Podium Finish Vital For F1 Business

[Mark H]

PETALING JAYA: In the Formula One (F1) business, profitability is vital but performance on the racing tracks with a podium finish is key; otherwise, sponsors are likely to fizzle out after a season or two.

 

It is a high stakes, high risk business. But the stakes are even higher on the track where the real game takes place.

 

Only cars that make it to a top 10 spot earn points in the F1 race. Indeed, it has all to do with making it to the top of motor racing.

 

Minardi is a clear example of how even with sponsorship and a Ferrari engine, it came in last or was knocked out of every race. While that may be history, there are sceptics who caution against a repeat of this “story of passion, pride and pain.”

The newly established 1Malaysia F1 Team Sdn Bhd (1MF1T) is a dream driven by entrepreneurs with a passion to be in the F1 business. But passion in itself is not going to be enough.

 

They need the right car, an experienced driver who also has to be an international name, and enough money to sustain a business that drains cash.

 

While the overall cost of getting into the grid is relatively lower than in previous years, bear in mind that seasoned players like Toyota and Honda have opted out. So can this new kid on the block pull through?

 

“Our target is to be the best of the new teams, like being in the 9th or 10th place. Then we are looking to reach mid levels but we are not here to come last. So I hope in three to five years we will be up there (at the podium).

 

“We are certainly not here to throw Malaysia’s name away,” 1MF1T team principal Datuk Seri Tony Fernandes said recently at the Singapore F1 Grand Prix.

 

The first race for the 2010 season begins in Bahrain and F1 supremo Bernie Ecclestone expects 14 teams to start next year even though one or two teams may drop off, in contrast to the 10 teams this season. “The honeymoon will be over (if we continue to come out last),” Fernandes said.

 

He is a man who dares to dream and does not want to get up at 55 only to regret that he should have gotten into the F1 business. His sentiments were shared by the late Tan Sri SM Nasimuddin SM Amin of Naza Group. The two met 1½ years ago before the passing of the motor czar.

 

In July, a proposal was put forth to the Government, which gave its blessings but would not put in money for the venture. Getting slots was not easy and 1MF1T got it at BMW Sauber’s expense.

 

BMW Sauber, which was sponsored by Petroliam Nasional Bhd (Petronas), is out of the next season. 1MF1T wants Petronas to back its Lotus F1 team since the oil giant has not selected a team to sponsor for next season.

 

Fernandes and his long-time business partner Datuk Kamarudin Meranun hold a 60% stake in 1MF1T. The remaining 40% is held by Nasimuddin’s son SM Nasarudin in his personal capacity.

 

Britain’s Litespeed is coming in and the eventual shareholding structure would be 55:35:10 respectively.

 

This is a business that needs to be right from the start; there cannot be any favouritism, and the driver and the engine both need to be par excellence, according to an observer.

 

Cosworth is an old engine but Fernandes said “a new one is being built.”

 

A lot of work is going on at Norfolk where Lotus is based, and by February the Lotus F1 car will be tested at the Malaysian grid. Reports suggest that power to the rear wheels is provided by Cosworth and Litespeed is said to be working on the chassis.

 

But why Lotus? “Lotus is one of the greatest racing brands,” Fernandes explained.

 

He believes the Lotus name, even though it has been out of F1 for several years, can still command the clout some great racing names have.

 

But the sceptics don’t share his enthusiasm, noting that it will be a real challenge for the new team. The late racing legend, Ayrton Senna, was associated with Lotus.

 

Now the Proton group owns Lotus cars, and there will be spillover effects from this venture onto Proton.

 

Making money in the first year would not be so difficult with the right sponsors; the seed capital needed is RM168mil while the estimated annual budget will be RM308mil.

 

The biggest cost will be people, according to Fernandes. 1MF1T plans to hire 225 people.

 

“We have not done any business not making money. We will make money in the first year and still get (somewhere on the tracks),” Fernandes reckoned.

 

Nasarudin added that “it must give good returns even though there are risks.” F1 creates new jobs and innovators will emerge from this exercise while the spillover effects are enormous.

 

The F1 fever has gone to some schools in Malaysia and this is where the young can be nurtured into innovators and drivers of the future.

 

Malaysia is scaling new heights with its entry into one of the most challenging motor sports.

 

The ultimate goal should be a place at the podium.

 

http://biz.thestar.com.my/news/story.asp?f...mp;sec=business