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Editor’s note (12:05)
2014F1 calendar: part 2 or 156 (12:07)
Vijay: Pot and Kettle (13:18)
The F1 debt farce (16:06)
Lewis on the up(pers) (19:15)
Hi, I’m Andrew Huntley-Jacobs, I have the grandiose title of TJ13 chief editor… which entails being the coffee maker and general literary dogsbody behind much of the content which the TJ13 site produces. Seriously, I news spot, receive all the press releases and help TJ by drafting up the news stories for him to craft into the excellent pieces he produces. The connections he makes and how he develops the immediate story never ceases to amaze me – often in a few minutes.
The Judge is pretty busy at present, but is maintaining contact with us all daily from a variety of mobile devices from a variety of locations around the world. We will be getting a Judges Chambers post later in the week where he’ll let us know how August will be managed. Early indications are that from next week, daily news will be sporadic at best and we know many of you come to the site via a favourites button in your browser.
If you register with either the RSS feed or the site email, you will be able to see instantly new material is published, and not keep dropping by and being disappointed when nothing has been added. During August we have some pre-planned historic, social and technical articles we will be publishing which of course are not particularly time or breaking news sensitive.
The Judge is keen to continue to develop our community and a huge part of this has been the successful development of a number of writers. Some of whom have never written anything for public consumption before. We have started people writing small 150-200 word articles for the ‘On this day’ (OTD) feature. We provide the daily topics and the year they are from and help with everything from writing style to formatting.
Writing about F1 certainly makes you feel closer to the sport, as when The Judge has been away I have experienced this with the daily news. It may be you can only write an OTD feature once a week or on an occasional ad-hoc basis, but if you are interested please contact email@example.com.
Yesterday was an incredible day – and the daily news post has to date seen over 100 comments on the site, and this is another part vital to the development of our community. TJ tells me he had tweets from new people who have never seen us before and they were recommending us specifically to their friends because they could see the debate around the news and features is quite excellent.
The comments define an F1 site. There are sites out their like the F1Blog which have been going for years, and as a writer I greatly respect the work they do, however, their posts attract little debate and it is this in particular which adds to all our lives. Everyone has something to offer – even if it’s just thanking someone who has made a comment giving us new information – a quick ‘thank you for that’.
You don’t have to be an expert to have an opinion and TJ has from day one asked we all respect each other and so even if someone says something which appears from left field – there will be no brutal criticism or belittling of the new commentator.
I have been following Formula 1 for many years, and since becoming involved with TJ13 my knowledge and understanding has increased exponentially, from the news, features, history pieces along with TJ’s and everybody’s comments and the debates and analysis.
One last thing, if you are part of other sites where you comment, please when appropriate, put links in the comments to relevant articles or news here. The first 1,000 regular readers came to TJ13 mostly from the BBC and James Alllen. After the events of yesterday, I suspect the news will be a little more sparse so we can all catch our breath.
Good to speak with you all and keep up the great contributions which is what makes TJ13, IMHO, the best Formula 1 site around.
2014 F1 calendar: part 2 of 156
I did predict yesterday this would become a tortuous matter and even suggested – watch out Korea. Well here we go again. AMuS is reporting that Korea will disappear from the calendar for 2014. Apparently the organiser’s have run out of money and the regional state government is refusing to cover the losses after this year.
AFP news agency confirms this stating that the organiser “has lost money since it first hosted formula one in 2010, and local authorities are unwilling to cover losses”. I don’t think Mr. E will be giving them a freebie a la Germany 2013.
Further TJ13 did a number of pieces and we even had video footage shot from the site in New Jersey some months ago, One of the best during that week or so was from Daily News 2nd May (You can use the search bar on the right hand side of the page to perform keyword[s] searches).
It appears the scepticism TJ expressed was without good reason. No state funding and nobody willing to pay Bernie. There were brief rumours for a while that Ecclestone himself would fund the race – but why do that? Not only is he losing the hosting fee, but also it then becomes and additional cost.
