Formula 1 - profit making venture or?
“We will make money in the first year as we have always done with our other ventures” said Kamarudin Meranun, the business partner of Tony Fernandez.
That was on September 29.
Honda, BMW and Toyota should have been wise enough to ask for advice from the owner of 1Malaysia F1 Team on how to run an F1 outfit and stay competitive and most importantly, profitable. If they had, they would still be around competing against the like of Ferrari, McLaren and Renault and none the less, 1MF1T, for that elusive dream of becoming world champion.
On November 13, an online news portal carried the following:
“Lotus Formula One is still seeking sponsorship to help the new team survive in its first season in 2010 despite a tight budget.”
“What is wrong with asking for sponsors from GLCs like Petronas?” asked the man who, less than two months ago, was brimming with supreme confidence (or was it sheer arrogance) counting the chickens before they are hatched.
Most Malaysians will surely agree that there is nothing wrong if Lotus F1 remain as private entity, independent of government handouts. What worried us is when the Malaysian government became the main sponsor or the bailer, throwing unending life line for the sake of seeing the slogan “One Malaysia, People First, Performance Now” displayed on the front, side or the rear diffuser.
If participating in F1 is a sure bet, then Minardi, Spyker, Jordan, Jaguar and countless other names will still be there every season. To date, the only independent team that has withstood the test of time is Williams. Even Renault, one of the three remaining manufacturer’s team could be missing from the starting grid of 2010.
If Williams F1 is the inspirations behind the reincarnation of Lotus, then Tony Fernandez has to have the ruthlessness of Frank Williams. Remember how, in 2005, he squeezed 24 million pounds from Jenson Button for reneging on his contract.
According to Tony Fernandez, 48 percent of respondents in his online conference thought that his team has the chance to become world champion. Hopefully, the 48 out of 100 respondents have read what is written in Ferrari’s website. Had they done so, they would have grasp the intricacies of F1 and probably strike a different chord.
“Formula 1 continues to lose major players: in the past twelve months, Honda, BMW, Bridgestone and, only this morning, Toyota, have announced they are leaving the sport. In exchange, so to speak, we will now have, Manor, Lotus (at least in name only, as this incarnation has little to do with the team that gave us Colin Chapman, Jim Clark and Ayrton Senna to name but a few,) USF1 and Campos Meta. Can we claim that it’s a case of like for like, just because the numbers sitting around the table are the same? Hardly and we must also wait and see just how many of them will really be there on the grid for the first race of next season in Bahrain and how many will still be there at the end of 2010”
How many will still be there at the end of 2010! A mind boggling question that Ferrari, the only team that had seen it all, rightly asked. Will Lotus F1 be one of the early quitters? It is very unlikely because this adventure (or misadventure) has the backing of the Malaysian Government.
Lest we forget, to remain in F1 require not only bottomless resources but also the uncanny foresight and ability to forge the right combinations of people and machine.
For a start, 1MF1T has appointed ‘journeyman’ Mike Gascoyne as the Chief Technical Officer.
Who is Mike Gascoyne? He may had all the paper qualifications and experience but still lack the Midas touch to lead an all conquering F1 technical outfit. The two race victories for Jordan GP team in 1999 and a miserly single race win for Renault in 2003 were scant consolation and a far cry from the superlative achievements of Ross Brawn, Rory Byrne or Adrian Newey.
At Toyota, a team reputed to have a budget comparable to that of Ferrari, Mike Gascoyne could hardly create a race winning car with distinctive cutting edge performance much less a championship winning team. Of no surprise, his tenure at Toyota did not last three full seasons. His stint at Spyker which later become Force India was even shorter. Ironically, Force India had its most successful season after he left.
What can he achieve with 1MF1T or how long can he last? Will he be able to integrate and be an integral part of a formidable team that could rewrite the sad epilogue of Lotus-Mugen-Honda that was so wanting in its farewell race of 1994 in Australia.
- Mika Salo retired lap 49 with electrical problem
- Alessandro Zanardi retired lap 40 with throttle problem
- Johny Herbert retired lap 13 with gearbox problem
We can still be optimistic if the reincarnated Lotus F1 is powered by Mercedez, Ferrari or Renault engine. Sadly, that is not the case. How much therfore can we expect from an engine supplier whose last seven seasons in F1 was so pathetic that the public have forgotten, in an era long gone, Cosworth was the main engine supplier to many successful teams.
From year 2000 until 2006, the final year of its involvement in F1, the teams that were fitted with Cosworth engine had either finish last or thereabout, except for that single freak victory by Jordan in 2003 Brazilian GP when the race scheduled for 71 laps was aborted on lap 54 due to treacherous track conditions. Giancarlo Fisichella, the most fortunate driver in that ‘lucky draw’ admitted that had the race continued, victory would have been impossible. Even with that ‘accidental’ win, it could not help elevate Jordan team higher than seventh.
