Live the passion


When you stand under the podium in Monza the world ceases to exist, in some weird way you cease to exist, you become part of that energy, you breath with it, you scream with it, and you cannot quite believe that this can be real.

Monza wasn’t really planned for me three weeks before the race, but it suddenly came on the radar, when stuff got sorted out in the real life. I have always wanted to go to Monza, and it was not really about the event, it was more about the circuit. God she is beautiful! For a while before I started going to races, I didn’t quite get all the old-school-circuit kind of talk. I think after being to Spa twice and now having visited Monza, I begin to understand what people mean. There’s something about it, that I personally cannot put into words. Sheer realisation of the history of the place is enough for it to be breathtaking, but what comes on top, is the incredible energy the fans bring to the circuit. Oh, and it doesn’t hurt if you are a bit of a Ferrari fan.

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6h of Nürburgring or three days of pure happiness


This weekend couldn’t  be more perfect. I think I will need a while to comprehend that this everything was real, that I didn’t dream it.

WEC is an amazing race to go to, after two years in a row in Spa, I knew that much for sure. Tickets are very affordable, the access is amazing, organisation is mostly impeccable. WEC is an amazing kind of racing to watch live.

Nürburgring has proven to be a great venue, too. The area is unbelievably beautiful. High up the Eifel mountains with the tiny villages around and that mideavel castle on top of the hill, it is a great destination to get away from the hassle of the real life.

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My take on the Pirelli vs. Seb

On lap 42 of the Belgian grand Prix today Sebastian’s tyre has disintegrated “out of the blue”, and after the race Sebastian was furious, I guess I have never seen him so furious before. Ever. He spoke to RTL, saying that he wasn’t concerned about the result, he was concerned about safety, and had the tyre given up 200m earlier he would head into the wall at 300 km/h. Moreover he mentioned that Pirelli said the tyre was good for 40 laps. And those 40 laps, in my opinion is the crucial problem.

The statement was confirmed by Paul Hembery. He of course said that it was just a guideline, and that they didn’t expect anyone doing a race on one stop. At this point I ask myself isn’t 12 laps too much of a deviation on 40 lap guideline? And if they were not sure, and expected the teams to do at least a two stopper, why would they have the 40 laps guideline? What are they having from overstating the useful life of the tyres, while their job is to make tyres that don’t last too long?

Sebastian also mentioned that concerns were raised after the incident with Nico Rosberg, who also escaped what could have been a very nasty accident. He is one of the people who has often voiced concerns that others didn’t: remember Suzuka 2014? Seb was the one who said that it was a shame they didn’t reschedule the race, and as far as I remember he said it before Jule’s accident.

I am sure Sir Jacky Steward wasn’t too popular when he fought for safety improvements. None of the people who contributed enormously to the safety in Formula One was. But their legacy is why after a crash the drivers get out of the car and carry on with their business.

Ihe risky strategy adopted by Ferrari is not really an excuse. It was a gamble, yes. But the tyres were 28 laps old (12 laps less that the guideline!), and at worst you should expect dramatic drop in performance, not the tyre disintegrating at 300 km/h. Ferrari gambled, the gamble didn’t pay off (though the worst case scenario would be fourth) – this happens this is racing, and it wasn’t what Sebastian was talking about. He spoke about safety, not the results.

What kills me is the hypocrisy. People complain about swearing? Really? Firstly, he speaks a foreign language, and it is likely to be a prejudice from my side, but I wonder how many of people who criticize him for it are able to form coherent sentences in a foreign language. Another point is, how so many forget he is actually a human being. I wonder how many of us would be able to keep calm and politically correct if someone shoved a microphone in front of your nose just five minutes after you had an accident that under slightly different circumstances could have cost you your life? Especially if you spoke about the situation a day before. Really I would look at you.

Seb is harsh, and I guess Britta will not be too happy about what he said, and the way he said it. But aren’t the same people who now criticize Seb say that the drivers have become too perfect and to corporate and no one expresses their opinions. You have an opinion and someone who has the balls to express it, so I am not sure there is a reason for complaints.

Formula one is a dangerous sports, and I guess from time to time all of us want to be fans of chess of snooker, it will always remain dangerous, but it doesn’t mean there is no point in trying to improve safety. If everyone would stick with “it’s dangerous, deal with it” philosophy, there wouldn’t be helmets or seatbelts yet.

