JSBM 11.03 - Joe Saward
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JSBM 11.03 - Joe Saward
Contents: The Gribkowsky investigation A breakthrough for the Arab world NASCAR acts to improve support series Randy goes to Hollywood Williams F1 goes to Caracas Karting getting its house in order HRT looks for more cash Edmonton returns to IndyCar F1 turns its back on Rome Alonso versus Rossi January 17 2011 Issue 11.03 joesaward'sbusinessofmotorsport N E W S , T R E N D S , I D E A S A N D E C O N O M I C A N A LY S I S F RO M T H E M OTO R S P O RT W O R L D The Gribkowsky investigation There have been claims in the German media in recent days that the $50 million that were found in an Austrian foundation controlled by Gerhard Gribkowsky, came from companies owned by Bernie Ecclestone. No conclusive proof has yet emerged that this is the case and Ecclestone has denied all involvement in any payments to Gribkowsky, and has threatened legal action against anyone who suggests that this is the case. The Bavarian prosecution service is nonetheless continuing its investigation, which is headed by state prosecutor Hildegard Bäumler-Hösl. It has been reported that there was an Austrian investigation into the money as long ago as 2006, and that Gribkowsky explained that he had been paid the money for consulting services. If this was the case then there will no need to hide the source of the money and his explanation will come under increasing scrutiny if investigators find that attempts have been made to hide such information. Bäumler-Hösl has been involved in a number of corruption investigations in recent years, notably with Siemens, which was accused of paying out €1.3 billion in bribes between 2000 and 2006. Last year a court handed two Siemens executives suspended sentences and fines for their part in the scandal. There was a similar case against executives at the truck-making firm MAN, with the firm agreeing to pay €150 million in fines to resolve the investigation into alleged bribes paid to officials in Kazakhstan. The former chief executive Heinz Juergen Maus was given a two-year suspended prison sentence and ordered to pay $123,000 to charity as part of a settlement. Bäumler-Hösl was also involved in an investigation into German engineering group Ferrostaal which was accused of paying politicians in various countries to be allowed to procure contracts. Even if Gribkowsky can convince the Germans that all is well, he still needs to explain why the money was not reported to the German tax authorities, which would have resulted in Gribkowsky paying higher taxes. If the Germans find evidence of misdoings they will probably apply to the Serious Fraud Office (SFO) in Britain. Under British law bribery is considered to be a criminal offence. The laws were reformed recently with the Prevention of Corruption Acts 1889 -1916 being replaced by a new Bribery Act, which states that bribing "foreign public officials" is illegal. The question of Gribkowsky's money is not going to be sorted out quickly as investigators will need to dig through records to try to find out where the money came from. This is bad news for Formula 1 in general as it means that there will be question marks about the people running the commercial operations, perhaps for years to come. This will not help the sport to attract new sponsors; nor will it make the negotiations for the next Concorde Agreement easy. A breakthrough for the Arab world Qatar’s Nasser Al Attiyah has become the first Arab to win the Dakar Rally after claiming the Volkswagen Race Touareg’s third consecutive win on the event. Volkswagen finished 1-2-3 in this year's race in South America, with Al Attiyah winning by 49 minutes from his team-mate Giniel de Villiers (who won in 2009) and Carlos Sainz (the 2010 winner), who was a further 30 minutes in arrears. The German cars won 12 of the 13 stages with the only other winner being Stephane Peterhansel in a BMW. He finished fourth overall. "I’m incredibly proud of the entire team, both the employees who made this win possible and also the team with its superhuman efforts here on location," said team boss Kris Nissen. "It was without a shadow of doubt the toughest Dakar that we have ever contested." Sainz dominated the early part of the event but on the eighth stage he ran into trouble close to the finish and was twice stuck in the sand near Copiapo, in northern Chile. He lost six and half minutes and ended up five minutes behind Al Attiyah in the overall standings. After that more page 2 joesaward'sbusinessofmotorsport time was lost as the rally headed back into Argentina and the final blow came when Sainz lost more time while stuck in the dunes near Fiambala and then made a navigational error. This was followed by an 18-minute loss in the closing stages of the event when he once again became bogged down in sand while also suffering a puncture and gearbox trouble. Sainz fought back in the final