Mark Gallagher’s “The Business of Winning” looks at F1 from financial, insider perspectives

1 Comment

For more than 30 years, Mark Gallagher has been a staple in Formula One paddocks. From working with Marlboro, then onto Jordan before joining Jaguar, then Red Bull, and frequently being involved on the commercial side, Gallagher has some of the best inner understandings of how things work in terms of F1 business.

More recently, he has moved into team ownership over the last decade with Status GP, which has seen its stature grow over the last several years. The team takes over the Caterham GP2 operation for 2015, which adds to its GP3 platform. Status has also raced in A1GP, where it won the championship with A1 Team Ireland and driver Adam Carroll, and in sports cars.

The above intro is to give some insight into Gallagher’s new book, The Business of Winning: Strategic Success from the Formula One Track to the Boardroom, published by Kogan Page, released in the last month.

With F1’s financial situation one of the major story lines in the back half of the season, we had the opportunity to check in with Gallagher on that and other lessons from the book in a wide-ranging Q&A. We thank Mark for his time, and here’s the insights below:

MotorSportsTalk: The business aspect of this book is particularly timely now given the financial situation that appears to be hitting. Do you think the evolution of Caterham/Marussia owes to a lack of poor leadership, poor finances, poor branding, a poor understanding of what they were getting into or the combination of the four?

Mark Gallagher: You could pick three of those headings; Leadership, Branding and understanding of the challenge, and apply them to a greater or lesser extend in each case.  I don’t think Caterham or Marussia suffered from a lack of finance; in fact I know the shareholders concerned put a great deal of money into their teams.

This was not about a lack of investment, but either the leadership did not have a realistic business plan, or have the capability to make one work.  There was insufficient revenue – you need to develop revenue streams in any business, and be resolutely focused on being profitable.

I do think the branding did not help – Caterham lost a lot of valuable time, and money, battling over the Lotus name.  Marussia was Virgin, which started as Manor, and I think that also didn’t help them – to begin with the proposition seemed to be all about licensing the Virgin brand and trading on the fame of Richard Branson’s reputation, but that concept was never going to work.  Marussia was very ‘Russian’ – I know that’s obvious, but nationally-branded F1 teams really struggle to gain traction with global brands; F1 sponsors want to be global, not national, in my view.

Finally the challenge – F1 is very exciting for about 1% of the time, the rest of it is about knowing the sport inside out, knowing all the key people and having fantastic relationships with FOM, the FIA and all the other stakeholders.

MST: F1 has survived other roller coaster periods of transition before, but perhaps the biggest change now comes from Bernie’s potential for departure in the next few years. Considering what he has done for the sport and considering how most inside the beltway praise it, is there another individual that can carry the torch forward? Or might a collective form of leadership be a better option?

MG: F1 needs a strong CEO going forward, not matter what kind of a structure is built around him or her.  The business benefits enormously from having a clear leader, although there are significant opportunities for FOM to develop a broader-based management across the business’s various functions.

My personal view is that the new CEO of F1 should come from outside of the sport, as they will have an opportunity to start with a clean sheet of paper and not be burdened by previous associations or reputation.  Peter Brabeck, who has been Chairman of F1, would have been ideal a few years ago, but someone of his experience (he ran Nestle) who knows how to run a big, complex, multi-national business would be ideal.

The Business of Winning.

MST: F1 has had distinct business eras, with the tobacco demise of course leading to the technological revolution of backers coming in to replace. Do you see the technology companies as being a viable option to sustain the teams given the increased level of investment?

MG: No.  The days of purely sponsor-funded F1 are most likely in the past; it is much better to operate to a different business model where you can develop revenues and profitability from diversifying into other areas such as McLaren and Williams have done.

F1 also need to sells itself to commercial partners in a very different way; not just ‘marketing’, but as a resource for research & development, leadership training, joint-venture businesses and so on.  F1 also has a lot of scope to develop better links with technology companies because it is a data-driven sport which creates fantastic digital content; audio, video, data.  Content is so important to tech companies, including social media, I think the sport has a huge opportunity lying ahead.

MST: Do you think budget caps are achievable in F1? Why or why not?

MG: They are difficult to police because of company structures, and also because there will always be someone pushing the system further than expected.  For example, when a team is a subsidiary of a car company, how do you apportion cost that the car company may absorb but yet benefit the F1 team?

My view is that the FIA could cap costs by creating technical regulations which make it impossible or pointless to spend more than a certain amount of money.  Everyone knew the new powertrain regs were going to triple the annual costs, so the flipside is that you could equally proscribe certain technologies to limit future spend.