‘Niki know all’ appears to have some inside information as he is on record telling ORF agency that New Jersey “didn’t happen this year because of a lack of money”, adding, “As far as I know, it’s already gone from the  calendar”.
Here’s an idea – charge poor little Monaco a fee instead of giving it them for nothing – and use the money to fund a new F1 street circuit race each year to see if it’s viable.
So, today for 2014 we have India and Korea out, Sochi in, maybe Austria in too if anyone is allowed to go watch in the beautiful alpine setting – which of course must be protected from people going there to see it an ruining it, New Jersey is still a non-starter and there is a scuba diving community who have been smoking way to much of the local herbs saying,
Dive bum 1: “F1… come to Thailand… man…. or men…. “
Dive bum 2: “Hey man…. that’s sexists… saying man. You should be sayin – people”
Davie Bum 1: “Yeah man yous right….. F1 people…. COME…. ENJOY….yeah?”
Dive bum 2: “You too stoned to dive still? I hear there’s giant manta ray circling off the point”.
Vijay: Pot and kettle
Grandpappy Judge as you longer term readers will know, fed me on a diet of life advice when I was young and much of it was from pithy English sayings which contain kernels of truth. I remember when once complaining about something my sibbling had done to wrong me; a slow smile crept across his face and he said, “That’s appears to be the kettle calling the pot black”.
Clearly in his mind my protest was rather hypocrytical, as he deemed this action something I had done regularly to him.
Well folks, today we have a certain Indian businessman appears has been sent in to bat on behalf of the teams with the Indian Authorities. The matter: Tax.
Mallya tells ESPN, “Yes there is a problem with India’s tax authorities, but India’s tax authorities tend to be a very difficult bunch. They even launched a humongous tax claim on Vodafone and Nokia and other multi-national companies. This sort of standoff on taxes is nothing unusual.
Their logic is that there are 19 races and one race is India, therefore 1/19th of all revenue generated in Formula One is subject to Indian tax. From a narrow-minded, Indian tax man’s point of thinking maybe that is justifiable, but we need to sit down with them and engage with them and say, ‘Listen, this is not the only country that’s hosting an F1 race. There are other countries that have been hosting F1 races for decades and they don’t make the same demands. So how can you?’
“The Indian government on one side say they want India to be modern, vibrant country and want the global society and global industry and global sport to take notice of India and its potential. But the irrational behaviour by the taxman doesn’t support such a mission. So it’s a question of sitting around the table and hammering it out with them.”
The alliances and allegiances in F1 never cease to amaze me. Mallya is currently facing legal proceedings instigated by the Indian Tax authorities, for tax avoidance of $10’s of millions. Here’s an extract from “The Times of India” earlier this year. TJ13 did cover the matter today is still ongoing.
BANGALORE: In fresh trouble for the head of crisis-ridden Kingfisher Airlines, Vijay Mallya, the special court for economic offences here has issued summons to him on an income tax department criminal case for not remitting to government the tax deducted at source from salaries of its employees.
The court’s action came after it took cognizance of the offence under sections 276B and 278B of the I-T Act, 1962, for not remitting Rs 74.94 crore deducted as TDS in 2009-10 fiscal and Rs 23.70 crore imposed as interest for not meeting the deadline stipulated for payment.
Section 276B entails rigorous imprisonment for a minimum of three months and a maximum of seven years with fine.
The development spells fresh trouble for Mallya, whose airline is tottering with a net loss of Rs 755.17 crore for the third quarter ended December 31, 2012, a period when it did not operate a single flight.
The I-T officials on Tuesday had filed the criminal complaint against the airline and Mallya for failure to remit TDS for the fiscal 2009-10.
The I-T department had also complained that Kingfisher owed the government Rs 401 crore as TDS amount, deducted from salaries of its employees and from payments made to others in the financial years 2008-2012.