stages but it was not enough to beat his team-mates. Al Attiyah was the winner of the Production World Rally Championship in 2006 and finished second to Sainz in the Dakar last year, just two minutes behind Sainz. NASCAR acts to improve support series NASCAR has sent out new licence applications that include a section in which drivers must indicate by ticking a box in which championship they wish to score points. The application says that they must select only one of the NASCAR Sprint Cup, NASCAR Nationwide or NASCAR Camping World Truck Series. This means that in future Cup drivers will not be allowed to score points in the junior championships.They hope to bring to an end the practice of Cup drivers making extra cash by racing in all three series and thus making it tough for less experienced drivers to score wins and thus draw attention to themselves. The last five Nationwide champions have all been fulltime Cup drivers: Kevin Harvick, Carl Edwards, Clint Bowyer, Kyle Busch and Brad Keselowski. The practice has been less of a problem in the Truck Series. In Nationwide in 2010 the only two non-Cup drivers to win races were Justin Allgaier and Boris Said, although the latter did a handful of Cup races, in his role as a road course specialist. Randy goes to Hollywood IndyCar has announced a range of changes, in an effort to make itself more attractive to the racing fans of America. The changes have come as a result of a revamping of the sport which is being led by chief executive Randy Bernard.The key change is the end of the Indy Racing League, which has been renamed IndyCar.This will act as the sanctioning body of the Izod IndyCar Series, the Firestone Indy Lights series and Mazda Road to Indy championship. "The time has come for our sport to move forward under a name that truly signifies a unified organization," Bernard said. "The IndyCar name has worldwide recognition and aligns with our positioning as the fastest, most versatile racing and drivers in the world." Bernard has also announced plans for IndyCar to open an office in Santa Monica, California, with a new entity called IndyCar Entertainment, to be run by new recruit Sarah Nettinga (right), who becomes IndyCar's senior vice president of media and entertainment. She joins IndyCar from NASCAR, where she worked to get the stock car series into mainstream motion pictures, with three notable successes: NASCAR 3D: The Imax Experience, Herbie: Fully Loaded and Talladega Nights: The Ballad of Ricky Bobby. "If we want to grow the sport, we need to be fully vested in relationships with the entertainment community that can tell the storylines of our sport," said Bernard. There are also rumours that IndyCar could be on the verge of a deal with the NBC network for coverage of the racing. IndyCar has a deal with rival ABC until the end of 2012, but this is a very limited arrangement, with ABC planning to televise just five races this year. The stories suggest that the ongoing merger between Comcast, the giant cable company, and NBC Universal could include a much higher profile for IndyCar as Comcast owns Versus, which is currently the cable channel provider for the series and is in year two of a 10-year deal. Versus is relatively small in comparison to rival ESPN, which is owned by ABC, but IMS Productions, which manages the IndyCar TV rights has been told to hold off on doing any new TV deals with ABC pending completion of the Comcast-NBC deal. Network TV coverage would be a huge boost for IndyCar, which has struggled to make much of an impact in recent years. Bernard has been working hard to create a more American flavour for the championship and hopes to be able to create interest in the series, using Danica Patrick and others. Among the other announcements was the decision to reduce engine size in 2012 from the planned 2.4-litres to 2.2-litres in order to be closer to the engines that manufacturers are favouring at the moment. Honda, Chevrolet and Lotus have committed to building engines fo 2012, with a maximum of six cylinders, but with turbochargers boosting power output to around 700 horsepower. The cars will run on E85 fuel. Moves are afoot also to reduce the age of fans allowed into the garage area to nine. Bernard says that surveys have shown page 3 joesaward'sbusinessofmotorsport that the many current fans discovered the sport with their parents and says that IndyCar wants to keep that tradition alive in order to build the next generation of racing fans. The circuits will set their own individual age limits, based on their insurance and on local regulations. IndyCar has also announced that it will introduce a 105 percent qualifying rule, rather than the current 107 percent rule. This will force teams to hire the best possible drivers, rather than taking those with the most available money.There has been speculation that the rule is aimed specifically at Milka Duno (right), the former model from Venezuela, who has