9/29/2004 0 Comments
The Minardi Solution
Ford Motor Company's decision to withdraw from all Formula One activities, namely selling the Jaguar team and engine maker Cosworth (or shutting them down if there's no buyer), has an effect on more than just the employees at Milton Keynes. After all, just a couple of weeks before Ford's announcement, Minardi and Cosworth signed a new engine deal for 2005, that will see Cosworth provide Minardi with latest-spec engines. Like the Jordan team, which also relies on the Ford-subsidised engines, Minardi have now found themselves caught in uncertainty and apprehension over their future existence. But of the three teams in question, Minardi seem to be the team most likely to survive - perhaps because they already have a vast arsenal of engines at their disposal, perhaps because team owner Paul Stoddart is the master of improvisation and staying afloat. Take his latest move, for example: at the Chinese Grand Prix last weekend, the Australian circulated a letter to all other team bosses, as well as FIA president Max Mosley and commercial rights holder Bernie Ecclestone, proposing a solution that will allow Minardi to survive and leave Formula One with one less team to worry about.
According to Stoddart's suggestion, Minardi would run next season with the current 2004 package - that is, both engine and chassis design - ignoring the various regulation changes expected to pass for next season. This, according to Stoddart, would provide Minardi with a year to heal financially but won't, at the same time, pose any threat to the rest of the teams. Put simply: if Minardi is currently around five seconds a lap behind Ferrari, and if next season all teams are expected to slow down (through restricting regulations) by three seconds, then Minardi would still be slower than the others, just not drastically more slow than they are now.
Whether this suggestion would come to pass, remains to be seen. So far, other team owners have not ruled it out - it seems no one wants to see another team shut down, and everyone is aware of the fragility of Formula One as a whole. And Stoddart is taking full advantage of this awareness.
"Ford and Cosworth didn't fail Formula One, Formula One failed them," Stoddart explains. "We're not, for whatever reason, doing a good job of running this sport, and Ford's decision has actually cut to the bone in Formula One – I think for the [third] largest manufacturer in the world to say 'enough' doesn't really send out the right type of story.
"So I've more or less requested the other teams, and in fact Bernie and Max, to leave us out of it now. Because we have an engine for next year - I first of all do believe that Cosworth will be successful in finding a buyer, and therefore my existing contract I'm sure will be honoured. But in the event that sadly they didn't find a buyer, I have no hesitation in doing what I did in 2001, and obviously we are already making contingency plans to run our own engine in 2005.
"So Minardi will be there [next season] no matter what. However, having said that, I do feel that we can't take a chance on going the wrong way with the chassis [design], so I am saying 'guys, look, if it helps, leave us to run the 2004 car' – well, it won't be the 2004 car, but to the same regulations [of 2004] – and it gives us a chance to recover from what's obviously going on, and it gives us a transition year.
"Because for everyone 2005 is going to be a kind of transition year: we know there are new regulations coming in 2006. So I'm saying that it's a bit too late to argue over the engine situation, and you can't possibly legislate for what's going to happen; we don't know how long it will take for a decision to be made, and what we don't have is the luxury of time. Time is our biggest enemy – it's too late for us to react to major problems like this.
"It probably affects Jordan more than it does me, which is why I'm trying to help by saying Minardi has a solution. We need an agreement for that solution to be implemented - let us not be part of the problem and people can put their focus on finding an engine for Jordan and hopefully for Jaguar if Jaguar is sold. And hopefully it will be Cosworth for all three of us, but you don't know right now that that's going to be the final outcome.
"So what I've been trying to say is, 'guys, I'll put my hand up and try and find a solution that guarantees that Minardi will be on the grid, and then Minardi is not an issue and you can put all your efforts on finding a solution for Jordan and Jaguar'. I think it makes sense but we'll see – I haven't yet had feedback from everybody, but I have to say that at this stage I haven't had any negative feedback, so it's early days."
DC: The Formula One Commission still hasn't made a final decision on the regulation changes and what kind of aero, tyre and engine rules will be in place for next season. How does that affect Minardi?
Stoddart: "Well, the Formula One Commission can't meet until October, and then the new regulations need the approval of the World Council. But whatever the decision on the new regulations are, things have changed since these regulations were mooted and put forward.
"Furthermore, these changes were brought in under safety regulations and the stated figure is three seconds – it's quite obvious that Minardi is already more than three seconds off the pace, sadly, so therefore in a kind of a way we're already where they want it to go, so all I'm saying is I know it creates a two tier system, but it should run like that for one year and one year only - a transition year, so that we can have a chance to get ready for the 2006 regulations - give us a break."