I really hope that they will figure out something to improve the tyres, to make the drivers trust their equipment again. And I think that one day if we are unlucky, people will thank Sebastian for voicing, what no one did, and for being politically incorrect.

Ultimately, I don’t think that the important question is whether Ferrari or Pirelli are to blame, but what can be done to improve, and avoid something like that ever happening again.

A small follow up to the fury post about the “biography”

The previous post of fury has lead to a conversation with the author of the book in question. This conversation has actually answered a lot of ifs as well and some whys.

Well, you might imagine that I have to fight hard not to add a sarcastic comment here and there. What is actually funny, though, Ms Sturm didn’t comment on some factual faults, I have pointed out 😉

A book for people banned on the Internet

When I had heard of Sebastian Vettel’s biography written by Karin Sturm, I thought I should get it. I even asked Ms Sturm on twitter whether it was the Tom Bower “skeletons in the closet” style or the Wikipedia style. She said it was neither. Well so far the book has a bit more interview quotes than the Wikipedia article, but other than that it’s Wiki.

One thing upfront, I haven’t finished the book, and I doubt I ever will, so my only hope is that somewhere in there it gets better. What I have read so far is more than disappointing it’s disgusting.

The fact that it’s Wiki,would be just disappointing, and I would just lay the book away and go reread something exiting like Tom Bower’s book, which is at least entertaining, or something with a claim to be true like the Autobiography of David Coulthard (even if you couldn’t care less about DC it is worth reading). Ms Sturm’s book takes the disappointment to the whole new level:

Zu Saisonbeginn [2009] hatte der Australier mit Sicherheit noch mit den Folgen seines Fahrradunfalls zu kämpfen, der ihn ja auch schon große Teile des Wintertestprogramms gekostet hatte. Im November war Webber in seiner Heimat, bei einem von ihm selbst veranstalteten Charity-Event, auf dem Rennrad von einem Auto angefahren worden und hatte sich nicht unkomplizierte Beinbrüche und auch einen Bruch in der Schulter zugezogen – Letzteres verschwieg er damals sogar seinem Team.

– Karin Sturm, p. 193

At the beginning of the season [2009] the Australian certainly had to cope with the consequences of his Bike accident, which had already cost him major parts of the winter testing programm. In November in the charity event he organised in his home country, Webber was riding a bike and got hit by a car and sustained not uncomplicated leg fractures and a broken shoulder – he has concealed the latter even from the team. 

The first point about missing the winter testing program may be partially true, but it is still worth mentioning that he was there when they launched the RB5 in Jerez in February (see e.g. Mark Webber, 2010 – A Season to Remember p. 9ff). The part about the broken shoulder is from a completely different chapter. Mark did suffer a broken shoulder and did conceal it from the team. Only it happened in October 2010, and not in November 2008, in a completely different accident (see Mark Webber, 2010 – A Season to Remember p. 176, The Telegraph). Ms Sturm’s book is not about Mark, obviously, but I am not sure that factual mistakes about googlable information should make it into a book.

This is the disappointing part. Another disappointment is the way the opinions are presented in a manner of the ultimate truth. It is clear that the paddock press takes sides, and one must be delusional to think that any of it as the whole truth. The whole Vettel-Webber saga, seems to be mostly the doing of the press rather than the drivers themselves. And Ms Sturm clearly follows the party line adopted by the German media: Seb is the saint, Mark is the villain. She clearly adores Sebastian in every way, but I am not sure she has any factual prove to the things she claims to be true. According to her, after the infamous Korean accident, Mark personally sent the troops of the British press into a crusade against Sebastian. Just a quote:

Mithilfe seiner [Webbers] guten Beziehungen zu den Britischen Medien stichelt er dann hintenrum doch gewaltig weiter.

– Karin Sturm, p.251

Using his good relationship with the British Press he keeps on taunting from the back. 

It is just to illustrate the tone Ms Sturm’s choses to write about Mark Webber, the guy is a pure evil, as are apparently “his people”. This is what Ms Sturm writes about the aftermath of the Brazilian Gran Prix 2010, when Red Bull won the WCC:

[…] sitzt im Fahrerlager jemand einsam und missmutig vor dem Red-Bull-Häuschen: Ann Neal, die Lebensgefährtin von Mark Webber. Vielsagend für die Stimmung – während  Vettel mit seinem Sieg und seiner souveränen Glanzleistung erneut unterschtreicht, wer in dem englisch-österreichischen Team derzeit der Bessere ist, können sich der Australier und seine Leute einfach nicht mit der sportlichen Philosophie von Mateschitz abfinden, eine WM im fairen Fight auf der Strecke und nicht durch Stallorder gewinnen zu wollen.

