We have always been trying to supply you the most reliable piece of information, gathered from the first hand, from the most series people. Today we are happy once again to publish an interview with somebody who is the best in the world in his niche. Dieter Rencken is a Belgian journalist, who deals with political, financial and law cases in Formula 1. He deeps in sport's inner problems and without any shadow of uncertainty, bravely points series reasons, what stands behind the stories, what big fished would prefer to keep private. You know this phrase from somewhere? Apart from co-operation with various medias around the world, Dieter also has his own page in F1 Racing magazine, what has been cover with such a sentence. During long and honest conversation with our website, Dieter points all the Formula 1's weaknesses and gives some examples about how to fix this situation. Enjoy the interview!
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Dieter, you are an expert in political, law and financial aspects of Formula 1 and I think that you know many details of Formula 1 management system. How would you describe the direction towards this sport goes?
First of all, I think that Formula 1 has both good times and bad times ahead. Formula 1 is a worldwide brand and sport and it is difficult to judge from one side. I have written some fairly negative comments about Formula 1 over the last 3-4-5 years, but I believe that it is going to be much better. It faces challenging times, it faces some series decisions in both short and medium term about how to restructure itself. I believe that this sport is strong enough to survive.
Nowadays there are many talks that Formula 1 concentrates only on financial statistics and wants to explore new markets, mostly in Asia and Middle East because these are the places where the biggest amount of money can be made, not only by Formula 1 itself, but by all the business partners. Is the increasing number of races in countries in Asia and Middle East something we should worry about?
I think that it was unenviable that Formula 1 go to new territories, not only Middle East and Asia, but new territories overall. It has just happened that the areas where it had never been before were Middle East and Asia, because it had been to North and South America, and at one stage I counted 5 races in North America in one year, because you had the Mexican Grand Prix, Canadian Grand Prix, US Grand Prix West, US Grand Prix East and you had the one in Dallas. So you certainly had a lot in North American continent. When it comes to South America, they have been in Brazil and Argentina, those are the 2 main countries in South America. As far as the Australia is concerned, there has been a Grand Prix there since 1986. If we have a look at Africa, there was a Grand Prix in South Africa and there was a Grand Prix in Morocco 1958. The only 2 territories that hadn't been attempted were basically in Asian continent and in the Middle East. That is the reason why Formula 1 has gone there. People call it "new territories" and yes, of course they are new territories, but it is only because all the other territories have been covered in the past. What I do believe and I think that it is a series issue is the fact that they have overdone it. We didn't certainly go for half a season to North America or for 5 races in Australia, or to other certain places. Now they have done it with Asia, but I think it was a go decision to go there, but the problem is that they have overdone it.
Can you please explain why the payment system in Formula 1 is told to be unfair and teams like McLaren, Mercedes or Ferrari shouldn't be given an extra price by the end of the season by the commercial rights holder?
I think it is pretty obvious. In Formula 1 money equals performance. The more money you have, the more you can buy performance and I don't think that you should be allowed to buy performance. It would be like saying to a sprinter "if you won the championship, I would let you use running shoes with 15 spikes instead of 10 spikes". The paying field should be at the equal level. It always used to be like that until 1998. It always used to be that if you come first in the championship you got equal amount of money as last, no matter if you are Ferrari, Brabham Lotus, McLaren or any other team. It has changed when Ecclestone took over the commercial rights to Formula 1 very slightly, because at that time Ecclestone paid Ferrari a premium of 5% - 2,5% from his own money and 2,5% from teams' money. Then has grown up to a wrong proportion and from 2013 the premium payments are enormous. As I said, money equals performance and the more money you give a team, the more performance they can buy - better engineers, better composes, better this, better that, better the other, and accordingly it is unfair and we can't call Formula 1 a sport, that's simple. If you want to call it a sport the paying flied must be leveled. Can you imagine that we can play football or rugby with the same rules, up and down? We would say "Ok, if you won the championship we would let you play downhill all the time and when you 8th at the championship, you must play uphill".
Some time ago there was a news that Sauber and Force India made a compliment to European Union about those rules in payment system in Formula 1 and Bernie said that everybody knew the rules and those rules are being fairly followed. Do you think that that compliment will change anything?
