Genii Capital double down on F1 presence

It appears that Genii Capital (Lotus Renault Grand Prix team owners) are moving to demonstrate that they are real serious about F1. Reports in the media are that Genii Capital are set to acquire a majority stake in Group Lotus whom currently have a sponsorship arrangement with the team. Genii's position and participation in F1 was discussed in August (HERE) if they would sell a stake in the F1 to Group Lotus. This was seen as not entirely plausible given Group Lotus's financial position. However, it has turned out that Genii are the ones buying in.

There is no doubt in my mind the joint venture of World Wide Investments Group (WWI) and Genii managing $10 billion USD in investments allows for more strategic thinking as it relates to the automotive sector; an area that has been identified as a target area in this joint venture. Genii's money definitely gives the spend happy CEO of Group Lotus, Dany Bahar the ability to continue the branding exercise he has engaged across multiple motorsport categories across the globe.

 With Team Lotus looking to have the team re-branded as Caterham, it stand to reason that Bahar is going to be very happy as he will be able to properly link the Team Lotus name with the Group Lotus motorsport and manufacturing activities. I am also sure that  Team Lotus owner, Tony Fernandes will be happy as he gets to cash in on selling the Team Lotus name to Group Lotus after beating them in court for the right to use the name. Fernandes can focus on promoting the recently acquired Caterham brand and build off of his other companies. Moreover, the proposed deal will most likely get Proton out from under Group Lotus which makes things work more harmoniously if you are talking about the whole concept of 1Malaysia. All the way around, this arrangement is definitely is more synergistic. If the deal comes off as it is expected to it will be curious to see how the final details shake out.

Nevertheless, one of the sticking points on the F1 side of things is this issue of re-branding Team Lotus as Caterham and LRGP as Team Lotus. For the name changes to be approved, 18 of the 26 members of the F1 Commission must support the move. The commission consists of the teams, Ecclestone, Jean Todt, representatives for sponsors, engine manufacturers and circuits. Nothing is easy in F1 particularly if it is something political. So, Ferrari, Sauber and HRT want to have a formal meeting on the subject. However, this is an example where I think it is just a matter of wanting to deal with future attempted name changes as everyone in the sport is ready to put the Team Lotus vs. Group Lotus name dispute in the past.

Did Red Bull cheat?

There is growing pressure coming down on the soon to be double world constructor champions, Red Bull Racing. The issue, a recent audit by a company called Capgemini found "discrepancies" in relation to Red Bull's 2010 budget as it related to the Resources Restriction Agreement (RRA). What is the RRA? It restricts the Formula One teams in terms of staffing levels, the aerodynamic development allowed in-house, the amount of time allowed for computational fluid dynamics (CFD) work and the amount of money for sub-contractors; all aimed at reducing cost in F1. There are a number of stories dedicated to the issue (Here) and (Here).

F1 had been talking about capping budgets for several years and in 2009 under the Mosley administration the RRA came into force for implementation from 2010-2012 (restructured to run until 2017); and as soon as it did teams were looking to close loopholes, renegotiating what is covered and understand what the penalties would be if the agreement was broken. So, did they cheat? Did they break the agreement? No. It boils down to these basic elements. The same auditors that found discrepancies certified the budget of Red Bull and the 2010 budget was submitted to FOTA, something done on a monthly basis until the close of the fiscal year for the teams (according to Stefano Domenicali is the end of February 2011 for FY2010). That is it.

However, there is something more. Just as everything in F1, you push the limits. The boundaries are defined and you push where there are gray areas. When those gray areas are exposed, you clarify the boundaries. Then you push a little further into more gray areas. That is the way it works whether you are talking about double-decker diffusers, F-ducts, flexi-wings/body parts or resource agreements. F1 is quite rare these days in that the teams make the rules in concert with the FIA. So, if a team crafts a rule or agreement with the other teams and it benefits that team, so be it. Teams knew about the gray area the double diffusers posed before the 2009 season, yet some went forward with the design, others did not. This is different only in the fact that one battle is on the car design side, this one is a battle of team management. 

Moreover, this is not a new story.  Mosley in December 2010 remarked to Auto Motor Und Sport, "Red Bull asked for an [overspending] exception. If that's true, that can only mean they spent more than they were allowed, and now they're asking for the [other] teams' approval. I am interested to know how their opponents are going to react."  Some would say, where there is smoke there is fire. In this instance, it is where there is smoke there is smoke. I do not expect to have a "Crash-gate" type revelation or a Worldcom accounting scandal after almost a full season and a certified Red Bull budget. Again, these teams are dealing with a gray and ever evolving agreement. For example, something not yet completely understood and covered is how to handle the use of outside suppliers and spending on future KERS/power train development; especially as KERS and other future, more efficient powertrains come on-line. This will be the new battleground for F1 supremacy that will yield future race team customers to who can get it right.

All the teams are looking for that extra advantage that comes with being able to draw up the rules. So, keep fighting ladies and gentlemen.

Link:
Will a Budget Cap work?

Will Genii Capital sell the Renault F1 team?

It has been a star crossed year at Lotus Renault Grand Prix. High hopes were basically dashed when Robert Kubica was injured in a near fatal accident, their innovative forward facing exhaust apparently has not yielded the performance they hoped for, speculation about the team's financial problems and their cars catching fire like kindling. Now the battle with their current or limbo-driver Nick Heidfeld, who was demoted for Bruno Senna, is taking the team to court to keep his seat. The team is in a bit of turmoil but say they have been buoyed by the performance of the newly installed Senna for Belgian and Italian Grand Prix. Well, at least while legal issues around Heidfeld's demotion are sorted.

Even with this statement of boosted morale in the team, do Genii Capital sell a stake in the Renault team or do they sell it outright? Currently, Genii is the 100% owners in the F1 team and plan to be for "the foreseeable future" in their words. Which to me is "until the right deal comes along". The obvious question is who would be the buyers in a still recovering global economy? The obvious answer would be Group Lotus, who currently have a sponsorship arrangement with the Genii-owned Renault team and an option to purchase a stake in the team by 2012. However, there are questions about Group Lotus's spending habits in terms of new product lines, plastering their name in just about every race series, even though they report they are meeting financial targets. Group Lotus is not in the best financial shape so you must question how much borrowing is going on to finance such activities. Also, will their owners, Malaysian auto-maker Proton, fork over more money for them to have any stake worthwhile. Moreover, a maybe not so major aspect is Proton have to navigate the 1Malaysia program. A participant in that program is Tony Fernandes' Team Lotus F1 program. To what extent do they ignore Fernandes to support Group Lotus in direct F1 competition? The whole Group Lotus vs. Team Lotus naming issue is a completely another story.  I think Group Lotus to spread too thin to make and real investment into LRGP.