One example might be having no specification changes permitted to the cars from race to race – perhaps upgrades only 4 times a year.  You could even – at the risk of upsetting the aero community – expect teams to fix their aero for a season. Radical, but an example of how you could stop development running away with budgets.

MST: Is there a company that you feel you could do what Red Bull has done – a team that had been in F1 first from just a pure sponsorship/branding element that has then brought its leadership, in the form of Dietrich (Mateschitz), and the people, (David) Coulthard, (Adrian) Newey, on down the line – and change the game in F1 once more? Or do you feel this is a once-in-a-generation type of story?

MG: Benetton did it, Red Bull replicated that and frankly any global brand who wanted to do what they have done could do so.  However in both these case they made sure they got the very best people involved – think Brawn & Byrne at Benetton, or Horner & Newey at Red Bull Racing.

There is no reason why a Samsung, Google, Tesla or Apple could not do F1 in the way Benetton and Red Bull have, but it would have to be run by people who understood the industry, and with the business plan that enjoyed the benefit of both a correct level of up-front investment as well as a clear focus on turning it into a profit-centre with third-party sponsorship attracted by the opportunity to work alongside the host company.  It has to be run like a business, otherwise if everyone thinks there is a patron writing the cheques each month the culture is wrong from the start.

MST: With good leadership and good communication so vital, which teams on the grid besides Red Bull and Mercedes are doing the best job of that now?

MG: Williams has rediscovered its capability on several fronts; technically, operationally and commercially.  Much of that is down to management changes so that the leadership is much more coherent than a few years ago.

MST: Were you at all surprised to see Mercedes win the title without Ross Brawn? How much did he and Michael Schumacher’s development over the three years play into the title, you mentioned it in the book.

MG: In my view Mercedes won because of Ross Brawn, and Bob Bell, who are responsible for this year’s car and put together the team that delivered it so magnificently.  Toto Wolff has been very clear about Ross’s contribution, and by implication Bob’s too, and no one should lose sight of the fact that the 2015 car was the result of the work done by Ross’s team in 2012-13 particularly in association with Mercedes HPE on the power train front.  A brilliant conceived and packaged car.

MST: Does it feel as though F1 is lacking for characters like an Eddie Jordan or Eddie Irvine? Part of the reason there’s a nostalgia element there is because to some outsiders, on the surface anyway, it appears many of today’s stars are corporate automatons devoid of much in the way of personality… to me anyway, it’s why Daniel Ricciardo is such a big hit because of his smile.

MG: I think there is a tendency to look at the past through rose tinted glasses.  I do it too!

I remember that in the 1980’s everyone was talking about the ’60’s, and then in the 90’s I used to meet guys telling me that the 70’s were great. Now we think the late 80’s and 90’s were a glorious time!

The drivers are very professional these days, but there are good personalities all around, and the media should maybe do more to uncover them;  it’s a relentless schedule for drivers with huge demands on their time, so it becomes very difficult to let your hair down.

I think Claire Williams is a fascinating new team boss, and looks set to carry the Williams forward as a family owned business; what a great story.  Sooner or later Ferrari will find a strong team boss to take them on to great things – maybe Christian Horner should consider it.  Why not?

I can tell you that if you had a glass or two of wine with an Eric Boullier, Bob Fearnley or Franz Tost, you would find very interested characters with a passion for F1 that burns just as brightly as it ever did in an Eddie Jordan or Colin Chapman.

With throaty roar, NASCAR Next Gen Camaro is taking Le Mans by storm on global stage

Le Mans 24 Hour Race - Car Parade
Chris Graythen/Getty Images

LE MANS, France — The V8 engine of the NASCAR Chevrolet Camaro has a distinct growl that cannot go unnoticed even among the most elite sports cars in the world at the 24 Hours of Le Mans.

When the Hendrick Motorsports crew fired up the car inside Garage 56, NASCAR chairman Jim France broke into a huge grin and gave a thumbs up.

“The only guy who didn’t cover his ears,” laughed seven-time NASCAR champion Jimmie Johnson.

GARAGE 56 SPECS: Full comparison of NASCAR Cup car to Le Mans car

BUTTON’S BIG MOVE: Hendrick drone tour was NASCAR entryway for F1 champion

France has been waiting since 1962 – the year his father, NASCAR founder Bill France Sr., brought him to his first 24 Hours of Le Mans – to hear the roar of a stock car at the most prestigious endurance race in the world.

A path finally opened when NASCAR developed its Next Gen car, which debuted last year. France worked out a deal to enter a car in a specialized “Innovative Car” class designed to showcase technology and development. The effort would be part of NASCAR’s 75th celebration and it comes as Le Mans marks its 100th.

