Force India: How the tower of cards could collapse

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Over the past few days I’ve been asked many times and seen people enquiring on various F1 websites as to how much is an F1 team worth. Of course the answer is simple, different teams are worth vastly different amounts. An F1 team is a business venture – registered with a legal identity independent of any rich owner and subject to the business regulations from the statutory authority where they are registered.

 Valuing a business

The way business ventures are valued is highly complex and sector/performance specific. There was old 3 times profit rule that was a fundamental when I studied Finance many years ago. Yet even this most simplistic valuation methodology is fraught with danger when you dig deeper. Is that profit before or after asset depreciation, asset goodwill, taxation, one off accounting entries of substance – I could go on..and on..and on…

I guess my favourite methodology which can be proved beyond doubt and its an old adage, which says “The value of something is best measured by how much someone is actually prepared to.”

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Korea GP review: Alonso and Kobayashi know the game is up. More poor marshalling ruins the race

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The rather limp wristed waft of the chequered flag by Psy, of “Gangnam Style” fame, probably encapsulated the event that was the 2012 Korean GP.

The headlines are, Vettel takes the lead in driver’s WDC from Alonso for the first time since Valencia, and Red Bull extend their lead in the constructors’ table, with Ferrari significantly overtaking McLaren for 2nd place.

Marshalling ruins another race

As I suggested following Singapore, the marshalling of the event had a significant impact today and  robbed us of what could have been a very exciting race. How it took until lap 10 to move Nico Rosberg’s Mercedes is beyond me, particularly when considering where it was. Races with high tyre wear are often fascinating in strategy and can produce exciting finishes. By lap 2 when the DRS was available, the cars were still tightly bunched any number of drivers may have been able to have a go at Vettel and a number of position interchanges would have occurred.

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Mallya lives in opulence whilst unpaid staff starve and commit suicide

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Thejudge13 reported last week that a family member of Kingfisher airlines staff was reported to have committed suicide due to financial ruin by Indian police (link)

Vijay Mallya’s Kingfisher airlines have been grounded now for 2 weeks and are on the brink of financial ruin: “The Economic Times” (click on search, put in “Kingfisher” and you’ll see a number of articles over the past few months), Police said last week that the wife of an employee who had not been paid since March committed suicide last week due to the stress of financial ruin. Before the Japanese GP staff were demonstrating as they had not been paid for months and this lead to violent confrontation.

Airline start up

The history of airline start up’s in the past 50 years is littered with failure. Around 9/10 fail owing hundreds of millions of dollars. The problem is not in the early days, as the entrepreneur identifies a few profitable routes, invests about 50% required and gets the project off the ground. Where the issues begin is when they wish to expand. Due to initial success they find financial backers prepared to put up vast sums of money for their expansion.

Each route they take on is incrementally less profitable and it only takes a dip in trade for a short time for them to struggle to generate enough cash to pay the interest on the loans. In the case of Kingfisher airlines they owe $billions.

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Arrest warrant for Mallya, McLaren secret new DDRS, BBC evicts thejudge13, and more coming soon

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F1 News, Fun links and comment

  1. Grim times for Kingfisher and Vijay Mallya. The striking pilots and engineers who have not been paid since March has been asked by the company’s  CEO Sanjay Agarwal to return to work on Sunday 13th October. The airline has been grounded for over a week. The Indian Civil Aviation Authority has threatened to revoke their license and has demanded no tickets are sold in the interim. (Economic Times). Mallya does have other investments and is being pressured to sell the liquor business to come up with the cash. Whether Force India as they are will be on the grid 2013 – only time will tell.
  2. BREAKING NEWS (GMT 12:48) “Force India boss Vijay Mallya has run into more trouble in Hyderabad where the 13th Metropolitan Sessions Court has issued an arrest warrant against him in a case filed by GMR Hyderabad International Airport Ltd which manages the Rajiv Gandhi International Airport”. (AFP News Agency) This warrant is without bail, because representatives failed to attend a hearing today – which means if or when he submits himself to the court he will be detained. It is estimated his airline is $billions in debt. Oh how far it is to fall .(Nice to see we beat the all established F1 sites and writers to this by an hour and 10 mins :D)
  3. Schumacher says the WDC title is Vettel’s to lose (autohebdo) “I thought Fernando (Alonso) had the advantage prior to Suzuka”, but now he believes it is Vettel’s to lose. Schumacher is certain his compatriot will now enter the exclusive club of winning 3 consecutive titles, a feat only achieved by Fangio (4) and Schumacher(5) himself.