DC: And you've got sixty odd engines, I think...
Stoddart: "We've got a lot of engines, but we wouldn't be using those, I don't think. We estimate our engine pool as being a pool of about 23 engines, but you don't work on that, you work on how many engine lives will you burn up in a season, and Minardi will burn up fifty engine lives in 2005, so we'd be doing fifty rebuilds. We've costed it, we know exactly what it will cost us, it's not an issue – we just need someone to agree to let us get on and do it."
DC: The obvious question, and it will probably come from the sharp end of the grid, is how can we run a two tier system? How can we have everyone running to one spec and you running to another?
Stoddart: "There is that argument, and I understand it. But we already have a two tier system – it's called a budget. We have the 'haves', and the 'have nots'. Let's just turn this around another way – let's just say that nobody agrees to this, then what's the likely outcome? The likely outcome is Minardi will be okay, but we would be seriously off the pace, which is not in the interests of safety, it's not in the interests of Formula One. So I would say it pretty much is a case of force majeure.
"Now, what are the other possible solutions? Well, we had a plan, and we still have a plan, for our new [Cosworth 2005] engine to be as competitive as it possibly can be. But if we don't have decisions, it's a bit much to expect a smaller team to actually turn around in January or February when they are getting ready for the start of the season in March if we don't know what we're actually putting in the back of the car. And we don't quite know, even at this stage, what we'll be running in terms of regulations. It's tricky – it's a lot to ask of a small team; the bigger teams have more budget and have probably already built parallel programmes to go whichever way.
"And in fairness, I don't want to labour on this because we pretty much all know what the regulations are, and we were before the [Ford] announcement all heading in a certain direction, and hopefully if there's a quick answer on a buyer then maybe all this goes away and we go back to Plan A, which is run the TJ engines, which we are contractually signed up to do, and we build our 2005 car. My argument is, if this drags on for too much longer, we won't have that option – that option will be taken away with the passage of time."
DC: Aren't Cosworth well under way with the TJ programme anyway?
Stoddart: "It's already there, it's done – it's not under way, it's done."
DC: So they've just got to build it now
Stoddart: "Correct, and there's no rocket science in that – it's already developed. What they have to know, and where we need absolute clarity, is whether they're building an engine that is expected to last for one race weekend or two race weekends.
"There is already a movement in the paddock; four manufacturers, I believe, have said that they are in favour of a one race weekend engine, and there are at least two or maybe three engine manufacturers that are in favour of a two race weekend engine. And I respect that, because everyone is entitled to their opinions, but it doesn't help the independents, because we're not able to influence this much. We have a vote, of course we do, but we're not an engine manufacturer so it's very hard for us to say whether it should be a one race weekend engine or a two race engine weekend; that is something the engine manufacturers have got to agree with Max Mosley.
"In the absence of agreement, Max will legislate - he is a regulator, and at the end of the day he is independent - and people will have to decide whether they are going to agree or not. The trouble is, it's going to be a tough one to win, because whichever way it goes we're going to have unhappy people, and unhappy people tend then to withdraw into their own little environment and plan for the future, and of course any plan to help out the independent teams goes out of the window whenever there is already argument and dissent amongst the manufacturers. We're almost a byproduct of the problem. We aren't the creator of the problems, but we do get caught up within the solutions."
During the interview, a Williams employee drops by the Minardi motorhome to tell Stoddart that Frank Williams and technical director Sam Michael have spoken about Stoddart's proposal and have given each other their thoughts. The Williams emissary tells Stoddart his team bosses are now waiting for feedback from Patrick Head, who himself did not travel to China.
"It's a tricky one," Stoddart continues afterwards. "You've just seen another answer, and that'll be a yes, but it's very hard to see where the real solutions are at the moment, because this news [about Ford] is actually devastating. And then we get into the next thing that no one really wants to bring up yet: if Jaguar is not sold, there will be nine teams in Melbourne - eighteen cars - and then Formula One's got a problem. If we have sixteen cars, we've got a bigger problem. If we have fourteen cars, we've got an even bigger problem.
"Then you get to the 'well, let's run three cars' – that sounds simple, but it's not. First of all, you need the FIA's agreement because currently in the regulations it's not very attractive to run a third car as it's not going to score points and it's really just a mobile chicane. Could that be changed? Yes, but again you need the FIA's agreement to that, and the governing body may not necessarily be agreeable to that! Certainly we've got Max, whose been very adamant in the past that if and when the situation ever arose, then we would follow the procedures that effectively mean that you ballot the teams, and whoever's number comes out has to run the third car.