been sponsored in recent years by Citgo, the US-incorporated oil company which is headquartered in Houston, Texas, but is owned by Petróleos de Venezuela SA (PDVSA), the national oil company of Venezuela. Duno was put on probation last summer for "not consistently meeting minimal performance standards". There has been speculation in recent weeks that she has decided to switch her sponsorship to ARCA stock cars and will only try to qualify her Dale Coyne IndyCar for oval races. In addition IndyCar has announced its intention to have cars line up side by side for restarts, rather than nose-to-tail, to make the racing a little more spectacular.The new rule will not be used on road or street tracks as some of them boast little room for such things, although IndyCar officials will study this in the course of the season and decide whether some of these could use the same system in 2012. The announcements underline Bernard's desire to rebuilt the IndyCar world following the damaging split between the Indy Racing League and CART between 1996 and 2008, during which time both championships were seriously weakened and helped NASCAR to grow into its current dominant position. Since the two reunited at the start of 2008 the recovery has been slow, but Bernard's arrival has accelerated progress. Williams F1 goes to Caracas Williams F1 has confirmed its new partnership with Petróleos de Venezuela SA (PDVSA). The news was announced by the country's controversial President Hugo Chavez, at a demonstration around the Paseo de los Próceres monument in Caracas. Around 60 percent of Venezuela's exported oil goes to the United States, with the remainder going to South America and Europe. The country is altering its export strategy and intends to expand sales in Asia, mainly China, in the years ahead. The details of the sponsorship has yet to be announced but is believed to be in the region of $36 million a year, for five years. The deal is based around Pastor Maldonado, but we hear that the team can replace him if he is not sufficiently competitive, but must then consider any other young Venezuelan drivers available. The team will work with the Fundación Pastor Maldonado to promote education, road safety and energy efficiency in Venezuela. "They are a substantial partner and can make a meaningful difference to our fighting ability," said Sir Frank Williams. "We are especially honoured that President Chavez himself witnessed the demonstration. On behalf of the team, we very much look forward to working with PDVSA and Venezuela and giving them some good results on track." The controversial Chavez is an unlikely recruit to Formula 1 sponsorship as he has long been a vocal critic of the capitalist system and has instituted many socialist policies since he came to power in 1999, including nationalizing a number of major companies. This week he has accused the United States of using the earthquake in Haiti as a pretext for occupying the devastated Caribbean country, by sending in 5,000 Marines and a hospital ship. Karting getting its house in order At the CIK-FIA Awards dinner in Paris on Saturday the new CIK-FIA President, Sheikh Abdulla bin Isa Al Khalifa of Bahrain, announced that he intends to develop push karting to "new frontiers" and to develop the commercial opportunities in the sport, which have long been neglected, despite the appeal of the exciting racing, which is where most of the future Formula 1 stars learn how to race. Sheikh Abdulla took over the role in October, replacing France's Nicolas Deschaux, who had been in charge of the sport for a year, after he succeeded Italy's Luigi Macaluso, who reorganised the sport into its current form in 2007. The kart manufacturers, mainly from Italy, rebelled against the federation and this year boycotted the KF1 World Championship page 4 joesaward'sbusinessofmotorsport and tried to set up their own rival championship, under the WSK World Series banner. The CIKFIA held firm and made the KF2 Series into the World Championship. In recent months there has been much negotiation involving Deschaux and Sheikh Abdulla's new deputy, Kees van de Grint, a respected former F1 engineer from Holland, who have worked to convince the Italians that their efforts are wasted as they will never be allowed to use the "World Champion" tag, as this is owned by the FIA. It is not unlike the fight that developed in the 1980s between the federation and the Formula 1 teams, which resulted in Bernie Ecclestone realising that he could not beat the FIA in outright conflict and resolved to negotiate commercial deals with the organisation, while his colleague Max Mosley climbed through the ranks of the federation and became its president. Karting has suffered badly in recent years from the confused state of its political situation and although things are moving in the right direction, Sheikh Abdulla says that his primary goal is to reduce the number of categories so that it