I can't certainly guess the EU commission, it is impossible to guess it and the court case and how the judge will rule, but all I can say is that the commission would not have accepted the compliment, had the commission to not believed that there is a ground to be investigated. First of all, there is a compliment about TVEU what is primarily about the governance procedure. Off to the money what comes into it, because of the way the governance procedure is structured. But what they are actually looking at primarily is the governance procedure and why the smaller teams are excluded from governance process and the bigger teams runs the strategy group. And then by the same token, as the result of the strategy group, certain teams got preferential terms and conditions. That is what they are looking at. Will it change something? I don't know. The EU commission may say tomorrow "Everything is perfect and I am not getting involved". I did a long column in F1 Racing magazine on it last week. I think that what will happen, going forward, is that the commission, in person of Margrethe Vestager, will ask for the other side - Formula 1 Management and CVC Capital Partners to submit to the given story and then the commission will look at both sides - the 2 teams and the commercial rights holder and CVC, look at the submissions and turn around and say "yes, I want to take it further", or "no I will disregard this compliment". If she disregards, that's the end of the road for compliment, it is closed. If she says "I will take it further" there are 2 options. One is that CVC and FOM offer a settlement and if the other teams accept it, the commission will put a stamp and say "OK, that's fine, I am very happy" but if they don't accept it, then the commission may turn around and say "I will decide what will happen", as she did with Google, as she did with Microsoft and as she did with Oracle and make the other side to do this, that or the other.
As you said, decision-making process isn't fair as well. Do you think that all the teams should be a part of strategy group and should CVC have a possibility to vote there?
It was never only the teams who had decided. Never the teams have decided. It was always an F1 commission to decide and Formula 1 commission was made of teams, of sponsors, of certain circuit owners, of certain partners of tires, of engines and the commercial rights holder and the FIA. What happened is that Ecclestone turned around and let only half of the teams to decide, increased his vote-power from 1 to 6 and FIA's from 1 to 6 and that is how it is to be run in future and that is the problem. At the past of F1 commission what happened is that from the teams to all the technical and sporting working groups had all the impute into the Formula 1 commission. The technical directors together would make proposals and the sporting directors together would make proposals for technical and sporting respectively, this is then go to Formula 1 commission and the Formula 1 commission would discuss these regulations. They may turn around and say "let's try this and that" for example let's change 15 inch tires to 13 inch tires, or whatever. They may say to technical directors to look at this again and decide that that we want 15 inch tires, not 13 inch or whatever the regulations changes. Then it was back to F1 commission and it was all up to them, they would vote for the regulation - Yes, or No. If it got through, the FIA would ratified it. The FIA hasn't had any executive power, except to turn down the regulation, but they couldn't change anything. They could say "we don't like 13 inch tires" and don't ratified it. Then it was back to Formula 1 commission, what was looking at it again. That system worked very very well from 1998 to 2012. In 2013 Ecclestone changed it.
What has been the real source of crisis in Formula 1? Has it been caused by introducing hybrid engines or something else, like increasing gap between rich teams not that rich teams?
All these things happened almost simultaneously, therefore it is impossible to divide them separately. I think that the hybrid engines were in fact the right decision. The execution was wrong. The execution was up to the Formula 1 commission and I told Bernie when I was interviewing him last Saturday, that he cannot forget that he was chairman of the Formula 1 commission at the time where those engines regulations were formulated. Therefore it was under his area of responsibility that these engines were introduced. But I still believe that it was a good decision but they were introduced wrongly and in addition to that, Formula 1 stupidly criticized its own new product. Instead of going out and telling people what a technological masterpieces these engines are, everybody complained because they didn't like the noise. In the process they turned off the fans and turned off everybody. The other problem is that stupid token system, what accidently was introduced under Bernie's watch-one, when he was chairman of the Formula 1 commission. I believe that it is what has completely went wrong. They shouldn't have made these tokens. They should have let engines companies do whatever they want to. That is why we have that situation. Renault has made a mistake when they designed their engine but they are not allowed to change it. Honda made a mistake when they designed their engine but they are not allowed to change it. Ferrari made half a mistake and they have been allowed to fix only a quarter of that mistake. We should never have had the token system. That is the biggest mistake. In addition to that obviously the financial disparity does cause the crisis. I will give you an example. Last year Ferrari earned 80 millions more than Williams, although they finished 4th in the championship and Williams finished 3rd in the championship. Do you know that you can buy for that money something like 300 engineers? That's a lot!