– Karin Sturm, p.266

[…] in the paddock, someone is sitting alone in front of the Red Bull hospitality: Ann Neal, Mar Webber’s partner. It speaks volumes amout the mood – while Vettel with his win and his solid performance undelines once again, who is the better one in the english-austrina team, the australian and his people cannot accept the sporting philosophy of Dietrich Mateschitz, to win the Championship is a fair fight at the circuit and not through the team orders. 

There might be some people who will find it acceptable, or even good journalism. I don’t. And not because I don’t agree, or I like Mark a lot, or because I suggest she is lying, but because I believe that making statements about people without any actual proof, does not qualify for good journalism.

I probably will not finish this book, my nerve cells are dear to me. This all just reminded me how much the press has hurt the people they write about. I remember a year ago Helmut Marko said something like Vettel is better than Hamilton and Rosberg together. Helmut was soon forgotten, but Sebastian was once again called arrogant. Those weren’t his words, but it was his name they stuck to. It’s sad that there is Sebastian’s name attached to this book. I hope he is a better person than that.

Horner talking, or How to stab people in the back

Don’t go to F1 searching for honour. People do and say horrible things, as if this were the only way. While everyone is busy with Christmas Shopping, Christian Horner is dutifully running the “Red Bull won’t miss Sebastian Vettel” campaign. So why not to give an interview to the BBC.

I don’t think Christian is making things up, but he is clearly very selective with the truth. He forgets to mention mechanical failures that cost Seb the practice sessions and car set ups, he forgets to mention all those times when the team made mistakes in strategy. He also forgets to mention that in Italy Seb was on older tyres, it was a great move, that Daniel pulled off, no question there, but you still need context.

I have always disliked sneaks. If you are unhappy with someone’s behaviour or attitude you go and talk to the man himself, you don’t go telling the press. Christian, who year after year praised Sebastian’s work ethic has suddenly decided to imply that Sebastian didn’t work hard enough, because he didn’t like the regulations. But stating it as a reason to leave for Ferrari. Well, sorry to disappoint, but Ferrari have the same set of regulations to comply to, so the move doesn’t exactly change anything in this respect.

What appointed me a lot more than selective memory of the Red Bull team principal, was the personal touch to it. “Knowing Sebastian as well as I do” implies good interpersonal relationships of some sort, and odds are there is some trust involved. He says this, and then lists all the things that can potentially undermine Sebastian’s credibility. Horner knows that that crazy unfounded hate did hurt Sebastian a lot more than he showed, and what he did now, was give the bloodthirsty press and couch experts a nice set of sticks to beat Sebastian up. It is disgusting.

Study in red

I think I am slowly coming to terms with Sebastian being a Ferrari driver from the next year on. At first I hated the thought of it, but the more I think about it, the more I think that I will be able to accept it.

Apparently Sebastian has engineered an amazing deal for himself with 25m a year plus bonuses (according to Sport Bild), furthermore Ferrari have always been fine with the personal sponsorship deals (which years ago lured Michael to them at the first place), and it is a lot of money, even compared to his 22m contract with Red Bull. I don’t actually think that there is something bad about choosing a better paying company.

Apparently his condition was that Alonso had to go, which is not surprising at all. And this point I find totally understandable, he doesn’t seem like a person who would be happy to play the mind games that Fernando excels at. Except he seems to have lost this round to Seb. According to the Sport Bild, Fernando was fairly pissed after his talk with Mattiacci on Thursday, the day before Seb told he was leaving Red Bull. So basically Sebastian has left Fernando with very limited bargaining power: he can’t stay at Ferrari, he is not going to Red Bull, Mercedes have two very good drivers, and Alonso seems to be the last person you would hire to improve the relationships inside the team. He is left with McLaren.

Ferrari has a mythos around it, this mythos is valid. They have been there forever, they used to be synonymous with F1 for so many years, they have the highest amount of trophies to their name. Ferrari have history, and being so much in love with the history of motorsport, Sebastian wants to write his own. I remember that interview done by “Ich bin kein Schumacher, ich bin ein Vettel” (I am not a Schumacher, I am a Vettel) said the 12 year old Sebastian. Now he has four titles to his name, the experience and confidence that he can do what Schumacher once did. If Seb pulls it off he is a legend.