"Then you have the school of thought that says seven good teams are better than ten with some not so good, but the very next question that comes up is, which manufacturer wants to put its hand up to be last, last and last? Because that's the beginning of the end, and I defy any manufacturer to sit there year after year and be last. If, of course, on the other hand you take the opinion that, well, we'd only be last for one year and we'll spend our way out of it, then you'll start an arms race here second to none, because whoever's last will spend another fifty or a hundred million and off we go again, and you'll start an upward spiral that will be almost uncontrollable until the next manufacturer says, 'I've had enough of this, I'm out of here'.
"So we don't want to belittle the intricacy of actually trying to sort this out, because it's not an easy problem – if it was easy it would already be sorted out. But you have a lot of interests here, and the best thing that can come out of all of this is that Jaguar finds a buyer, Cosworth finds a buyer, there are ten teams in Melbourne, and everybody's engine deals are honoured.
"There is now the other problem that if Cosworth is going to be a commercial entity, and it's no longer subsidised, then it means that Eddie and I - and maybe also Jaguar under new ownership - could actually be expected to pay for engines a price that we already can't afford. And you come back to the GPWC, the agreements on traction control and various other things where we actually say well, in reality we were promised commercially affordable engines back in April 2003, it didn't really come, we were promised all kinds of things that haven't actually happened, but then the money has to come from somewhere to fund all of this.
"What holds the key to more money? A new Concorde Agreement? Because currently we all know that the teams don't receive a lot of the money in Formula One – it's not that the sport doesn't have money, it's just where the money goes! So the whole thing is much more involved than people realise; it's a real tangled web, I'm afraid to say."
DC: There is a rumour that the deal you made with Ford Cosworth may not carry over to whoever buys Cosworth – is that true?
Stoddart: "No, it's not true. I've been very lucky, I've had a fantastic relationship with both Ford and Cosworth over the years, and I have nothing but respect for them. my deal is actually with Cosworth Racing, but I think it's fair to say that the relationship there is strong enough that I'm sure we would find - no matter what the situation - a negotiated settlement.
"I cannot see a situation where Ford, Cosworth and Minardi would fall out – we've been too strongly aligned in the past, and I have nothing but the best wishes for them, I totally understand what they've done, and there's not one ounce of anything other than good things to say about them. I can't see anything that's going to change that, because I am lucky in a way - there are no shareholders [in Minardi], there's only me, and I know what my feelings are to Cosworth and to Ford, and that's not going to change."
DC: You probably feel sorry for all the guys working there
Stoddart: "I do, totally. A lot of them are my friends, and I just want them to find a buyer."
DC: In spite of the fact that you've got this brilliant relationship with Cosworth, everything is up in the air. Have you spoken to any other engine suppliers at all?
Stoddart: "Because I have such a good relationship with Cosworth, I have not spoken with any of the other manufacturers seriously. Obviously in the longer term - maybe 2006, maybe later than that – I do believe that engines in Formula One are going to have to be free. And let me clarify that: nothing in life is free, but one of the biggest barriers to enter into this sport is the cost of engines, and one of the biggest differences between the 'haves' and the 'have nots' is that the 'haves' are backed by a manufacturer, and they not only get the engine for free but also get vast sponsorship backing from that manufacturer.
"Competing against manufacturer-owned or supported teams is nigh on impossible – we just can't get near the budgets. However, if in the long term those manufacturers had two teams, or had an interest in a second team, then life gets a lot easier for the second team, and the second team can fulfill quite a valuable role for those manufacturers. They can bring in younger drivers, that's the classic one; they can share technology; or they can share testing responsibilities, if there's a serious ban on testing, as has been so much discussed.
"Then we're getting into almost junior teams, and it's probably a bit too early to discuss that, but longer term the one thing I do agree on with Bernie is that the days of non-manufacturer teams being able to survive on their own is limited. There's no doubt that after this Concorde Agreement expires, if the manufacturers don't take an interest in the non-manufacturer teams, then it's going to be very difficult to see where the appetite will come from for the independent teams to actually want to go back in again – it'll be very tricky."
DC: So what does that say about the future of Formula One? One of the biggest questions is, has this almost killed off the future of Formula One?