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Gangnam Style banned by Ecclestone, Marko dismisses “Lord Lauda”, Cracks in Ferrari unity….and other stuff…

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Its Thursday before race weekend, lots going on so today is bite sized links to the less reported comments with a few wry comments from me.

  1. Psy – the Korean pop star with one off world wide hit “Gangnum Style” is going to wave the chequered flag on Sunday. Yes I know this was announced yesterday but celebrities waving the chequered flag does not always work too well. Ask Pele about Brazil 2002. (YouTube link). For those of you without video capabilities, When Pele was asked to wave the chequered flag at the Brazilian Grand Prix it seemed a perfect PR opportunity, the country’s, if not the world’s, greatest footballer at one of its biggest sporting events. And, to be fair, it is not exactly a task burdened by onerous or complex rules. But, it seemed the organisers appeared to fail to explain the intricacies of Formula One to the great man, so when Michael Schumacher crossed the line to take the victory, followed home by brother Ralf, Pele was busy chatting with officials and forgot to show them the flag. Alerted to his mistake, he enthusiastically waved the flag at the next driver past, which happened to be Takuma Sato who was some two laps behind the winner, meaning technically he had won the race. “Pele is very little,” noted Schumacher. “I didn’t see the flag though, that’s the only thing I noticed.”
  2. Talking of Psy, whether he is a one hit wonder or not, he his HOT HOT HOT at the moment. The promoters of the Korean GP had a spoof video made with the “Gangnam style” soundtrack behind track workers dancing and clips of F1 action at the circuit. It was posted on YouTube and the video went viral worldwide. Of course FOM and Bernie’s lawyers spotted it and told YouTube to take it down as it was showing clips of copyright material. This morning my daughter who knows I’m connected to F1 but she shows no other interest in the sport – she asked me out of the blue, “Daddy where can we see the Gangnam video with your racing cars?” Trying to attract the youth to F1 Mr E? – FAIL!!!

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S. Korea, Ecclestone and the Emperor’s new clothes

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The Korean GP is held at the Korea International Circuit is a 5.62 km (3.49 mi) Herman Tilke designed circuit located near the port city of Mokpo. It is estimasted the cost of building the 135,000 capacity facility (including Tilke’s fee) was around $264 million (250 billion won). The promoters of the race are Korea Auto Valley Operation (KAVO – a joint venture between the mysterious M-Bridge Holdings and Jeollanam-do regional government) and the inaugural race in 2010 was close to being called off due to delays in construction. 

Crowds in the past 2 years at the Korean Grand Prix have hardly been significant in their absence. Empty grandstands and comments about no atmosphere at the circuit from TV reporters hardly substantiate the organisers claim to have sold 85,000 tickets last year. Even if we believe this exaggerated figure when compared to the venue’s 135,000 capacity, this indifference from the Korean public is not really helping the organisers financial woes. The Korean Times in its article “is it worth the tax payers money” tells us the local government will lose $60m every time they hold the race.

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Lauda to sack Brackley personnel, Nascar mother of all pile ups, Lola closes doors, Tooned will be ‘racey’

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After battling with F1 and global finance until gone midnight on “Ecclestone to load a mountain of debt on F1“, then the day so far has been spent with lawyers – so we’ll start with a News Links post and see if I’ve got enough time and energy for an in depth article later. (Anything in wite on this page is a URL link to the original or pic or video).