Does Renault buy back into the team? They just sold the remaining 25% share in the team to Genii last year and the current arrangement of Renault only providing engines and technical support while reaping the benefits of their name still on the car without incurring the huge costs of running the team is rather advantageous for Renault. It also frees them to focus more in-depth on the technical partnership with other teams, like Red Bull, Team Lotus, and soon Williams in addition to LRGP. So no.I think they are gone for good as full fledged team owners.

Does Brazilian money enter the equation to buy a stake in the team? World Wide Investments Group (WWI) may have some money to play with it. Earlier this month, Genii announced a joint venture with WWI in which the two companies will manage an investment portfolio totaling $10 billion USD. The joint venture's focus: private equity investments in energy, renewables, real estate, information technology, telecommunications, oil, gas and the automotive sector; most of which WWI already engages in.

Why would WWI bother? F1 is a global championship with huge opportunities for branding, investment, cross collaborations in a number of industries: communications, defense, info tech, manufacturing, green technology. Sounds like some synergies right off the top. Also, it creates more competition with Apex-Brasil, an trade and investment agency that views motorsport favorably and currently works with Indycar through 2012.

Moreover, a F1 tie up with Genii will also allow WWI to have an opportunity to create a connection with one of the most famous names in motorsports and one that holds saintly status in Brazil, Senna. With Bruno Senna now in the race seat for LRGP for the time being and potentially for the future with a promising performance in his first grand prix in about a year it makes sense. However, the complication is of course Robert Kubica. There is some mystery as to whether he will be fit enough to ever come back. If he doesn't, then a Vitaly Petrov/Bruno Senna line up works. If he is able to return do they ditch Petrov's sponsorship portfolio or keep themselves out of the F1 ownership business if Senna has no seats? Maybe, as there is still plenty of investment opportunity without a near term Brazilian driver. 

If anything is to happen, you won't hear about it until there is some certainty around Robert Kubica's ability to return to F1. Regardless, I think there is going to be some interesting business deals coming down before 2012 season.

Can we expect 3 car teams in the future?

There are a lot of things to talk about in F1. Sometimes the same topic keeps cropping up from time to time usually because there is someone pushing the agenda whether it is a team, the FIA or FOM (Bernie). Something that has received off and on talk for several years is whether if teams should be allowed to race with three cars. Although the issue is quiet right now, we know that things are always in play. I think the main question is, with the sport in cost control mode, will there be a point in which budgets come to a level where having three cars is not cost prohibitive? I think that we are not to far from it.

Teams running third cars during grand prix weekends is not really new. From 2004 to 2006 teams were allowed to use a third car during the grand prix weekend as long they did not finish in the top four of the previous year's constructor's championship. Although they were not allowed to race it had advantages. Teams were able to evaluate younger talent during the pressure of a grand prix weekend, acquire additional data for race preparation and free test experimental parts. Then as easily as it came into effect, it went away for the 2007 season.

Almost five full season later, the talk is still around about third cars. Ferrari president Luca di Montezemolo is on record that he will continue to push for the top teams be allowed to run three cars. He is also a strong advocate of a return to in season testing; something FIA president, Jean Todt is very much on the same page on. I guess we will see if di Montezemolo keeps the lobbying pressure on.

I will certainly like to see teams have the option to run a third car. In addition to the potential return of in-season testing, having a third car allows for more young driver development, more practical testing opportunities and of course more data for GP's. Also, it is benefit to Pirelli as it will allow them to collect more data. However, that might not be as big a need in the next couple of years. Moreover, the afore mentioned Ferrari seems to be willing to run a third car, McLaren is more than likely to be in a position to run third car, Red Bull Racing own and run four cars (RBR and Toro Rosso). Bigger grids certainly add another dimension and increasing the number of good cars ups the level of competition.

One may ask how does this effect the championship? If third cars return, teams do not have to race a third car every race; they can essentially be wild card entries eligible for driver points only. F1 can utilize a system that was previously used in the World Rally Championship in which teams can nominate two cars for constructor points if they have a third car entered.

One of the cases against three car teams would be that it would push smaller teams out. I do not agree with this as there would be no reason to force teams to run a third car if they were not able to. Their constructor position in the championship is not effected as three car teams would only be able to nominate two cars for constructor points. A smaller team may get into an arms race with another small team, but that is competition. Another point to consider is that there still would be how to deal with potential cost issues. How do teams go about securing extra engines and tires and is there enough space in the garage area? Do tracks need some modifications?

Keep an eye on Jean Todt. As he pushes through some of FIA environmental initiatives and the global economy recovers, we will see third cars make a comeback to the front burner of F1 discussion, and I think its eventual reinstatement.

Toyota recalls and F1 plans

I know they are out of F1 now but I want to raise a point in regards to the following news. Toyota told its U.S. dealers Tuesday to immediately quit selling the new and used cars and trucks that it recalled on Jan. 21 because their throttles could stick open. Moreover, it will quit building 2010 versions of the models effected until it finds a solution for the throttle problem.

It has suspended U.S. sales of eight models. These models are: 2005-10 Avalaon, 2007-10 Camry, 2009-10 Corolla, 2010 Highlander, 2009-10 Matrix, 2009-10 RAV4, 2008-10 Sequoia and 2007-10 Tundra. Toyota has had 2 recalls related to throttle issues affecting over 6 million cars. This problem may also impact 2 million more European model Toyotas.

It makes you wonder how long they knew of the problem or whether the scope of the issue was not realized until much later. Toyota had made strong commitments to F1 going forward before their eventual pull out in November. As late as early September there was strong support for the program. Perhaps these events give us a little more insight to why Toyota chose not to engage in a series where expenses are in the hundreds of millions of dollars. When they announced their pull out they cited "current severe economic realities". Wonder if that meant that in an economic recession could they afford F1 and a large scale vehicle recall? At the time Toyota was verbally re-pledging its commitment in F1, it was looking to slash the F1 budget by at 40%. Their first recall was in late September dealing with floor mats supposedly hitting the throttle. Again, something to consider.

