The story behind Ferrari's most recent quit threat

It all starts to make sense now

The right people working for the right media outlet could always reach Bernie Ecclestone. There were times when he would do the reaching out. Few in the business of sporting administration had a better intuitive understanding of how to play the media game than Formula One's Mr E.

Ordinarily the interaction would be a low key, one-on-one affair, selectively driving whatever message home. The difference this time was the industrial nature of the operation, the full bundle of targeted Formula One reporters invited to his old Knightsbridge lair.

The subsequent headlines betrayed the rationale behind the meeting: 'Ferrari in F1 quit threat'. I smiled. If I had a pound for every word published in pursuit of this tale over the past 20 years, I wouldn’t be writing this. I’d be sunning it in my Cayman Islands retreat, raising a glass to the greatest marque in Formula One, and the sporting impresario pulling the strings on their behalf.

What a caper, hysteria on a grand scale whipped up at a critical moment in the negotiating cycle of a commercial agreement coming under renewal. Ecclestone is right, Ferrari is Formula One is Ferrari. The rest can come and go. The only colour in the global pit lane is red. It doesn’t matter where in the world you go, one team alone commands loyal attachment.

There are Williams diehards out there, there are McLaren love-ins but despite the contributions these giants of the sport have made, they remain specs in the grandstands from Monaco to Melbourne, Montreal to Mexico compared with the emotional pull of the Scuderia.

F1 Winter Testing in Barcelona - Day Two

Commercial powerhouse

Ferrari are the only team to have contested every round of the Formula One World Championship since its inception in 1950. As a commercial power they stand alone. The other teams in the pit lane understand and accept this, knowing that without that big red reference point on the grid, interest and money might drain.

An illustration of the brand power of the Maranello empire. Manchester United are the most successful commercial vehicle in football, richer according to Forbes' most recent calculation than Real Madrid and Barcelona. Take away the heavily slanted TV revenue distribution in La Liga and the Spanish clubs would not even be close.

Yet when Vodafone was the title sponsor of both United and Ferrari from 2001, they coughed up four times more for the privilege of riding on the Prancing Horse every fortnight from March to November than they did to appear on a red shirt every week of the football season, £36m over four years to United v £110m over three to Ferrari.

That is why Ecclestone has always tipped Ferrari heavily for their participation. In the present commercial agreement that comes to an end in two years, Ferrari are guaranteed an annual bonus of $100m over and above prize money allocated in the constructors’ championship.


Billion dollar babies

This is the financial position Ferrari are keen to protect when the new deal currently being thrashed out with new owners Liberty Media is signed. Typically prize money of around $1bn dollars, distributed annually according to finishing position, accounts for a third of team budgets. That yield comes from the huge sums Ecclestone squeezed out of promoters for the privilege of hosting a race and broadcasters for the privilege of showing it on their myriad platforms.

Ferrari believe their presence on the grid is driving the business. Without them new owners Liberty would not be able to command the same mad fees from promoters and broadcasters. This is the discussion coming to the boil as the teams prepare for the season opener in Melbourne at the end of this month.

Which brings us to the gathering in London last week where Ecclestone was doing the bidding of Ferrari president Sergio Marchionne. Before Marchionne held the levers of power at Maranello Ecclestone walked hand in hand with his predecessor Luca di Montezemolo, and before him with the old grandee himself, company founder Enzo Ferrari.

When Di Montezemolo was the capo di capi throwing his weight around, Ecclestone was notionally the target as the head of the commercial gig, except any opposition suggested by Ecclestone was just that, never substantial. His tactic was to appear neutral then fall into line with Ferrari and persuade others to follow suit, as Williams did in 2005 when the grid was split down the middle ahead of talks about the 2008 renewal.


Breakaway fever

Back then it was McLaren leading the breakaway movement backed by the big manufacturer block of Toyota, BMW, Renault and Honda, all seeking a more equitable split of the profits. In October 2004 the block thought they had Ferrari onside as a founder member of the Grand Prix World Championship, an embryonic entity that threatened its own breakaway series, until one misty morning in the winter of 2004/05 when Ecclestone announced Ferrari had jumped ship and were staying put.

In December 2005 Williams followed suit, a huge addition to the lighter weight newbies Midland (ex-Jordan), Red Bull and Toro Rosso, who were also committed to F1. Once again the power of Ferrari held sway, just as it did four years later in 2009 when the story repeated with Ferrari leading the calls for change and a new series, until Ecclestone gave them what they wanted.

Politically Ecclestone and Ferrari went way back, almost three decades to be precise when the fight for control of F1’s commercial rights erupted in a way that would transform the F1 landscape. In a dispute with the FIA over a volatile financial structure, it was the alignment with Ferrari that led to the restructuring of the sports commercial operations under the aegis of Ecclestone and his right-hand man Max Mosley after the pair had first threatened to form a breakaway series.

A race staged in South Africa in 1981 under the banner of something called the World Federation of Motorsport was the ultimate act of brinkmanship. Even Mosley admitted that had the FIA, the sport’s ruling body that had hitherto controlled all commercial aspects of F1, called their bluff they might never have pulled off their audacious coup since they could barely cover the cost of the tyres in Kyalami let alone make a penny to pay the teams.


No turning back

Nevertheless with Ferrari at his back the FIA agreed a deal with Ecclestone that saw him take ownership of F1’s commercial rights. The sport has never looked back becoming the multi-billion dollar pageant that persuaded Liberty to pay $4.4bn to acquire it a year ago.

The timing could not have been more auspicious for Ferrari, who produced their most competitive car in a decade to take the fight to Mercedes for most of the year. Sebastian Vettel cracked the first bottle of champagne on the podium with victory at the opening race in Australia. He maintained Ferrari’s advantage all the way to the summer break with another dominant win in Hungary.

Only a combination of bad luck, mechanical gremlins and Singapore, where Vettel and team-mate kimi-Raikkonen took each other out in an insane act of self immolation, handed the initiative back to Mercedes, for whom Lewis Hamilton rammed home the opportunity with a couple of races to spare.


Sebastian Vettel on the money

The first week of testing has been hit with poor weather but on the second day before the snow came it was Ferrari with Vettel at the wheel that was the first to dip below 80 seconds around the Circuit de Catalunya.

He is not only fighting for the championship but to underpin Ferrari hegemony in the talks with Liberty. The sports new owners were given a taste of Ferrari’s capacity to engage the audience like no other in the first half of 2017. Marchionne knows the longer Liberty take to put their chips on Ferrari the harder it becomes to negotiate future race and broadcast deals.

Though it is hard to see how Ferrari might prosper outside the F1 umbrella, similarly F1 would be devalued hugely without its most celebrated marque. The pair need each other. Ecclestone’s doomsday threats about Ferrari’s separatist intentions are merely prompts to bring Liberty into line and keep the Scuderia where it belongs, at the core of F1.