Features - News Feature
JANUARY 29, 2003
The State of the Union
BY JOE SAWARD
Formula 1, in other words, has been strangling itself. The men at the controls have too much power and cannot agree on how to use it. Despite the fact that the ownership of the shares has changed hands again - Leo Kirch's empire collapsing and his shares being handed on to creditor banks - the sport has remained under the control of Bernie Ecclestone. Ecclestone is still a potent force but he is no longer the unchallenged might that once he was. Gone are the days when he could whip the teams into shape whenever there was a problem. Since he sold his Formula One business and pocketed a mountain of gold there have been dissenting voices which would never have been heard before. The Concorde Agreement is such that total agreement is needed to change things quickly and the teams cannot agree on anything. Government by committee has never been the most effective form of rule and until Max Mosley waded in recently the sport seemed to be in a state of drift.
The downturn in the world economy which began in the summer of 2001 with the dot.com crash and was exacerbated by the September 11 attacks and the accounting scandals in the US had led to a crisis in confidence in business and a slide in the value of most big companies. This has meant that less money has been available for sponsorship and so the sport has had to contract. Thousands of jobs were lost in the racing industry in 2002 as teams laid off workers or went out of business. Although it is a painful business, a recession is good for the sport in that it ensures that only the strong survive. Formula 1 needed to cut costs because things had got out of hand in the late 1990s with unrealistic salaries and profligate waste. The problem is that some teams have appeared to have no limit to their budgets and so will not agree to allow costs to be cut for fear that they will reduce their advantage over the opposition. Mosley has tried to stop this blinkered approach. He may not have been very diplomatic in the way he did it but ultimately change was necessary and it was not happening.
The latest figures suggest that advertising revenues are now beginning to recover and so in six months from now when new sponsorships are being discussed for 2004 and beyond, F1 has the chance to pick up new money. What is important is that the sport can tell the future sponsors where it is going and what form it will take. The key to the money, therefore, is political stability and so finding a compromise for the future must be the priority. Talking about finding a solution is not good enough.
The problem is that some of those making the most noise cannot see the wood for the trees and as a result we have watched the development of a simmering battle over the future of the sport. The car manufacturers say that they wish to go their own way with the GPWC. This popped up in the Spring, trying to take advantage of Kirch's financial weakness to get hold of the commercial rights to Formula 1. Leo Kirch refused to be drawn into a fire sale and although he went to the wall as a result, the GPWC did not get its hands on the business. Since then things have drifted. The banks which now own the shares can afford to wait and see what happens. The FIA started out sitting on the fence but when the GPWC started talking about setting up a series with an alternative regulatory body, the federation began to look very darkly at the proposed enterprise. The talk of compromise has evaporated and attitudes have begun to harden.
The sport seems bound for a bigger crisis - and that is a problem when it comes to convincing companies to invest in the long-term future of the sport.
The fans, however, do not care about the business of the sport. They felt that the problem of Formula 1 in 2002 was that the racers were not putting on a good enough show. They started turning off their television sets. At first it was a gentle decline but after Michael Schumacher wrapped up the world title in the summer the ratings went into freefall. The panic that ensued in F1 was unseemly and illogical.
The two reasons why the ratings began to drop were that Ferrari had been too good at its job; and that the TV coverage of F1 was not good enough to keep up interest in other battles going on throughout the field. The first problem will be solved as soon as another team does the job properly and takes on Ferrari. The second is more complicated but with the failure of pay-per-view television the door is now open for free-to-air broadcasters to get their hands on the footage they need in order to lure back the viewers. The teams must solve the first problem; Bernie Ecclestone must fix the second.
One cannot blame Ferrari for doing so well, except to say that the team was inordinately clumsy from time to time. Its use of team orders in Austria sparked off an amazing reaction from members of the public all across the world. Formula 1 responded by saying it was always like that but the fact remains that the world is changing and F1 must change with it. The FIA (quietly) accepted this in October when it pushed through a ban on team orders. We all know that one can never stop such things happening as teams can (and will) manipulate results if they wish to do so, but the new rule will stop them being so unsubtle. And that has to be good for the sport. The Austrian issue faded gradually away but then Michael Schumacher did a very dim thing in Indianapolis, trying to pull off a tight formation finish. The result of this was that he handed Rubens Barrichello a victory by accident. Michael tried to make out that he has been trying to stage a dead heat (which is a stupid argument given the modern timing systems). He then changed his story and said it was a gesture to Rubens, which buried Michael in even deeper trouble. It was another public relations gaffe.