Coincidentally, Toyota offers a virtual good bye this week to F1 via its website.

http://ms.toyota.co.jp/en/

"There is too much politics"

Former F1 driver and 2007 World Champion Kimi Raikkonen thinks there is too much politics in F1; that is an understatement from the Finn, and he could not be more right. Just as there is a coming sense of excitement, F1 wants to shoot itself in the collective foot. Whether it was battles between the FIA and FOTA or Max Mosley speaking as if he is still the FIA president, the dog eat dog world of Formula One could not be more cannibalistic and blind to the outside world. Instead of focusing on the new teams, car launches and testing we may be forced to watch for more updates on hearings, lawyers pontificating, etc.

Meanwhile, Kimi Raikkonen has removed himself from all of that and appears motivated about his opportunity in the World Rally Championship. In addition to not missing the politics of F1, he goes as far to say that a WRC title would mean more than his title in F1. On that point, I would agree with him again. Not to say that one has higher value over the other as they are different disciplines but for a driver to make the switch to WRC or vice-versa and win a title would be an achievement of two lifetimes in this modern era of specialization.

Although there was plenty to criticize Raikkonen for in my opinion, one thing I always appreciated about him is that he says what he believes to be the truth and does not play many games. You were not going to get politics from Raikkonen. I suppose with all wranglings of F1 out of his hair for at least a year we actually might see a more vocal and less enigmatic Raikkonen. It would not be a surprise to many people if he never comes back; and I would not miss him one bit. I would be too busy appreciating his skills in the WRC.

Super License and Registration please

A driver in Formula One needs a lot of things; skill, talent and money are a few. One other important need is a Super License. A super license is what allows a driver to compete in F1. Yes, just as in your road car you require a license to compete in racing. All series have some sort of licensing process. The FIA has a grading system for different levels and disciplines lettering in D, R, C, B, A and Super License.

How do you get a Super License? Even though that process is spelled out by the FIA International Sporting Code, there is still a level of subjectivity involved. There are examples of drivers that end up in F1 that make you scratch your head; and conversely there are drivers that do not get a super license that leave you equally puzzled. Nevertheless, first things, first. Here are the needs:

Driver must already hold a Grade A license and meet at least one of the following:

-minimum of 5 starts in F1 the previous year, or at least 15 starts within 3 years.

-previously held a Super Licence and have been a regular test driver in F1 the previous year.

-within the previous 2 years finish in the first 3 of the F2, GP2 Series, GP2 Asia Series, Japanese F/Nippon; or finished in top 4 of Indy Racing League within the past 2 years.

-be the current champion of Formula 3 Euro Series; F3 in Great Britain, Italy, Japan, Spain; or World Series F/Renault.

-be judged by the FIA to have consistently demonstrated outstanding ability in single-seater formula cars, but with no opportunity to qualify under the above. Then the F1 team concerned must show that the driver has driven at least 300km (186 mi) in a current F1 car consistently at racing speeds over 2 days, completed within 90 days prior to the application.

However by exception, if supported by the Safety Commission, the FIA may approve a super licence to persons judged by the Council to have met the intent of the qualification process.

However, after you get over this hurdle one remains, the fee. In recent years this has been a source of irritation and even a source of potential protest from the drivers. Fees vary from driver to driver due to the fact it's calculated by adding cost for insurance, total points scored in a season, and for the license itself. For example, if you were a rookie like Toro Rosso's Sebastien Buemi, in 2009 you paid 13,120 euros ($18,950). However, if you were the 2008 Champion, Lewis Hamilton you paid 218,920 euros ($316,000).

As mentioned above, there have been interesting decisions regarding who gets or does not get a Super License. Recently, rally legend Sebastien Loeb was denied a Super License in the midst of winning 50+ WRC rallies, having raced at the 24 Hours of LeMans in the prototype class, and having impressed the Red Bull team during a test. Seems counter intuitive that Kimi Raikkonen can freely go to the WRC, but Loeb a much more accomplished driver in his discipline and with some experience in circuit racing is denied an opportunity in F1. One would think that the provision allowing for exceptions would be used, but alas it was not. Even Kimi Raikkonen was almost refused a Super License back in 2001 because even though he was proving fast in testing, he had very little lower formula experience; and although it was eventually granted, it was initially on a probationary basis.

In 2006, the FIA granted Yuji Ide, a poor example of a F1 driver with the now defunct Super Aguri, a license before they revoked it after 4 races. USF1 is reportedly seeking a license for Jose Maria Lopez, a driver with a lackluster resume but has a conditional deal with the team. He has not been in single seaters since 2006.

In the next coming weeks when we get all of the F1 driver slots filled, and we have potentially drivers you never heard of, think about the basic process of just getting a license and then some of the subjective wrangling that may be associated with it.

Take the money and go testing

Stefan Grand Prix chief Zoran Stefanovic is continuing with plans to enter F1 next season after recently visiting the ex-Toyota factory in Germany. Stefanovic is looking to complete a deal to take over the design of the 2010 F1 car Toyota would have used. Although Stefan GP does not have an entry, they aim to be ready. The Toyota entry was given to Peter Sauber, who reacquired his team from BMW in the wake of their withdrawal. According to Stefanovic, the plan is simple, Plan A: F1 in 2010. Plan B: go into F1 in 2011 but test and test a lot in 2010 as not being bound by the Concorde Agreement places no restrictions on them.

What's nice for Stefan GP is that they may acquire the rights to a car designed by Toyota that can instantly make them more than tail-enders. However, as I do not see there being 14 teams on the grid, 2010 is just a dream...unless one of the current teams is not on the grid in March. However, I don't blame Stefanovic for pushing hard on the 2010 entry as they may have a car, facility and the potential of making some money as a potential mid-field runner with the ex-Toyota package. But a 40% increase in teams that finished 2009 is an expansion that I do not think F1 is prepared to support.

So the proper thing to do is go testing and develop the team, package, analyze the competition and prepare for a real onslaught in 2011; and they just might do that. The latest report from Autosport.com says Stefan GP is looking to start a young driver development program to coincide with their testing plans. That says to me that they will take the option of spending 2010 testing; and earning some money while doing it. Stefanovic says, "we will offer teams, who are changing drivers during the season, or even young drivers themselves, the chance to test our car so they can gain experience. It will be purely a commercial operation."

F1 is still too expensive; still needs more 'green'

"F1 is too expensive," are the words of newly FIA president Jean Todt in an interview Le Figaro. "I am sad that Honda, BMW and Toyota have left, but when one spends enormous amounts of money without the desired results, it is inevitable. On the other hand, it is great that new teams are coming in." Although Todt plans to be a big advocate in F1 cost reduction just as former FIA president, Max Mosley, he was not very keen on the idea of budget caps but obviously wants to work to find a solution, "if we want to sustain F1, we need a true awakening..."

