Dimitry Mazepin’s next move

As the F1 circus moves on to Sochi for the next round Russian President Vladimir Putin will no doubt be pleased the Haas cars can circumvent the ban on drivers racing under the Russian flag with the adoption of the ‘Russian-themed’ livery.

The irony of course is Haas arrived on the F1 scene with the emphasis on the team being F1’s American team!

Much has been written over why Gene Haas remains in F1 with various theories doing the rounds.

One school of thought is Gene Haas turned down the more than generous offers tabled in 2019 by the Saudi’s and Dmitry Mazepin from a patriot standpoint ensuring an American team remains on the grid. 

This may have been in doubt as William’s new owners’ American private equity firm Dorilton Capital was also rumoured to be ‘having a look’ at Haas.

The patriotic angle can now be dismissed as news emerges that Michael Andretti’s Andretti Autosport approached Gene Haas to buy the team only to be turned down.

Andretti Autosport is in the process of raising $287.5m to top up its available spending pot to $400m.

Andretti was a potential bidder for Force India and only walked away when faced with what they perceived to be ridiculous valuations.

With Williams, Dorilton outbid all interested parties to secure the ownership for its unknown mystery beneficial owner.

Andretti Autosport is a serious player running a 4 car Indy team. a FormulaE team with BMW, a 4 car Indy Lights team, and a LMP3 car in the ISMA’s Sportscar series.

Undeterred by Gene Haas’s rebuttal Michael Andretti confirmed a continuing interest in F1 telling Racer magazine, “If the right opportunity comes up, we’ll be all over it. But we’re not there yet, It would be great but there’s a long way to go if it were to happen.”

Instead of selling Gene Haas took Mazepin’s sponsorship roubles in return for Junior’s race seat and of course the opportunity to brand the cars.

Mazepin may or may not be disappointed with Nikia’s performance to date, but he is apparently delighted with the global exposure his company Uralkali has received.

The sponsorship has been instrumental in opening doors and has resulted in new business that has more than recouped his investment.

The world’s biggest potash producer has just got even bigger, and this may have increased his desire to own a team not only for his son’s career but for the business opportunity that F1 presents not dissimilar to Lawrence Stroll’s F1 journey.

If Mazepin wants to own a team there are only two other realistic options, Williams, or Sauber but both will in all likelihood be out of reach. 

In William’s case if Mazepin writes a big enough cheque you would naturally assume a private equity firm would do what private equity firms do, namely take the money and run. 

The spanner in the works is the motivation behind Dorlitons backer for Williams speculated in previous columns is more heart than head and no amount of money will change that.

A similar scenario exists at Sauber aka Alfa Romeo which is owned by billionaire Swedish Finn Rausing worth $14.4bn courtesy of the Tetra Pak empire.

Rausing became involved in F1 when back in 2016 he was approached by fellow Swede Marcus Ericsson who drove for the Sauber F1 team that was in financial difficulties.

Rausing bought out owner Peter Sauber and chief executive Monisha Kaltenborn initially through his secretive Swiss investment firm Longbow Finance SA later transferring the ownership to himself.

He appointed trusted family friend Pascal Picci as chairman and took no active role in the running of the team.

Rausing quietly attendees race weekends without any media attention.

He is a regular visitor to the factory in Hinwil, Switzerland spending hours happily chatting away to engineers.

Rausing currently supports the team to the tune of $20-$30m so it may be like Williams a heart and not a head decision, well he’s got to spend his money on something!

The million-dollar question or more accurately the multi-million-dollar question is would Mazepin start a new team with all that involves.

Well, Liberty Media would like to expand the number of teams on the grid after the pandemic has ended and Sporting Director Ross Brawn commented to Russian broadcaster RT in July 2020, “If there was interest from a Russian team or any other that we thought was sustainable then we would be fully open to exploring the opportunity.”

One option for Mazepin would be to join forces with fellow Russian billionaire Boris Rotenberg founder of the Russian bank SMP who along with his brother Arkady owns the SGM Group, the largest construction company for gas pipelines and electrical power supply lines in Russia.

Rotenberg is a close confidant of President Vladimir Putin from his childhood when both men learned judo together in Leningrad (now St Petersburg).

Rotenberg has had a few troubles of late.

SGM Group was involved in large infrastructure projects in Crimea which after the annexation of Crimea in 2014 led to American sanctions of both brothers and their assets.

