F1: Ferrari (NYSE:RACE) Demands Approval of Any Rule Changes

F1: Ferrari (NYSE:RACE) Demands Approval of Any Rule Changes

F1: Ferrari (NYSE:RACE) Demands Approval of Any Rule Changes


Ferrari entered F1 in Y 1950 at the Monaco Grand Prix and have been synonymous with the motorsport since.

Ferrari’s boss Sergio Marchionnesaid the Scuderia could quit F1 if they do not approve the direction taken by Liberty Media.

The Ferrari President pinpointed proposals for a new engine design from Y 2021, as he made the threat in a conference call with investors Wednesday

Mr. Marchionne said F1 has been “part of our DNA since the day we were born”.

But  added: “If we change the sandbox to the point it becomes unrecognizable, I do not want to play any more.”

His concerns follow objections from both MercedesAMG and Renault over plans for a new engine design that were presented jointly  Tuesday by governing body the FIA and the F1 Group, bought by Liberty earlier this year.

They set a confrontational tone for the major meeting on 7 November of F1’s strategy group, which includes the FIA, F1 and the 6 leading teams.

Liberty is expected to outline further details of its plans for the sport, including how to instigate a budget cap.

Mr. Marchionne said: “Liberty has got a couple of good intentions in all of this, 1 of which is to reduce the cost of execution for the team, which I think is good.

“There are a couple of things we don’t necessarily agree with, one of which is the fact that somehow powertrain uniqueness is not going to be one of the drivers of distinctiveness of the participants’ line-up. I would not countenance this going forward.

“The fact we now appear to be at odds in terms of the strategic development of this thing, and we see the sport in 2021 taking on a different air, is going to force some decisions on the part of Ferrari.

“I understand Liberty may have taken these into account, but it needs to be absolutely clear that unless we find a set of circumstances, the results of which are beneficial to the maintenance of the brand, and the marketplace, and to the strengthening of the unique position for Ferrari, Ferrari will not play.”

Mr. Marchionne likened some of Liberty’s ideas to those witnessed in the American NASCAR stock-car racing series, which effectively uses standard cars and employs a number of artificial means to keep racing close.

He said: “I don’t want to play NASCAR globally, I don’t.”

But Mr. Marchionne added: “I don’t want to prejudge any of this. We’re walking into this meeting next Tuesday with the best of intentions. We will see where it takes us.”

The new engine rules retain the architecture of the current engine as a 1.6-litre V6 turbo hybrid but make significant changes, including introducing standardisation of some parts and removing the MGU-H, the part of the hybrid system that recovers energy from the turbo and which is responsible for about 60% of the total hybrid energy.

Both MercedesAMG and Renault say the proposals amount to a new engine, which would force a major development and financial investment.

Liberty/F1 wants to make engines cheaper, more simple, noisier, enable independent companies to enter the sport and make them more attractive to fans.

It is believed to be willing to listen to other ideas on the design of the engine post-2020, as long as they meet those fundamental objectives.

Like most other teams, Ferrari is committed to F1 contractually until Y 2020, but has nothing tying it to the sport after that.

This is not the 1st time Ferrari have threatened to quit F1 on the basis of rules they do not like.

But Mr. Marchionne’s comments underline a Key problem for F1’s commercial rights holders.

Notably, 3 of the 4 engine manufacturers involved in the sport oppose their proposed new rules. And although Honda has not commented, the likelihood is it does too, given the current rules and their relevance to road-car efficiency are why it entered F1 in the 1st place.

The engine rules are wrapped up in the rest of the post-2020 F1 picture, which also includes a desire to cut costs, redistribute prize money and other issues.

Liberty Media will reveal more of their plans next week.

They need to be very careful,and not to attempt to fix something that is not broken, F1 is not broken, it just need to be louder.

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 117.43 3 November 2017 0.32 118.25 118.36 117.36 497,400
HeffX-LNT Analysis for RACE: Overall Short Intermediate Long
Bullish (0.27) Bullish (0.41) Neutral (0.23) Neutral (0.17)

Have a terrific weekend

The following two tabs change content below.

Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

You must be logged in to post comments :