Stoddart: "Well, no, I think you've got to look at it in a different way: if you could find one manufacturer, any manufacturer, who could stand to be last and last, I'd be very surprised – the answer is no. So therefore if that's the case, the independents will always have life in Formula One – but being an independent in Formula One on your own is one thing; being an independent team in name and title but everything else being aligned with a manufacturer could make you credible in your performances, could help the manufacturer, and most certainly would make Formula One affordable.
"Let's not get too caught up in the myth here: if we end up with a cheaper to produce engine that is lasting longer than it did before, then the Research and Development costs - which is where the vast amount of money goes – those costs will be amortised, they're going to be spent anyway. If you're making fifty engines or a hundred engines, there is a defined cost that it is not that great, and at that point if you also cut down the testing, then to be absolutely honest you end up in a situation where a manufacturer could actually save money by supporting a second team with an engine.
"I know what my engine lives are next year - they are fifty engine lives, that's all I will burn up. Now, if you asked any manufacturer, what's an extra fifty engines on your budget next year? If they're honest about it, they'll say it's a very small amount, because they'll blow that many up on the dyno.
"So if you get the costs right for them, it makes supplying a second team economical. Add the fact that this manufacturer has a young driver programme - and most of them do, if not all of them - so you are able to race your young drivers at the junior team. And teams like Minardi and Jordan have proven that we're where the drivers come from anyway, they are far better to do a year in.
"We're able to help them in other ways as well. So it does actually stack up – even financially it does stack up. But you've got to get over the current mindsets in Formula One of 'I don't want to help my neighbour', and that's the problem – how can I help a competitor? Well, you're not actually helping a competitor, you're helping yourself, because without your competitors you're racing yourself, and if you're racing yourself no one's interested."
DC: Well turn it around, then; what's the future in Formula One for independent teams, if new teams are not coming in? No one wants to come in to prop up the back end of the grid, and surely neither do you or Eddie...
Stoddart: "Correct, which is why you have to align in the longer term with a manufacturer. You're never going to get a spending cap - you might get some technology caps but they'll be hard fought over, and those with money will always find ways around them. So in a perfect world, in the longer term - though probably not until after 2008 - you probably want a manufacturer with their own name on the team and a supported independent which is running with their engine or some of their technology.
"Just look at the days when Jaguar gave the same specification engines to Arrows: at that time, [then Jaguar boss] Niki Lauda said 'I actually want them to beat me because that means we're not doing a good enough job'. If your technology transfer is actually good enough, you'll create competitive teams that in their own name and in their own right on their day can have a very, very good time. It was only last year that Jordan won a race, and we need to remember that. Lucky as [that win] may have been, it happened – there are a lot of manufacturers that have yet to win a race.
"So we've really just got to sit back and look at it – it's not all over for the independents, but in today's market, with today's spending, it's a very brave independent that comes into the sport without an alignment with a manufacturer."
DC: You say there is never going to be a spending cap – why is that?
Stoddart: "Because you can't stop somebody spending their own money. You can - as indeed the FIA has tried to do - limit the areas in which you can spend the money, but you can't tell any company, be it Mercedes, Ford, or BMW, that they can't spend their money, you can only ever tell them where they can spend it. Were you to turn around and say, 'right, the teams have got to have a wage cap of this, it's got to have a drivers cap of that, car build cap of whatever' - all you would be doing is you would drive the expenditure into third party companies that are making the components that are then sold at a loss to that team to fill that criteria; you're just cheating yourselves.
"Formula One is the cutting edge of technology – you're not going to restrict it – but we've got into the league now of super spends, what I call the 400 million budgets that are ultimately unsustainable. The manufacturers are the first to say they want to cut the price. Agreeing amongst themselves on engine specifications will in itself drive the spend down, agreeing on the life of an engine will in itself knock down the number of units – the big one they're yet to touch is a proper agreement on testing, and they will struggle with that, because while there are two tyre manufacturers in Formula One it will be incredibly hard to drop tyre testing, and if you don't stop tyre testing you will never stop testing."
DC: Finally, you said last month, in Spa, that you are already starting to build a new car. Are you still doing that?
Stoddart: "Yes. We've not suspended it, but we definitely slowed down the significant expenditure until we get some clarification, because as I said earlier, we can't afford to go the wrong way, so we'll just have to wait and see what's goes on over the next few weeks."
DC: But even if you get an agreement with the other teams and the FIA to run to the 2004 regulations next year, you will still build a new chassis?
Stoddart: "Oh yeah, exactly – it keeps the factory happy!"
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