. He will have looked at the problem through the eyes of a banker. And he is a tough one. In his youth he was a boxer and he cut through the detail and went to the heart of the problem. Fischer is a clever man and quickly realised the issues involved. He realised that the first thing he needed was a deal with Ferrari to secure the future of the sport and to divide the opposition and force them to come to the table to negotiate a deal.

For a banker Ferrari is an impressive company, except for one important detail. It spends most of its profits to compete in F1 and there is a question as to whether or not anyone would buy Ferraris if it was not linked to racing. This is the problem which Ferrari boss Montezemolo has been struggling with in recent years. His answer was to find new sources of revenue other than the cars. The takeover of Maserati gave him a second brand to play with. This, he figured, would be a cash cow for Ferrari. And there were forays into finance and in recent times serious work on the exploitation of the Ferrari brand as a fashion statement. In this respect The Mole thinks Montezemolo may have learned from the man who bought the Bugatti name and tried to build cars. Romano Artioli ended up making more money from Bugatti-branded handbags, ties, key rings and leather goods than he did from selling the cars.

The Ferrari problem is different to other F1 teams because they solve their problem by remaining independent and getting backing from the bigger car manufacturers, who can afford the numbers.

The reason that there was a threat from the GPWC is because car companies are these days run by men who are always under pressure to cut costs. Men rise to the top of car companies because they know how to squeeze more out of a supplier for less money. If one considers F1 to be just like a windscreen wiper manufacturer, it is obvious that the car manufacturers would be trying to cut costs.

The truth is that they do not really want to have to own and operate a company which runs motor races but as the opportunity existed they tried to do it.

The way to stop the GPWC was thus to make them an offer that they could not refuse by reducing their costs.

Ferrari was a bit different but as the future of the firm is tied to the sport and vice versa it is logical to look at deals to cement the relationship between SLEC and Ferrari.

And thus when Lehman Brothers (one of the SLEC partners) announced recently that it had acquired 6.5% of the shares of Ferrari, The Mole was not surprised. More announcements will follow and before long The Mole believes the GPWC will announce that it has suspended all plans to start its own World Championship in 2008. Fischer has a difficult task ahead but with Ferrari in the bag it will be easier. The sport generates something like a billion dollars a year but it could do more if it was professionally exploited and managed like a corporation. To date most of this money has gone to Ecclestone. But in the future it will not. The Formula One corporation will keep less money for itself but will generate more for everyone.

While Fischer has been doing his work the GPWC has gradually faded away. There was a meeting at Silverstone at which the F1 team owners came away more impressed than ever at the preparation work that was being done but since then there has been nothing.

Tens weeks have slipped quickly by without anyone apparently noticing what has been happening.

Click here to read previous Mole columns: The Mole Archive

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