Category Archives: FOM

Formula One: Opinion – Formula Finances

AbuDhabiSFI

As teams prepare for the final qualifying session of the season, what started as murmurs around teams requesting advances on 2015 prize money from Formula One Management (FOM) is heading towards a deafening crescendo with Manor Marussia, Sahara Force India, and  the Sauber F1 team reportedly making requesting support.

The distribution model under which teams are allocated and receive prize funds was established a number of years ago. The model has not changed. The distribution model splits prize fund payments to the team through the season following the season in which the funding was earned. Once a paying position is achieved (i.e. higher than 10th place in the WCC) the team are assured payment for multiple seasons.  Payments are only made in season.

It is the payment structure teams appear to struggle with. Since requests have been lodged it should be assumed the teams in question have insufficient funding or credit rating in place to sustain team plans from December to March.  The Force India F1 Team found themselves in a similar situation in the lead up to the 2015 season, commenting that ‘close season’ is the most expensive period for a team and the only period when they as not getting paid through prize funds or commercial agreements.

Formula One Teams are companies in their own right; they are independent of Formula One. They are masters of their own destiny. They develop their own commercial agreements, agree to the terms of funding distribution models, and should be empowered to budget accordingly. Teams find themselves in a predicament of funding shortfalls in the ‘off season’ because they have made decisions to spend money they, in reality, did not have. A complaint Bernie Ecclestone has often publically voiced.

If a team is not capable of planning capital expenditure over a rolling 12 month period do they really deserve to represent the pinnacle of motorsport?

Perhaps it is cynical to view Formula One teams in this regard, to suggest they should operate as first and foremost as a business, perhaps it would diminish from the racing spirt, but would a more calculated approach to racing really be such a bad thing? To achieve a level of sustained security as to which teams are on the grid and what their position is within the sport may make investment a more attractive proposition.

Looking back to early part of 2015, the financial challenges faced by the Force India team were clear for all to see, the team failed to attend the majority of pre-season testing stating the car they would begin the season with was essentially the 2014 challenger updated to comply with 2015 safety regulations. This hybrid 2014/2015 car was the result of severe budget restrictions limiting payments to 3rd party suppliers. Working to a limited budget the team used this car for the first 8 races of the year, developing the 2015 challenger once prize funding and sponsorship revenue came back to the team. Through these first 8 races, the team amassed 31 points, an average of 3.8 points per race. Once the team were able to introduce the 2015 challenger they achieved a further 89 points over 10 races, (average 8.9 per race) the culmination of these 2 vehicles have left  Force India with 120 points heading into Abu Dhabi, with 5th place in the constructors championship assured.

But what if they had taken a different route? Had the team stuck with hybrid 2014/15 challenger for the entire season and for the sake of argument maintained their points scoring ratio of 3.8 per race they would be heading into Abu Dhabi with 70 points battling with Lotus and Toro Rosso for the 5th they have already secured. Had the introduced the non-budget constrained 2015 challenger from Melbourne and assuming a the afore mentioned average of 8.9 points per race they could have been looking at a total point’s tally of 160 points, but still be in 5th place with an outside chance of achieving 4th against Red Bull Racing.

This simplistic maths ignores the variable points tally other teams would have been able to achieve had Force India’s performances differed from those actually seen, but the point is in both scenarios the possible outcomes in terms of constructor championship performance  do not differ greatly if at all.

The very fact that Force India are again requesting  early payment of prize funds ahead of the 2016 season suggests the team went the wrong way, the desire to race, to compete, overtook the business rationale, perhaps this is what racing is all about, but is it sustainable? Force India over achieved through apparently over spending and are now reliant on external influences to assure 2016 plans.  This is not a criticism of any specific team, rather an observation of the culture of racing.

Across business the way in which a Formula One Pit Crew services a car in under 3 seconds is often cited as the epitome of teamwork, individuals working together towards a common goal. These lessons in teamwork have changed the business world. Perhaps the world of business can give something back to Formula One, and teach teams that a budget is something you work within, not something you take to Bernie when the numbers turn red.

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Formula One: Hype’d Force India Impress in Free Practice

Motor Racing - Formula One World Championship - Abu Dhabi Grand Prix - Practice Day - Abu Dhabi, UAE
Nico Hulkenberg (GER) Sahara Force India F1 VJM08 leaves the pits. Abu Dhabi Grand Prix, Friday 27th November 2015. Yas Marina Circuit, Abu Dhabi, UAE.
Sahara Force India delivered a strong performance in today’s two practice sessions in preparation for Sunday’s season-ending Abu Dhabi Grand Prix.
Sergio Perez              VJM08-02
FP1:     1:44.934            (P8)                  27 laps
FP2:     1:42.610            (P3)                  23 laps  
Sergio: “Today has been a good start to our race weekend, despite the brake issue we experienced in the evening session. The first session is not very representative of race conditions here, because the track temperatures are much higher than you would have in the evening, so we took the opportunity to try a few test parts that will help us in the development of next year’s car. FP2 was a very positive session: I felt comfortable in the car from the start and the changes we made worked well. Our long run programme was interrupted by the brake issue, but we have plenty of data from Nico’s runs that we can analyse tonight. The baseline set-up we worked on is already quite good, so we’re in good shape for tomorrow.”
Nico Hülkenberg       VJM08-03
FP1:     144.751             (P6)                   22 laps
FP2:     1:42.928            (P8)                  35 laps
 
