F1: Ferrari’s (NYSE:RACE) CEO ‘Encouraged’ By Coming Engine Discussions

F1: Ferrari’s (NYSE:RACE) CEO ‘Encouraged’ By Coming Engine Discussions

F1: Ferrari’s (NYSE:RACE) CEO ‘Encouraged’ By Coming Engine Discussions

$RACE, $LMCA

Speaking to analysts in a post Q-1 results conference call, Sergio Marchionne said he sees ‘meaningful discussions’ on the F1 engine issue, and hoped for a full resolution by the end of the year, if we cannot then Ferrari will pull out.

“I’m encouraged by the change in the attitude that we are seeing from Liberty (NASDAQ:LMCA) in terms of the extent of the changes that they’re forecasting in 2021,” he said.

“Probably the biggest indication has been the recognition of the fact that the engine regulations need to reflect sort of the nature of the sport. And we cannot really dumb down engine development just to accommodate new entries, right?

“So the stuff that’s on the table now is potentially workable as a system. The economics are not,” he added. “I think that’s something that we need to go back to Liberty with.”

Commercial rights holders Liberty Media, who took over F1 in January 2016, want to implement a cost engine and car build cap, improve the racing and have a fairer distribution of revenues to level the playing field.

They also want engines to remain hybrid and road relevant, with the rules making the sport attractive for any new entrants

Ferrari, the oldest and most successful team in the Tier 1 motorsport, receive special payments to reflect their status.

Critics say the current V6 turbo hybrid engines are too complicated, quiet and costly and need to be simpler, cheaper and louder.

Mr. Marchionne has warned in the past against standardization, which he has compared to the US stock car racing series NASCAR.

“I think we now have enough of a basis to try start having meaningful discussions. And hopefully, we’ll get it all resolved by the end of this year one way or the other,” said the chairman.

Marchionne said budget cap discussions were “more encompassing in nature than just dealing with engine development” but he could see value in removing some of the costs associated with aerodynamic development.

 “The important thing for us… is that we don’t touch the nature of the technical development of the power-trains because that is at the heart of what Ferrari does for a living,” he emphasized.

“I think we need to continue to work with Liberty with the commercial rights holders and with the FIA to try and bring about a sensible equilibrium. If we cannot, as I said before, we will just pull out.

“But we not not there today. I think we owe the sport a phenomenal effort to try and bring about closure of these items. We will try and get that done before the end of this year.”

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 137.33 4 May 2018 6.34 134.92 137.45 134.28 1,201,600
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Neutral (0.21) Bullish (0.25) Bullish (0.29) Neutral (0.10)

Have a terrific weekend

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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.

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