One may think that leaving Red Bull now is a betrayal, that Seb’s jumping ship. And to be honest to some extent he is. Red Bull has been on the top of the cycle for four years, and now they are inevitably going down. With less involvement from Newey, with the Renault motors they are stuck with, they will need at least a couple of years to regroup if they are to be on the very top to challenge Mercedes. It’s the same time Ferrari needs to build themselves up with the new people and the new hopes. Sebastian now did what Lewis did two years ago, he has left the team that has brought him up for the new challenge. He actually uses the same rhetorics Lewis used back then. Lewis made the right choice, and I hope that Sebastian made a right bet as well. I want him to manage what Alonso failed at.

I don’t know how I will manage my negative feelings towards Ferrari and my adoration towards Seb, but I somehow managed it with Lewis and Mercedes, it’s just going to be the round two. After all it takes 22 to tango, after all F1 is one big family quarreling about the estate.

I will still love Red Bull, they have something very special, and I want them to do well through the much tougher times that they have been having this year. I want them to keep pushing, and I am sure they will. Daniel has proven that he can do the job, he has pretty much outpaced the four times world champion. I am not sure about Kvyat, though. It is a gamble, it’s a huge gamble. But I am very happy that Red Bull went with their programme, that they didn’t go shopping for someone with a name to pay for. Next year they will have at least 20 more million to put into the car and one proven driver. It will be tough for the marketing department, though. It’s going to be hard to sell a Russian in Europe, or in fact anywhere in the world but Russia. Daniil though is as much a Russian as Nico Rosberg is a German. And in general I think that nationality is fairly irrelevant in F1. I just hope he does well and doesn’t cause too much of a fluctuation in the team, that he can build the sort of relationships with the guys that Sebastian and Daniel have built over the years. That he feels at home in the team and that the team feels good about him. Open mindedness gained through years of international experience may help him with this.

I think Christian is not entirely honest, saying that he was taken aback by Seb’s decision. People must have known before, I am not sure that Kenny leaving, or being let go, is a coincidence. And Seb has told them as soon as his deal with Ferrari was done, I don’t think that the timing of the announcement was bad. And Red Bull must have given a thought to what they do if Seb leaves. They had a plan, and PR wise they have handled the situation fairly well, announcing the driver line up, not to give a ground to any speculations. Christian seemed hurt, though, on more than just professional level. As did Dr. Marko. Sebastian reportedly was in tears, when he told his team in the morning, and that tweet from Stu is heartbreaking. Sebastian is obviously leaving a very happy place, and people who are dear to him. But he moves on, and the only thing left is to wish him to succeed at what he does.

Hockenheimring 2014

I don’t expect too much too often, and it clearly applies for Formula 1. I also tend to understate a bit, but it was a mind blowing weekend, despite the fact that Germans turned out to be fairly lame in organizing events.

Since I study in Mannheim, a city about 15 miles to the north from Hockenheim, going to the German Grand Prix was a no brainer, especially after my friends decided to join. We spent ages choosing the seats and at the end decided to get the North Grandstand B, which at the level of the apex of the first corner, it was a great place to watch the start, but Mercedes grandstand and the South seem to be better in general, but obviously more expensive. At the end we paid 250 Euros for the weekend tickets. 

Apparently sales at Hockenheim were really bad, there were only about 50.000 people, and the promoters made all sorts of discounts (e.g. 11 Euro per goal the German National Team scores in the latest match. Remember the demolition of Brazil?), which was extremely annoying since we’ve bought our tickets in October.

On Thursday we went to Hockenheim for the Pit Walk. It is generally one of my favourite parts of the weekend. I love seeing the teams work, seeing the cars close up, and generally the feeling of being a little bit closer to the backstage. Firstly, people were let to the grandstand. We have spent about an hour watching people painting the lines, Kevin Magnussen doing an interview, Nico Rosberg doing the interview for Spanish broadcasters. Nico Rosberg makes you want to address him with “Your Royal Highness”, I actually recognized him by the way he walks: chin up, thinking about every move, making sure the hair is okay. He had a football and did a couple of tricks for the camera, we cheered. There were a couple of GP2 teams doing the track walk, someone ran the track, Max Chilton, for example. The crowd cheered, and was becoming increasingly bored, since it was time. Sebastian came to take pictures with the cheerleaders, at some point Britta asked him to wave, which he did. The cheering was really loud. 