The following miserable statistics could perhaps put things into clearer perspective.
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Year 2000 position 9 out of 11 teams
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2001 8 out of 11
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2002 7 & 11 out of 11
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2003 7 & 10 out of 10
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2004 7 & 10 out of 10
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2005 7 & 10 out of 10
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2006 8 & 9 out of 11
Can the partnership of Lotus and Cosworth reclaim lost glory? Can they survive 21 barren and resource-draining years like Ferrari before recapturing the driver’s championship? Can the sponsors, with the exception of the ‘milking cow’ called PETRONAS, wait year in and year out, hoping against hope that someday their dreams of ‘value for money’ exposure come true?
How long is the perceived exposure?
“Four hours” said the wise man that created ‘highly profitable’ Perwaja, ’state-of-the art’ Proton and ‘environmental-friendly’ Bakun.
Trust his arithmetic at your own peril.
The season that had just ended recorded total track time of 2,325 minutes - 1,560 minutes on 17 race day and 765 minutes on 17 Saturdays. If, in the most unlikely scenario that all the twenty cars manage to complete every race, which mean that each car (sponsors) could reap the benefit of 78 minutes exposure for the 17 race days and 38.25 minutes during 17 qualifying sessions.
Adding both race and qualifying track time for each car for the whole season will give a total of 116.25 minutes. And the two Lotus F1 car could only be exposed for the world to ‘cheer or jeer’ for a combined total of 232.5 minutes. Is it attainable?
Yes, if you live in a virtual world. No, if it is in real life.
During race weekend, there will be commercial breaks. collisions, spin off or mechanical breakdown. It could be in the first corner or early in the race. And once that happened, the anticipated exposure for that particular Sunday is virtually zero. If it could survive but remain at the back just to make up the numbers, how many times in any particular race will the cameras focus on also-rans?
How much will it cost per minute?
Sooner, rather than later, the sponsors will realize that the FIA and the commercial rights holder, Bernie Ecclestone, are the real beneficiaries. While the two are laughing gleefully to the bank, the sponsors’ tear wells and dreams vaporize faster than the morning dew.
Whatever the outcome, it is not “morally right” for the government to get entangled in the games of the rich and famous. It is also “morally wrong” to take from us and give it to the rich because many poor Malaysians who have nothing but one vote still need cheaper and reliable Proton cars and fuel subsidies.
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November 15th, 2009 at 12:26 am
wow. that’s something that should be given thought of.
but then, why did tony fernandes agree to be the team principal?
from my observations, that guy is serious about the whole thing. thus, i’m giving the team benefit of the doubt because of him
November 15th, 2009 at 1:04 am
Very simple,
This Lotus F1 has the backing of UMNO/BN. Every Malaysian PM spend millions of RM to promote their image via oversea agencies. Tony Fernandez is aware of that.
He is also aware that Najib/Rosmah are eager to be exposed to the sporting world. For sure, they will take whatever opportunity to do that and the best way is to visit Lotus F1 paddock on racedays and have their faces broadcast live to the world.
So, he will ‘jaga’ Lotus F1 and not let it die standing.
If the team is struggling financially, he just need to pick up the phone and tell the Malaysian tycoons to help or risk losing business opportunities.
Worst case scenario, just channel government aid thru another company.
Semua bisa diatur bah. Rugi pun boleh dapat untung.
November 15th, 2009 at 5:30 pm
In BolehLand semua boleh, rugi pun tak apa janji menteri dapat nama. So much for this bloody fund wasting venture. Bloody politicians don’t know where to channel fund.
November 15th, 2009 at 6:35 pm
Agreed. Can’t say it better.
F1 is very risky and costly sport. Not even Toyota the richest car maker in the world could survive without victories.
BMW one of the world most famous marque, with PETRONAS being of one of the main sponsors, bowing out before 2009 season had ended.
Renault, despite winning the championship in 2005 & 2006, is seriously contemplating to quit in 2010.
Ferrari and McLaren the two biggest team in F1 are not immune, they may quit one day. At the moment they have big sponsors to cover the cost.
Winning in F1 takes a lot of everything to be in the best place. The right engine, the right aerodynamic, the right suspension, the right driver, the right leadership etc. I don’t see Lotus 1Malaysia (whatever it names) could even manage to get a championship point, let alone a podium.
Hope PETRONAS do not waste money. IF they could not do it with BMW, what’s to expect from Lotus?
IF Lotus is so confident of making profit in the first year of its operation, let them do it without PETRONAS’ money.
How F1 teams making profit?
1. Sponsorship deals
2. Merchandising
3. Championship prize money
And certain marques, like Ferrari, BMW, Mercedes etc. the more they win, the more they could sell their brand. A certain part of the profit could be distributed to motorsport activities. Motorsport is part of their advertising campaign.