But, lest we forget, drivers are paid to drive not to be spin doctors and Schumacher drove brilliantly all year. Rubens Barrichello played the perfect number two. The impression given was that at some events the Ferrari men were actually fighting all the way. On other occasions one got the impression that Michael had more performance in hand and could go even faster if he had needed to. Amazing though that may sound it is probably true which increases his stature and at the same time diminishes the achievements of Barrichello. It matters little in the overall scheme of things. Ferrari has a good solid team and should not change a winning formula. Some have criticized Ferrari for not allowing its two drivers to fight to help F1 in its hour of need. Others would argue that there is no contest between the two men anyway and so Ferrari's actual path is probably the wisest.
When all is said and done one must also say that the team's success was, in part at least, due to the failure of its rivals to produce a decent challenge. At the start of the year we joked that a McLaren chassis mated to a BMW engine might do the trick. Williams had produced a chassis which was just not very good and while the horsepower of the BMW engine and the individual brilliance of Juan Pablo Montoya enabled him to take seven pole positions, the overall package was rarely on the pace of the Ferraris in the races. Things were not helped by the fact that Ralf Schumacher on several occasions behaved like a real brat and the result was that either Montoya was delayed or that the two cars collided. Montoya cannot escape a little criticism as well because on too many occasions he damaged his car early in the race and had to muscle it home. The two Williams-BMW drivers were not comfortable team mates and that could lead to more trouble this year.
Both men are fast but at the moment neither is a Michael Schumacher.
McLaren's problem was that the engine was not up to the job. Team members complained early in the year that the 2002 Mercedes-Benz V10 was producing less horsepower than the 1997 unit. It was never entirely clear why this had happened but there is no doubt that a bad mistake was made somewhere. McLaren has a very good ability of making things look super-professional but stories from the inside always indicate that it a racing team like all the others. Things do not always run smoothly.
The team did a good job to recover from the poor start and seemed to have worked out a much better understanding of the Michelin tires by the end of the year. David Coulthard and Kimi Raikkonen were a good combination and although Coulthard was the only man to win it will not be long before Kimi wins races as well.
Behind the top three teams it was a very long drop to the rest. These were led by Renault, which was handicapped by a poor engine (which is an odd thing to be writing about the once-dominant French engine-builders).
Most of the other teams can be picked apart for their poor performances but it is perhaps better to point out those who did well. Given its resources, Sauber again did an amazing job. The team should have scored more points but fifth in the championship was still a great achievement.
There are other positive aspects to emerge as well. Finally it seems that the sport is actually going global after years of just talking about doing so: Bahrain and China have both confirmed that they are going to hold races in 2004 and Turkey and St. Petersburg seem to be close behind. It is now inevitable that the number of European races will be cut. European legislation - notably over tobacco advertising - has pushed the sport away from its traditional base. The money that the sport generates is going to go elsewhere.
For the moment Britain remains the center of the motorsport industry but there are increasing signs that erosion is taking place. F1 technologies are now beyond the realms of all but the biggest research and development departments in the motor industry and in aerospace and as Britain's automotive and aerospace industries have been undermined and outperformed by foreign competition or have slipped into the hands of foreign companies, the technologies needed are no longer available.
In America there is the technology available and it will be interesting in the months ahead to monitor the progress of the new Falcon Cars, as it goes up against the European opposition in the Indy Racing League. If the firm can prove itself, we could see more cars being built in the US.
The Germans too have the technologies necessary and while there is a growth of the F1 industry in Germany that has yet to translate into the other formulae. That may yet happen. There is talk of Mercedes-Benz opening its own F1 engine plant in Germany and the firm recently bought control of Ilmor Engineering. There is similar talk of BMW doing its own thing in Formula 1 but for the moment the Bavarians are being cautious.
It is a time when caution and prudence are necessary as it is unlikely that we will see much of a recovery in the motorsport economy within the next 12 months. Next autumn will be a crucial period as it will dictate whether or not the current sponsorship drought will continue for another year. The sport's biggest weakness - from top to bottom - is that it divided. Competitors in other sports have begun to realize that they must work together in order to cope with the challenges of the modern world. But motorsport remains as individualistic and ego-driven as ever it was. Formula 1 drives the rest of the sport along - certainly in Europe - and as long as its management and players are divided the sport is going to struggle. That may not seem to be a very positive assessment of the short-term future but these are times when reality cannot be ignored. But there is always hope that the inventiveness that built such an amazing sport will triumph over circumstances and that the sport will get over the recession quickly in the course of 2003.