he7lius
03-05-2005, 09:19 PM
I was reading " The Guardian" today and i came across this article which i found very interesting. The title says it all. How true is it????
After six years of formula one dominance, the world champions suddenly look vulnerable as paddock wheeler-dealing and international market forces take their toll
If modern grand prix racing has a colour, it must be red. Rosso corsa, racing red. Once simply Italy's national racing livery, probably inspired by the red shirts of Garibaldi's soldiers at the end of the 19th century, now it is thought of by millions of fans around the world as the colour of Ferrari. Even those whose memories go back before the era in which Michael Schumacher established the team's current dominance find it hard to resist the romance of the red racers, and almost impossible to imagine life without them.
"Formula one without Ferrari wouldn't be formula one," the former grand prix driver John Watson said in the paddock at Albert Park yesterday, shouting to be heard above the engine noise as practice got under way for the opening race of the 2005 season. Around the track the grandstands were, as usual, a sea of red shirts and baseball caps.
If ever that colour had been in danger of disappearing from grand prix racing, then surely the time was between 1979 and 2000, when the Ferrari team suffered its longest period of sustained failure. Yet it is now, with the team at the height of their competitive and commercial strength, that questions are being asked about the effect of their continued existence on the health of formula one.
The effect of their success on Ferrari themselves is hard to miss. In the marquees at this weekend's Australian grand prix, spectators will buy three souvenir items of Ferrari merchandise for every piece bearing the Williams or McLaren logo. Between them, Ferrari and Schumacher attract more than 30% of all the merchandising revenue harvested by the formula one circus as it makes its way around the globe. For the first time in the modern era, however, people within formula one are beginning to talk about the possibility of a future without the red cars.
Success has certainly spoiled Ferrari, or at least the feeling that surrounded the team while Enzo Ferrari was still alive. The old man, as he was known, had a legendary gift for scheming, for sulking, for breaking promises and for making his team out to be a special case deserving of special treatment, even when they were failing miserably. But under the leadership of Luca di Montezemolo, once Ferrari's protege, the present team's keenness to exploit every ounce of their current supremacy and their historical value goes beyond even the levels of ruthlessness established by their founder.
The effect has been to eat away at the soul of the sport. If they can hardly be blamed for the deadening effect of their years of hard-won and expensively bought supremacy, the belief that the team enjoy a favoured status has created a corrosive resentment. And for all their embodiment of a link to the glorious, blood-soaked past, for all the championships won in the red cars by heroes such as Ascari, Fangio, Hawthorn, Surtees and Lauda, it may be that grand prix racing would finally be better off without its most famous name.
Although Ferrari start tomorrow's race in search of their seventh world championship in a row, and Schumacher's sixth with the team, their disappearance from the scene seems more likely now than it was during the 21 years when they laboured without reward. That prolonged agony served to seal and strengthen the emotional bond between the team and successive generations of fans. Once Ferrari started winning again, and winning easily, and then winning with monotonous regularity, the ties created by shared suffering began to weaken.
This unexpected development could be seen in the relatively muted acclaim for their recent victories at Monza, for many years the heartland of Ferrari fanaticism. Now the cheers are louder in Bahrain or Japan. And gradually, as they became more successful, the team lost some of their charm. English took over from Italian as the working language of the multinational band of designers, engineers and drivers, and an undeviating professionalism replaced the atmosphere of semi-anarchy in which the team once did their work. Now a Ferrari slump lasts not decades but one or two races at most. Easy to admire, they have become harder to love.
Harder still when it was announced, a fortnight ago, that they had broken ranks with their fellow constructors in the battle to persuade Bernie Ecclestone to pay all the teams a higher percentage of the vast earnings from formula one's commercial rights. Howls of outrage greeted the announcement that Ferrari had accepted Ecclestone's offer of a bonus of $100m (£53m) in exchange for committing themselves to compete in his championship until 2012, leaving their rivals to negotiate their own terms.
At a stroke, Ferrari appeared to have undermined the genuine threat posed to Ecclestone's control over formula one by Grand Prix World Championship (GPWC), the breakaway series which the major constructors, including Ferrari themselves, had promised to launch after the expiry of their collective deal with Ecclestone at the end of the 2007 season.