The U.S. Treasury claimed that Putin had awarded the Rotenberg’s billions of dollars in contracts from Gazprom and for the Sochi Olympics. 

EU sanctions followed but only covered property in Rome and Sardinia valued at €30m.

As Rotenberg held Finnish citizenship due to a previous marriage to a Finnish citizen, he bypassed the sanctions. The assets included three villas in Eze, Nice, and Rotenberg’s racing team SMP Racing, which also trains drivers in the city of Le Luc, France.

SMP Racing has a host of Russian drivers on its books including ex Williams F1 driver Sergey Sirotkin and rising star Robert Schwartzman.

Rotenberg is a confirmed petrolhead and raced in a variety of series from 2011 to 2014 with his biggest achievement coming 2nd in the 2012 – 24 hours of Barcelona race.

Rotenberg is interested in forming an all-Russian F1 team using SMP racing and made clear his intentions back in October 2019 at the Russian Grand Prix when he said, “The more you try to create in motorsport, the more chance you have to flourish. Do we want to create a Formula 1 team? I think the more teams there are, the more opportunities there will be for our drivers.

“Everything is possible. The main thing is to make the effort. First of all, are the financial considerations.”

Well, in 2020 Rotenberg planned to invest in Dutch car maker Spyker that would enable the company to resume producing a range of three sportscars in 2021 namely The C8 Preliator supercar, the D8 Peking-to-Paris SUV, and the b6 Ventator supercar. 

Hoping to emulate Ferrari, McLaren, and Aston Martin with a sportscar manufacturer sponsoring their own F1 team Rotenberg ambitiously claimed, “Our group of companies will launch the Spyker brand successfully in the league of the world’s best super sportscars.”

Alas, it all ended in tears with the investment never materialising and Spyker filing for bankruptcy in January.

In May 2021 BR Engineering, the race car constructor established by SMP Racing released details of their third single-seater car, the BR03 developed specifically for the Russian market.

Rotenberg may be down but is not out and no doubt is planning his next move aboard his brother’s $75m superyacht ‘Rahil’.

So, will a combination of Mazepin’s money and Rotenberg’s expertise create a new all-Russian F1 team?

Time will tell.

In the Pit Lane – Liberty Media spoilt for choice

As the global pandemic continues to create havoc with the 2021 race calendar Liberty Media continues to look forward.

Liberty has an ambition to ultimately hold 25 races per season and to facilitate this the introduction of more double and triple headers will be necessary regardless of the human cost to the teams.

Liberty aims for a third of the races to be held in Europe with the remainder spread throughout the world including a wish list race in the continent of Africa.

As part of the strategy, Liberty is examining the prospect of alternating races with some circuits hosting every two or three years. This has happened before with for example the German GP which was spilt between Hockenheim and the Nürburgring.

Liberty will endeavour to protect the ‘heritage’ races such as Monaco, Silverstone, Spa, and Monza the rest will be decided on who has the deepest pockets.

Currently, there are 33 FIA Grade 1 approved circuits with more in the pipeline, so supply exceeds demand hence a bidding war is created.

Pre the pandemic Liberty had plans to increase hosting fees which in 2019 generated an income of $602.1 million making it F1’s second-largest source of revenue.

Individual deals are not disclosed and an average of $28.7 million does not give a fair representation of the gap that exists between the European circuits and for example the circuits based in the Middle East.

Liberty does consider the teams/sponsor’s commercial interests in a country as well as the TV audiences but in the final analysis, cash is king.

The argument for not racing in countries with poor human rights records which may have changed post-Ecclestone but didn’t is now finally redundant with the upcoming race in Saudi Arabia.

Instead F1 is now positioning itself as a force for change with Stefano Domenicali declaring,” Formula One has zero embarrassment at competing in Saudi Arabia. Formula one has a role to play in advancing our values in different places in the world. Sport can progress this in a faster way by shining a spotlight. We can be an enabler and are discussing these kind of things with the Saudi’s.”

Debate closed!

What about the FIA?

Well, the calendar falls within Liberty’s remit courtesy of the 113-year deal struck between Bernie Ecclestone and the late Max Mosley back in the day.

As long as the circuit’s administrative and safety standards are met then the FIA has no say in where F1 races.

So, it comes as no surprise Russian President Vladimir Putin is getting the chequebook out with the construction of the new Igora Drive venue in St Petersburg replacing Sochi in 2023.

It is believed the switch is due to Putin wanting to showcase and promote the region and no doubt the Haas team’s controversial Russian-themed livery helps especially as the doping ban on flags for the nation’s drivers begins.

