Toto Wolff holding his head

Toto Wolff’s pack of cards.

Toto Wolff always described as one of the most powerful individuals in F1 was given his real power from former Daimler Chairman Dieter Zetsche who chose Wolff to represent Mercedes interests not only in F1 but as head of the entire Mercedes-Benz motorsport programme.

Wolff’s personal investments in the Williams F1 team and driver management became incidental when he purchased his stake in the Mercedes F1 team and started his rise to power in the paddock.

Wolff over the past few years has exerted his influence over everything from engine deals to rival teams and controlled aspects of the driver market.

The power base allowed him to ‘help’ his old team Williams in 2014 acquire Mercedes engines and from 2022 a full powertrain supply. 

Wolff always had purchasing Williams as a plan B but this evaporated with the purchase by Dorilton Capital last year who have put in place their vision which does not include Wolff.

In 2019 FormulaE team Venturi Racing announced its engine, cooling system, rear frame, rear suspension, dampers, software, onboard electronics, and wiring looms would all be purchased from Mercedes. 

The team is of course part-owned and run by Susie Wolff!

Wolff is associated with Lawrence Stroll and the two men are good friends often holidaying together. 

How much ‘influence’ Wolff exerted on the Williams F1 team is unknown but well Lance Stroll became a Williams driver in 2017 and it might not have just been his father’s money at work.

Wolff used his Mercedes influence when Stroll entered the bidding war for the Force India team when administrators were appointed.

Mercedes were Force India’s largest creditor and Wolff wanted owner Vijay Mallya out and Lawrence Stroll in. 

Wolff let it be known that Stroll was Mercedes preferred bidder and organised a pre-bid agreement to supply engines.

Later he backtracked claiming Mercedes was ‘neutral’.

Mudding the waters, he insinuated that Stroll’s rival Dmitry Mazepin would struggle with compliance requirements from Daimler the implication being Mazepin would fail a credit test. 

Stroll was as we know successful in the bidding war even though his offer was $40m lower than Mazepins something the Russian businessman took Force India administrators to court over and subsequently lost.

Stroll as we know renamed the team Racing Point Force India and close ‘cooperation’ with Mercedes followed with all the resulting controversy over the car being a copycat Mercedes.

Stroll’s subsequent purchase of the Aston Martin car business has some analysis believed been saved with Mercedes investment back in October raising its stake from 5% to 20% in return for providing Aston Martin with technology which critically includes future-oriented electric/electronic architecture.

So, Wolff with his Mercedes backing became a serious player, but trouble lay ahead in the shape of Ola Kallenius who in May 2019 was appointed chairman of Daimler and head of Mercedes-Benz replacing the retiring Dieter Zetsche.

Forget the Mercedes PR machine and Wolff’s spin the two men simply do not like each other and Kallenius decided the paddock was not big enough for both of them. 

Kallenius’s plan was simply to dispense of Wolff by purchasing his stake in the team as part of an agreement that Wolff and the late Niki Lauda had signed which allowed their shares to revert to Daimler at the end of 2020 at pre-determined valuations. 

Kallenius offered Wolff $80m for his 30% stake. Wolff countered with a valuation of $200m which Kallenius rejected.

Wolff found himself in a difficult position and so he turned to Sir Jim Ratcliffe whose opening salvo had been to become title partner to the team through his INEOS conglomerate.

Ratcliffe’s plan was never to sponsor the team but to buy it and to this end, Wolff engineered the perfect face-saving solution for both himself and Kallenius.

The shareholder was to be split between the three parties with Ratcliffe paying Mercedes $200m for 33.3% making Wolff’s original valuation spot on. 

Critically the deal did not include the Mercedes-Benz High-Performance Powertrains business based in Brixworth.

In one of the worst kept secrets in F1 Ratcliffe will buy out Mercedes remaining 33.3% share probably at the end of the 2021 season and the team will be renamed INEOS Grenadier.

Mercedes will remain as an engine supplier with team INEOS simply becoming a customer of the Mercedes-Benz High-Performance Powertrains business.

At this stage, Mercedes may switch allegiance and invest further in the Aston Martin road car business something Ola alluded to when he told GQ magazine, “Our partnership with Aston Martin is robust. Will it lead to more? We will see.”

The scenario is Daimler through its increased stake in Aston Martin and subsequent sponsorship of the Aston Martin F1 team forces Stroll to side with Kallenius leaving Wolff out in the cold.

The question is will Wolff sell his stake to Ratcliffe at the same time as Daimler?

Well in all probability he will remain as team principle/CEO of team INEOS but it will be a whole new world with the new 2022 regulations hopefully creating a more competitive field. 

Wolff will have lost his Mercedes influence and will instead be effectively just another team principle having to concentrate solely on his own team.

Wolff’s remaining power base as head of Mercedes-AMG motorsport has gone with the appointment of Christoph Sagemuller in March as head of Mercedes-AMG motorsport with additional responsibility for marketing at the High-Performance Powertrains business.