In response to this prima facie evidence of betrayal, the other members of the GPWC - Renault, BMW, Mercedes-Benz, Honda and Toyota - proclaimed an increased determination to get their own series under way, leaving Ferrari the prospect of competing for the existing championship against a couple of minor teams anxious not to lose the financial benefits of Ecclestone's patronage. And a grand prix grid without Ferrari, the remaining GPWC members concluded after careful consideration, is not so unthinkable after all.
"Life would go on," Nick Fry, the chief executive of the BAR-Honda team, said on the eve of practice. "That's the bottom line. We've thought quite carefully about this. Formula one would clearly be the worse off without Ferrari. However, there are five other major motor manufacturers involved, including our team, and there is no doubt that we will continue. We will make the best of it and we will make a great show. It would be difficult to start with. But you've got to look forwards as well as backwards, and I think maybe formula one has looked backwards for too long.
"We've got to understand that, yes, we are competing with each other, but we're also competing with other sports, with Desperate Housewives and with doing the gardening, and we've got to have more of an outward focus than formula one has had in the past. It's always looked internally and it's always looked backwards. Now's the time to start looking outwards and forwards."
Oddly, for such a lavishly equipped and well rewarded outfit, who pay their champion driver about £25m a year, Ferrari's sudden decision to reverse their support for the GPWC is based on economic necessity. Although they command the biggest budget in formula one, spending about £250m a year to maintain their supremacy, new pressures are squeezing them. Though sponsors provide a significant subsidy, a large proportion has been injected directly by the Fiat group, which bought a half share in the company from Enzo Ferrari in 1967 and took a majority stake on his death 21 years later. In recent months, however, Fiat's own troubles have forced the team to confront a very different reality.
"I understand that they're no longer receiving large sums of money from Fiat," Patrick Head, the co-owner and engineering director of the Williams team, said this week. "Fiat are also saying: 'Hold on, we're not going to let you carry on spending the money you make from selling road cars. We're not going to let you take those profits. If you can finance your racing from sponsorship and what you get from Bernie Ecclestone, that's up to you.'"
Two years ago Montezemolo postponed a plan to capitalise on the recent spell of success by floating Ferrari on the Stock Exchange. Last week, in his new capacity as the president of the Fiat group as well as of Ferrari, he announced that the flotation would take place as soon as possible, possibly next year, thus creating further funds for the troubled parent company.
Montezemolo is the architect of the team's recent revival. Twelve years ago, with the company in chaos, he brought in Jean Todt as sporting director. Together they hired Schumacher and the technical team with which the German had achieved two world championships at Benetton, creating a unit more effective than any the sport had seen. But the contracts of several key members of the team - including Schumacher, Rubens Barrichello, the technical director Ross Brawn and the chief designer Rory Byrne - expire at the end of next season. Some of them, if not all, will leave, and history suggests that their successors will find it hard to maintain the same freakishly high standard of performance. Montezemolo will be keen to ensure that the flotation is not delayed until a possible decline has begun.
And once in public ownership, Ferrari would be at the mercy of their shareholders. Should the present level of success not be maintained, it is easy to imagine those investors questioning the wisdom of spending hundreds of millions of dollars every year on going racing. Some might even be attracted by the idea of shutting down the racing department, saving all those hundreds of millions and concentrating instead on profiting from the image created by that unmatched history. Ferrari is, after all, one of the world's most marketable brands.
"You can trade on an image for a long time," Patrick Head observed. "Look how long Jaguar went on trading on their five wins at Le Mans." Bentley, Maserati and Alfa Romeo are others whose aura remained long after they had left the racetrack.
According to Head, the fear of failure could also influence a decision. "I said a few months ago that I thought Ferrari would stop when Michael stops," he observed. "Look what happened when Michael left Benetton. The structure of the team changed and they slid backwards. And that's probably what will happen with Ferrari. So maybe they'll say: 'Let's stop for a few years and create a dividing line between the eras, maybe four or five years, and then we'll look at it again and if we can put together enough of a budget we'll give it another go.' If Ferrari stopped, formula one would certainly lose something. But it would carry on."