In other developments, Domenicali continues to court the American market telling The Business Breakdowns podcast, “The United States of America represents one big challenge for us that we need to make sure we take in a good way.”

Enter one Rodger Penske who confirmed at the Goodwood festival he would, “love to welcome F1 back to the brickyard.”

The only problem is he wants to pay $20m and Liberty is looking for $30m so it will be a case of who blinks first.

Domenicali has been a busy man of late meeting with Sergio Perez’s father Antonio at the Hungarian GP.

According to Reforma, a Mexican newspaper, Antonio was heading up a consortium of Mexican businesspeople to discuss the possibility of a second grand prix in Mexico most likely in Cancun.

Qatar who has long held ambitions to host a race may also be exercising its influence behind the scenes.

Liberty is in talks with the Volkswagen Group aiming to get the company back into F1 either as an engine supplier or team owner.

Well as a sweetener Liberty may agree to a race in Qatar to satisfy Volkswagen’s second-largest shareholder QIA the sovereign wealth fund of Qatar!

Liberty has made a lot of noise about the advantages of some of the new circuits with Ross Brawn commenting of the Saudi circuit, “We no longer want mickey mouse circuits we don’t want those old classic street circuits with 90 degree turns we want fast sweeping circuits, circuits which are going to challenge the drivers – and they are going to love this one – and we want circuits where we can have wheel to wheel racing.”

What about the most important but all too often overlooked stakeholder – the fans?

In a survey carried out in 2020 on Formula 1’s Fan Voice website, only 10 per cent agreed with the notion that there should be more races. Of those surveyed 51 per cent think the current number of races is “about right” while 39 per cent feel there should be fewer races in a season.

The events fans are most looking forward to in 2021 were, the Netherlands, Britain, Italy, and Monaco.

Time will tell where F1 ends up racing, but it may not be in countries or at circuits that have the fans blessing.

In the Pit Lane – Lando Norris bucks the trend

Lando Norris continues his impressive season with a podium in Austria leaving his expensive teammate Daniel Ricciardo scratching his head.

Lando owes much of his success to his father’s deep pockets.

F1 has a trio of billionaire fathers backing their sons to various degrees of success namely Lawrence Stroll, Michael Latifi, and Dimitry Mazepin.

The debate on a father paying for a race seat goes along the lines of is it fair or right that the sons concerned get the drive regardless of talent compared to other drivers who get a drive and financial backing due to talent.

Well, Lando Norris may be bucking the trend.

Lando is a pay driver a fact not often publicized but his millionaire father has coughed up $44m to date to ensure Jnr’s racing career.

The good news for Norris and McLaren is the kid has the talent witnessed by multiple karting championships, a F3 championship, and now top ten finishes in F1.

His dad Adam Norris made his fortune as a founder of stockbroking firm Hargreaves Landsdown and is believed to be sitting on a $200m cash pile.

He first got the chequebook out at McLaren through his Horatio Investments fund back in 2017 to secure Lando’s role as test driver.

Lando was upgraded to reserve driver in 2018 before landing the coveted race seat in 2019 in a three-year deal costing Snr $12m a year.

The difference from say Latifi is McLaren knew Lando was potentially the real deal, so it was a win-win for the team.

This year it was announced Lando had signed a three-year deal but not before Norris Snr had got the chequebook out again this time paying $5m a year.

Norris Snr knew McLaren had the upper hand as they could provide a competitive car unlike other teams who would welcome his cash and so he went in for a penny in for $59m.

McLaren again scored a win-win with Norris agreeing to pay the cash-strapped team the three-year cost of $15m upfront.

Lando has always rather naively played down his father’s cash stating, “I don’t really like to talk about it, but compared to Lance Stroll my father is not nearly as wealthy.”

For the Norris family, it’s worth spending big bucks matching the talent to a competitive team and avoiding the scenario that is Williams or Haas.

At Williams, Nicholas Latifi brings a staggering $30m to the team in the shape of both his father’s money and sponsorship from Royal Bank of Canada and coffee giant Lavazza.

Williams also tap another billionaire, Sylvan Adams who pays $6-7m for his protégé Roy Nissany’s role as test driver.

It does beg the question if Russell goes to Mercedes will Adams write a bigger cheque to secure the race seat for Nissany in 2022?

At Haas, Mazepin Snr is backing Nikita by providing Gene Haas with $12m of sponsorship and a ‘contribution’ of $8m in what may be a ‘try before you buy’ deal.

