Autosport 07/11/2013
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Kimi Raikkonen's revelation that he's been "paid zero Euro the whole year" by Lotus is the result of driving for a 'have not' team.
"Some teams’ survival may depend on drivers whose calls they’d otherwise not even return"
Like a couple that have finally made public their split but are still together for the last few weeks of
formalities,Kimi Raikkonen and Lotus are finding it difficult now even to be in the same room as each other.It ’s such a shame.This was a row about money,nothing else The racing side of their partnership worked terrifically well,Kimi was low maintenance,and the team made few demands on him outside of a race weekend. But Raikkonen was contracted to a salary and points bonus and it simply has not been paid. At the time of writing it’s believed he is owed over £15million.
Regardless of your position on the scale of pay,it's not reasonable to expect someone to continue to work when they are so many months behind on what has been contracted.The team was in breach of contract and Raikkonen was giving serious consideration to not racing at all in Abu Dhabi — and might still sit out the remaining races of the season.
Even his move to Ferrari has only come about because the financial assurances could not be given by Lotus — if that the outstanding payments would be made by a set date.Although his points bonus is extremely generous,those points he harnesses like a machine pay the team more than they then owe him in terms of the payments for constructors’positions.He’s expensive, but his results bring the team more money than he’s costing.
The problem is that the team’s payments are deferred for a year, whereas Kimi needs paying now.
This broken relationship is partly about the mismatch between the team’s high level of competitiveness and its low level of cash liquidity.The unique way its funding is structured has been partly to blame for this mismatch,but it’s also to do with — inevitably — how much money is being taken out of the sport by F1’s owners.It's not unreasonable for the owners of something to make money from it,but when the extent of that is beginning to strangle the very entities that comprise the business,then that business model is deeply flawed.
Outside of Ferrari, McLaren, Red Bull and Mercedes —the four big—budget teams — the landscape is dominated by pay—driver budgets. The very survival of some teams may well depend upon them reaching agreement with drivers they would otherwise not even be returning the phone calls of.So the silly—season is rather different from how we all remember it — because in the last year or so there has been a fundamental shift in how the driver market works.
Lotus has been Red Bull’s strongest challenger in the second half of the season,with a consistently quick car,always well operated.In days gone by this would be giving it the choice of F1‘s elite drivers, its income such that it could pay top dollar, the fast cars and best drivers automatically attracted. But Lotus, despite being a top team competitively,is far from the best equipped financially. Luckily, it has one driver — Romain Grosjean — who has Total sponsorship and is rapidly developing into an absolutely top driver.
But in its other seat until — the Quantum deal apparently rescued the team — it was potentially heavily dependent upon attracting Pastor Maldonado and his associated $40m of PDVSA money. Maldonado — capable of the occasional outstanding performance and a grand prix winner.but still not putting it together consistently — is now the most important driver on the market. The very future of Lotus could have been dependent upon him.
Sauber's chances of attracting him would seriously boost its prospects:his expected departure from Williams is believed to have been softened by appropriate compensation from his state-owned Venezuelan backer.
That the prospects of so many — including one of the most competitive teams of all — are dependent upon one moderately successful driver,tells the tale of a structure that’s not robust.A very particular relationship between a sportsman and his country,the patronage of a billionaire businessman or three — these are not merit-based commercial relationships or something that can be relied upon.They are whims, not strong commercial models.
Meantime, there is a distinct possibility that Nico Hulkenberg and/or Paul di Resta will not be in F1 next year.Which would be quite absurd.
F1’s political animal
The falling-out between Raikkonen and Lotus indicates a fundamental problem with Formula 1's business model.
"B-League Teams faced the Devil's Alternative,damned if they signed,doomed if they didn't."
Kimi Raikkonen’s salary woes were well documented in Abu Dhabi,but that all was not well on the fiscal front between the Finn and Lotus became clear in September when he gave as reason for his departure for Ferrari in 2014 as “the things I haven’t got, my salary...”
To most in the paddock it seemed inconceivable that a team that had recently won two grands prix and been Red Bull Racing’s closest challenger in the second half of this season failed to pay its star driver,instead putting it down to gross mismanagement by team owner Genii Capital
— the Luxembourg—based investment firm run by Gerard Lopez and Eric Lux.
Critics opine that any company racking up £40m in losses is ineptly managed,and,to a certain degree,that brooks little argument — particularly as the team lacks title sponsorship,with acres of prime real estate remaining conspicuously unsold.
What sponsorship Lotus enjoys comes courtesy of blue-chips Unilever (Clear/Rexona) Coca—Cola (Burn)and Microsoft,but,saliently,analysts suggest the total income to be less than Raikkonen’s annual stipend.Yes, a case could be made that the team has been financially irresponsible,but that is to totally ignore the monstrous elephant in the room,namely F1’s inequitable financial structure introduced this year after the demise of the previous (2010-12) Concorde Agreement,the covenant that binds governing body FIA,the commercial rights holder and the teams.
That Kimi has not been paid this year — arrears are believed to be over £15m,and mounting — can be traced back to early 2012, when F1 star Bernie Ecclestone,CEO of Formula One Management, in turn majority owned by venture equity fund CVC Capital Partners,offered 10 of the 12 teams then contesting the Formula 1 World Championship commercial offers for their continued participation in the series.Excluded, at that stage, were Marussia (now included) and (now—defunct) HRT.
However, Ecclestone picked off the Big Three (Red Bull Racing, Ferrari and McLaren, in that order) with substantially better offers secure in the knowledge that ‘B-leaguers’ would have no choice but to fall into place.Effectively such teams faced The Devil's Alternative:damned if they signed;doomed if they didn‘t.
