Daily News and Comment: Saturday 27th April 2013

Ron Dennis responds
Predictably, Ron Dennis has clarified the position at McLaren. A little over three years ago I signed a five-year contract with the company against the background that both then and now I am the joint second largest shareholder in the group with 25% – and I own 15% of automotive.

untitledMy position for the first three years of my contract was executive chairman. At my request – I drafted the contract and agreed terms – my role went from executive chairman to non-executive chairman in January 2013.

The difference in the job is I don’t have accountability for the actions of the management. I am the chairman of both of the boards – it gives me formal obligations – and a significant shareholding.

There has absolutely been no suggestion of my role in the company changing beyond the change of roles that took place as per my contract in January.”

Asked whether he would see out his contract he responded, “Categorically, that is exactly what is going to happen – unless I request for it to be changed, and I don’t intend to. I couldn’t work any harder than I am on a variety of things.”

Investment funds which take equity in a business nearly always insist on key individuals not leaving the business for a number of years. Dennis’ executive role for the past three years would have been non-negotiable to protect the Bahraini investment and prevent their key man from cashing in his millions and disappearing off to tend his garden.

The volume of supercars the McLaren business plan projected to sell each year was fairly ambitious. Yet to attract the investment to develop the MTC facility in its entirety it was clearly necessary to make the returns attractive.

Business plans like ‘how to create a volume supercar brand’ and ‘how to build a Formula 1 circuit miles from anywhere’ – and make money – are fraught with danger. The assumptions these plans are founded upon have no existing or reliable similar data on which to sit the financial projections.

It may be the Bahraini investors are feeling ‘burned’ and now realise their money is not going to return to them any time soon- if ever. Dennis does not deny there have been disagreements, merely states they are rare.

untitled

$400m and this is what you built?

It only takes one disagreement for the relationship to be broken. e.g. Investor: “Are we going to get our money back“? Company Management: “Not this century“.

In life there are times when people enter spheres of existence they know little about and when the stakes are big money, more often than not they lose because they’re playing a game with those who write the rules.

Middle Eastern sovereign fund Aarber lost hundreds of millions (not on Lauda’s cap) playing poker with the 9% they acquired of Daimler Benz. Dubai aspired to be ‘destination fun’ for the planet. They built scores of skyscrapers both commercial and residential that are empty – the country almost went bankrupt until Abu Dhabi bought them out.  Bahrain buy an F1 associated company with a business plan for a venture never remotely achieved before.

This may be unfair, even the western based corporate craps players (equity investment funds) lose on 2 of every 3 deals. Yet when it happens and happens big an old saying my wise old pappy used to repeat spring to mind. ‘A fool and his money are easily parted’.

Racing resumes in Duxford
9 months after Maria de Villota lost an eye in a crash at the Imperial War Museum Facility, testing resumed yesterday by an ‘unnamed’ team.

untitledEsther Blaine of the IWM  commented, “We have this wonderful straight line runway and it’s that they’ll be testing on. It’s really about getting the car as perfect as it can be for the next race test.”

Under the rules of straight line testing, up to 180 runs a day can be completed over the 10 hours the facility is made available.

The Health and Safety Executive said it was still investigating the Marussia crash.

KERS in a road car
I prefer to argue the necessary existence of F1 from a historic perspective and ‘because it just be done’. Yet for some it is important to find reasons that justify the existence of F1.

One of those reasons that allegedly entices manufacturers into the sport is that innovation from F1 can make its way onto road cars that we all drive.

KERS in its present form – as a short burst of power – doesn’t appear to be the most cost effective addition to a road car and manufacturers are hardly lining up to fit it to their fleets.

When KERS was first developed, Mercedes F1 engine division demonstrated KERS to a group of the parent company’s road car engineers. Their spokesman commented later, “I don’t believe there is much in common between KERS and our goals on the road car side. It is very interesting technology, but I don’t believe there is a future for it in road car applications.”

However, Renault and Renault F1 have collaborated on the company’s road going offering called the Twizzy and fitted a KERS syle system.

The Twizy F1 also boasts a body kit that has vague similarities to its F1 big brother coming complete with front and rear wings, a rear diffuser, and a set of slicks.

“We always said we wanted to create F1-derived technology that was road relevant,” said Jean-Michel Jalinier, RenaultSport F1 president. “Hopefully, this car will make a few people smile while also making a serious point… I’m not sure we’ll be seeing many of these cars on our roads, but it does show that the same principles we see on the race track can be filtered down to the road car range – this is just the evil elder brother!”

The Twizy KERS raises the car’s power from 17 horsepower to 97, for just 14 seconds. After harvesting the energy from braking it is stored and then activiated by a paddle on the car’s steering wheel, which is taken directly from the Formula Renault 3.5 racing machines.

Marko marks Niki’s card in Lauda watch
There was a story recently suggesting Red Bull’s billionaire owner was incandescent with rage following the ‘multi21’ fiasco and threatened to shut down their F1 programme.

untitledMarko has been ferriting away like a good Pinscher to find the truth for the past month. He now brings us an explanation and the smoking gun is pointing in Lauda’s direction.