can be more easily understood. At the moment the CIK-FIA sanctions international championships in KF1, KF2, KF3, KZ1, KZ2 and Superkart. The KF1 World Championship has been re-established in 2011 and will consist of a five-round series with races at Suzuka, Wackersdorf, Zuera, Genk and Sarno. HRT looks for more cash The Hispania Racing Team is still looking for money for 2011. Jose Ramon Carabante, the team owner, has been telling the Spanish press that money is coming from a multinational company, but the team itself has been operating on a rather different level and getting funding from wherever it may come. The signing of India's Narain Karthikeyan was no doubt underwritten by a significant payment to the team and now there are several other drivers hoping to secure the second HRT seat - the last available for 2011, if one accepts that Force India will settle on Adrian Sutil and Paul di Resta. This means that Tonio Liuzzi (right) will be dropped, despite the fact that he has a contract with the team for 2011. This being the case, Force India must pay for him to race with another team. This has all been done so late in the day that HRT is the only choice. Colin Kolles is a big Liuzzi fan and would be glad to get a driver with Liuzzi's experience. The question is how long Kolles will be willing to wait for Force India boss Vijay Mallya to reach a settlement with Liuzzi. The Italian is in a powerful position in some respects as he has nothing to lose by taking legal action against Force India. Mallya has an unfortunate reputation of taking a long time to pay his bills and Liuzzi cannot afford to wait while the Indian billionaire looks for his chequebook. The one thing that Mallya does not want is negative publicity that would be embarrassing in the run-up to the first Indian Grand Prix, and the first FIA Prizegiving in India, which Mallya is believed to have committed to fund. Having said that, Mallya has in the past kept the likes of McLaren and Ferrari waiting for cash - which was not the smartest thing to do. Liuzzi landed some unexpected support last week from Fernando Alonso, who was asked at the Ferrari media event in Madonna di Campiglio why Italy was struggling to find a topline F1 driver. After mentioning Jarno Trulli and Giancarlo Fisichella, Fernando said that Liuzzi is "a major talent" but a driver who "did not yet have the possibility of driving a car to express that talent." The situation with HRT thus remains fluid with rumours that Davide Valsecchi, Alberto Valerio and others have money available. Another name that has been mentioned for HRT is that of Fairuz Fauzy, but it is hard to imagine that he would be in the running given a fairly poor performance in 2010 as Lotus test driver. Edmonton returns to IndyCar The Canadian city of Edmonton has negotiated a return to the IndyCar Series this year, having been dropped from the original calendar because of a dispute over $3 million needed for repaving at the City Center Airport. The event had been taken over by Octane Motorsports Events Inc, a new promoter, when the city council decided not to pay up. IndyCar held firm and the race was dropped, which caused consternation and recriminations in Edmonton. A deal has now been struck to revive the city's biggest event of the year. page 5 joesaward'sbusinessofmotorsport Octane's president François Dumontier, who also promotes the Canadian Grand Prix, said that his company is now in a position to turn the race into a more profitable event. The sanctioning fee that he has negotiated is much lower than the previous promoter had to pay, but he says that the changes to the track will generate more business. Things are helped by the fact that the airport has now been decommissioned and that means that the fans can be moved closer to the action. "Without having to deal with airport rules and with a clean sheet of paper to design the new track, I think we can build a footprint which will put the stands and the fans as close as they are in Montreal," Dumontier said. "I think that Edmonton losing the race for a few months might even turn into a positive. We are now going to be able to build and design a track that is exceptionally exciting and bring the grandstands and the fans much closer to the action." The hope is that with a new circuit the fans will turn out again and perhaps even surpass the three-day attendance figure of 200,050, which broke all records for ChampCar is Canada. "We think we can make every year like that year," Dumontier said. "What we do for a living is promote auto racing. We’re going to have to work double shifts the next seven months, but in the end I think everything that’s happened here can be turned into positives. We saw that the business community and the fans were behind this event. City Hall received some major pressure from the community when the race was lost back in November." F1 turns its back on Rome The Formula 1 world has decided not to