For perspective the average budget in F1 in 2008 was 279 million dollars with the big spender being Toyota at 445 million. In 2009 when there seemed to be fears of an eminent collapse of the economy never mind F1, the average budget was 232 million dollars with McLaren being the big spender at 298 million. Although everyone knows F1budgets are not particularly sustainable, the powers in that be could not slash their costs to the point where teams like Toyota, BMW and Honda could justify their participation. It will be very interesting to see how Todt will tackle this problem. Will his efforts be seen as more constructive than those of Max Mosley?

In addition to reducing the green on one end, Todt wants to increase the 'green' on the other end by continuing to investigate new energy sources and eco-friendly technology for F1 and motorsports in general. "I am convinced that we absolutely must reflect the environment with new technologies. After giving up on KERS, we will accomplish nothing innovative next year. I'm sorry about that. I have therefore decided to create a working group...Gilles Simon, former boss at Ferrari engines, will join the FIA in this context."

Two things that I think will help achieve his goals on the cost and the environment are the facts that teams are moving towards more reliance on CFD and simulator based car development. This can definitely be less expensive than running a windtunnel 24 hours a day and having to send a test team out on the track. Also, with the FIA plans of introducing a world engine, a new 1.6-liter turbo-charged formula pushed by the FIA with the goal being use in many racing series, would definitely help push cost down as teams (manufacturers) that race in different categories would be able to use one engine. For example, BMW could race world engines in F1 and World Touring Car. Moreover, Volkswagen, who races through various brands and divisions is very interested in supplying engines to F1 teams with the world engine concept being a motivating factor.

As the FIA moves forward we will see if Todt can avoid having a caustic relationship with the teams; something that Mosley could not avoid after many years in F1, as Ecclestone's 'partner', and as FIA president. Given the current economic situation I am sure Todt will have some cooperative partners. We will just have to wait and see what it looks like in a few years.

F1, Advertising and "New" Media

Just this past week participants in the Motor Sport Business Forum pushed the idea that Formula One should be doing more to embrace the internet and new media rather than trying to focus on protecting its more traditional media channels; i.e. television. Given that a number of media companies and industries have embraced online content in a big way and advertisers have followed what is taking F1 so long to get with the program?

There certainly is an emergence of free and paid content models that F1 can explore. In my opinion, there is plenty in which F1 can offer its fan for free. Conversely, there is also plenty of things F1/teams can offer fans as "premium content" that people would probably pay for. But obviously I would prefer the free.

Here in the United States, F1 television coverage is pretty good. It is not like the saturation that exists with NASCAR, but nonetheless pretty good. SPEED has some shows dedicated to F1 in addition to broadcasting Friday Practice 2, Qualifying and the Race itself. However in terms of the new media question, I think F1 can certainly do more. I think they should stream races online. There can be podcasts of races and different practice sessions. They could make their Season Reviews videos available online. They could offer free telementary and live car to pit radio.

Maybe some fans would pay subscriptions to have access to older historic races. SPEED used to have a show called F1 Decade from 2003-2005, where they broadcast edited races from 1993-1995. Reportedly it cost the network too much money to continue with the arrangement in addition to paying for broadcast rights for the races. Well, maybe fans would pay a little fee to have access to this sort content online. Maybe fans would a pay a little to have access to old car designs or pay to have access to webcams that are filming engine bench tests or windtunnel sessions.

The World Rally Championship (WRC) has some interesting ideas for more exposure for their series in the new media context. For example, some of those plans include more access to live on-board footage and service park webcams on the internet, plus high definition and 3D television coverage in the future, as well as a new WRC video game into which live action from the stages could be integrated.

Now how great would it be to match up against Lewis Hamilton in a downloadable or live race situation?

As it is with most large monolithic institutions, change in this area appears slow. Which to me is a bit of a paradox given the hi tech nature of Formula One. However, with new fans coming in, new teams that seem willing to embrace such media and the ever increasing need for revenue there might be some serious movement on expanding the streams in which F1 fans get their content as opposed to having to get F1 content and sharing it "illegally".

I think with new team principals like Tony Fernandes of Lotus F1, who has extensive experience in the music industry, (an industry that has battled and finally embraced online content) will help F1 see things a new light.

Formula One makes deep, tough cuts

Formula One's slash and burn tactics to reduce costs continues to evolve and solidify. Some of the steps that Formula One is prepared to undertake are a total ban on in-season testing, major changes to engine rules and dramatic cuts in aerodynamic development are the main pillars of F1's cost cutting program.

Following a meeting of the FIA's World Motor Sport Council in Monaco on Friday, the FIA announced a host of measures that have been agreed with the Formula One Teams Association (FOTA) and will be put in place over the next few years that will cut budgets by at least one third from next year.

Below is the full list of cuts from the FIA press release:

The following measures to reduce costs in Formula One have been agreed by the World Motor Sport Council. These proposed changes have the unanimous agreement of the Formula One teams, who have played a major role in their development. The FIA is grateful to the Formula One Teams' Association (FOTA) and its Chairman Luca di Montezemolo for their incisive contribution.

2009

Engine

-Engine life to be doubled. Each driver will use a maximum of eight engines for the season plus four for testing (thus 20 per team)

-Limit of 18,000 rpm.

-No internal re-tuning.

-Adjustment to trumpets and injectors only.

-The three-race rule voted on 5 November remains in force.

-Cost of engines to independent teams will be approximately 50% of 2008 prices.

-Unanimous agreement was reached on a list of proposed changes to the Renault engine for 2009; all other engines will remain unchanged. Comparative testing will not be necessary.

Testing
No in-season testing except during race weekend during scheduled practice.

Aerodynamic research
No wind tunnel exceeding 60% scale and 50 metres/sec to be used after 1 January 2009. A formula to balance wind tunnel-based research against CFD research, if agreed between the teams, will be proposed to the FIA.

Factory activity
Factory closures for six weeks per year, to accord with local laws.

Race weekend
Manpower to be reduced by means of a number of measures, including sharing information on tyres and fuel to eliminate the need for "spotters".

Sporting spectacle
Market research is being conducted to gauge the public reaction to a number of new ideas, including possible changes to qualifying and a proposal for the substitution of medals for points for the drivers. Proposals will be submitted to the FIA when the results of the market research are known.