Nico: “I’m feeling pretty happy with a successful day and lots of laps under our belt. In the morning we had a busy programme with several test items and future development work, which went to plan and gave us a lot of information. The afternoon was straightforward with no issues and our one-lap performance looks quite competitive. There is still room to improve with our long runs so we need to do our homework tonight and understand what we can change for tomorrow. Overall I’m feeling positive about our performance today.”
Otmar Szafnauer, Chief Operating Officer
“The car has been working well straight out of the box and both drivers were happy with the baseline balance, which allowed us to push ahead with an extensive test programme to gather data with a view to next year. The cooler temperatures in the second session were much more representative of what we expect for qualifying and the race, and both Nico and Sergio remained happy with the balance and the changes we made between the sessions. We look quite competitive, but the margins between all the teams are very small. Sergio lost some track time towards the end of the second session with a left rear brake issue, the cause of which we are still investigating. It means he missed out on doing a long run with the option tyre, but fortunately Nico completed a full programme so we have enough information to analyse this evening.”

Formula One: Infiniti Red Bull Racing continue to tease with further partnership extension announcements

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Infiniti Red Bull Racing has announced an extension of its partnership with Sabelt into 2017, continuing a long and successful relationship with the Italian safety equipment manufacturer.
This partnership extension is a continuation of a long and successful supply relationship between Sabelt and Infiniti Red Bull Racing, which has been in place since the team’s inception in 2004. Sabelt have provided high quality safety belts and fittings for all our drivers in the team’s 11 year history in the sport.
Sabelt was founded in 1972 as an Original Equipment Manufacturer of seat belts, and went from supplier to partner of Infiniti Red Bull Racing in 2005.  The Italian company has pioneered innovative manufacturing techniques for producing reliable, light weight safety equipment for extreme applications. As such, Sabelt has established itself as an industry leader in safety harness equipment across a range of top-level motorsports, as well as aerospace and automotive applications.
In addition the team has announced  an extension of its longstanding partnership with wheel manufacturer OZ Racing for a further three years until the end of 2018.

The wheels supplied by OZ Racing are exceptionally lightweight, whilst at the same time easily withstanding the extreme forces experienced on track; making them a great partner for Infiniti Red Bull Racing.
OZ Racing is an Italian company with its main headquarters and production facility in San Martino di Lupari, Padua, Italy. They sell light alloy wheels through a global network into multiple sectors, including: racing, after-market, motorbike, and OEM.
OZ has been involved in motorsport for more than 30 years as supplier of top teams across a variety of global race series. The quality and performance of OZ’s racing products is evidenced in the number of victories and World Titles their customers have achieved during a long history in motorsport. OZ use these years of racing experience to develop a superior performance product, offering wheels which combine cutting edge material and manufacturing technology, quality and safety.
Claudio Bernoni, CEO, OZ SpA: “Our partnership with Infiniti Red Bull Racing demonstrates the value, competence and reliability of our products. For us, this is the best opportunity to test our products in extreme conditions and transfer the experience to our wheels dedicated to street use.”
Christian Horner, Team Principal: “We select our innovation partners carefully, and in each case have selected what we believe to be the best available product for the job – as well as a great partner to work with. OZ Racing are no exception to this, and we’re pleased they will be continuing as a partner to deliver exceptional products to us for another three years”.

Formula One: Ahead of the Abu Dhabi Grand Prix

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Through the continued Starwood Hotels and Resorts partnership with the Mercedes AMG Petronas F1 Team, Lewis Hamilton recently filmed a new short film at the Sheraton Park Lane Hotel in London to showcase Starwood Preferred Guest (SPG) membership. As Lewis and the team prepare for the final race of the year in Abu Dhabi, Starwood Hotels and Resorts have shared behind the scenes images taken during the filming where we see Lewis, fresh from filming his Zoolander 2 cameo, is keen to get behind the camera.

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Ahead of the launch of the #TravelLikeLewis campaign on Thursday you can preview the finished film here:

Starwood Hotels and Resorts choosing Lewis Hamilton and the Mercedes AMG Petronas F1 team as ambassadors for SPG membership further demonstrates the value of F1 engagement and the sports  audience reach. It also goes to show a Formula One drivers job extends far beyond requirements at the track.

To see more from #TravelLikeLewis you can follow SPG on twitter by clicking here.