In general I have to say I am actually surprised by the Germans, I expected them to cheer for Rosberg al lot more, but Sebastian is the people’s favourite, and even the Mercedes fans aren’t all about Nico, so many support Lewis. Sebastian said in an interview that he’s happy that the driver the crowd was cheering for won, well it’s not really true, the crowd was cheering for him. And in general the level of respect from the audience was fairly decent.

The entry from the grandstand to the Pit Lane was very badly organized, instead of letting people it sector by sector they ended up forming a huge crowd on the steps. It was potentially very dangerous, and unsurprisingly, bad organization encourages all sorts of anti-social behaviour.

All the disappointment with bad organization vanished when we landed next to the RedBull garage. Dom was fiddling with something on the pit wall. We asked him to pass on a note we wrote to the team. We did this last year, just thanking the guys for the hard work and for putting the racing together and we decided to repeat it. We ended up watching Dom give the note to Stuart and Stuart run around the garage looking for sticky tape and put the note on the wall in the garage. He came to chat for a bit, thanked for the support and signed my friend’s flag. I would say it made up for lame organization. 
On Friday was the moment of truth. We heard the new engine sound for the first time. And I have to say it was a shock. After watching a WEC race in Spa I started to hope that the new sound is not that bad. LMP1 cars aren’t madly loud, but the sound is amazing, unlike the GTE Ferraris which are loud and terribly annoying. I hopped that not loud didn’t mean bad. Well it means exactly that in F1. Apart from resembling a vacuum cleaner or a hair drier, the sound is so quiet that you can see the cars before you can hear them. The sound was disappointing. Only after a while when you listen to the engines for a long time and lose a reference point, it sounds okay, not a bit impressive, but okay. 

On Friday one could go to any grandstand apart from the cool ones, so we ended up watching the second free practice from the Mercedes grandstand. And I have to say that it is probably one of the best places to watch the race. You can see a big part of the circuit, and some slow corners, except that you can’t hear the cars on the back straight. And I couldn’t help but feel that from there the cars look like toys. 

The best thing about Mercedes grandstand was the live band they had there. We joked that it was Lewis who chose the band, which is probably not the case, because they were singing Adam Lambert a lot better than Adam Lambert, and Lewis would have chosen hip-hop. 

They also did an interview it Bernd Maylander, which was not really informative, but still nice, and he obviously spoke German, which didn’t help my friends too much.

Another part of the entertainment at the Mercedes area was changing wheels on a DTM car, which was pretty cool, the sound of the wheel gun is nice, wheels are heavy, and it’s a hell of a team work: one screws up, everything is lost (by the way, I wasn’t the one who screwed up).

We watched the GP2 Qualifying with the thought “F1, GP2 sounds better than you, confirm you understand the message”. Slightly disappointed with Mitch’s qualifying we headed back home. 

On Saturday we lived through the frustration of hearing the cars once again, and went to take a look at the GP2 autograph session to try to understand how the F1 autograph session was organized. We were dreading the moment after the disaster of Thursday. We were underestimating the extent to which the organizers could fail. 

Luckily Maria doesn’t watch qualifying sessions, so she stayed in the queue which was starting to form an hour before the qualifying and 3 hours before the scheduled autograph session. We went to the grand stands. 

When Lewis ended up in the was I almost had tears on my eyes, because I wanted him to have a good chance to win so badly, since I like him so much more than Rosberg. On the other hand I knew that he was going to race, really race, not just start from pole and drive away, what essentially Rosberg did. 

After the qualifying we headed to my friend in the queue, missing the GP2 race, which Mitch has won from 15th on the grid. The queue was already about 100-150 meters long, so we felt very thankful to our friend. The only problem was the queue wasn’t really working, because there were people coming from all the sides, and not exactly someone who was joining their friends. By the time the autograph session was about to start there was just a crowd. 