For Mick Schumacher, the German communications company 1&1 pay $12m in sponsorship but with the caveat, Mick gets the drive.

The Schumacher family stump up another $6m.

The reality is Haas bank $18m and Mick gets to trail around at the back of the grid!

At the other end of the grid, we have Sir Lewis Hamilton resigning for Mercedes-AMG wearing his ‘loyalty’ t-shirt to match his ‘loyalty’ tattoo.

Lewis did not have a rich father, but Anthony Hamilton held down three jobs and spent every penny he had on his son’s racing career.

So, the F1 world was surprised at the very public falling out in 2010 when Lewis sacked Hamilton Snr as his manager.

Questions were asked of Lewis’s loyalty but as with most events F1-related it was about money.

Lewis lost the bulk of his newly earned millions when Anthony got on the wrong end of a land deal in the Caribbean Island of Grenada waving goodbye to $20m of his son’s money – ouch!

So, the debate will continue on pay drivers which also include drivers who bring sponsorship money to the table, but the crucial difference is for these drivers’ talent was paramount in securing the funding.

Nicholas Todt plays the long game.

The ‘who is going where’ silly season starts early with all sorts of speculation on F1’s game of musical chairs.

Heavily involved are the driver’s management teams and when it comes to driver management the power brokers that come to mind are the usual suspects of Toto Wolff and Helmet Marko. 

In fact, one of the most powerful individuals behind the scenes is the ambitious and well-connected Nicolas Todt.

Nicolas of course must live with being the son of former Ferrari team principal and current FIA president Jean Todt and all the resulting accusations of nepotism.

Nicolas Todt is a serious player managing the careers of the likes of Daniil Kvyat and Charles Leclerc through his All Road Management company which he founded in 2003.

His journey started when Felipe Massa asked him to become his manager and so began Todt’s rise to power.

Todt’s strategy was clear, find the drivers young before they are signed up and to this end, he bought into Birel ART a big player in the karting world.

Todt explains, “I look for the best talents and need to sign them young because it’s a competitive landscape, to say the least. If they’re already in F2 and winning races they’ll already be in discussions with F1 teams and it won’t make sense to sign with someone like me. So, I try to follow karting very closely because that’s the grassroots, where 99% of the best drivers start.”

Todt first met Charles Leclerc when he was a 13-year-old kart racer and told Corriere della Sera, “I talk to the best people in the industry and form an opinion. In karts they told me that Charles was special.”

Hoping history will repeat itself in 2018 he signed another 13-year-old, Italian driver, Gabriele Mini.

The signs are looking good with Mini now competing in the lower formulae and last year he took the first three pole positions and a race win in the Italian F4 Championship.

Todt like with Leclerc beforehand will have had to finance the youngster something that does not come cheap.

Toto Wolff has recently questioned the whole system saying, “What I think we can do is make sure that grassroots racing becomes more affordable, so kids that haven’t got any financial background can actually be successful in the junior formulas.

“All the big Formula 1 teams [need to be] able to identify those kids, rather than making it so expensive that a good go-karting season costs €250,000, an F4 season €500,000, and an F3 season €1 million.

“That is totally absurd, [and] needs to stop, because we want to have access. I think we need to give access to kids that are interested in go-karting, the opportunity to race for much more affordable budgets.”

For the numbers to add up for Todt he needs a backed driver to make it into F1 as Leclerc did and on an estimated 2021 salary of €10m Todt will pocket €2m.

You can imagine Todt disagreeing with Leclerc when he told il Giornale last week, “I wouldn’t leave Ferrari even if he was offered double the salary.”

Until the end of 2018 Todt was the co-owner of the motorsport team ART Grand Prix which he founded with current Sauber team principal Frederic Vasseur in 2004. 

Todt confirmed in 2019 that he would have a role in Mick Schumacher’s career telling Sky Sports, “My job for Mick is to advise the family to guide them and give them some advice what I think they could do.” Adding it was his job to protect him.

Todt acknowledged his father’s influence in an interview with Forbes Monaco back in 2019 he said, “Having a Dad like this for sure helped me to enter this industry because I was able to follow motorsport closely from a young age and develop a very good network.”

An understatement to say the least!

When it comes to Todt Snr it would be fair to say he is not without his critics, but it says a lot about him as a human being that he still regularly visits Michael Schumacher.