Eventually a compromise between Ecclestone and the GPWC teams could keep Ferrari within the fold. A fear of the wrath of the Italian people might persuade the team's management to pull back from the brink of withdrawal. But, almost incredibly, the subject is on the table. The unthinkable is being thought. And old Enzo Ferrari, a master of bluff and brinkmanship, would be having the time of his life.
Bernie's battle: a quick guide to F1's big split
What's all this talk about a schism in formula one?
The vast majority of the 10 grand prix teams feel they are getting a poor deal out of Bernie Ecclestone, formula one's commercial rights holder. Currently the teams share 47% of the television revenues and promoters' fees, amounting to around $200m a year (this is divvied up in proportion to each team's level of success). But the teams complain they earn nothing from all the trackside advertising and corporate hospitality at each round of the world championship. According to their maths, this income stream amounts to another $200m annually - reducing their share of the commercial rights purse to 23%. As a result of Ecclestone's reluctance to address this financial disparity, seven of the 10 teams have now aligned themselves with the group of car manufacturers known as GPWC (Grand Prix World Championship), who are planning a separate world series in 2008 when the teams' current contract with Ecclestone runs out.
So why are Ferrari the only team to have renewed their contract with Ecclestone?
Because the other teams do not trust Ferrari's motives. The Italian team were initially aligned with GPWC, but then Ecclestone tempted them away with promises of a much more generous financial deal on the basis that Ferrari are central to the success of any international series. Because of this, Ecclestone remains confident the other teams will eventually fall into line.
Where does that leave the car manufacturers?
They are absolutely furious. BMW, DaimlerChrysler (which owns Mercedes), Renault, Toyota and Honda all believe Ferrari have reneged on the original GPWC deal to stick together. Ferrari's defection to the Ecclestone camp has hardened the car makers' resolve to pursue the development of their own series, which will not only give a bigger share of commercial rights to competing teams but also offer the commercial transparency they desire.
Is anyone else adding to the tension?
The rebel teams' tempers have been further tested by the unilateral interventions of the president of the sport's governing body, Max Mosley. Normally calm figures such as Sir Frank Williams have been left spitting mad by Mosley's sweeping rule changes for this season and beyond, imposed at short notice on the auspices of cost cutting. The fact Ecclestone and Mosley are such traditional allies has heightened the sense of a sport divided.
Surely this sort of split has happened before?
Yes. There was a major power struggle between 1980 and 1982 when, ironically, Ecclestone led predominantly British teams aligned as the Formula One Constructors' Association (Foca) into battle against the FIA, F1's governing body, in a row over who owned the sport's commercial rights. Ecclestone and Foca won but Ferrari didn't join up, staying loyal to the FIA on the sidelines until the matter was resolved. The Italian team were, however, happy to receive a cut of the new commercial agreement once the political dust had settled.
So what will happen this time?
Expect the current stand-off to last at least a year. While GPWC is working hard behind the scenes establishing the infrastructure for its proposed new series, Ecclestone holds most of the cards when it comes to contracts for TV coverage and race promotion at the most important circuits on the F1 calendar.
So how will the split eventually be resolved?
By Ecclestone offering a compromise deal to the GPWC-aligned teams which offers not only more money but also more transparent business dealings. The car makers believe he can no longer be permitted to run the formula one business as his own personal fiefdom, as he has done since the 1980s.
What's the worst-case scenario?
The sport could be split into two camps with separate championships, as happened in the United States in 1995 when Champcar and the Indy Racing League went their different ways. This decimated single-seater racing in the US, and both categories have struggled for credibility to this day. Formula one could be fatally damaged if a similar scenario is allowed to unfold.
Could this mean the end for Ecclestone?
Conceivably. His company, Formula One Management, is 75% owned by three banks who inherited their shares after the German Kirch media group went bankrupt. They are intent on recouping their $1.6bn investment in the company, and could eventually lose patience with Ecclestone's autocratic management style.