From Hungary last year I had a photo with Newey, Horner and Vettel, signed by Newey and Horner, and I really wanted Sebastian’s autograph on it. A friend of mine was closer, so I gave an envelope to her. Back then Sebastian was the only one on stage (with the adorable Britta at his side), Ksenia got me the autograph while I was squeezed somewhere in the crowd. Trying to get out was not an option, especially when Daniel came to the stage. I don’t remember what Sebastian was saying in his interview, but Daniel was adorable, when he was the Aussies somewhere in the crowd he started to sing the national anthem, he smiled brighter than the sun, se said he liked German beer and after a while ended up with some, which he obviously didn’t drink. When it was my turn he was sat next to Sebastian.

Since Ksenia has managed to pass me back the rest of the pictures, I asked Sebastian for another autograph, wishedhim a lots of luck. He is adorable, but very tired, hiding his eyes behind sunglasses, he was clean shaven and it makes him look so much younger, he seemed somehow vulnerable but with such a positive energy around him. After the official on stage autograph session he spent about 45 minutes signing autographs for people standing next to the railing. 

Daniel is all smiles, and it was very kind of him to sign pictures for me and Ksenia, even with the pen I gave him. And when I was standing next to him and the crowd started to sing something, he asked Sebastian “What’s the chanting, Seb” in a tone which you would use talking to a good mate. 

For the autographs I have chosen Vladimir Rys’ photos, they are beautiful, and when I posted the pictures on twitter, he replied saying he’s seen them at the autograph session. Such a shame I wasn’t thinking he would be there, otherwise I would love to thank him in person, his pictures are stunning, they are soaked in emotions. 

Afterwards I was just hoping that Maria will get her Rosberg autograph. I had one picture of Nico and since I didn’t know when the Mercedes drivers were coming, I parked in the proximity of the railing to try to get her his signature, in case she wouldn’t make it. I ended up with Kvyat’s and Grosjean’s autographs on my ticket. 

I got Rosberg’s autograph for Maria, congratulated Nico on his marriage. He is perfect, as if made of plastic, or just stored safely in air conditioned room while everyone around has been waiting for hours in +30°C. 

Deep inside I was hoping to get Lewis’ autograph as well, and I got it. Lewis was the one who impressed me the most, he has incredibly positive, very kind energy around him, with that small smile hiding the frustration of the day, with a drop of sweat running down his temple. I couldn’t help but tell this “you age going to fight back” he smiled a little wider and a little sadder and replied “I hope so”. Well, he did fight back. 

Physically and emotionally drained we gathered up at the Biergarten. Apparently due to the brilliant organization (and experience in Moscow tube in rush hour) Maria managed to get 11 autographs. 

On Sunday I managed to persuade Ksenia to join me for the GP2. When we went through the F1 Village we could take a close look at the cars which the drivers used for the drivers’ parade. Sebastian had the coolest one.

The GP2 race was amazing, probably less spectacular than the one on Saturday, but it still had a lot of fighting and obviously a strategy element with the rain. We hoped it would rain for the F1. Not the undrivable kind of rain, but something to spice up the inevitable cruising of Rosberg.

At the drivers’ parade the Germans were rushed through to do the interviews in the last corner, while the rest were going fairly slowly. We waived Dan with the Aussie flag we had, and after his driver drew his attention he gave us thumbs up. Lewis pointed at every single Britishflag, waving and giving people thumbs up. 

While Martin Brundle and David Coulthard were molesting drivers on the grid, the north grandstand was busy doing the wave. Unfortunately it died out somewhere towards the south where the VIPs were sat and it never reached the end of the south grandstand, which caused a lot of booing from our side of the circuit.

The only thing that the organizers didn’t screw up was the choreography for the national anthem. The north grandstand looked stunning, with the German flag. Last time I felt something similar was at Anfield road, when the stadium was singing You’ll never walk alone. It was amazing. But making the flag during the warm up lap was rather suboptimal. 

The closer to the start the more nervous I was getting. I am generally very nervous at the start of the race, but live and in the first corner is a completely different level.

We all know what happened at the start, and I will probably never forget these dreadful seconds when Felipe wasn’t moving. Seeing it with your own eyes gives a different perspective, it rips your heart apart and the harder you cheer when the marshal gives the thumbs up and when Felipe gets out of the car on his own and you understand that he is fine. 

I was happy to see Sebastian have a good start, especially considering what happened between Massa and Magnussen and obviously very disappointed that Ricciardo got caught in it. It could be worse though. 