Quick thanks to someone on German site MotorsportTotal.com who posted a link to thejudge13 and we’ve had over 50 new German visitors today from their site. Great work.

  1. Last week I did a couple of articles on Niki Lauda, suggesting there may be fireworks at Merceds F1 now he’s the big boss (a position he couldn’t help refering to on TV at the weekend I noticed). Niki’s inability to “suffer fools gladly” is legendary. So today, our favourite German publication Bilde has the following, “Schumi’s car builders are fired”. (I always put the link to prove the source, but be careful with any translation software – particularly verb tenses). Anyway Christian Danner RTL expert pundit and ex F1 driver of note (I’ll come back to this) says today that Niki Lauda needs to fire the designers of this years car. He suggests that after 9 months the car is performing like a Torro Rosso and heads must roll. He urges Niki the hatchetman on, “He is responsible to make the next decision. And the next decisions will be primarily personnel decisions”. RTL commentator Danner, a little bit like Mr. J Herbert for SKY, drove in Formula 1 over 4 years. 2 of those he was not classified with any points and had a career best P4 in USA 1989 when he also had his best season scoring a total of 4 points. WATCH OUT ROSS

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Ecclestone to load a mountain of debt on F1.

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It’s not possible to in a single article convey the mess that is F1 and its financial arrangements, and I’m not feeling inclined to write a book. Yet there are severe storm clouds on the horizon for F1 and it appears the governing body and the teams are oblivious to this.

The Korean Times reports the organisers’ of the F1 race are facing again huge losses. It is claimed they have avoided the contractual 10% escalation in fee from last year but still have a total budget of $67.5m to find.

The national government picks up about $5m and the rest is shouldered by the South Jeolla provincial government. Of course there is the ticket receipts, but the event has not been a raging success with mass crowds attending. The losses the provincial government has had to fund are 2010 $65m and in 2011 $54m. With a contract to 2016, local commentators are not sure they will be able to fulfill this commitment.

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Jenson denies following Lewis but deletes the evidence!

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Its Monday and I’m all Grosjean, Kimi and ALonso’d out – time for a bit of fun and where best to turn but to Lewis and his Twitter machine.

Whilst lying on the couch, watching TV last night, I had my lap top open and twitter rolling away. A tweet from Lewis arrived and I was expecting him to be competeing with guru Alonso who had sung, (@alo_oficial) “5 great races coming! If the enemy thinks in the mountains, attack by sea, if they think in the sea, attack by the mountains”.

I sat up quickly. Maybe Lewis would give us another Martin Luther King quote from the book he’s been reading for most of this year.

Twittergate #2

But no, we got this from @LewisHamilton, “Just noticed @JensonButton unfollowed [me], thats a shame. After 3 years as teammates, I thought we respected one another but clearly he doesn’t.”

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Japan GP review: Grosjean bashing unjustified (inc video footage)

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I’m a little perturbed about the F1 fraternity’s reaction to Romain Grosjean today. Grosjean bashing appears to be many of F1’s figures favourite sport this year and at times its prejudicial and poor form. It reminds me a lot of the way senior MotoGP personnel were treating an exciting young gun called Simoncelli last year before his tragic death.

Let’s remember he is not being accused of deliberately driving into anyone and will not be removed from the season’s records as has happened in the past when a certain individual was accused of doing just that.

Romain is clearly very quick and unlike some of the petulant F1 drivers a very likeable young man who always own’s up to his mistakes (again unlike some) and was clearly distraught when interviewed at the end of the race.

To be fair, Nico Rosberg’s response when questioned what kind of penalty Romain should receive made it clear it was not for him to comment. It’s a shame some of the other driver’s do not behave with a little more circumspection over these matters.

Of course 7 first lap incidents involving Romain is statistically relevant, but each incident should be examined individually and treated accordingly.

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