Bob Barnard Track Engineering

I know you all think F1 cars run on gasoline, petrol, but they really run on money, and lots of it. As promised the Pit Pass web site has come up with the goods to explain why 2010 was harder for F1 to make money, but make money they did because the bad economy lowered the interest rates on the debt. And when you have that much debt, as CVC does, then you are quids in. For the full explanation go to;

http://www.pitpass.com/fes_php/pitpass_news_item.php?fes_art_id=43328

As Mrs. Barnard said last week when the original story broke about the huge loss, it looks like money laundering, but no, it is good old tax avoidance, and all quite legal I'm sure. Most of the expenses must be in lawyers and accountants fees to work all this out and manipulate it. It does show however that the income from race fees may have peaked, with tracks no longer willing or able to pay up. If that is true, and if as Jean Todt suggests the TV audience is down, then when interest rates go back up there could be a problem. Bernie is telling us though that the debt will be repaid by 2014, so maybe not. I have learned that Bernie is a lot smarter than anyone else I know when it comes to making money.

In a related story it seems his henchman, Patrick McNally, his signage cohort, is retiring. I hope he has trained someone well to replace him as I do not know anyone who can place signs like Patrick, truly amazing. If you do not think that this is an art stop watching the cars next race and just look at the signs and where they are placed. Remember, in most countries the TV cannot be placed or shot to maximise the signs, the signage has to be "incidental." There is nothing incidental about where Patrick puts them, the cameraman cannot help but shoot them.

Lots of discussion about a "confusing" race yesterday, and if the drivers found it confusing how about your average fan. I did not find it confusing, but as I said yesterday, I found it unsatisfying. I did not comment yesterday on the amount of rubber on the track off-line as it did not seem to stop a lot of overtaking, but Perez said that his crash could have been caused by picking up a chunk on his tire, and drivers have come out about being hit by flying pieces. This is not a good situation.

Well that was fun, not. Web site and blog hacked this morning so late in writing this up.

We keep hearing that the DRS wing is going to make overtaking easy in Malaysia, but it is raining. Even if intermediates are on the car the wing cannot be moved, so it has to be totally dry for us to see if it works better than Oz. With less than twelve hours to first practice there is little to stir the emotions.

It seems the financial writers are no better at working out what is going on with F1 finances than I am. Pit Pass web site points out that the increase in the gross income does not jibe with the extra that should have been generated by the addition of Canada and Korea, so it would seem the race fees went down last year for all, or some. Pit Pass promises to give us the real story soon. There are stories that the teams are going to push for a 75% share of the gross in the next Concorde Agreement due shortly. That will put a dent into an already bad situation for CVC.

Jean Todt is cranking up the rhetoric. My friend Allen Petrich actually may have hit on what he is up to, make the F1 name so devalued that the 100 year rights are not worth having, and the FIA can start another Championship. Jean was talking down the audience numbers today, saying no one is watching because the tracks are boring and racing is bad. Pushing the 1.6 l Turbo down Bernie's throat could also be part of the plot. Does anyone know what GP2 is going to run when that happens? Is GP2 going to stick with the current engines, and will they be more powerful? I see that Renault has come out and said that they are increasing fuel usage due to the need to keep feeding the exhaust driven diffuser, about 10% more per race. That's really green isn't it?

Abu Dhabi is also looking to make changes to the track layout to help overtaking, and make it suitable for MotoGP. That is not going to be easy, but who do they have doing it? Why Mr. Tilke of course. Now, isn't it the definition of stupid to do something the same way twice and expect a different outcome?

The earning figures for Formula One are a big story today, with Bernie and the teams getting a raise in income. But there is something wrong here that I need an accountant to explain. My arithmetic obviously does not work in the world of accounting. The gross revenue for F1 is reported at $1.08 billion. The teams received $658m divided between them, not equally of course. Bernie received $7.9m and the net income is $296m. So $117m seems to be an operating cost. It is then reported that CVC LOST $660m! Now to my mind this means that CVC's costs are $296 + $660m, yes/no? Now CVC is a venture capital group, so apart from some management fees, this must be interest on the debt? Is that possible? No wonder they are looking to sell F1. What am I missing?