Once he had the approval, France persuaded Hendrick Motorsports, Chevrolet and Goodyear – NASCAR’s winningest team, manufacturer and tire supplier – to build a car capable of running the twice-around-the-clock race.

The race doesn’t start until Saturday, but NASCAR’s arrival has already been wildly embraced and France could not be more thrilled.

“Dad’s vision, to be able to follow it, it took awhile to follow it up, and my goal was to outdo what he accomplished,” France told The Associated Press. “I just hope we don’t fall on our ass.”

The car is in a class of its own and not racing anyone else in the 62-car field. But the lineup of 2010 Le Mans winner Mike Rockenfeller, 2009 Formula One champion Jenson Button and Johnson has been fast enough; Rockenfeller put down a qualifying lap that was faster than every car in the GTE AM class by a full three seconds.

The Hendrick Motorsports crew won its class in the pit stop competition and finished fifth overall as the only team using a manual jack against teams exclusively using air jacks. Rick Hendrick said he could not be prouder of the showing his organization has made even before race day.

“When we said we’re gonna do it, I said, ‘Look, we can’t do this half-assed. I want to be as sharp as anybody out there,” Hendrick told AP. “I don’t want to be any less than any other team here. And just to see the reaction from the crowd, people are so excited about this car. My granddaughter has been sending me all these TikTok things that fans are making about NASCAR being at Le Mans.”

This isn’t NASCAR’s first attempt to run Le Mans. The late France Sr. brokered a deal in 1976, as America celebrated its bicentennial, to bring two cars to compete in the Grand International class and NASCAR selected the teams. Herschel McGriff and his son, Doug, drove a Wedge-powered, Olympia Beer-sponsored Dodge Charger, and Junie Donlavey piloted a Ford Torino shared by Richard Brooks and Dick Hutcherson.

Neither car came close to finishing the race. McGriff, now 95 and inducted into NASCAR’s Hall of Fame in January, is in Le Mans as France’s guest, clad head-to-toe in the noticeable Garage 56 uniforms.

“I threw a lot of hints that I would like to come. And I’ve been treated as royalty,” McGriff said. “This is unbelievable to me. I recognize nothing but I’m anxious to see everything. I’ve been watching and seeing pictures and I can certainly see the fans love their NASCAR.”

The goal is to finish the full race Sunday and, just maybe, beat cars from other classes. Should they pull off the feat, the driver trio wants its own podium celebration.

“I think people will talk about this car for a long, long time,” said Rockenfeller, who along with sports car driver Jordan Taylor did much of the development alongside crew chief Chad Knaus and Greg Ives, a former crew chief who stepped into a projects role at Hendrick this year.

“When we started with the Cup car, we felt already there was so much potential,” Rockenfeller said. “And then we tweaked it. And we go faster, and faster, at Le Mans on the SIM. But you never know until you hit the real track, and to be actually faster than the SIM. Everybody in the paddock, all the drivers, they come up and they are, ‘Wow, this is so cool,’ and they were impressed by the pit stops. We’ve overachieved, almost, and now of course the goal is to run for 24 hours.”

The car completed a full 24-hour test at Sebring, Florida, earlier this year, Knaus said, and is capable of finishing the race. Button believes NASCAR will leave a lasting impression no matter what happens.

“If you haven’t seen this car live yet, it’s an absolute beast,” Button said. “When you see and hear it go by, it just puts a massive smile on your face.”

For Hendrick, the effort is the first in his newfound embrace of racing outside NASCAR, the stock car series founded long ago in the American South. Aside from the Le Mans project, he will own the Indy car that Kyle Larson drives for Arrow McLaren in next year’s Indianapolis 500 and it will be sponsored by his automotive company.

“If you’d have told me I’d be racing at Le Mans and Indianapolis within the same year, I’d never have believed you,” Hendrick told AP. “But we’re doing both and we’re going to do it right.”

Le Mans 24 Hour Race - Car Parade
Fans gather around the NASCAR Next Gen Chevrolet Camaro ZL1 that is the Garage 56 entry for the 100th 24 Hours of Le Mans at the Circuit de la Sarthe (Chris Graythen/Getty Images).

General Motors is celebrating the achievement with a 2024 Chevrolet Camaro ZL1 Garage 56 Edition and only 56 will be available to collectors later this year.

“Even though Chevrolet has been racing since its inception in 1911, we’ve never done anything quite like Garage 56,” said GM President Mark Reuss. “A NASCAR stock car running at Le Mans is something fans doubted they would see again.”

The race hasn’t even started yet, but Hendrick has enjoyed it so much that he doesn’t want the project to end.

“It’s like a shame to go through all this and do all this, and then Sunday it’s done,” Hendrick said. “It’s just really special to be here.”