After all, what alternatives did such as Lotus, Williams,Sauber and Force India have but to accede to Ecclestone’s paltry offers given they exist solely to design, build and race Formula 1 cars?They could not suddenly switch to Le Mans, IndyCar or tin-tops. Simply put: no deal, no race.
Mercedes took a while longer to come on board,but eventually caved in, as Ecclestone knew the Three-Pointed Star would, particularly given the company’s massive investments in its race team and high performance engine facilities.
Its reward was a substantial sweetener and promise of a guaranteed place at the main (so—called ‘Constructors Championship Bonus’) table with the Big Three,despite never having won a constructors’ championship — unless you include the 2009 title won by Brawn GP, just before it was bought and converted to Mercedes GP. Williams also has a permanent place on a ‘heritage’ basis.
By contrast, Lotus had, as Renault, won titles in 2005/6,yet received no preferential offer despite its track record and ‘Team Enstone’ carrying CCB —type overheads and manning levels.Plus, no one can deny the lure of the brand.
One simple statistic illustrates the disparity in F1’s financial structure:were,say,Lotus,to win this year’s constructors’ championship,the team would receive less ‘Bernie Money’ than would Red Bull Racing,Ferrari or McLaren,even were they to non—score in every round throughout the season; conversely,winning the title would enrich the CCBs by an estimated £80m over second—tier teams!
Thus Lotus goes into battle with one hand tied behind its figurative back, having been forced to borrow heavily from shareholders to keep pace.Not surprisingly they cried “enough” on the basis that Lotus should stand on its own feet, as it once could.The prevailing economic climate means, though, that big—buck sponsors are not exactly two a dozen — but,forget not,under the (expired) Concorde Agreement the team’s shortfall would have been amply covered by its rightful share of F1’s revenues,certainly on the basis of present performance.All the while CVC Capital Partners has reported record results as it gears up for an IPO,with 2012 financial statements showing profits of almost £600m — while the non-CCB teams record losses, with drivers, personnel and suppliers in certain instances going unpaid.
The only criticism that can be levelled at Genii was that its owners blindly accepted FOM’s offer, but the alternative may well have resulted in 350 personnel members,including Kimi,being put on the street.Possibly the Finn should look to CVC for his missing money.
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Raikkonen and Lotus:How did it come to this?
The relationship between the Enstone Team and its star driver has turned sour.EDD STRAW explains their near-split.
Kimi Raikkonen‘s remarkable Formula 1 return with Lotus has been one of the biggest stories in motorsport over the past two years.The combination of Raikkonen‘s hugely popular
anti-charisma and the Enstone team’s social—rnedia-savvy public image has proved irresistible and attracted a vast fanbase.Both on and off track,everything seemed to be going so well.Yet the spat between team and driver,which almost led to Raikkonen walking away from Lotus last week,became
the main talking point of the Abu Dhabi Grand Prix weekend.
After returning to Switzerland following a controversial Indian GP,in which Raikkonen disregarded a team order to let Romain Grosjean past,the Finn's participation in Abu Dhabi was still uncertain the day before practice started.This meant reserve driver and 2012 GP2 champion Davide Valsecchi was on standby to race.
A deal was struck for Raikkonen to drive in Abu Dhabi and he boarded a plane to the UAE on Thursday,but only on the basis that a proper agreement was reached over outstanding wage payments.On Sunday morning, not long before Raikkonen’s race came to an end at the first corner after hitting Giedo van der Garde, team owner Gerard Lopez and Raikkonen‘s manager, Steve Robertson,did agree terms that should ensure Raikkonen finishes the season.
Inevitably, attention focused on what happened in the closing stages of the Indian GP a week earlier, when trackside operations director Alan Permane ordered Raikkonen to “get out of the *"**"ing way" of team-mate Grosjean. This was as a result of Raikkonen,struggling on old rubber,fighting Grosjean and at one stage forcing him to run off the track.But while this moment helped to escalate the situation,it was far from the cause of the fractured relationship.
As is so often the case in F1,money is at the heart of the problem.Raikkonen confirmed in Abu Dhabi that he has received “zero Euro" from Lotus so far this season.AUTOSPORT understands that the full value of his 2013 deal is over £15 million thanks to a contract that heavily-rewards points scored.
Last year, the team also deferred payments before eventually paying him,but with the out-of-contract Raikkonen having committed to Ferrari for 2014,there is less incentive to paper over the cracks.This applies both to Raikkonen‘s attitude to the team and the degree to which Lotus is willing to tolerate his cold attitude in the garage, creating an atmosphere of heightened tension.
That Grosjean has got the better of Raikkonen on a regular basis in the second half of the year is also understood to have affected the 2007 worldchampion’s approach.
RAIKKONEN:“We found an understanding on the certain issues we have been having.[Indian GP radio]is a part of it"
Raikkonen was open about his initial reluctance to come to Abu Dhabi.After Friday practice,he confirmed he only attended because “we found an understanding on the certain issues we have been having“.When asked about the role the Permane radio message in India played,Raikkonen made it clear the situation was far wider-reaching than merely car-to-pitwall friction.
“It is a part of it,” said Raikkonen,“It is true those things should not happen but they have happened. That is not really the issue.It is all the other stuff,and all the things come together in the end.Like I said, it is easy to say that is the reason but it is not that."
With the long-awaited buy-in by Quantum Motorsports (see right) potentially securing the team’s financial future and playing a key role in the agreement struck between Lopez and Raikkonen,there is no reason why he will not see out the season and help Lotus attempt to climb to second or third in the constructors’championship.But after what has happened,both team and driver will be happy to see the back of each other at the end of the year.