Last week Todt told Corriere della Sera, “I see Michael at least twice a month. I never leave him alone. Corinna, the family: we’ve had so many experiences together. The beauty of what we have experienced is part of us and it goes on.”

A true friend can be measured in not only the good times but more importantly the bad times.

The last word goes to Nicholas who once said, “You can be a great manager but if you aren’t working with the right driver you will never make it. You can’t turn a donkey into a racehorse!”

F1 cars on the grid

In the Pit Lane – Amazon, Apple, and Disney have competition.

The recently published Nielsen Sports’ report found interest in F1 was driven by younger audiences galvanised by F1’s social media, Netflix’s drive to survive, and esports.

The research found 77% of the growth came from the 16 to 35 age group, which is equivalent to 46% of F1’s fandom in 2021.

Nielson Sports predict a billion people will be interested in F1 by April 2022.

Stefano Domenicali told investors back in February that, “We saw only a marginal reduction in TV audiences, caused by multiple reasons but clearly driven by a shortened and limited geographical calendar compared to 2019, but something every major sport has experienced in 2020. We are proud of what we delivered in 2020 and know we have an incredibly strong fan base and audience platform to grow in the coming years.”

So as Liberty Media continues to pursue the promised land of digital streaming the giants of Amazon, Apple, and Disney may have a serious competitor in DAZN the global sports subscription service and media company.

DAZN has just launched a 24/7 dedicated Spanish language channel DAZN F1 in Spain after reaching an agreement with Telefonica’s Moviestar+ to broadcast races until the start of 2024.

The channel will have veteran Spanish F1 commentator Antonio Lobato and ex-F1 driver, Pedro de la Rosa, heading up the coverage.

DAZN is already covering most sports and is involved in motorsport covering Indy car, FormulaE, ExtremeE, the Dakar Rally, the World Endurance, and the World Touring car series.

DAZN it is believed have their sights on 20 Spanish speaking countries and the next step will include a Portuguese F1 channel to cover 11 Portuguese speaking countries.

In February DAZN announced its sponsorship of the Scuderia AlphaTauri team for the 2021 season and signed Yuki Tsunoda as a brand ambassador in Japan

DAZN means business and in March 2020 they announced the expansion into 200 countries worldwide with its boxing coverage spearheading the growth.

When Covid-19 struck DAZN suffered the loss of content and an exodus of subscribers from its service which had ironically marketed its cancel anytime policy as a selling point to fans.

The service did launch in December 2020 with an aggressive starting price point of £1.99 for its boxing which will have had the likes of Sky Sports worried.

In April, The Athletic website reported boxing promoter Eddie Hearn had struck a record-breaking nine-figure deal with DAZN, ending an exclusive Sky Sports partnership.

DAZN is ambitious and is not hanging around with the company securing the rights to show seven exclusive Italian Serie A football matches per week in a deal worth $987m per season.

Even with these sums of money involved DAZN co-chief executive James Rushton told SportBusiness that DAZN would make money on the deal stating, “DAZN is a high-growth tech business but the most important thing for me is doing deals on solid and sensible unit economics. I’m not interested in vanity projects or making big splashes in the market that don’t make sense.

“We will make money on Serie A in Italy. No doubt about it.”

Rushton claims the service will be a ‘fans-first model’ by remaining ‘accessible’’ and ‘value priced’.

Not words the F1 fan who watches their sport on free-to-air TV with neither the inclination nor money to watch behind a paywall will want to hear.

Rushton believes the move away from TV is inevitable telling Forbes, “There is a seminal change happening in the balance of power between linear TV and [Over the Top (OTT) providers] where rightsholders recognize the future of their sport is with platforms like DAZN,” he says. “The tipping point has happened.”

DAZN is looking to that new younger audience Liberty is cultivating hoping to attract them with flexible contracts, cheaper subscriptions, and the ability to watch on the device of their choice.

DAZN like the other players in the market need to invest upfront often incurring losses witnessed by a 76% increase in subscribers pre the pandemic but a resulting $1.4 billion loss.

DAZN may not have the financial firepower of the likes of Amazon, Disney, and Apple but it does have deep pockets as it is owned by the multinational industrial group Access Industries best known for its ownership of the Warner Music Group.

As is often the case in F1 a billionaire is involved, step forward Ukraine born but London based Sir Leonard Blavatnik worth $32bn making him Britain richest man ahead of INEOS boss and Mercedes team shareholder Sir James Ratcliffe at $17bn.

