Daily News and Comment: Friday 26th April 2013

This page will be updated throughout the day

FIA trusts telemetry provider

There has been remarkably little information on this matter. Then the FIA issued a press release yesterday which most news outlets have published verbatim the same story.

untitledTo cut a long story short, the problems with the race control systems are not caused by globe trotting giant anitpodean rodents as first suspected.

Neither is McLaren’s ECU the problem – though the reason the new supplier Riedel has been given such grace is because both McLaren and the teams would have extensive re-programming and wiring to do of the cars should they have reverted to the previous supplier .

This year we have yet to see a race contested where the cockpit warning light system has been fully functional, this means in the 21st century the drivers of the world’s leading multi-hundred million prototype motor vehicles are having to revert to the use of semaphore – to rely on the flags around the track.

Further, there have been DRS infringements which have gone unpunished by the stewards because the system that usually prevents early deployment of the rear flap does not work.

untitledThe have said that the progress made including the Bahrain weekend means they are “satisfied that the marshalling lights and GPS aspects of the electronic system had improved enough to be up to standard. And although the telemetry system, which controls the cockpit warning lights, was not good enough to be used – it was better than it had been at the first three grands prix.”

Ron Dennis demoted?

There appears to be story doing the rounds this morning that Ron Dennis has been demoted. It is from a particular source which distributed their news across a number of web sites verbatim. The basis for the story is that the road car of McLaren is losing vast fortunes of cash and the Bahraini masters, Mumtalakat Holdings are most displeased.

The writer is suggesting that Dennis has been ‘demoted’ and stripped of his voting rights on the McLaren Group Board and is now merely a non-executive director and that ‘due to his status as a company owner’. This would mean he no longer has any operational responsibility or control in the company.

The article cites for support AMuS who recently wrote, “Instead of the planned 3,500 units, only half of that are sold. The Bahrainis are seeing their money disappear, never to return,” they add that estimated losses are in the hundreds of millions.

The level and quality of content in this report is weak and inconclusive. So let’s investigate some of it’s claims.

untitledAnyone with a reasonable understanding of UK company legislation and how different types of shareholdings can be structured allowing shareholders to have either voting or non-voting shares would raise an eyebrow at this article.

I do have this understanding having been most unfortunate to attempt a transaction with a certain ‘venture capital’ company recently in the news in connection with F1. They pursued our enterprise with promises of wealth beyond belief and possibly even immortality. Yet their offer to acquire a shareholding and re-structure the existing shares was derisory and this all came together with a most punitive structure and interest/fees/penalities to the capital injection they benevolently deigned to consider.

Being ’angry’ with Ron or losing money is not an acceptable basis in law for re-structuring the shares within an organistation from voting to non-voting. This would require the consent of the shareholder with voting rights. Further, the article states that the only reason Ron Dennis is still on the board is because he owns shares – is a ‘company owner’. This is rubbish as owning shares does not necessarily convey the rights to an individual to be even a non-executive director.

I would expect McLaren will be rebuffing these allegations should they gain traction in the more mainstream media.

Further, the article refers to ‘the hundreds of millions’ of losses. This is not operating losses, it is referring the capital investment in the infrastructure required to build road cars. That is not ‘lost’ at all as it is still there. Neither are McLaren making ‘hundreds of millions’ in operating losses.

Selling half of the targeted number of cars will merely mean the debt to build the infrastructure is not being repaid as envisioned, which is hardly surprising given the biggest world recession in living memory popped up since the planned automotive motor division was conceived.

There may be some grains of truth in this report, however the substantive perception it purveys is nonsense. What the story does interesting create is consideration to the question, ‘why now’?

untitledBahrain is a ‘democratic monarchy’. The Al-Khalifa family control the ‘democratic’ government in Bahrain with all the top jobs held by Al-Khalifa’s and their relations. King, Crown Prince, Prime Minister, deputy Prime Minister (4 of), Defence, Foreign Affairs, Exchequer/Taxes, Internal Affairs (read KGB style operations)…. All in all some 15 cabinet positions out of the 30 or so that exist in the Bahraini ‘government’ are occupied by the Al-Khalifa family and others by cousins et al.

Mumtalakat Holdings describe themselves as follows. “As Bahrain’s investment arm for the Kingdom’s non-oil and gas strategic assets, Mumtalakat’s vision is to grow the wealth of the country”.They take the revenue the government receives from Oil and Gas and invest it elsewhere, Formula 1 is just one example of the kind of playboy assets they hold.

This fund is in effect the Al-Khalifa family multi-billion dollar capital investment fund.

It is more than of passing interest that this alleged ‘anger’ from the Al-Khalifa’s toward Ron Dennis becomes public knowledge just days after the Bahrain GP.

Day 4: Christian Aid week

Here at TJ13, we wanted to pay tribute to Christin’s racing legacy during this difficult time of re-adjustment since his ‘demotion’ from the role of Red Bull ‘team boss’. Today we look at happy times when 3 amigos including Christian and his 2 F1 mentors had fun in Monaco.

Here are the other articles for ‘Christian Aid’ week if you missed them.

Day 1

Day 2

Day 3

27 responses to “Daily News and Comment: Friday 26th April 2013

  1. “Selling half of the targeted number of cars”

    “given the biggest world recession in living memory popped up since the planned automotive motor division was conceived.”