He told German media that Niki called Dieter Mateshcitz following the race and they were happily chatting away about both the team orders and the rapidly degrading 2013 tyres.

Marko now believes Niki is suffering from the same issues as Bernie – dementia and memory loss. Helmut argues Lauda mistook Dieter’s apparent uncontrollable anger at the Pirelli tyre wear to be directed at Sebastian and Christian and the lack of order and control within the team.

This said, TJ13 reported Marko walking down the pit lane on his way down to the podium ceremony as being the one who stated that this was unacceptable and the team’s orders should be obeyed – even as far as saying the team would have to ‘have a word’ with the drivers.

Marko and Lauda are just warming up in their duel – we have another 15 race weekends to go yet.

Christian Aid Week
An important part of Christians’s rehabilitation is to recall the moments in life when he was truly recognised as the master of his domain. Times when he was accepted as the undisputed numero uno in his field will be important for Christian to remember as he rebuilds his shattered confidence in his authority.

Today, what must be the event better then all others says ‘You’ve made it lad‘ for any kid dragged up on the streets of one of England’s Spa towns. Christian was invited and embraced by – some would argue is the most – erudite and historic institutes of English academia.

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16 responses to “Daily News and Comment: Saturday 27th April 2013

  1. Me thinks Dennis had visions of being the English Enzo Ferrari and it sure looks like the Bahraini’s let their motions get the better of them. While I’m no expert – the numbers just don’t add up. Total Ferrari production, which is spread over 4 cars, is around 7000. Annual Porsche supercar production of the GT2 RS was 500. Lamborghini sell 2000 cars a year. Yet McLaren believed that after just 5 years they could be selling 3500 – 5000 a year. While Dennis may have believed McLaren Cars was viable, the Bahraini’s should have taken some Latin lessons to understand what caveat emptor means.

    • Interesting interview with Montezemmolo in the May Motor Sport magazine in which he somewhat mischievously claims that Ferrari have a problem deciding which of their 700 favoured customers will be able to buy one of the 499 LaFerraris and states that the McLaren P1 is not a 100 percent new car, of which he goes on to claim, only half of the 375 production run has sold!

      • No less mischievous than Gordan Murray stating that “no-one at Mclaren welds that badly” when asked about the F1 vs the F40.
        There has been exchanges between Dennis vs Ferrari throughout the years and ultimately what goes around comes around.

    • Some history lessons may have helped him too.
      Dennis arrogantly believed that the F1 back in the 90’s would sell out and humble Ferrari. If what I have read is correct, they struggled to sell 100 cars, and that at a loss.
      The problem is, Mclaren is internationally known as an F1 race team. They have no real recognised history in America, Ferrari and Porsche’s main market.
      Ferrari and Porsche are not established in America because of Formula One but because of Le Mans.
      Yes they have been producing road cars for generations, but any motorsport success recognised over there is Le Mans and sportscar etc.

      Lamborghini has been established for 40 odd years and recognised because of that, but they have no motorsport heritage whatsoever. It may well take Mclaren a decade or two to get up to that level in the USA.

      It’s not just about fastest car in the world either. Bugatti have a rich history from a different era, yet they struggled to sell the Veryon. Reading a magazine some months ago, the used value of a Veryon has gone down, whereas the Ferrari Enzo has practically doubled. I think they call it provenance.
      For mega priced classics, you would list Testarossa, GTO, 250 LM, 275GTB, Californias, and moving away from them, countless Porsche’s and Mercedes from the 50’s and 60’s. All with sports-car racing history. Not one F1 car is ever mentioned as collectible classics.

        • Completely agree, I have huge respect for Ron Dennis, but some of his ways are eccentric to put it mildly.
          Have you ever heard of his having his gravel on his drive washed once a month?

  2. “KERS in its present form – as a short burst of power – doesn’t appear to be the most cost effective addition to a road car and manufacturers are hardly lining up to fit it to their fleets.”

    LaFerrari uses KERS. Though with an 800HP engine the extra 120 from the KERS does seem like overkill.

  3. Personally I think KERS in these small cars. I have been unfortunate enough to have driven small engined rental cars and overtaking other cars on the rd is interesting to say the least. A push to pass would be a great thing in my opinion and also save fuel… no need to drop a gear and rev the living daylight out of the engine 🙂

  4. Correct me if I’m wrong but aren’t all the ‘British” F1 teams except Williams all foreign owed?

    • True of many British founded organisations in business in general. They remain primarily staffed by British employees.

      It may be fair to suggest whilst Red Bull plays the Austrian anthem when it wins a race, were it to be located in Austria many of it’s personnel may choose to work for other English based teams and regardless of cash they may not be the force they are at present..

      The topic of a fool and his money being easily parted has been highlighted in recent F1 rumours and maybe getting someone else to ‘own’ – indeed ‘pay for’ – highly speculative operations is in fact a smart move.

  5. I was pleasantly surprised with Christian’s performance today…
    But who was the bored-looking moron wandering around with the microphone, always in the way of the cameras, and at one point stood right in front of Christian when he was speaking…?

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