November 15th, 2009 at 9:16 pm
Agree with you Mr KR,
Let them do without PETRONAS money. And I am sure they will not be able to last the full season.
How rich is TUNE and NAZA group? They want to compete with the owner of Red Bull and Force India? The owner of both teams are billionaires. And if they cannot stay on top, they will also quit.
I heard the commentaries in the last race…the difference between 3rd and 4th placing for constructors is about 10 million USD.
Any idea how much the team receive for being last or second last?
November 15th, 2009 at 9:50 pm
Below are excerpts from another blog. I feel obliged to share with you all. If you want the full version, go to news.motorstop.asia
1. If Toyota and Honda, with such big budgets and substantial expertise, found it hard to compete effectively, what makes 1MF1T, with a significantly smaller budget and still searching for expertise, believe that it can pull a rabbit out of the bag
2. a number of government-linked companies (GLC), led by Malaysia Airlines, that could feel pressured to sponsor the team, if not by obligation then at least by association
3. Fernandes brought to attention how one F1 brand managed to sell £150 million (RM 816.7 million) worth of T-shirts. While the Lotus brand may be notable, it is absurd to even suggest such an unrealistic sales target—one reachable by Ferrari and perhaps McLaren, and no one else
4. Unlike a conventional business that loses money and folds, 1MF1T’s failure could well drag Malaysia’s name through the mud, along with Fernandes and company’s
November 17th, 2009 at 9:30 am
U write about ships, chin peng and formula one with facts and figures and your attack on the establishments are subtle. I read the other article after yours and the firing is the opposite. Why not hantam like others?
Can I put it this way, it is your upbringing.
Oh yes, your style is also different. It seems to me you belong to the old school.
Am I right?
November 17th, 2009 at 9:32 am
Sorry to ask again,
That serials in a language that I cannot understand, can you translate. Which part of the world does that language belong.
November 17th, 2009 at 4:56 pm
Aoplogy for for the delay in responding,
Yes. I belong to the old school.
In the old days, I like to read books about ships and 2nd world war (more than a hundred), Muhammad Ali and of late Formula 1.
Why I don’t blurt out my anger? Too old to to do that. As the Malay saying goes “Anjing menyalak bukit, bukit tak akan runtuh”. Or “The hill will still be there even if the dog barks non stop” so to speak.
Which serial? The one in Malay is about my life in uniform. The other one is in “Banjarese”. It is mostly about life in the village. By the way, Banjar is an ethnic group in Kalimantan, the Indonesian part of Borneo island.
Hope it clears the mystery.
As of translating it, wait and see if I have the time because writing is just a past time. Most of the time I have no time.
November 17th, 2009 at 11:52 pm
samson, that serials’ language is Banjar.
You may click the following link to know a bit about the language:
http://en.wikipedia.org/wiki/Banjar_language
In practical, you find out some words may have similar meaning with Malays’ words, but for some who are familiar with these two languages, the way they pronounce the words, they know which group is belong to which group.
Back in the old days, Malaysian’s Banjarese, spoke a pure Banjar. And now, only a very few selected old-timers could speak as purely and fluently without mixing it with Malays’ / English’s words. I guess that are caused by many factors, mainly assimilation, education and modernization process.
Hope it helps.
November 19th, 2009 at 9:14 am
Thank Q sir,
It surely help.
I guess you belong to the same group and can speak the language or at least can understand.
How lucky you people unlike us who are not English but can only understand English.
December 17th, 2009 at 7:49 pm
Airasia refuse to pay the Government Airport tax it collected from passengers. Does this shows that AirAsia is making money?
Airasia was forced to give FREE one milion seats. Does this generate any income? Tony ordered so many airplanes and now say no parking space. sound stupid? Yet there are peope who believe him.
Now Lotus belongs to Proton a Governemt comapany but why is NAZA and Tony hijacking Lotus to be the vehicle for their F1 team?
The plan is two prong.
1 Hijack Lotus from Proton with Najib agreement
2. Apply for sponsorship from Govenrment Petronas
So what Tony and Naza has done is to use Lotus Proton to
claim they have an F1 team and so hope for RM200 to EM1 billion
from Petonas.
Why didnt Najib ask Proton to initiatie after all PRoton is the
car manufacturer like BMW. Why take in scums to hijack Petonas
money?
So the MACC or Pac MUST investigate the F1 project.
The illogical reasoning that you need 100 million to buy 2 minute advertisement in Japan does not make sense as it focused on one
product.
But one billion that Petronas has spent so far has not produced any
effect on the country.
Better to sent more astronauts or give to ibu tunggal who cannot
afford food on the table.
July 29th, 2010 at 10:33 pm
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