A1GP struggles on

The news that hedge fund RAB Capital has removed its chief executive Philip Richards is not good news for the A1GP Series, as it is a sign that RAB recognises that the investment made in the series was not a good idea. Richards spent $150m at the end of 2006 to buy a 52% stake in the championship from Sheikh Maktoum Hasher Al Maktoum, using money from the RAB Special Situations company. The firm has since revised the value of the A1GP shareholding with write-downs which mean that the A1GP stake is now worth almost nothing. The series continues to run races but income from TV coverage seems relatively small although the series has TV deals with ESPN Star Sports across Asia, China's CCTV5, India's ZeeSeeTV and Taj TV, Malaysa's RTM, Pakistan's Geo Super, South Africa's SABC, Greece's Novasports, TV3 New Zealand, Fox Sports Australia, UK's Sky Sports and Holland's RTL7. It is rumoured that a deal has also been struck with Italy's RAI, which has been attracted by the Ferrari involvement.

There have long been rumours that only a few of the teams are properly funded and that the rest are subsidised by the organisers. A1GP lost an astonishing $240m in the course of the 2005-2006 season but since then has managed to reduce the spending, although it is said that the company has nonetheless worked its way through as much as $500m since its inception.

RAB's A1GP investment was a significant part of the problems at the hedge fund and the final writedown accounting for 9% of the fund's 22% drop in August. Richards was forced to go although he remains in charge of the Special Situations company.

In an effort to improve its financial situation A1GP has employed Octagon Worldwide to provide strategic advice about commercial strategy. The deal is for three years, the same duration as the new chassis and engine partnership which will see Ferrari engines and Ferrari branding being used by the series. There have been rumours of money problems in recent months but once the cars are acquired the costs of keeping the series going will reduce, although there is no question that new investment or better returns from the series are needed to keep things afloat.

If that can be achieved then the series may one day be able to return to the plan of a stock market listing with the debts being paid off with some of the money raised. The big question is really whether or not A1GP can compete with its rivals - both in motor racing and in the larger sporting market. The problem is that the A1GP drivers are largely unknowns and the concept of national teams is not generally accepted as good in motor racing unless the countries are represented by the very best drivers available. They are all involved in F1 and making large sums of money. Until it is perceived as a real rival to F1 the drivers are going to remain old F1 drivers who want to go on racing and rising stars who hope to use the series as a stepping stone.

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