Note: It is estimated that these changes for 2009 will save the manufacturer teams approximately 30% of their budgets compared to 2008, while the savings for independent teams will be even greater.

2010

Power train
Engines will be available to the independent teams for less than €5 million per team per season. These will either come from an independent supplier or be supplied by the manufacturer teams backed by guarantees of continuity. If an independent supplier, the deal will be signed no later than 20 December 2008. This same engine will continue to be used in 2011 and 2012 (thus no new engine for 2011). Subject to confirmation of practicability, the same transmission will be used by all teams.

Chassis
-A list of all elements of the chassis will be prepared and a decision taken in respect of each element as to whether or not it will remain a performance differentiator (competitive element).
-Some elements which remain performance differentiators will be homologated for the season.
-Some elements will remain performance differentiators, but use inexpensive materials.
-Elements which are not performance differentiators will be prescriptive and be obtained or manufactured in the most economical possible way.

Race weekend
-Standardised radio and telemetry systems.
-Ban on tyre warmers.
-Ban on mechanical purging of tyres.
-Ban on refueling.
-Possible reduction in race distance or duration (proposal to follow market research).

Factory activity
-Further restrictions on aerodynamic research.
-Ban on tyre force rigs (other than vertical force rigs).
-Full analysis of factory facilities with a view to proposing further restrictions on facilities.

Longer term
The FIA and FOTA will study the possibility of an entirely new power train for 2013 based on energy efficiency (obtaining more work from less energy consumed). Rules to be framed so as to ensure that research and development of such a power train would make a real contribution to energy-efficient road transport. An enhanced Kinetic Energy Recovery System (KERS) system is likely to be a very significant element of an energy-efficient power train in the future. In the short term, KERS is part of the 2009 regulations, but is not compulsory. For 2010 FOTA is considering proposals for a standard KERS system. The FIA awaits proposals. A number of further amendments were adopted for the 2009 and 2010 Sporting and Technical Regulations.

http://www.fia.com/en-GB/mediacentre/pressreleases/wmsc/wmsc08/Pages/wmsc_121208.aspx

Honda is out of F1 effective immediately

Honda have announced their immediate withdrawal from Formula One, the Japanese manufacturer's president and CEO Takeo Fukui confirmed on Friday morning.
After a night of frenzied speculation about the future of the Honda Racing team, Fukui told a hastily called press conference in Tokyo that difficult financial conditions had forced the company to make the decision.

"Honda must protect its core business activities and secure the long term as widespread uncertainties in the economies around the globe continue to mount," he said. "A recovery is expected to take some time. "Under these circumstances, Honda has taken swift and flexible measures to counter this sudden and expansive weakening of the marketplace in all business areas. However, in recognition of the need to optimize the allocation of management resources, including investment regarding the future, we have decided to withdraw from Formula One participation. We will enter into consultation with the associates of Honda Racing F1 Team and its engine supplier Honda Racing Development regarding the future of the two companies. This will include offering the team for sale."

Autosport.com understands that Honda Racing team principal Ross Brawn and CEO Nick Fry are due to fly to Tokyo on Monday for talks with the Japanese chiefs about the future.
Sources suggest that Honda chiefs have been told that the team will be funded only until March - giving them three months to find a new buyer before they are shut down. It is understood staff have been told that potential buyers have already been lined up, with Brawn already focused on securing an engine supply deal with Ferrari to try and keep the team in F1. Fukui admitted that the withdrawal decision had been a hard one to take - especially as Honda had taken a victory as a car maker in 2006 and had already invested a huge amount of money in bidding to return to the top under the leadership of Brawn.

He added: "In its third era of Formula One activities, Honda has been participating in Formula One races from the 2000 season, initially with BAR, by adopting a new format of jointly developing racing machines. Subsequently, in a move to meet the changing environment surrounding Formula One, we switched to running a 100% Honda-owned team commencing with the 2006 season. Surmounting many challenges, the Honda Team achieved a grand prix victory in 2006, enabling Honda to receive overwhelming support from Honda fans around the world that were looking forward to greater success. It, therefore, has been an extremely difficult decision for us to come to this conclusion without having been able to fully meet the expectations of our fans. By making the best of what we have learned during these times of economic turmoil, coupled with the spirit of challenge gained through active participation in racing, we intend to continue with our commitment in meeting new challenges. Finally, we would like to take this opportunity to sincerely thank our fans and all those who have supported Honda's Formula One efforts, including everyone in the world of Formula One."

http://www.autosport.com/news/report.php/id/72322

This is a major blow to Formula One and cements the impact of the financial crisis on the sport. Although it pains me to say it, Max Mosley and his slash and burn cost cutting measures seem to be a truly necessary 'evil'. This may be a temporary fall in the economy, it looks very necessary to do these cost cutting measures to ensure there is an F1 when the economy picks back up.

As mentioned in the story, it is possible for the remnants of the team will be on the grid, it will be very difficult. The question is who will buy the team? It would be ironic if Prodrive and its chairman, David Richards would be interested with some afore mentioned assistance from Ferrari.

Historic and fundamental change in F1

In what is being described as historic changes to Formula One, the FIA and the Formula One Teams' Association (FOTA) have announced sweeping changes in the name in cost reduction. It is understood that this radical agreement was reached between FIA president Max Mosley and FOTA leaders Luca di Montezemolo and John Howett to introduce dramatic cost reductions starting in 2009. There are additional cuts in the works for 2010 and beyond.

According to autosport.com some of the changes are:

- Engine life will be increased from two to three races from 2009.

- Manufacturers must be prepared to make 25 engine units available, at a cost of 10 million Euros, to customer teams.

- There will be a further meeting between FOTA members in Brazil to determine testing kilometre limits for 2009, and an agreement in principal on the introduction of a standard Kinetic Energy Recovery System (KERS) unit for 2010 or 2011. KERS is believed to remain open for teams to use next season.

- The sport's governing body and FOTA will meet again after the Brazilian Grand Prix to discuss measures to reduce costs related to chassis development and the continuation of the use of customer chassis in the future.

In an letter penned to the FOTA by Max Mosley yesterday, Mosley laid out the financial concerns and asked for teams' input to help make the sport sustainable. Moreover, he laid out the FIA vision of the future in which he discussed standard engines, custom and customer gearboxes, standard components of the chassis, and solicitated suggestions regarding race procedures or "the show".