Sagemuller’s role has been called a new position and confusion is in the air with Wolff proclaiming as late as last week when discussing the team’s technical director James Allison new role as chief technical officer he said, “I’m also the head of Mercedes motorsport, and so it makes sense to have a technical director for all motorsports programmes.”

All will be clear when Toto gets the memo from Ola and so ends his final Mercedes influence which is the bedrock to his power.

So, what next for Wolff?

Well, he may well sit back and wait till his buddy Strolls plans come to fruition and the two men make their ultimate move.

Stroll’s five-year plan is to turn the Aston Martin road car company into a very valuable asset at which time he will exit. The plan is many think ambitious, to say the least, and feel Stroll has fallen into the trap of believing he can emulate Ferrari.

For Stroll to succeed Aston Martin will simply have to start designing and producing cars that appeal to its target clientele to boost sales and attract new customers otherwise its demise will be swift. The company is pinning its future on the DBX SUV, two new mid-engined supercars, hybrids, and Aston’s first pure-electric car.

Stroll aims to have his fortune seriously bolstered by an eventual sale of Aston

Martin and the F1 team in which he aspires to be world champions by the 2026 season with the icing of the cake being son Lance as driver’s world champion.

To understand his mindset, you only have to look at recent comments in GQ magazine when he claimed, “With Liberty’s new game plan and the budget cap to level the playing field, I believe the asset of an F1 team will one day be between £1bn to £5bn.” 

This may well be fantasy stuff on Stroll’s part a bit like his recent comments that “80% of people who watch F1 buy a high-performance car.”

When Stroll exits the Aston Martin car business and the F1 team with his pot of gold he may then decide to retire again as he did after the sale of his fashion business.

Wolff may fulfil his prophecy of, “I will leave the sport and return to what I’ve done before and be a private equity person.” 

Or they could combine forces and with the obligatory consortium buy F1 from Liberty Media who will in five years (if they last that long) have either cracked the TV revenues thus capitalising on their investment or if not, Liberty will cut their losses and run.

Then the two men will become F1’s most powerful individuals.

Time will tell.

mont tremblant circuit

Is Lawrence Stroll cash strapped

News broke last week that Lawrence Stroll was selling his Canadian racetrack Le Circuit Mont-Tremblant.

Stroll has owned the circuit which hosted the Canadian GP in 1968 and 1970 since 2000.

He has invested in the 2.65-mile circuit including a new timing tower and enhanced medical facilities valuing the venue at over $10m.

The sale comes on the back of selling his South Florida penthouse previously owned by Oprah Winfrey for $20m.

Citing a conflict of interest with his Aston Martin shareholding he is in the process of selling his $220m collection of vintage Ferraris with the jewel in the crown being the $25m ex-Mark Donohue/Roger Penske Ferrari 512m.

In August 2020, several credible sources in the yachting world said Stroll’s $200m superyacht Faith had been sold to no other than one Michael Latifi!

So, is Lawrence Stroll cash strapped?

Well, an individual’s net worth can indeed be tied up in assets and not cash as pleaded by ex-F1 team owner billionaire Sir Richard Branson.

Branson faced criticism when at the start of the pandemic he asked for taxpayer’s help for his Virgin Atlantic airline.

He responded with, “I’ve seen lots of comments about my net worth—but that is calculated on the value of Virgin businesses around the world before this crisis, not sitting as cash in a bank account ready to withdraw.”

Branson has a net worth of $4.2bn with $600m in cash and investments outside his Virgin brands.

In Stroll’s case, there are substantial assets with include homes in Geneva, London, Quebec, and the Caribbean island of Mustique.

Stroll amassed his fortune selling his shareholdings namely Pierre Cardin, Polo Ralph Lauren, Tommy Hilfiger, and the jewel in the crown Michael Kors leaving him with substantial resources.

His net worth today stands at $3.2bn up $1.4 billion since 2012 so the selling of some of his physical assets is probably not because he needs the money.

Stroll and the word consortium go hand in hand and like Branson, he is an expert in using other people’s money.

Branson’s F1 team was funded by Russian sports car manufacturer Marussia and his FormulaE team by Chinese wind power company Envision Energy and both deals substantially reduced his financial exposure.

Although Stroll’s Yew Tree consortium ploughed £182m into Aston Martin an additional £500m was raised by existing investors including fellow billionaire Juan Abello.

This subsequently was not sufficient and last October Stroll refinanced the company with a £1.3bn package.

This has left Stroll with $1bn of debt sitting on the balance sheet and the Times newspaper estimates an average interest rate of an eye-watering 16%.

Facing the huge challenge of both the F1 team and in particular the car company Stroll is in all probability selling his ‘toys’ so he can remain totally focused with no external distractions.

For now, gone will be the Partying witnessed by his lavish 60th birthday party at Villa Lysis in Capri with 250 guests back in 2019.

A distant memory will be last year’s wedding to long-term girlfriend Raquel Diniz in which he took over the whole island of Mustique for 3 days. 300 guests were flown in with the select few staying at his $100m house ironically called the Great House?