    It hasn’t hurt Ferrari who in 2012 sold 7,318 cars, up 4.5% from 2011. I seriously doubt that McLaren will ever be able to compete with Ferrari and Porsche as a “large” volume manufacturers of supercars. Lamborghini only survives because it is part of Audi. The supercar market is probably too small to justify McLaren’s existence. The F1 was a success because they built a limited number of cars to showcase their technology but it was never meant to turn a profit. I think the roadcar division has taken McLaren’s eye off what they do really well – which is design, manufacture and race F1 cars.

      • The McLaren road car concept wasn’t started during the current recession. Compared to a Ferrari it lacks passion and seems sterile, which probably is a reflection of Dennis.

    • Not sure I agree with you. It takes a bit of time to establish yourself and doing it in the midst of a recession is twice as hard. Pagani started in 1988 and Koenigsegg in 1993 and they both still go strongly. I don’t ever expect Macca to sell teh numbers Ferrari does, but it’s a good idea to have a car division the size they do, not too big like Lotus did, not too small like Ascari.

  2. “Pagani started in 1988 and Koenigsegg in 1993 and they both still go strongly.”

    And each produce about a dozen cars a year. I remain unconvinced there is a market for another 3000 – 5000 supercars a year.

    • You forget the emerging markets and the visibility F1 has in Asia. Lambo’s sales in China increased 30% within a year and they’re not even in F1.

      • “Lambo’s sales in China increased 30% within a year”

        Which sounds impressive until you realize they sell 300 cars a year there.

    • That’s a good point, but then you have to take into account how long Porsche and Ferrari have been building sports and super cars. The length of time Pagani and Koenigsegg have been in business is nothing more than a pin prick compared to the might of Stuttgart and Maranello.

      When you take into account the accumulative budgets you would have to say Horacio is doing a fantastic job at Pagani. Ferrari are still owned by the FIAT Group and of course Porsche is now part of the VW monopoly in Germany – budgets that only Koenigsegg and Pagani could dream of.

      Give it another 10 years and with suitable investors I think both could join Ferrari and Porsche as 3000-5000 cars a year. You also have to take into account how many models Ferrari produce and what span of price ranges they cover.

      Pagani only make 1 model, the Huayra and each one is unique to it’s owner, the craftsmanship even exceeds Ferrari and Porsche – that is why the pricing structure is so high and why the Pagani owners club is considered a “select” club – give it time and who know’s how far they can both blossom.

      • “both could join Ferrari and Porsche as 3000-5000 cars a year.”

        And when you add in McLaren there will be 10,000 – 15,000 more supercars on the market. I seriously doubt there is a market for anywhere near that number.

        • Could it be the business plan needed ambitious numbers to entice the ‘hundreds of millions’ of capital to develop the MTC complex.

          Due diligence of ‘reasonable’ projections is the investor’s responsibility. Yet when the opportunity is most glamorous, investor’s judgement often gets clouded.

    • As they say up North – ‘trouble at t’mill”. Investors and management often go to war when the money men are not getting what they think they should.

          • Cav – Is this a source of great amusement to you by any chance?

            Things may have been very different at The Scuderia had Bernie managed to buy the team as he claimed he attempted.

            The whimsical gods of F1 fate at times deal hands of fortune no mortal can fathom.

    • If you look at http://www.f1times.co.uk/news/display/07524
      “There are reports that the FIA and the teams are discussing a new way of penalising drivers in 2014 and beyond, when the cars will be powered by 1.6 litre V6 turbo-charged engines…….It’s believed the FIA and the teams have discussed the idea of reducing the power produced by the turbo charger for a set amount of time as an additional penalty for a minor infringement……With the new power units for 2014, race control has the ability to monitor the turbo-boost, and it would only require a small change to the electronic control unit (ECU) software to allow them to regulate it too.”
      Is this really seriously being considered? Will there be an electronics “counter-espionage ” race between the teams in order to turn down opponents turbo boost? Oh my!!! Think of all the conspiracy theories that will abound. 🙂

        • This seems a bit nuts to me – from a safety point of view. If the intention is to provide the same sort of penalty as a drive-through (which is, what, 15 seconds or so…?) then I’m assuming the FIA are going to need to slow the offending car down at least 5 seconds a lap – if a penalty lasts too many laps then it’s going to get a bit silly, no? Do we want to be racing with some cars 5 (or even 3) seconds a lap slower – is that safe? will they have to run hazard lights too…?

          Or have I got my sums totally wrong? 😉

          • It would be an interesting test of driver skill. Remember Schumi all those years back (Barcelona?) stuck in 5th for most of the race but still very nearly on the pace. Some drivers would be able to adapt to the handicap better than others.

            Of course, I’d suspect some drivers are better at taking drive-through penalties, the same as some do better pitstops as they can hit good in and out laps.

  3. “Things may have been very different at The Scuderia had Bernie managed to buy the team as he claimed he attempted.”

    It was never for sale and Bernie knows that. More BS from him.

    • How can you infer such a thing???? (shock)

      I wonder if anyone has ever been as mistrusted as Ecclestone. It appears that at least every other statement/comment he makes is blatantly unbelievable never mind the rest..

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