It would appear that Max Mosley has cunningly struck at the moment when teams and manufacturers were most vulnerable (losing money in an economic downturn) to essentially bring Formula One back to the 1970's or to some "the Golden Era"; something Mosley made no secret of over the years. With the specifics of the radical changes to come out shortly, F1 will enter a new, old era racing. Honestly, I am not sure where this puts Formula One. On the surface, I would simply say these agreements just makes them a global open wheel NASCAR series. I am sure if F1 fans wanted NASCAR or a complete standardization of the series, they would have just watched NASCAR or the Indy Racing League (IRL). Given what fan surveys called for, I do not see this move as keeping Formula One fans interested. However, fans are a fickle bunch and it just might be the solution in making F1 more popular. I just as you, will be watching what the specifics will be.

Nevertheless, feel free to check out opinions and information on the financial crisis that led to today's announcement:
http://formulaoneamerica.blogspot.com/search/label/Business%2FTech

Global Economy kills 2009 French Grand Prix

The French motorsports federation announced on Wednesday that it will not promote the race in 2009 due to financial difficulties.

"For reasons related to the financial situation, the Federation Francaise du Sport Automobile (FFSA) has decided to cancel the Grand Prix of France," said the FFSA in a statement.
"The FFSA would like to thank all customers who attended the Grand Prix of France and have supported this international event in recent years."

The French race was on the calendar announced earlier this month by the FIA for the 2009 season. The decision leaves the 2009 calendar with 17 races after the Canadian Grand Prix was also absent from the schedule.

http://www.autosport.com/news/report.php/id/71421

In recent years there was always some financial questions around the French Grand Prix dealing with the financial guarantees set forth by FOM's Bernie Ecclestone. However, the race was always run. This time it seems that the global financial crisis is largely to blame for the axing of the 2009 French Grand Prix. If things remain unchanged, it will the first time since 1955 that there will not be a Formula One French Grand Prix. I wonder if there are other races that will suffer the same fate.

Economic downturn and F1 safety

In light of the economic crisis that has impacted global economies, thus impacting the economy of Formula One, the sport has to be very cautious that dramatic changes for 2009 and drastic proposals being considered does not impact safety. Most notably for 2009, Formula One is implementing a kinetic energy recovery system and dramatically reducing downforce. Now, the FIA and F1 teams are looking at more sweeping changes such as a ban on refueling and a further restriction of testing, in addition to the standardization of components ranging from engines to brakes. This technical upheaval amidst these global conditions is bringing up eery feelings of 1994.

What occurred in 1994? Formula One saw itself under threat by North American open-wheel series, CART or Championship Auto Racing Team (preceding governing body to Champcar). This is series closely affiliated with the Indianapolis 500. The series was growing in world wide popularity and was seen as a real contest between drivers instead of the technological and spending competition between cars that was F1. 1993 was seen as the zenith of Formula One technology and drivers were scientist in race suits. Many claimed that F1 was so advanced and the cars were so easy to drive, any slouch could win provided he had the car.

In response, the FIA and Formula One enacted major changes for the 1994 season. Cars were stripped of many aids such as launch control, traction control, ABS, power brakes, fly-by-wire throttles and active suspension. Also, they more rigorously employed the safety car and re-instituted refueling.

During the 1994 pre-season, 3-time F1 champion Ayrton Senna remarked, "it's going to be a season with lots of accidents, and I'll risk saying we'll be lucky if something really serious doesn't happen. It was a great error to remove the electronics in the cars. The cars are very fast and difficult to drive;" and indeed the cars were difficult to drive. Formula One suffered a rash of testing and racing accidents: Jean Alesi, JJ Lehto, Karl Wendlinger, and the deaths of Ayrton Senna and Roland Ratzenberger. In response to this situation, the FIA instituted further changes aimed at reducing downforce and horsepower to help ensure drivers safety; drivers were again skeptical. Martin Brundle commented, "if we are fundamentally changing the car to go to the next race with an unknown quantity it does not strike me as particularly safe." About a week and half later, Lotus driver Pedro Lamy was nearly killed in a crash testing the new modifications. All of these changes exposed the safety void that existed in Formula One as well as exposed the poor, rushed decision making.

Today similar conditions are brewing. There appears to be a knee-jerk reaction to implement new regulations in addition to the ones coming on-line for 2009 in an effort to deal with cost. There have been a number of proposals that give the impression that drastic action is needed if the sport is to remain competitive and viable. In 1994, the economy was not in great shape and the wide sweeping technical changes were in response to the perception that F1 was 'losing' the competition with CART so a swift response was needed. In 2008, the global economy is in crisis and the sport wants to slash costs but introduce new technology and regulations while competing with evermore diverging fan interests. And we see that F1 is trying to enact a swift response in an effort to remain sustainable.

Even though the times are tough, Formula One needs to be very prudent and not fall victim to the law of unintended consequences. Each time there has been a major overhaul of the sport there has been push back from the teams. This time there seems to be very little push back, so the additional reforms that are proposed might be implemented. I hope with the rush to cut costs that safety is not reduced due to teams not properly sorting their cars because they have budget caps or can not test car properly. Moreover, I hope safety is not reduced because one bad batch of standard parts effects 4 or 5 teams instead of 1 team resulting in accidents. To keep the sport sustainable and exciting will be much appreciated by F1 fans in the long run, but to do it at the expense of killing or maiming 2 or 3 drivers in the process is not the legacy the FIA and F1 need to be remembered by.

Formula One in economic free fall?

Formula One teams seem prepared to turn the series into a standardized series in the mold of NASCAR and the IRL as a way to make immediate cost reductions amidst a global economic crisis. In an autosport.com article out today we have the following:

"FIA president Max Mosley has ramped up efforts to bring F1's costs down amid fears that the sport is unsustainable in its current guise. He is due to meet with the Formula One Teams' Association (FOTA) after the Chinese Grand Prix to discuss an urgent plan of attack. And although he and F1 commercial rights holder Bernie Ecclestone have floated the concept of a standard engine, sources have indicated that several manufacturers would pull out of F1 if such a rule was introduced. However, despite the reluctance for a single-specification power unit, teams do appear willing to support the concept of introducing more standard parts - such as brakes or gearbox." http://www.autosport.com/news/report.php/id/71236

BMW and Honda have been very vocal against having standard engines although both manufacturers support reducing costs and seem ready to compromise with some standardization of the engine.