No Stroll realises that his reputation and legacy rest on the success of his F1 team and the Aston Martin car company, both require his absolute attention.

He may have the Midas touch, but helping him to focus will no doubt be the memories of his $100m loss he and business partner Silas Chou suffered in their investment in the Asprey jewellery business 20 years ago.

Williams F1 car nose cone with sponsors logos

F1 Bucking sponsorship trends?

In the Covid -19 world sports sponsorship has taken a pounding with a 23% contraction in the European sponsorship market.

New research from the European Sponsorship Association and Nielsen Sport found the total value of Europe’s sponsorship market shrunk from a record €30.69bn in 2019 to €23.63bn in 2020 – its lowest point since 2010.

Analysis of the figures indicates the sports sector fared better with a fall of 9%.

F1 has been bucking the trend with some major deals recently struck and is emerging in good shape all things considered.

‘Sponsorship’ is old hat with the new buzz words ‘commercial partners’ taking centre stage.

Williams is particularly proactive in attempting to change the narrative offering to add value through technical expertise.

Tim Hunt, Williams Racing’s Commercial and Marketing Director told SportsBusiness, “In Formula 1, it used to be that the two choices you had when sponsoring a team were ‘how big do you want your sticker on the car?’ and ‘do you want Chablis or Chardonnay in hospitality.

“Thank God, those days are behind us. Those things are still factors and will always be part of the proposition, but the reality is that in today’s market we need to look at, how do we actually fundamentally impact a partner business’s P&L?

“It’s the reality behind the perceptions of a Formula 1 team as being a high-performance, well-oiled machine. It’s a commercial manifestation of the cliché of having 18 guys deliver a pitstop in under two seconds, which is arguably the definition of teamwork, and it is the tip of the iceberg in terms of our high-performance culture that we are now looking to apply with our partners.”

To highlight an example Williams used their thermodynamics expertise to assist sponsor Unilever on two projects; changing the process they produced soap powder for the Rexona brand and making the way they make ice cream more efficient, both of which delivered considerable bottom-line benefits to Unilever.

As hunt says, “A simple manifestation from my side is that our sales deck used to say, “join our team”, where it now says, “how can we help?”

Hunt summarises the post-COVID-19 sponsorship landscape by saying: “They (partners) are not going to spend the dollars they used to on eyeballs or on brand awareness and a logo on the car. They’re going to have to grow their way out of what we’ve all been through, and I don’t think there’s any better way to position our sponsorship proposition right now than finding out how we can help our partners do that.”

On the other side of the coin is what a sponsor can bring to the team in particular with technical expertise, step forward the software and technology companies.

Nielsen Sports head of rights holders Tom McCormack highlighted a “growth in the number of digital service providers joining F1’s sponsorship landscape.

“We expect to see more entrants from this sector as the 2021 season progresses.”

Well, he is not wrong, take a look at deals worth over $2m:

Mercedes – Epson $5m, Crowdstrike $4m, AMD $4m, TIBCO $4m, Pure Storage $3m, and Hewlett Packard $2m.

Red Bull – Oracle $30m, Citrix $4m, and Hewlett Packard $2m.

Ferrari – Kaspersky $4m.

McLaren – Dell $15m, Dark Trace $10m, Arrow Electrics $4m, Cisco $4m, Webex $4m, and Splunk $2m.

Aston Martin – Cognizant $15m, NetApp $2m, and Sentonel One $2m.

Alpine – Hewlett Packard $3m, 3D Systems $3m, and Microsoft $2m.

Alfa Romeo – Zadara $4m, Acer $2m, Additive Industries $2m, and Mitsubishi Electric $2m.

Haas – Ionos $2m.

Williams – Versa Integrity $4m and Acronis $3m.

Interestingly some deals consist of cash and non-cash with the latter equating to the value of goods and services supplied to the team. A good example is Red Bull’s $30m deal with Oracle which includes $10m in non-cash and McLaren’s $15m deal with Dell that includes $10m in non-cash.

So, it is good news that the big-spending and deep-pocketed technology companies have committed $147m in sponsorship sorry in commercial partnerships.

The F1 grid still relies upon the Car Manufacturers Renault, Honda, Ferrari, Mercedes, Alfa Romeo, and Aston Martin who pump in over a billion dollars.

In F1 money talks and the ‘dirty’ industries of Oil and Tobacco still contribute huge sums into F1’s coffers.

The oil companies stump up $224m – Petronas $100m, Shell $42m, Exxon Mobile $37m, Castrol/BP $22m, PKN Orlen $20m, and Gulf Oil $3m.

Tobacco’s Philip Morris International and BAT cough up (excuse the pun) $130m.

Just like the good (bad) old days!

On a footnote: Williams have recently announced a new sponsor damn it commercial partner in the shape of food company Honibe, owned by Island Abbey Foods, owned by Dorilton Capital, owned by ???