Blavatnick gained control of the DAZN group back in 2014 when Access Industries increased its stake in the company from 42.5% to 77%.

Blavatnick like fellow billionaire Dmitry Mazepin made his first fortune during the ‘privatisation’ of Russian state assets selling his stake in Russian oil company TNK-BP for $7 billion back in 2013.

Blavatnick as the 46th richest man on the planet has all the billionaire playthings owning the obligatory $80m 242 ft superyacht Odessa 11 and no less than 4 private jets including a $150m Boeing 767.

He is also a philanthropist having pledged over $700m mostly to universities, including Oxford, Stanford, and Harvard.

Time will tell who will win the battle for F1’s coverage but no doubt as always the case in F1, cash will be king.

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 ???

Liberty Media offices

Optimism Required during 2021 season

The 2021 season gets underway with a cracker but with it, all the uncertainty off the track in the Covid-19 world remains.

Liberty Media may well have had a rebrand introducing a new logo and F1 theme written by Hollywood composer Bryan Tyler, but it cannot gloss over the hard financial reality.

In 2020, annual revenues fell 44 percent year on year to $1.1billion, resulting in an operating loss of $386 million. The group took big hits on its other businesses with the Atlanta Braves baseball team and concert promoter Live Nation posting losses.

Not helping is Liberty’s $3.7 billion of debt sitting on its balance sheet.

As a third wave of Covid-19 spreads throughout Europe the upcoming Imola race must be a concern and the news that international spectators will not be allowed to attend the Olympic Games held this summer in Japan must have left Liberty worried.

Putting a brave face on the development Liberty president Greg Maffei told Wall Street analysts, “I think one of the things about being part of the Liberty group is we have the ability to hopefully look ahead and be thoughtful with the benefit of our operating companies.”

The problem is Liberty is banking literally on spectators returning to races and race promoter fees returning to ‘normal’ not to mention a full race calendar.

Backtracking Maffei claimed Liberty were not in the crystal ball business and commented, “We’re not here to make a forecast, in part because some of this is still up in the air, floating around. It’ll definitely be impacted, the amounts to which we’ll see.”

So, Liberty may need to raise cash.

CEO Stefano Domenicali told Servus TV, “There is great interest in Formula 1 from the financial market. Many investors are knocking on our door. That’s a good sign.”

Liberty may turn to the world’s sovereign wealth funds like it did last April when Saudi Arabia’s sovereign wealth fund took a 5.7% stake in Liberty’s Live Nation business.

The world sports empires which have a combined value in excess of $100 billion are attractive to the wealth funds no more so than Liberty which holds the No.1 position with a valuation of $13 billion (this includes their stakes in Drone Racing League and Ball Arena).

The top 10 sovereign wealth funds globally include China which runs four separate funds, Singapore, Kuwait, Qatar, Saudi Arabia, and Abu Dhabi.

It is no coincidence these wealth funds host races with Kuwait and Qatar waiting in the wings and let us not forget the wealth funds out of the top 10, Bahrain and the United Arab Emirates who have interests in F1.

The wealth funds have trillions of dollars looking for a home so when China and the Middle Eastern countries face human rights criticism but have the cash you can see Liberty’s dilemma.

Bucking the trend is the world’s largest sovereign wealth fund although it is actually a government pension fund. Step forward Norway with its 1.3 trillion-dollar fund which owns approximately 1.5% of all equities in the world.

Their portfolio includes $30 billion invested in sports-related companies.

The Norwegian’s originally invested in F1 when CVC capital partners owned the business paying out $300 million for a 4% stake back in 2012.

It was not a harmonious relationship and the Norwegian’s were incensed when the then CEO Bernie Ecclestone faced a trial for bribery.

Yngve Slyngstad Chief Executive of the fund launched an attack on Ecclestone telling Norwegian newspaper Dagens Naeringsliv, he wished Mr Ecclestone had been “formally suspended” from his role as executive ahead of his forthcoming trial for bribery.

“We are of course not happy with the situation that has arisen. What’s especially unfortunate are the corruption charges.”

The Norwegians remained invested with F1 but now seem to have had a change of heart and last month reduced their holdings by 20% now holding 1.27% of F1 worth about £155m.

So as the world grapples with the ongoing pandemic F1 may need to access the resources of the sovereign wealth funds aligning them even closer with some questionable regimes. On a footnote, Liberty’s owner John Malone may decide to be an individual wealth fund having seen his fortune rise during 2020 from $5.8 billion to $8.1billion!