Money will change any plan; even in Formula One. The FIA and F1 wanted to keep technology and technology development a centerpiece of the sport as that pillar was supported overwhelmingly by F1 fans in a 2006 survey the FIA administered. At the time, Max Mosley said, "we recognize their (fans) view that technology is important but that the right balance with driver skill must be achieved and that improving car design to encourage overtaking must be one of our priorities. We are now working very closely with the teams and manufactures to ensure that we encourage the introduction of new energy efficient technology which will not only help to improve the show but will also have a direct environmental relevance for the motoring public."

They are delivering on the technology that have direct environmental relevance through KERS and have done some things with car design that may faciliate overtaking. Nevertheless, the need to do some more hatchet work on Formula One budgets seems very alarming. So, given the nature of the financial crisis and the easy willingness of teams to standardize the sport, one must ask the questions how 'liquid' is Formula One? How damaged is Formula One by this global crisis? One of F1's shareholders, Lehman Brothers (part of the CVC group that owns 16.8% of F1) filed for bankruptcy in September. So, how shaky are the other shareholders? Below is the link to the Business posts for Formula One America in which some of these issues are discussed.

http://formulaoneamerica.blogspot.com/search/label/Business%2FTech

It's about time they shared the money

Formula One is finally starting to make some sense in terms of really trying to help the smaller teams. The new Formula One Teams' Association (FOTA) is considering this week a restructuring of how the prize money is to be divided. Instead of dividing the money where payments are weighted on a team's final constructors' championship position, they are thinking about dividing the money more equally. Currently, the higher a team finishes in the constructors' championship, the bigger share they get of the estimated $500 million (USD) revenue that is currently given to them by Formula One Management (FOM). Bernie Ecclestone, who heads the FOM proposed and supports this redistribution and it is gaining support from the teams as well.

One team principal source told autosport.com: "This would be a good way of securing the finances of all teams, without hindering those at the front. Teams that win are able to command more sponsorship money than those at the back anyway, so there will always be benefits to winning."

I discussed this money sharing in a September post regarding budget caps in that I said if Formula One is to have an effective cap system there had to be better revenue sharing and if the sport wanted to really save independent teams as well as control costs more effectively, they would give smaller teams an equal share of the TV money to help supplement team budgets. This sort of system is in place in the National Football League (NFL) and in the NFL, everyone makes money and no one is in danger of going bankrupt ala Super Aguri did this season.

This is simply a common sense approach to the growth and sustainability of Formula One and should have been thought about years ago. There is no need for slash and burn cost cutting policies. There just needs to be better sharing the hundreds of millions of dollars that is flowing into the sport.

http://formulaoneamerica.blogspot.com/2008/09/will-budget-cap-work.html
http://www.autosport.com/news/report.php/id/71079

Formula One and the credit crunch

The trouble in the global economy has hit many institutions and businesses. Formula One is not immune to the financial down turn in the world. Here is an interesting article by Alan Baldwin of the International Herald Tribune (Global Edition of the New York Times) regarding Formula One and the credit crunch. For the sake of full information, below is the full article:

Formula One looked in fine fettle at Sunday's stunning night-time grand prix in Singapore but the worry lines are always more apparent in the cold light of day. Money is the lifeblood of the billion-dollar sport and, with the credit crunch biting deep into the global economy, those involved know they cannot continue to spend like there is no tomorrow. "Formula One is in rude good health...and I think that it can stay in great health provided that we take action," Williams team chief executive Adam Parr told Reuters. "Formula One is marketing itself very well in terms of establishing new races in key areas but we need to do more. "Costs have grown exponentially in the last 10 years and it's time to put an end to that."

International Automobile Federation (FIA) president Max Mosley warned in July that Formula One was "becoming unsustainable" and the global economic climate has only deteriorated since then. Honda-backed Super Aguri folded in May, leaving Formula One with 10 teams and no prospect of anyone new coming in. Some insiders fear others could also head for the exit unless changes are made. Toro Rosso, co-owned by Red Bull energy drink billionaire Dietrich Mateschitz, have a guaranteed budget for 2009 but their future remains uncertain beyond that. Red Bull Technology currently design the cars for both Toro Rosso and Red Bull Racing but in 2010 each team will be required to design and make their own, a huge burden for the smaller, Italy-based outfit. "I would struggle to carry on alone," Toro Rosso co-owner Gerhard Berger told Italy's Gazzetta dello Sport last month. "I need the backing of a car manufacturer. Which isn't there."

DWINDLING SALES
Red Bull use their two teams to promote and sell their product while Force India are bankrolled by aviation and drinks billionaire Vijay Mallya, who says he is in for the long haul. Williams, the only team without a manufacturer or billionaire behind them, reported losses of 21.4 million pounds for 2007 on Tuesday but said they were well-funded for the future. In a sport where sponsorship contracts are generally negotiated to run for three and sometimes five years, and spaced out to ensure they do not all expire at once, the former champions can expect to weather the immediate storm.

However big-spending manufacturer teams may be more vulnerable to the parent company's board looking at the bottom line and deciding enough is enough. "It's a lot of money that can be addressed with one swish of the red pen," said Parr. BMW, Fiat (Ferrari), Honda, Mercedes (McLaren), Renault and Toyota all either wholly or part own teams -- some with budgets of more than 226 million pounds a year -- against a backdrop of dwindling sales and sinking share prices. Some, such as Toyota, have pumped billions of dollars into the sport with little to show for their investment. Honda, whose car promotes environmental awareness rather than any major external sponsor, have also spent hugely.

MORE PRESSURE
"Those teams that are very dependent on car manufacturers for funding and don't have commercial sponsors might be under more pressure," former Benetton and BAR team boss David Richards told Reuters. But there is unlikely to be any knee-jerk reaction. It (withdrawal) is such a high-profile decision to make." To try to bring down the costs, the teams have formed an association to work with the FIA and commercial rights holders. "I think it is absolutely urgent," Parr said of the need for cost-cutting. "Whatever measures we take must be in place for 2010. Anything beyond that is too late, both the teams and the FIA recognise that. "The car manufacturers could halve their spending in Formula One tomorrow," he added. "I know that because, guess what, I know what we are spending. Why does anyone have to spend more than Williams spend on going racing? If the board of another team says we want to stay in F1 because it's a fantastic platform for our business but we are only prepared to spend what Williams spends -- is that the end of the world? Some of these teams could save 100 or 200 million euros by doing that."

On the plus side, the money is pouring in from new venues such as Singapore and Abu Dhabi, which will make its debut in 2009, and there is no immediate sign of sponsors running for cover.
"I think we had 900 guests over the Singapore weekend. Our sponsors were enormously active," said Parr, who added that three or four partners had renewed or extended contracts in the last few weeks. "Businesses still have to achieve their key objective and Formula One is still a unique platform for doing that," he said.