Do you think that introducing budget limits for teams would improve the situation?
I believe that if you had a fairly money distribution, you wouldn't need that. Let's just turn around and let us say that there is a budget cub of 300 million. At the moment Ferrari are earning 150 million from commercial rights holder and they have a sponsorship of another 300 million, so if you put a budget cub of 300 million, it means that all Ferrari is going to do is to have a profit - 150 million a year.
Do you think that changes in management system in Formula 1 will come along with the ownership changes, because Bernie said that some companies from Qatar and USA are about to buy some assets from CVC Capital Partners?
I think you have to be very careful with that - Bernie Ecclestone said that they are interested, they haven't said that they are interested or not. So we have to be very very careful. Ecclestone used to work as a used car salesman. Let's not forget that the news that the Qatar and Stephen Ross, the owner of the Dolphin company from the USA, came up from Bernie, the day after the EU commission. Now this is Ecclestone all over, that he places the information in the public domain, without the tuition, saying that the Dolphins are buying, or not buying. It is very strange that the Dolphins and Qatar haven't admitted that they are going to re-buy it and made no comment.
Current Red Bull situation is very tough now, as they said that they had terminated the contract with Renault and they don't have an engine supplier now. As the negotiations with Ferrari and Mercedes failed to succeed they are about to renew the talks with Renault. Some time ago there were some rumors that they were about to sign a deal with Volkswagen or they would leave Formula 1 completely. There was also a second rumor that they would buy assets from CVC and come to Formula 1 in a new role. Which option seems to be more probable and which one will have more positive influence on Formula 1?
Firstly, we have to bare at mind that it hasn't became a fact yet. To every comment what says that the contract with Renault has been terminated, let's not forget that it takes two parties to terminate the contract, from both sides. You can't just get up and say "we are terminating the contract". It is like a divorce, a man can't say "I will divorce with my wife" and the wife agrees without speaking to court, or whatever. The information I have at the moment is that the contract has not actually been terminated yet.
So do you think that the situation will not change and Red Bull will still follow up with Renault in next year, as they haven't signed any other deal yet?
I don't know but I think that there is a possibility that they will stay with Renault, if they want to stay in Formula 1. They may decide that they won't stay with Renault and therefore they won't stay in Formula 1. That is a serpent issue. The bottom line is that Mercedes issued some mix messages, because Niki Lauda told me, when I was speaking with him in Japan, that they have never been approached by Red Bull. Toto Wolff said that they decided to not supply engines, so why they have made a decision if they hadn't been approached by Red Bull. Equally with Ferrari. They were running around and saying "Ferrari offers us engines". Now it is transpired that they engines that have been offered by Ferrari are probably 2015 engines. It also pre-supposes that the engines regulations will not allow 2015 engines [they are already forbidden], because they way the regulation stands for next year now is that you can't run both 2015 and 2016 engines. The regulation what has been approved recently says that the engines should be identical. From that perspective there is a lot of stuff around Red Bull and engines and Ferrari and Mercedes. The bottom line is that Red Bull treated Renault shockingly, OK, Renault did not provided good engines, I accept that, but if you put it in human terms, like husband and a wife - the wife gets sick when he suddenly criticizes her in the public and running her down and then when he suddenly realized that he cannot find another wife, he wants to take her back.
So do you think that it is possible that Red Bull will leave Formula 1 completely?
Absolutely, in exactly the same way as Honda left Formula 1, and Toyota, and BMW, and Jaguar, and Benetton. Companies come and go from Formula 1. This is the irony about the whole story. It is the company, whom Eccclestone pays premiums to say in Formula 1, but they are actually talking about leaving. The independent Sauber, Williams, Force India and these sort of teams don't leave, that is their business. To the other team Formula 1 is a marketing platform in exactly the same way as they do in TV marketing platform they do at the same purpose. Formula 1 at some stage is going to no longer provide a return for Red Bull and Matezitch can decide to go out of racing, or whatever and they will suddenly leave. So yes, they will leave, but the big question is if they leave now or in 5 years time. But at some stage Red Bull Racing will leave, I can guarantee.