I can’t write about the race, because everyone has seen it, but I have to say that it was one of the most impressive races I have seen. Vettel vs. Alonso vs. Raikkonen, Alonso vs. Ricciardo, and Lewis, Lewis, Lewis. I knew he would fight back, and he made a hell of a show. 

After the chequered flag we ran towards the podium like crazy I have probably never ran a 300 meters stint that fast, it was so much fun, and seeing the podium so close was amazing. Lewis looked not really happy though, and he went on spraying the models, which is rarely a good sign. 

We went towards the last corner, to gather some rubber, and at some point were asked to go back, we went to the first corner, then along the DRS zone to the second corner, somewhere in the middle of Parabolika I packed out my phone and switched on We are the Champions, the song I associate mostly with Sebastian. We took a couple of pictures in the Hairpin, enjoyed the wind on the back straight, unfortunately we weren’t allowed to the Sachs-corner, but it still was a surreal feeling, walking the track than just an hour ago was a arena of such a spectacle. 

When we were back there were trucks already parked in the main straight and the teams were packing up the equipment.

This weekend left me with an incredible sense of gratitude to all the people who made it happen: teams, drivers and all the amazing people I could share this weekend with.

Pie in the sky or baking at its finest

Look, I know, I have forgotten about the blog for a while. And I am pretty rubbish at writing regurlary. But I have come across a topic which I can actually say something about.

The lawsuit between Constantin Medien and Bernie and Co in London is a pretty interesting thing to observe. Some people say some things that are pretty fascinating. One of such things that ended up in the press is Donald Mackenzie’s statement regarding the valuation of the business.

DM: No, they, I think they put it in because, well, the client asked them to and because they could make the numbers work. They made all sorts of ridiculous assumptions in that document. That the Concorde Agreement would stay in place for ever. That earnings would go up endlessly for ever. And the risk of the whole business was as low as you could imagine. So they got it wrong. I think they had something like 70% of the value, the value that they put in that document, relating to the Concorde period after 2012. And we hadn’t even signed Concorde from 2008 to 2012. So it was a very pie in the sky valuation, in my opinion.


The assumptions sound rather bold, but the thing is that this is industry standard. What E&Y did was a simple Discounted Cash Flows Valuation, which requires all sorts of ridiculous assumptions. To value a company you need two sorts of things: cash flow forecasts into infinity and a discount rate.

Usually 3 stage model is used:

  • 1st stage is a detailed forecast of the firm’s cash flows for the next 5 years. You analyse your strategic position, the value drivers, you forecast revenues and costs making most of the assumptions based on the analysis of your previous periods and the management’s plans
  • 3rd stage is so-called perpetuity stage, where you assume that your revenues will continue into infinity. The  logic behind this is that you expect the firm to be there forever, but making forecast for the next 5 years is hard enough, to forecast anything that happens in 100 years is pretty much impossible. What you need for this stage is the perpetual growth rate, which we’ll discuss later.
  • 2nd  stage – which E&Y probably have just left out – is the normalization phase. This is the period in which the yearly growth rate of revenues converges towards the perpetual growth rate from the 3rd stage. Usually it is assumed that the growth rate decreases linearly, but usually the functional form of the transition is not that important.

At the first sight an assumption about perpetual revenues growth is ridiculous, but actually it’s more than logical. The cash flow forecasts are made in nominal terms, they don’t take into account an inflation rate. This means that if you want to assume constant revenues in real terms you still need your nominal cash flows to grow. The industry standard is to take the GDP growth rate in the country of operations and add the inflation on top. In this case you assume that the cost increases induced by inflation can be charged from the customers. Oh and there is a mathematical shortcut to calculate the Present Value of a perpetuity. The thing is called Gordon Growth Model and looks like this: FCF / (r-g) where FCF is free cash flow of the first period, r – cost of capital and g – growth rate. Doesn’t look like rocket science.

One could argue, that there is no guarantee that F1 is worth anything without the Concorde Agreement, and one should only take into account the cash flows for the years for which the agreement is in place. The problem is that the company has all the possibilities and plans to extend the contract, and this possibility has to be paid for. To assume that the new agreement will be signed is very logical.

This is the first part. Now the question is how risky the whole thing is, how much the investors want to be paid for the risk and for time value of money.