TJ13 Note: 1 crore is $168,000 so 401 crore is $68.18m. Kingfisher debts to around 20 banks were calculated at 8,000 crore – $1.34bn, some of which is secured against Mallya’s personal assets which include a share in United Spirit’s. However, the banks also have debentures against United Spirits shares for the debt.
Vijay criticising the Indian Government? Pot calling the kettle black I submit.
Sauber: Defending the indefensible
It appears we have moved from the high drama of the news yesterday to a day when it is one of farce. This particular one is rather sad. Monisha Kaltenborn is reminding us of the Sauber heritage and legacy, of how they have been a team uncovering young F1 talented drivers. In recent times this has included Michael Schumacher, Kimi, Massa and young Mexican, Sergio Perez.
There has been a lot of criticism in the Swiss and Continental media of the plan Sauber has which sees them employing young Russina Sirotkin as a race driver in 2014, after daddy promised oodles of moula to save the Swiss F1 team.
Kaltenborn couches the introduction of the young Russian as follows, “We are aware of our responsibility, because we’ve been in similar situations, even if the drivers were perhaps not so young. We have shown in the past that we take this responsibility very seriously and want to do our best to prepare it.”
What on earth does this mean? Are you telling us Monisha that Sauber have taken it upon themselves to sacrifice their chance of employing drivers who are capable of winning to – from the goodness of their hearts – provide the bigger teams with an opportunity to check out the young talent?
It wouldn’t be so bad if the team got a beefy transfer fee when their new and ‘discovered’ drivers are stolen by McLaren, Ferrari et al as in football ($100m for Ronaldo – Man U to Real Madrid). Yet they get nothing – except maybe a few quid off a Ferrari engine.
Of course young Sirotkin must get his super license before he can drive in an F1 race and it appears a team is allowed to set up a ‘test’ day – outside the testing regulations – with this as the sole purpose (Mr. F1 rule book – Jenkins – so informed me this weekend).
Yet the most fantastical bit of the ‘on the couch’ (yeah yeah… I mean like in Oprah not anything else) session with Monisha is yet to come. She claims of the impending Russian investment, “No one has ever said that the deal is based on who drives. You have to be careful. We are aware that we have not been communicating much, but you should not now draw certain conclusions or assess our plans prematurely., It is a long-term contract.”
Mmm. As I said at the time the Russian deal was announced, Sauber were making it up on the hoof, desperate to head off creditors about to sue – which was of genuine concern. That is not to say there is no chance of a deal, but the manner in which the information crept out was chaotic and disjointed.
If Hulkenberg is off to Ferrari – or anyone who might actually pay him – and Gutierrez has been less than impressive but brings in cash from Telmex; then what of the exciting young prospect that is Frijns? Is he about to be bypassed by some kid who won in a formula hardly anyone has heard of?
Monisha accepts that this particular young and talented driver is in a tough situation. “At this time in his career you really need miles and to gain experience. Therefore we will sit down with him and discuss the situation soon.” Oh well Robin – that’s all okay and sorted now.
Sauber have a young and talented driver, so why try to pursuade the world bypassing Frijns and recruiting Sirotkin is nothing to do with Sirotkin Snr’s ability to raise funds.
What utter nonsense; and I’m disappointed with Monisha, whom we’ve come to expect better from. (Quotes from Motorsport-Total)
The F1 debt farce
As I said earlier, from the high’s and excitement of Maranello whipping Alonso in public and sending him to the stocks and rumours about a big Ferrari announcement in Monza, we return to the ridiculous and inexplicable aspects of the sport we love today.
Did you know F1 is in debt to the tune of $2.5bn? And why would Formula 1 be in debt at all?
Those less familiar with F1 may think it has borrowed this money because the sport assists with the cost of building and delivering exciting new venues in exciting new countries around the world. Nope. I could bore you with a range of ways CVC could ‘invest’ in F1 – but in fact I’m sure you all could think of even more.