"For a company worth let's say 40 billion pounds, to invest 20 million a year in a Formula One partnership is not a major undertaking. It's significant but not major."

International Herald Tribune
http://www.iht.com/articles/reuters/2008/10/02/sports/OUKSP-UK-MOTOR-RACING-MONEY.php?page=1

Will a Budget cap work?

The idea of a budget cap has been thrown around for several years and initially championed by former Jaguar Racing team principal Tony Purnell. In January, FIA president Max Mosley stated, "starting in 2009, there will be a cap on expenditure for all Formula One costs other than engines, drivers and expenditure exclusively for promotion and marketing." So with those words and the backing of the teams Formula One will have budget caps next season, but the exact details of how everything will work is still being figured out. The initial questions in regards to this cap are how much will teams be allowed to spend and on what? The proposed cap figures from the FIA and the FIA consultant Tony Purnell, one of the original backers of the idea, is as follows:

250 million USD for 2009 , approximately 200 million by 2010, and approximately 156 million in 2011. The proposed cap would not cover expenditures on engines, the new KERS, marketing costs or driver and team principal salaries. Although there seems to be no issues on what is not being capped, the reactions by team principals to the proposed cap figures have been mixed. Honda Racing CEO, Nick Fry has said, "next year's figures are workable, but Honda is a little concerned about the glide-path, which needs more discussion. By pushing the number too low, we may not only attract marginal operations but also alienate those at the top who want to develop high technology." Renault team principal, Flavio Briatore said "I already pay 40% less than the cap. If I want to keep to the limit then I need to spend more. It's nonsense." Although, this is before he publicly declared yesterday that Renault had increased their F1 budget by 30-40% amidst difficult economic conditions.

As an American that enjoys the National Football League and likes how the NFL manages their salary cap structure, I do wonder about the feasibility and impact of a cap in Formula One. In the NFL, there are 32 teams and each team is allowed to spend a fixed amount on player salaries. In 2008, the figure is 116 million USD; player salaries are the most expensive line item in a team's budget. Also, team owners can spend whatever they want in areas like marketing, investments, stadium infrastructure, etc. Moreover, the NFL shares its TV revenue equally. This helps to keep small market teams (Green Bay Packers, Jacksonville Jaguars) financially competitive with its bigger market brothers (New York Giants, New England Patriots).

In recent years the FIA has instituted a number of restrictions with the aim of reducing costs and keeping the independent teams alive and competitive (currently teams like Williams, Red Bull and Force India). The costs of operating a team are so high because car manufacturers have vast resources that squeeze out independent teams. The FIA has done what the NFL has done by putting restrictions on the most expensive line item, engines and engine development as well as restricting testing which has its pros and cons. In addition to testing and engines, the FIA have reduced the number of cars you can bring to the race, they have implemented a standard electronic control unit and they contracted a single tire supplier. Nevertheless, these measures help the smaller teams to a degree and have had only marginal success in controlling costs. Bigger teams would just shift expenses to other areas of development; for example investing heavily in building or acquiring wind tunnels, supercomputers and developing lubricant technology.

If Formua One is to have an effective cap system there has to be better revenue sharing. In F1, there is not a TV revenue sharing deal like the NFL's. F1's commercial aspects are governed by the Concorde Agreement which is a contract between the FIA, the Formula One teams and Formula One Administration. It dictates the terms by which the teams compete in races and take their share of the television revenues and prize money. This money is divided on a sliding scale. If the sport wanted to really save independent teams as well as control costs more effectively, they would give smaller teams an equal share of the TV money to help supplement team budgets. This current proposal is designed to regulate budgets in a way that can impact the livelihood of what amounts to the "working class" of F1; designers, engineers, factory staff, etc., particularly since the cap proposal is not a stable figure or one that incrementally increases; again it decreases and decreases drastically. It is a 42% decline in the budget cap figure in 2009 to 2011. Toyota's team president John Howett: "The one issue is how low the FIA wants it to go over time and the impact on people's livelihoods. That's the biggest concern I have." This proposal does not effect team principals or drivers as they can get paid whatever the team chooses, but some talented aerodynamacist who has more impact on the car has his salary capped. This is where there is another difference. In the NFL, the players (F1 equivalent would be drivers) have their salaries capped. Now, would it be more interesting if Ferrari did not manage their budget correctly and Sebastian Vettel became a "free agent"; and because BMW or Toyota managed their budget wisely they have the opportunity to get Vettel? I think that would be more interesting than having to worry about letting go some talented engineer for some second rate engineer because his or her salary puts a team over the budget cap.

In any event, it would not be the first time that FIA president Max Mosley let little fish die off. In late 2006, as a result of the engine development freeze, long time engine supplier Cosworth had to lay off 150 employees (40% of the staff). Mosley's comments at the time were, "there are bound to be redundancies. If you employ 1,000 people to put two cars on the grid 19 times a year, and you can do the same thing with 200 people, at the same level, well then, those 800 people, haven't got a job." This causality was a result of just an engine freeze on development. If the proposal goes in as planned, what causalities will there be for an aerodynamacist or engineer for a mid-level team like Red Bull? It would certainly hurt their competitiveness. Sharing the TV revenue equally would at least give teams an equal starting point of competitiveness, then the differences of better team management and getting/developing driving and engineering talent comes more into play as opposed to 2 teams simply fighting for the same sponsorship dollars.

So, as 2009 comes closer we will see what the final proposal will look like and see if it will help the independent teams and control costs effectively and keep F1 sustainable.

F1 Shareholder files for Bankruptcy

Quoted from F1 Technical

"In the midst of a financial crisis on all markets, Lehman Brothers, the fourth-largest US investment bank, has filed for bankruptcy protection, dealing a blow to the fragile global financial system. Lehman Brothers is part of the CVC group that own 16.8% of Formula One shares.

Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday and the company lost 94 percent of its market value this year. Today, the stock dropped a further 92%, making it virtually invaluable.Earlier on, the American government had decided to take over Fannie Mae en Freddie Mac but have opted against that option for Lehman Brothers. It still remains to be seen how the value will evolve and if whether anyone would allow the bank to go bankrupt completely.It is also not clear how such would influence F1, but it is clear that interested parties may try to take over the stock owned by the troubled bank."

More details: bloomberg.com.