Richard Williams in Melbourne
Saturday March 5, 2005
The Guardian
After six years of formula one dominance, the world champions suddenly look vulnerable as paddock wheeler-dealing and international market forces take their toll
If modern grand prix racing has a colour, it must be red. Rosso corsa, racing red. Once simply Italy's national racing livery, probably inspired by the red shirts of Garibaldi's soldiers at the end of the 19th century, now it is thought of by millions of fans around the world as the colour of Ferrari. Even those whose memories go back before the era in which Michael Schumacher established the team's current dominance find it hard to resist the romance of the red racers, and almost impossible to imagine life without them.
"Formula one without Ferrari wouldn't be formula one," the former grand prix driver John Watson said in the paddock at Albert Park yesterday, shouting to be heard above the engine noise as practice got under way for the opening race of the 2005 season. Around the track the grandstands were, as usual, a sea of red shirts and baseball caps.
If ever that colour had been in danger of disappearing from grand prix racing, then surely the time was between 1979 and 2000, when the Ferrari team suffered its longest period of sustained failure. Yet it is now, with the team at the height of their competitive and commercial strength, that questions are being asked about the effect of their continued existence on the health of formula one.
The effect of their success on Ferrari themselves is hard to miss. In the marquees at this weekend's Australian grand prix, spectators will buy three souvenir items of Ferrari merchandise for every piece bearing the Williams or McLaren logo. Between them, Ferrari and Schumacher attract more than 30% of all the merchandising revenue harvested by the formula one circus as it makes its way around the globe. For the first time in the modern era, however, people within formula one are beginning to talk about the possibility of a future without the red cars.
Success has certainly spoiled Ferrari, or at least the feeling that surrounded the team while Enzo Ferrari was still alive. The old man, as he was known, had a legendary gift for scheming, for sulking, for breaking promises and for making his team out to be a special case deserving of special treatment, even when they were failing miserably. But under the leadership of Luca di Montezemolo, once Ferrari's protege, the present team's keenness to exploit every ounce of their current supremacy and their historical value goes beyond even the levels of ruthlessness established by their founder.
The effect has been to eat away at the soul of the sport. If they can hardly be blamed for the deadening effect of their years of hard-won and expensively bought supremacy, the belief that the team enjoy a favoured status has created a corrosive resentment. And for all their embodiment of a link to the glorious, blood-soaked past, for all the championships won in the red cars by heroes such as Ascari, Fangio, Hawthorn, Surtees and Lauda, it may be that grand prix racing would finally be better off without its most famous name.
Although Ferrari start tomorrow's race in search of their seventh world championship in a row, and Schumacher's sixth with the team, their disappearance from the scene seems more likely now than it was during the 21 years when they laboured without reward. That prolonged agony served to seal and strengthen the emotional bond between the team and successive generations of fans. Once Ferrari started winning again, and winning easily, and then winning with monotonous regularity, the ties created by shared suffering began to weaken.
This unexpected development could be seen in the relatively muted acclaim for their recent victories at Monza, for many years the heartland of Ferrari fanaticism. Now the cheers are louder in Bahrain or Japan. And gradually, as they became more successful, the team lost some of their charm. English took over from Italian as the working language of the multinational band of designers, engineers and drivers, and an undeviating professionalism replaced the atmosphere of semi-anarchy in which the team once did their work. Now a Ferrari slump lasts not decades but one or two races at most. Easy to admire, they have become harder to love.
Harder still when it was announced, a fortnight ago, that they had broken ranks with their fellow constructors in the battle to persuade Bernie Ecclestone to pay all the teams a higher percentage of the vast earnings from formula one's commercial rights. Howls of outrage greeted the announcement that Ferrari had accepted Ecclestone's offer of a bonus of $100m (£53m) in exchange for committing themselves to compete in his championship until 2012, leaving their rivals to negotiate their own terms.
At a stroke, Ferrari appeared to have undermined the genuine threat posed to Ecclestone's control over formula one by Grand Prix World Championship (GPWC), the breakaway series which the major constructors, including Ferrari themselves, had promised to launch after the expiry of their collective deal with Ecclestone at the end of the 2007 season.
