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Written by:
Cassio Cortes
RACER Magazine http://www.racer.com
RACER Magazine http://www.racer.com
12/25/2006 - 07:00 PM
Sao Paulo, Brazil
Great racing action was abundant, but A1 still lost a whopping $212 million in its maiden season. (LAT Photo) » More Photos
Last March, I was one of a handful of brave souls that endured temperatures in the 30s, hail and snow to witness A1 Grand Prix's debut on American soil at Laguna Seca.
The general impression I gathered back then was one of a great product ran by a company which, however, I could not see turning something remotely resembling a profit anytime soon.
But in journalism, the opinions of those who are alleged experts in the field that's a given story's subject are the ones to be highlighted. Sitdowns with A1 owner/founder, His Highness Sheikh Maktoum Hasher Maktoum Al Maktoum, a member of the billionaire royal family of Dubai, and with communications entrepreneur Rick Weidinger, owner of the Team USA franchise in the series, indicated that perhaps my impressions were wrong – Weidinger, for instance, said he expected A1 to soon become a "cash cow". People with five-figure incomes, like 20-something racing journalists, tend to give a vote of confidence to those worth thousands of times over what they are, at least when it comes to business/financial matters.
Great racing action was abundant, but A1 still lost a whopping $212 million in its maiden season. (LAT Photo) » More Photos
Maktoum did admit, in what was probably the highlight of our interview, that the few seconds I had used to ask him how much money he was losing through A1's first season – back then, estimated by paddock gossip at circa $150m – had already cost him plenty of dough. But even with A1 being a money loser, the Sheikh seemed to have pockets deep enough to weather the red-ink storm until the series took off for good.
And yet, as those who follow racing news from up close already know, those Laguna Seca predictions were wrong: A1GP lost a whopping $212 million in its first year, roughly what the Renault team needed to clinch a second consecutive Formula 1 world championship in 2006. So another storm did move in, a hurricane of changes that saw Maktoum leaving the series he conceived
In a way A1 has increasingly become more and more like Formula 1, the series that it expects to "complement" with its winter model (and with which it hopes to eventually compete for sponsor dollars, thus explaining the current wariness of one B.C. Ecclestone towards all things A1GP): the complexity of its political and business sides. Names like RAB Capital plc and Nomura Group (could "Bambino Holdings" be too far away?) and news from its managerial shuffling have become du jour lingo for people following the series.
Great racing action was abundant, but A1 still lost a whopping $212 million in its maiden season. (LAT Photo) » More Photos
You still get the feeling Tony Teixeira, Maktoum's original partner and A1's Chairman, is the one calling the shots – and that most likely he's always been, with Maktoum's royal pedigree serving to lend some credibility to A1's birth. But then again, who knows? In what could be considered a testament to the series' turbulent times, my successive attempts to schedule an interview with new CEO Pete de Silva came to no good (and had to eventually be dropped, as most magazines tend to abide to this weird "deadline" policy...)
As complex as it may look, though, A1's intrinsic problem is simple: it spends way more money than it earns. And it does so for equally simple reasons, those being chiefly:
- It takes a lot of money to fly an entire racing series around the globe;
- It takes plenty of tradition and/or star power in the field to get people to spend serious money for racing tickets, and A1 lacks in both departments;
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