THE MOLE

How to avoid a hangover

The Mole had a hangover. Too many brandies after dinner at the club the previous evening had left him feeling rather fragile as he set off for the office with Oswald the chauffeur. The Mole had breakfasted well but he still felt fragile and felt the need for water, coffee, and then some more water. Oswald tried to make polite conversation for a moment or two and then realized it was not a good idea and left The Mole to stew in his own juices.

To forget the pain The Mole decided to occupy his brain. It was a trick he had learned in foreign embassies, where hangovers are an occupational hazard. Forget all those horrid remedies with raw eggs and Worcester Sauce, forget Coca-Cola, forget Red Bull.

Or perhaps not, thought The Mole, Red Bull was the perfect subject for diverting his mind. The Austrian drinks company makes so much money that for most people it is impossible to envisage the numbers. It is the kind of company that makes Bernie Ecclestone feel jealous. It makes something in the region of $2bn a year in profit. Company boss Dietrich Mateschitz has all the toys that money can buy, including two Formula 1 teams and one NASCAR team which he is just creating now. His aim is not just to market Red Bull but also to have fun and to win. Mateschitz learned long ago that it is always best to buy things rather than rent them and so he has given up being a mere sponsor and now buys racing and soccer teams, aeroplanes and whatever else takes his fancy. As far as he is concerned big is beautiful. Once he had plans for a vast motor racing and aviation complex at the A1 Ring with engineering and flying schools, a five-star hotel, and the headquarters of all of his racing teams. The local birdwatchers stopped that happening and Mateschitz left in a huff, leaving the A1 Ring derelict. Ever since The Mole has wondered if one day Red Bull would try to create a similar facility in England where the birdwatchers are more under control.

Red Bull Racing is working out of a headquarters that was once a ball-bearing factory. That was sold to Stewart Grand Prix and then became the headquarters of Jaguar Racing and ultimately transformed itself into Red Bull Racing. The team has a wonderful windtunnel around 15 miles away near Bedford. Scuderia Toro Rosso has a very old factory down in Italy and no windtunnel of its own. Mateschitz says he will keep the team there for a while but there are no guarantees beyond that and the team is internationalising fast. The Toro Rosso car this year looks an awful lot like the old Red Bull RB1 and with the rules changing in 2008 the two teams will be able to use the same machinery without having to make even cosmetic changes. And thus economies of scale will make it logical to have two teams in the same place. The thought process is going along the same lines at Honda with plans for Super Aguri to one day join Honda Racing F1 in Brackley. It is logical for Red Bull to consolidate its operations in (or at least near) Milton Keynes.

The Mole paused and his headache returned. He took a deep breath and dived back into the subject.

Red Bull can buy as many super engineers as it likes but the one thing that they will all be saying is that if the company really wants to win, it needs an exclusive engine supply. Sniffing around GM and Volkswagen has suggested that neither is interested in F1 and all the other major manufacturers are either involved in F1 with their own teams or not likely to be very good at the sport. The best thing to do a year ago was to do a deal to get Ferrari engines but that is expensive and while helping the team to lift its game, will not result in wins. No Ferrari customer team has ever won a World Championship Grand Prix. Adrian Newey, the new Red Bull Racing technical chief, will no doubt have made this point already. The option is to buy in expertise and it is very convenient that Cosworth Racing, just down the road in Northampton, has suddenly produced a marvellous V8 engine. The obvious move for Red Bull is to divert a convoy of security vans full of money to Northampton and convince Cosworth owners Gerry Forsythe and Kevin Kalkhoven that they really do not have any desire to be in the engine-building business. This may not be that hard. Both men are essentially venture capitalists and know that you buy when something is cheap and sell when the price rises. They acquired Cosworth because they needed to secure the engine supply of their Champ Car series. Ford Motor Company wanted to sell the business and the price was so cheap that Ford insisted on confidentiality clauses about the deal.

Now Mateschitz faces the choice of paying out $50m for engines for his two teams next year or offering a similar sum to Kalkhoven and Forsythe in order to become the owner of Cosworth. Kalkhoven and Forsythe could have a deal which guaranteed them engines and that would be that.

"It is a no-brainer," said The Mole out loud.

"Absolutely," said Oswald, deciding that simply agreeing was better than asking for an explanation.

If Red Bull was to then stick all its assets in the same place it would have a nice little package to one day sell to a new manufacturer wishing to enter F1 or simply go on using it until even the bushmen of the Kalahari are buying Red Bull six-packs

The problem, thought The Mole, is that if Red Bull Racing takes Cosworth off the market, Williams will be without power next year. There are talks with Toyota which are well-advanced but no deal is yet in place. Williams does not want to have to pay for engines because it needs all of its money to fight the manufacturer teams. Williams needs manufacturer support.

At the same time Toyota is burning up money with its own team in Cologne. For the last six years it has been tipping huge sums of money into the programme and progress has been slow. The Mole has always argued that not being in Britain was a huge disadvantage because everything is more difficult and a lot of F1 people do not want to go to live in Germany, unless they are paid enormous sums of money.

Might it not be more logical for Toyota to buy Williams? thought The Mole. It could provide the team with money and engines and success in F1 would come. Sir Frank Williams is obviously not going to sell the team unless it keeps him busy for the rest of his days, but there is nothing wrong with the kind of deal Enzo Ferrari struck with FIAT back in 1968 that left the old fox running the racing team, even if it was owned by the Italian car manufacturer.

Sir Frank has long needed to have some kind of exit strategy to allow him to go on racing and at the same time provide financial security for his family. This could be the perfect scenario.

It would be a big decision for Toyota, The Mole pondered, but Toyota was quite capable of such a thing. The Mole recalled that back over in America Toyota had a long-established factory-like relationship with Dan Gurney's All American Racers. It had started in 1981 and had been successful at various levels of the sport but in 1996 Gurney and Toyota entered CART. The results did not come and after four years Toyota reacted in ruthless fashion. Gurney was dropped and Toyota did a deal with Chip Ganassi.

Winning was all that mattered.

Might the same thing happen again in Europe? The Mole thought.

And then the pain came back.

March 21 2006

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