It is common knowledge that CVC – a global corporate gambling entity whose ilk are significantly;y responsible for the near collapse of our global banking system – acquired the commercial rights to F1 in 2006 from Bernie’s family trust and three banks; JP Morgan, Lehman Brothers and the German lender BayernLB.
It is believed Ecclestone retained 15% in some trust or company, though exactly where it is no one is certain. This is not a matter of speculation because Bernie claims the $44m bribe he gave to Gribkowsky – who at the time worked for Bayern LB – was to prevent him grassing Mr. E up to the UK tax authorities – which would have presumably cost him even more.
Anyway, this acquisition by CVC was financed by 2 loans of just over $2bn. They were roughly equal in size and one was from RBS and the other from CVC’s own investors out of an account called Fund IV. The price CVC claim to have paid for F1 is around $1.8bn so where they hell the extra $200m went is anyone’s guess. Oh yes, their own in
To date, the investors which includes CVC itself have received a return of $3.7bn and the debt has been re-financed a number of times. Part of that return has come from the private placement of CVC’s shares with the likes of other venture capital partners in which CVC is involved with on other deals – such as Channel 9 Australia (cost $5bn). Other’s who have acquired the shares have been the Singapore sovereign fund and as TJ13 reported in September – certain North American teacher’s pension funds.
CVC are believed to now own just 35% of F1.
CVC have done this because they claim they require the cash for other arrangements – no mention is made of the fact that Bernie’s law suit may result in the FIA cancelling the original sale of the rights and reclaiming all the shares on the grounds the transaction was illegal and corrupt.
There are a string of companies which own bits of F1, but there is an umbrella company located in a tax haven called Delta Topco which in effect is the holding company for all the fragmented pieces. We will shortly be seeing the 2012 figures which must be filed by September 2013, but the latest accounts for Delta Topco show the following
The year ended December 2011 generated receipts from sales (TV, circuits, sponsorship) of $ 1.5 billion after paying for stuff like Bernie and F1 TV and the teams and the FIA about $750m there was a profit left of $358.3 million. This was after interest charges on the $2.5bn of loans of $118.3 million.
4 weeks ago, CVC re-financed the RBS debt again. A source close to CVC said, “Because the market was hot, there was a way to reduce the cost of debt inclusive of six to four percent, no more and no less. There are still net $ 2.5 billion debt,” The source explained this action saying, “We have $ 2.5 billion debt. If we can reduce the interest rate by two percent, saves 50 million dollars a year,”
Good news for F1? Nope. Good news for CVC.
So F1 was bought with a loan of $2bn has paid out of profit to it’s various investors $3.7bn in 5 years – but there is still an increased loan of $2.5bn. Why?
Well CVC will tell you because of the stellar work performed by their chief exec Mr. E they have made Formula 1 more valuable. This is evident as they claimed the value of the failed 2012 Singapore float was to be $10bn. But how has this value been created?
Well the number is based around a multiple of the profit today, add in extra value coming down the line and we get to $10bn – somehow.
Specifically, Bernie has been doing stellar work by signing up circuits and TV contracts and has bound the teams to perform in every race via the Concorde agreement until 2020. Remember corporate bankers don’t understand F1
Anyway, please with Bernie’s efforts and thei new found value of $10bn for F1 their asset, CVC borrowed some more money against F1 and paid it to themselves. F1 the global trademark/brand is now further in debt.
This may seem unfair to most F1 readers but in the big bad world of corporate finance, F1 the brand is an asset against which people can borrow money – claim it has gone up in value – borrow more against the incremental value and pay it to themselves.
Then they sell the asset to someone else who thinks they can do the same who in turn will borrow money to buy F1 – sign contracts into the future – pay themselves future revenue out of more borrowings – and round and round we go again.
Funny really. This is how the western world’s banks collapsed.