In response to this prima facie evidence of betrayal, the other members of the GPWC - Renault, BMW, Mercedes-Benz, Honda and Toyota - proclaimed an increased determination to get their own series under way, leaving Ferrari the prospect of competing for the existing championship against a couple of minor teams anxious not to lose the financial benefits of Ecclestone's patronage. And a grand prix grid without Ferrari, the remaining GPWC members concluded after careful consideration, is not so unthinkable after all.
"Life would go on," Nick Fry, the chief executive of the BAR-Honda team, said on the eve of practice. "That's the bottom line. We've thought quite carefully about this. Formula one would clearly be the worse off without Ferrari. However, there are five other major motor manufacturers involved, including our team, and there is no doubt that we will continue. We will make the best of it and we will make a great show. It would be difficult to start with. But you've got to look forwards as well as backwards, and I think maybe formula one has looked backwards for too long.
"We've got to understand that, yes, we are competing with each other, but we're also competing with other sports, with Desperate Housewives and with doing the gardening, and we've got to have more of an outward focus than formula one has had in the past. It's always looked internally and it's always looked backwards. Now's the time to start looking outwards and forwards."
Oddly, for such a lavishly equipped and well rewarded outfit, who pay their champion driver about £25m a year, Ferrari's sudden decision to reverse their support for the GPWC is based on economic necessity. Although they command the biggest budget in formula one, spending about £250m a year to maintain their supremacy, new pressures are squeezing them. Though sponsors provide a significant subsidy, a large proportion has been injected directly by the Fiat group, which bought a half share in the company from Enzo Ferrari in 1967 and took a majority stake on his death 21 years later. In recent months, however, Fiat's own troubles have forced the team to confront a very different reality.
"I understand that they're no longer receiving large sums of money from Fiat," Patrick Head, the co-owner and engineering director of the Williams team, said this week. "Fiat are also saying: 'Hold on, we're not going to let you carry on spending the money you make from selling road cars. We're not going to let you take those profits. If you can finance your racing from sponsorship and what you get from Bernie Ecclestone, that's up to you.'"
Two years ago Montezemolo postponed a plan to capitalise on the recent spell of success by floating Ferrari on the Stock Exchange. Last week, in his new capacity as the president of the Fiat group as well as of Ferrari, he announced that the flotation would take place as soon as possible, possibly next year, thus creating further funds for the troubled parent company.
Montezemolo is the architect of the team's recent revival. Twelve years ago, with the company in chaos, he brought in Jean Todt as sporting director. Together they hired Schumacher and the technical team with which the German had achieved two world championships at Benetton, creating a unit more effective than any the sport had seen. But the contracts of several key members of the team - including Schumacher, Rubens Barrichello, the technical director Ross Brawn and the chief designer Rory Byrne - expire at the end of next season. Some of them, if not all, will leave, and history suggests that their successors will find it hard to maintain the same freakishly high standard of performance. Montezemolo will be keen to ensure that the flotation is not delayed until a possible decline has begun.
And once in public ownership, Ferrari would be at the mercy of their shareholders. Should the present level of success not be maintained, it is easy to imagine those investors questioning the wisdom of spending hundreds of millions of dollars every year on going racing. Some might even be attracted by the idea of shutting down the racing department, saving all those hundreds of millions and concentrating instead on profiting from the image created by that unmatched history. Ferrari is, after all, one of the world's most marketable brands.
"You can trade on an image for a long time," Patrick Head observed. "Look how long Jaguar went on trading on their five wins at Le Mans." Bentley, Maserati and Alfa Romeo are others whose aura remained long after they had left the racetrack.
According to Head, the fear of failure could also influence a decision. "I said a few months ago that I thought Ferrari would stop when Michael stops," he observed. "Look what happened when Michael left Benetton. The structure of the team changed and they slid backwards. And that's probably what will happen with Ferrari. So maybe they'll say: 'Let's stop for a few years and create a dividing line between the eras, maybe four or five years, and then we'll look at it again and if we can put together enough of a budget we'll give it another go.' If Ferrari stopped, formula one would certainly lose something. But it would carry on."
