NOVEMBER 19, 2005

A question of focus

Formula 1 is all about markets these days and this may help to explain why the Midland F1 team has made much of getting a Russian racing licence for the team. Midland (or rather MF1) boss Alex Shnaider came originally from St Petersburg but grew up in Israel and later in Canada.

Formula 1 is all about markets these days and this may help to explain why the Midland F1 team has made much of getting a Russian racing licence for the team. Midland (or rather MF1) boss Alex Shnaider came originally from St Petersburg but grew up in Israel and later in Canada. His Midland steel business is based in the Ukraine. But Shnaider obviously believes that his best chance of raising money for MF1 is in Russia - although, for obvious reasons, it might be worth approaching the British low-cost furniture company MFI - which is expanding internationally with franchise operations in China, Russia, the Philippines and in the Arab world.

What is fast becoming clear is that Shnaider's partners in Midland are not keen on spending company money on the racing team.

Shnaider has plenty of personal cash but Formula 1 has a habit of eating through piles of cash and so he is out looking for cash to go racing. The Russian Federation is a good place to start. The country has a population of 143m and a GDP of $1.40 trillion. The economy is developing and a Russian team would be useful for a Western company trying to grow its business inside Russia or a Russian company trying to sell itself on the international scene.

The Formula One group is also keen to get Russians excited about Formula 1 and so is being as supportive as possible of Shnaider's efforts although, when all is said and done, there are bigger fishes to fry and FOM's biggest desire at the moment is to ensure that Narain Karthikeyan is racing around in an F1 car next year. India has a population of one billion and a GDP of $3.3 trillion and an emerging middle class that equals the entire population of the United States of America.

The best solution would be for Karthikeyan to be with MF1 and kill two birds with one stone but Narain and his backers wants more than that and have less money than Portugal's Tiago Monteiro. Tiago did a good job in 2005 but when all is said and done Portugal has a population of 10m and a GDP of only $188bn - small potatoes in the bigger picture.