One day someone woke up and was offered a corporate asset to buy and said, “HEY. That price is a rip off. It’s worth a fraction of that”. The whisper spread like wildfire, and all the banks realised their assets they had been trading with each other were worth a fraction of the price they had paid.
Everyone realised the value of the assets they had were just based on what somebody else said they may be worth in the future.
I wonder if the person who started the Chinese whisper had the night before read their small child the story which ends with someone shouting, “The Emperor has no clothes”.
Anyway, time for a cup of Earl Grey and a rest after all that.
Lewis on the up(pers)
Most independent minded F1 fans should admit the Hamilton drove exceptionally well in Hungary and as Lauda remarked if it’s because he is broken-hearted, let’s hope he stays that way.
Lewis is an emotional character, and that makes him endearing at times and human in the midst of a sport that would love to turn its lead players into corporate clones.
Yet Lewis has been all over the place this year. Testing 1 he had a car failure and didn’t get much track time and was down hearted, In Barcelona test 1 he was still adapting to the car and struggling to understand all the buttons on the steering wheel.
After a successful final day in Barcelona 2 Lewis believed that he could win races and he team the constructor’s title. This bullish attitude somewhat faded over the first few races when he realised his car was eating rubber like a man fresh from a 40 day fast and that was most pitiful in the moment he wailed to the team, “Guys… I’ve just been passed by a Williams”.
In Monaco Lewis believed more in the car as he and Rosberg locked out the front row, but failed to get a solid 2nd place finish due to not understanding how long 6 seconds was and slowed too much under the safety car allowing the Bulls to pass him in the pit stops.
Still the car was good enough to win at Monaco, but was it anywhere else Hamilton questioned?
Secret testing and ‘lots of hard work’ – according to Brawn – saw the Mercedes looking fast in qualy and Lewis leading the race when his tyre exploded. He applied himself and drove from plum last to recover an excellent 5th. This was the race after he and his boo split.
In Germany again Lewis was on pole, but a poor start saw him swarmed by the Bulls into turn one, and he failed to recover. Another 5th place saw a philosophical Lewis disappointed his team-mate had 2 wins and his 2 poles in the last 2 races led to naught.
Yet in Hungary, Hamilton was on a mission; drove brilliantly and dedicated the race win to his ex-girl, again demonstrating heart wrenching emotion.
Reflecting on his win we see the positive Lewis, making a statement as positive as he has been for a number of years. “Last year I didn’t feel like I had the car to win 10 races,” he said. “This year I feel I have a car that can win 10 races. The tyres are going to play a massive part but I truly believe in this car. It feels awesome.” (Telegraph)
There are 9 races left this year, so if Lewis believes his car can win 10 in total, this would surely give him the WDC.
Lewis was asked how the car ranked amongst others he had driven Hamilton had to check himself when asked where the car ranked in his all-time list. “It’s different,” he smiled. “One of the best. [The McLaren in] 2008 [in which he won his world title] was pretty good. I wanted to say it was even better than that.”
Some cynics may see this as a sneer aimed in Ron Dennis’ and McLaren’s direction, but Lewis is not that calculating. Lewis is in a good place at present but there may be more trouble ahead.
Yet TJ13 is hearing Lewis is planning a big reconciliation with Nicole and to give her what she wants. He tweeted last week, “If you’ve found that special someone, don’t EVER let them go no matter what!! Nothing in this world is more important…”.
This was followed by “My hideaway…..pouring my heart into these track!!” Lewis posted a picture with his tweet but later withdrew it.
Lewis may always live on the emotional roller coaster of life, whilst the iceman is flat-lining and barely breathing. Yet post Hungary Hamilton is clearly on the up(pers) right now and believes he can win a lot more races this year. Let’s hope so because for F1 fans a Lewis on the up is one who can seriously challenge Sebastian Vettel because it looks like the matador has lost his focus and is distracted by fighting with his cloak makers.