get involved in the Rome Grand Prix. It is reported in Italy that Bernie Ecclestone sent a letter to the city saying that none of the Formula 1 teams want two races in the same country, which is rather ironic given what is happening at the moment in Spain. Given that Italy has a long-established race at Monza, which is regarded as one of the key traditional events, there is no room on the calendar for a second Italian race. The idea of alternating the race between Rome and Monza has also been rejected. Formula 1 continues to run the European Grand Prix at Valencia - effectively a second Spanish race - but there are more and more indications that the government of Valencia has fallen behind with its payments. The city will have paid a guarantee of around $50 million to secure a date before the initial contract was finalised but there are reports that the Formula One group has received nothing since then and now owes around $25 million for the race in 2010. This may not mean that the city is in breach of contract as some of Ecclestone's contracts are believed to include clauses that allow for late payments in times of crisis. This means that the Valencian government may be able to keep the event going for another year, but in the longer term the future is bleak, unless the race can start making some money. The failure of F1 to go for a race in Rome could end up backfiring on the sport as there is no doubt that other international championships might jump at the chance of a race on the streets on Italy's capital city. These will demand less money from the promoter and would generate less interest, but one can imagine that a championship such as the DTM might well be interested in such a venue. The German series, which is basically a sales promotion for German manufacturers Audi and Mercedes, with BMW and Opel expected to join in 2012, might turn out to be a good option for the Romans. DTM has long been looking for a suitable venue with which to get into the Italian market. This began as long ago as 2003 when there was a race at Adria.This was repeated in 2004 and 2010, while there were races at Mugello in 2007 and 2008. There were no events in 2005, 2006, 2009 and there are no plans for an Italian race this year, However DTM has been developing the idea of more street events in recent years and has the race at the Norisring and is developing an event in Shanghai and is even trying a non-championship show in Munich’s Olympic Stadium (right). Alonso versus Rossi Fernando Alonso has hinted that there might be some kind of promotional match race later this year between him and motocycle legend Valentino Rossi. Alonso believes that he is a good motorcycle racer, and Rossi has turned in some decent times when he has tested F1 cars for Ferrari. The two men now share the same sponsors now that Rossi has joined Ducati, which is supported by Philip Morris and Shell. A celebrity match race (or races) between Alonso and Rossi would certainly be Page 6 joesaward'sbusinessofmotorsport an interesting idea for all concerned. It would be good for Formula 1 and for MotoGP and great news for the sponsors... "I have known Valentino for quite some time," Alonso says. "Moreso since the middle of last year. We met in Maranello when he was there paying a visit and I think he is a nice guy. Fernando admits that there is something to the story, but he is not willing to say more than that at the moment. "We are working on it now, so I cannot tell you anything 100%," he says, "but before the end of the season - before December - there may be a surprise. I am not going to say anything about how it is going to take place." Nor is he willing to talk about what vehicles might be used. "Two-wheelers, four-wheelers, six-wheelers," he says. "I am not saying." WHISPER WHISPER WHISPER g A lawsuit in the United States has revealed that Advanced Fluid Solutions agreed to pay NASCAR $6.2 million of sponsorship over a seven year period in order to market its new EXP4 fuel and oil performance, as part of the NASCAR Performance” programme. The programme was due to start last year but did not begin as the company did not pay the initial $500,000 due in October 2009. NASCAR terminated the deal in December that year. The company says that NASCAR illegally terminated the agreement in terms of procedures, while it was trying to get the money together. g The BBC has announced that it will broadcast the 2011 Formula 1 season in High Definition.The BBC has also revamped its commentary team, dropping Jonathan Legard and replacing him in the commentary box with Martin Brundle, who will become lead commentator with David Coulthard becoming co-commentator. Eddie Jordan will become the primary analyst, working with anchorman Jake Humphrey, while the pitlane reporters will remain Lee McKenzie and Ted Kravitz. g Lotus Motorsport - the competition department of Group Lotus, has signed up French former F1 driver Jean Alesi as an