What Formula 1 can learn from racing series from the USA, or Australia, like NASCAR, IndyCar, or V8 Supercars?
I don't think that they can learn anything from V8 Supercars, what actually is a great entertainment spectacle, but let's not forget that in 3 years time V8 Supercars are dead, because Honda and Ford will stop produce V8 Supercars in Australia, so in theory the series is about to be dead. One thing what Formula 1 could learn from V8 Supercars is to not put all the effort into one basket, as they are doing at the moment with Ferrari and Mercedes engines. There is nothing more they can learn from V8 Supercars. I have enjoyed it, I have been to Bathurst, I think it is a great entertainment, but I don't think that it can teach anything Formula 1. Now let's go to NASCAR. What Formula 1 can learn from NASCAR is how to pretend. Here I am talking to everybody, from the commercial rights holder, down to the team staff, to drivers, to sponsors, everybody. If you go to the NASCAR race, it is almost open paddock. People can meet the drivers, they can take photographs with their drivers, they can do almost everything with the drivers. You know immediately who is following which driver, which team, which car company, Chavrolet, Ford, or whatever. According, they really know how to treat the fans. They do social media activities, and what Formula 1 does, is like from the 90's, or even 80's, in terms of facebook or whatever. NASCAR is really into the fan engagement, the social media engagement, etc. That is something Formula 1 can learn, I can guarantee.
I would also like to raise the Formula E topic - can Formula E become a challenger to Formula 1 in a few years time, as Richard Branson said some time ago?
I think that Formula E has got potential, it has a bright future, but we should see it in the light like football vs. rugby. Because you are a football fan, it doesn't mean that you can't watch rugby. If your favorite team is playing at the same time in football and rugby, you watch a football match. That is what it is. I think that Formula E is a wide addition to the motorsport in the world spectrum and it does have a future, a massive future and very important future, because of its technology, but I can't see it overtaking Formula 1 for importance. The same as rugby, I don't believe that it will ever overtake football.
How to attract young fans to Formula 1 who haven't seen all the political and financial aspects of F1 from the previous years?
I think that Formula 1 has to be more accessible, it comes back to the fact what we were talking about engaging fans, like they do in NASCAR, because obviously the young fans today relay heavily on the social media, like facebook, instagram, twitter etc and this is the point where Formula 1 is very very weak. I will try to give you an example. During the racing weekend in NASCAR there are about 80 people who take care about the whole fan engagement. There are 80 people who analysis facebook feed, instagram feed, twitter feed etc. They look at the race by driver, by sponsor, by car brand, by whatever. Whatever you are interested in, they look at. They are constantly twitting and sending out information, they are constantly analyzing their feedback to sponsors and do many sort of things. This is where Formula 1 at this stage is still very very weak. To close that circle - until Formula 1 does that, I can't see it attract Indian fans, in appreciate quantities in the near future.
For the end of our conversation I would like you to rate Bernie's achievements as Formula 1 chief times from the 70's, till now. Is it possible to do it?
Yes, but I think that we need to divide it into the decades. Then I will give you an average at the end of it. When it comes to the 70's, Bernie got involved in F1 management in the very last 70's so I think that we can't measure him at that time. We must measure him among the 80's, 90's, 00 years and half of a current decade. I think that the rate of Bernie's achievements in the 80's was probably 8 out of 10, in the 90's it was probably also 8 out of 10, in the 00's it was 8 out of 10 as well, but I think that in this decade so far he is probably taking 5 out of 10. So, if we look at it from the whole perspective, he is taking 29 out of 40, which means that his real rating is somewhere around 7.
That is a great summary. Thank you very much Dieter that you have shared your points of view with us and that you made some things clear. Talking with such an experienced was a great pleasure and privilege for me. Many thanks!
That was also a pleasure for me to share with you some of my opinions and I hope that polish readers will like it. Also many thanks!