Eventually a compromise between Ecclestone and the GPWC teams could keep Ferrari within the fold. A fear of the wrath of the Italian people might persuade the team's management to pull back from the brink of withdrawal. But, almost incredibly, the subject is on the table. The unthinkable is being thought. And old Enzo Ferrari, a master of bluff and brinkmanship, would be having the time of his life.
Bernie's battle: a quick guide to F1's big split
What's all this talk about a schism in formula one?
The vast majority of the 10 grand prix teams feel they are getting a poor deal out of Bernie Ecclestone, formula one's commercial rights holder. Currently the teams share 47% of the television revenues and promoters' fees, amounting to around $200m a year (this is divvied up in proportion to each team's level of success). But the teams complain they earn nothing from all the trackside advertising and corporate hospitality at each round of the world championship. According to their maths, this income stream amounts to another $200m annually - reducing their share of the commercial rights purse to 23%. As a result of Ecclestone's reluctance to address this financial disparity, seven of the 10 teams have now aligned themselves with the group of car manufacturers known as GPWC (Grand Prix World Championship), who are planning a separate world series in 2008 when the teams' current contract with Ecclestone runs out.
So why are Ferrari the only team to have renewed their contract with Ecclestone?
Because the other teams do not trust Ferrari's motives. The Italian team were initially aligned with GPWC, but then Ecclestone tempted them away with promises of a much more generous financial deal on the basis that Ferrari are central to the success of any international series. Because of this, Ecclestone remains confident the other teams will eventually fall into line.
Where does that leave the car manufacturers?
They are absolutely furious. BMW, DaimlerChrysler (which owns Mercedes), Renault, Toyota and Honda all believe Ferrari have reneged on the original GPWC deal to stick together. Ferrari's defection to the Ecclestone camp has hardened the car makers' resolve to pursue the development of their own series, which will not only give a bigger share of commercial rights to competing teams but also offer the commercial transparency they desire.
Is anyone else adding to the tension?
The rebel teams' tempers have been further tested by the unilateral interventions of the president of the sport's governing body, Max Mosley. Normally calm figures such as Sir Frank Williams have been left spitting mad by Mosley's sweeping rule changes for this season and beyond, imposed at short notice on the auspices of cost cutting. The fact Ecclestone and Mosley are such traditional allies has heightened the sense of a sport divided.
Surely this sort of split has happened before?
Yes. There was a major power struggle between 1980 and 1982 when, ironically, Ecclestone led predominantly British teams aligned as the Formula One Constructors' Association (Foca) into battle against the FIA, F1's governing body, in a row over who owned the sport's commercial rights. Ecclestone and Foca won but Ferrari didn't join up, staying loyal to the FIA on the sidelines until the matter was resolved. The Italian team were, however, happy to receive a cut of the new commercial agreement once the political dust had settled.
So what will happen this time?
Expect the current stand-off to last at least a year. While GPWC is working hard behind the scenes establishing the infrastructure for its proposed new series, Ecclestone holds most of the cards when it comes to contracts for TV coverage and race promotion at the most important circuits on the F1 calendar.
So how will the split eventually be resolved?
By Ecclestone offering a compromise deal to the GPWC-aligned teams which offers not only more money but also more transparent business dealings. The car makers believe he can no longer be permitted to run the formula one business as his own personal fiefdom, as he has done since the 1980s.
What's the worst-case scenario?
The sport could be split into two camps with separate championships, as happened in the United States in 1995 when Champcar and the Indy Racing League went their different ways. This decimated single-seater racing in the US, and both categories have struggled for credibility to this day. Formula one could be fatally damaged if a similar scenario is allowed to unfold.
Could this mean the end for Ecclestone?
Conceivably. His company, Formula One Management, is 75% owned by three banks who inherited their shares after the German Kirch media group went bankrupt. They are intent on recouping their $1.6bn investment in the company, and could eventually lose patience with Ecclestone's autocratic management style.
Richard Williams in Melbourne
Saturday March 5, 2005
The Guardian