ambassador for the Lotus Exos Type 125 programme, which is the company's quasi-F1 car.The company says it hopes to sell 25 of these vehicles for around $1 million apiece.The cars are powered by Cosworth V8 engines. There has been much speculation in the racing world where these cars have come, with suggestions that the cars might be based around the Panoz DP01 chassis, which was raced in the final days of the Champ Car Series and remodelled to create the Superleague car used today. g Max Mosley continues his crusade against newspapers breaching personal privacy. The former FIA President was at the European Court of Human Rights in Strasbourg last week trying to get the law changed so that the British government would be forced to pass a law forcing the media to warn people about stories that might harm their privacy. This would, of course, give the people the opportunity to gain injunctions and tie up the whole process in legal action, which publishers say would imperil investigative journalism. Mosley is being represented by Lord Pannick QC. g The Jetalliance team in Austria has announced a deal to field two Lotus Evora GTE cars in the 2011 Intercontinental Le Mans Cup (ILMC). The team previously fielded Aston Martins in the FIA GT championship for Jetalliance boss Lucas Lichtner-Hoyer. The team started out with Red Bull backing when Bahar was with the Austrian drinks company, but lost the funding after he went to Ferrari. Jetalliance is Austria's largest business jet provider, managing a fleet of 35 jets on behalf of their owners. It has offices in Vienna, Moscow and Kiev. g Plans have been announced for a new racing series called the enviroSportscar Series, which aims to change the way in which people look at performance cars and make them realize that enviromentally-friendly vehicles are not necessarily dull.The intention is for the series to be launched in 2013, after demonstration events this year and next. The series will combine drag racing at Santa Pod, circuit racing at Rockingham and a trial in Northampton city, thanks to the support of Northamptonshire Enterprise Limited, a public-private company which aims to develop the local economy. The series is the brainchild of Ian Forbes and Keith Bartlett. Forbes is an Australian advertising man who moved to Europe around 10 years ago and worked with Global Marketing Communication Ltd. In 2005 he joined the Stephane Ratel Organisation (SRO) as head of its marketing services but subsequently set up a company called Corporate Persuasion and began working with Bartlett, who set up Trakbak Racing Ltd in 1997 to run Santa Pod Raceway. He later expanded operations to run both the European and British Drag Racing Championships. g There seems to be some politicking going on in Korea with the announcement of the removal of Yung Cho Chung as the chief executive of the Korea Auto Valley Operation (KAVO). Chung was the man who put the whole scheme together and built the Yeongam race track and not long ago won the award for the best Grand Prix in 2010. g Gilbert Felli, the executive director of the International Olympic Committee has revealed that the committee has the right to call off the 2014 Russian Grand Prix in Sochi if it feels the race will impact on the preparations for the Winter Olympic Games. The first race could be pushed back to 2015 in such circumstances. Page 7 joesaward'sbusinessofmotorsport g ORECA is expanding its role as a racing car manufacturing. The company acquired Courage Compétition in September 2007 and ran an ORECA 01 sportscar in 2008. The following year ORECA created a new car for Formula Le Mans, a onemake series. This year the Swiss-based Hope PoleVision Racing will run one of the old ORECA 01 chassis, powered with a SwissHyTech engine, mated to a Flybrid hybrid system in LMP1, while a pair of new ORECA 03s will be competing in LMP2, with the longer term goal being to increase the client base in 2012. The company has taken on Welshman Doug Bebb as head of its customer department. A Williams F1 engineer in the early 1980s, Bebb moved to March Engineering before starting Dragon Motorsport in 1987.The team won the 1988 British and European GM/Lotus Championships with Mika Hakkinen and Allen McNish but after a poor Formula 3 season in 1989 Bebb switched the company into engineering and in the years that followed worked with many different manufacturers, including MG, Chrysler, BMW and Toyota. Connectivity JOE SAWARD’S BUSINESS OF MOTORSPORT is available only by subscription. 52 issues per year, distributed by e-mail on Monday morning of each week. Subscription rates are US$299.00 for a year or $25 per month. If you would like to take out a subscription, or would like further details, please contact us at www.morienval.com/businessofmotorsport.html © COPYRIGHT 2011. MORIENVAL PRESS, 4 RUE DES TROIS COURONNES, 60127 MORIENVAL, FRANCE. ALL RIGHTS RESERVED. 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