The industry standard to calculate the cost of capital is the Capital Asset Pricing Model (CAPM), which is composed of the following components:

  • the risk free interest rate
  • the so-called beta (the measure of the company’s systematic risk)
  • and the Market Risk Premium calculated as the difference between the return on the market and the risk free rate

The model is based on a bunch of assumptions that don’t really hold, for once for CAPM to work you need the interest rate at which you can borrow money be equal to the rate at which you can lend money – which is kinda not true. Another assumption is that capital markets are efficient, that all the information is reflected in the stock prices and there are no information asymmetries between the management and the investors. Further the model is based on the assumption that there are no transaction costs and no taxes. This is what I call a pie in the sky. The problem is that the alternatives are not really applied in the industry, and they have other sorts of assumptions, which are not really any better.

The risk free rate is the easy bit. You usually take the the yield curve of the government bonds of the countries with high credit rating. The yield curve gives you the interest rate of the bond with different maturities. Then you  have a choice: either you discount each cash flow at the corresponding interest rate, or you use the interest rate of about 9 year bond for all cash flows (which maturity you choose depends on the growth rate you’ve assumed before). The difference is minimal and the latter approach is more popular for complexity reduction reasons.

Beta is a complicated thing. As I said above it measures the systematic risk of the company. Systematic risk is everything you can’t diversify like general state of the economy. If the risk is diversifiable that’s what a rational investor would do, so the company doesn’t have to pay for it. The companies that produce luxury goods are more reactive to the market conditions and have higher than 1 betas, the companies that produce essential stuff usually have lower than 1 betas.

For traded companies beta is calculated using a linear regression of stock returns on the market returns for the past 5 years. The market in the model is assumed to be a perfectly diversified portfolio of all investment opportunities. Such thing simply doesn’t exist, that’s why people usually take a big national index. There is a bunch of problems: is the 5 year period representative for the future eternity? is the market and your stock liquid enough to provide a reliable estimate? which index do you take: DAX, Eurostoxx, MSCI World? do you take monthly data or weekly?

But what if your company isn’t listed? You can use the beta of comparable companies, the firms from the same industry, which have the same risk profile. But F1 doesn’t really have comparable companies, let alone listed comparable companies. You know that the beta for the entertainment industry is about 1.31 (calculated as a weighted average of the regression betas in the entertainment industry), but it doesn’t mean that F1 has the same risk as the entertainment industry. It would be logical to assume beta higher than 1, yes, but how much higher?

The market risk premium is another ingredient of the pie. It is the difference between the risk free return and the market return. The problem is that you don’t know what the market return is going to be in the future. So you usually take the historical data, calculate average and assume it’s going to stay the same. Nice assumption. The question is how far back in time you go: 20, 30, 70, 150 years? do you include crisis years? do you take geometric or arithmetic average? The latter choice gives you a difference of approximately 4% (based on German data, I’m sure UK or US aren’t that different).

You put all the things together and get the cost of capital = risk free rate + beta * market risk premium. And this is the number you use into infinity. Needless to say that it’s fairly easy to make the numbers work by just varying the components of the CAPM.

Did E&Y do something wrong? Methodically probably no. But the methods aren’t really robust, so that any value you get can be questioned, which both sides are now trying to do.

BelieveInMcLaren or Can we get some racing, please?

McLaren’s 2013 season consists of problems, and everyone who can make use of their common sense understands that points seem to be the highest target McLaren can aim at in any race. It is sad, but true, and to be entirely honest I was pleased to hear that the team is switching focus to the 2014 car. So 2013 season can be written off and forgotten like a bad dream, but I believe McLaren can still do something to enhance their image as a racing team.

I am not an expert, if I were I wouldn’t spend my spare time writing a blog, but I don’t get why McLaren are so unprepared to risk, where they pretty much have nothing to lose. There are several sources of cash in Formula One, and while McLaren don’t have a chance to score any good points in WCC this year, they probably should try to get some sponsorship money. Sponsors want exposure, they want the car with their logos to be on screen for as long as possible, in a current situation it seems achievable – just go racing. The beauty of overtaking maneuver is not measured by what place the drivers are battling for, so why not adopt a strategy with more pit stops in order to let the drivers go racing on track? Fans would be happy to see some action, sponsors would be happy to sponsor a racing team, not the tyre conservation team, and the sport in general would get a bit more spectacular.

McLaren seem to be sticking with conservative approach in a situation where they have nothing to lose. I seriously doubt that these potential couple of points are worth more to the team than half a minute on TV screen.  I really hope that McLaren will stop being too smart and just go racing.