Joe Saward has a piece that goes a bit further into illuminating the ever shifting world of F1 management.

http://joesaward.wordpress.com/

Formula One Administration has just transferred the F1 rights to a sister company Formula One World Championship, which is owned by Bernie's holding company SLEC which is in turn held by - well read it, I do not have enough space. Eventually we get to Delta Topco Ltd which has CVC and others as shareholders. You could lose a lot of money going through that lot, which is presumably the point. Other snippets is the sale of Instanbul Park between internal companies, presumably the F1 track the Turkish Gov't couldn't make pay, for $1, yes one dollar, an $11m write off apparently, but then how much did the Gov't write off? What does that say about the value of all those other monuments to ego and foolishness called F1 circuits?

In other news the Brazilian Federation has asked the FIA to look at the Interlagos track. Pedrosa has had successful surgery to unplug an artery trapped under the ironwork put in his shoulder after his accident last year. Let's hope he recovers quickly and is back in form to mix it with Stoner and Lorenzo. Jan Magnusson's son is setting fastest times in F3 testing, and Tony Fernandes is saying the name row is hurting sponsorship. I know how he feels, sponsors do not like uncertainty, especially over the person selling them something really has the right to it. I had exactly that problem with Eastern Creek when the owners were trying to sell sponsorship for the MotoGP that I was promoting. By the time that was sorted the time left for sponsors to exploit their investment was so short the value was greatly reduced.

Rain is forecast in Malaysia for the F1 race, fancy that, and in the monsoon season too. So, no movable wing and no more answers as to how it will improve overtaking, but there will probably be enough in the wet anyway.

Kimi had his first taste of NASCAR truck racing at a half mile oval and apparently did well. It was behind closed doors, so no real information is available, but it does not sound as if he stuck it in the wall.There are reports he is paying $100,000 a race for the ride, but I'm sure a sponsor will be all over that.

Well I have checked all the usual web sites and blogs and no one has any real new news, if that is not an oxymoron. Jerez MotoGP this week, but not much else going on except some finger pointing about which of the Torro Rosso's ran into who, and how Sauber managed to race with an illegal rear wing. CVC is up for selling F1 if someone wants it and Gerhard Berger thinks we should get rid of the gimmicks. Here here. If not do not put arbitrary constraints upon them.

There are a couple of interesting articles about CVC, the F1 rights owner, and Bernie, and the sale of the shares. CVC has instigated its own enquiry into the events surrounding the purchase of the shares from BayernLB and the supposed bribe paid to Gribkowsky. At the same time it is reported they are head-hunting a new Chairman for the holding company, Delta Topco. This is a non-executive Chairman, so presumably Bernie is still in control, but it points to a lack of confidence. Bernie may not be able to put a woman in charge if he is not calling the shots.

The other piece is in the Pitpass web site where Der Spiegel has done its own digging and come up with its opinion that the shares were not sold below market value. There was an auction with two other bidders and CVC's offer was the highest, so how could Gribkowsky rig the sale to assist CVC? This is Alice in Wonderland stuff. If Gribkowsky did not get a $50m bribe for this deal, where did the money come from and why? Bernie is going to have a field day with the magazines if this lot is true.

The World Motorsport Council met today and decided to give Bahrain till May to decide if it wanted to reschedule the race. All seems quiet to us, but there is a piece on Pitpass from a private citizen in Bahrain describing the ongoing and escalating demonstrations. It would appear that Libya has taken the spotlight off Bahrain whose news organizations are being prevented from covering the demos.

Other WMSC decisions involved the allotment of extra tires, both for Friday practice as "evaluation" for new Pirelli's, but also additional tires for the race. Does someone have a lack of confidence in how long the Pirelli's are going to last?The WMSC has also asked the "Circuit Design Group" to look at how exisiting tracks can be changed to increase overtaking. About time someone woke up that it's the tracks, stupid. Again Pitpass has a nice editorial piece, especially the last two paras:

http://www.pitpass.com/fes_php/pitpass_news_item.php?fes_art_id=43052

In Barcelona we have the first day of the last F1 test, as well as Arsenal playing in the Champions League. At least with the soccer we will know who wins. Today Webber is doing a lot of laps with the quickest at 1 min 22.5 secs, but most averaging 1 min 29 secs, so we can see how the tires are going to slow things down. Button is the only man anywhere near this time, most are 2-3 seconds off with the Virgin 9 secs off the pace! McLaren had everyone going with a weird nose and front wing which they took off after lunch and said it was just to measure the forces on the front wing. Ferrari had another of those "filming days" yesterday at Barcelona and featured a new exhaust layout, but these are all so tucked away it is hard to see what each team is doing. So nothing changes, thank goodness Melbourne is just under three weeks away and we will finally get real on who is doing what.