Formula One: Infiniti Red Bull Racing extends technology partnership with Siemens PLM Software to 2018

RBRBrazil

 

In a continued demonstration of their long-term commitment to Formula One Infiniti Red Bull Racing have announced the extension of their partnership with long standing technology partner Siemens for a further 3 years to 2018. Since the team’s inception in 2004, Siemens’ unrivalled NX™ software for digital product design and manufacturing has been integral to realizing the design vision for the car. As well as supplying the team’s primary design tool, Siemens’ product lifecycle management (PLM) software business also provides their industry-leading digital lifecycle management package, Teamcenter® software to manage the rapid and ever-changing workflows through the company from design to manufacture to track.

By using Siemens’ PLM software for design, manufacturing and workflow management as well as its ongoing support and services, the team have been able to achieve superior workflow handling, from the technical office right down to the assembly bays. With hundreds of new parts released for manufacture every week to keep the car development on track, design revision and bill-of-material management have become critical to the efficiency of the factory.
Team Principal, Christian Horner, said: “Siemens have provided a functional foundation for our design department for a number of years now, and their continued partnership has seen us take on more and more of their software to support our business processes. Managing the flow of design change through the company has become an increasing challenge as our capacity to innovate grows, and the PLM software has enabled us do this more effectively. This is another example of Infiniti Red Bull Racing seeking expertise from a class-leading supplier to help us improve our operation.”
Siemens PLM Software, VP EMEA Marketing, Neil Dunsmuir, said: “Infiniti Red Bull Racing continues to represent an ideal partner for Siemens PLM Software; continuously pushing our software’s capabilities in an effort to improve their on-track performance, the team consistently drives to achieve the highest levels of innovation. The partnership, in turn, serves as a unique technical showcase to customers and prospects, and supplies invaluable data and metrics for the development of our PLM solutions for other industries.”

Formula One: Pirelli- Smooth asphalt means low tyre wear and degradation

AbuDhabi

The 2015 championship concludes at a venue that is very familiar to Pirelli: the spectacular Yas Marina circuit at Abu Dhabi, which has been used for testing and a pre-season launch by the Italian firm, including the world’s first wet-weather test run at night. Due to the smooth asphalt, the two softest tyres in the range will be brought: soft and supersoft, as used at the slowest track on the calendar in Monaco (and at four more grands prix). The Abu Dhabi Grand Prix is held from late afternoon into the evening. As a result, track temperatures tend to drop over the course of the race, meaning that the pattern of tyre behaviour is slightly different to normal: another complex variable for teams to factor into their strategy calculations.

Paul Hembery, Pirelli motorsport director: “It’s incredible to think that the 2015 season is over already: it seems a lot less than a year since we were at Abu Dhabi for the final race of 2014. With the championships decided the teams can obviously push to the maximum and our tyre choice in Abu Dhabi provides them with an interesting challenge: while the surface is very smooth, the tyres are still pushed quite hard due to the track layout, so tyre management becomes an important part of the strategy, particularly under acceleration in the traction areas, where it is very easy to spin the wheels. This is the same nomination as last year, so we’d probably expect another two-stop race, but track temperatures can be quite variable as the sun goes down and this can clearly have an effect on the tyres and therefore strategy. Just two days after the chequered flag on the 2015 season, we already begin testing for 2016: there will be a dedicated Pirelli tyre test from 9am to 9pm on Tuesday 1 December, with all the teams running one car to test some 2016 constructions and the new ‘ultrasoft’ tyre, which will carry purple markings at next year’s races.”

The biggest challenges for the tyres:
The falling track and air temperatures over the course of the race (which does not start until 5pm) means that the track tends to get faster as the grand prix goes on, a phenomenon that is accentuated by falling fuel loads.

Just like the previous round at Interlagos, the track runs in an anti-clockwise direction at Abu Dhabi: a relatively unusual feature, which can sometimes cause physical problems for the drivers.

The first part of the circuit effectively consists of a series of non-stop bends, which heats up the tyre compound. The compound then gets a chance to cool down on the long straight, with the cars on full throttle for around 15 seconds, with the equivalent of around 800 kilograms of downforce.

Last year’s strategy and how the race was won: A two-stopper was the winning strategy for Lewis Hamilton last year. He started the 55-lap race on the supersoft, before changing to the soft on laps 10 and 31. Then 24 laps later, he became 2014 world champion!

Expected performance gap between the two compounds: 1.0-1.2 seconds per lap.

 

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Formula One: The Fastest Show on Earth

Fastest

 

The Fastest Show on EarthThe Ultimate Guide to the World of Formula One.

I like to think of myself as fairly knowledgeable when it comes to Formula One, or at least I did, after reading this book I have to say I feel humbled. The subheading of ‘The Fastest Show on Earth’ refers to the book as Mammoth, and believe me, this is an understatement! With over 600 pages of content no matter how much you think you know about F1 this book will teach you something new!

Do you know the complete history of every team on the F1 grid? Can you summarise their performance in each and every year they’ve participated in the world championship? This coupled with a tidy ‘teams in their own words ‘section is a fantastic tool to brush up on your team knowledge and build a greater understanding of the history of the sport.

In the Anthology section of the book Chicane have bought together a series of excerpts from experts across the sport, each with their own perspective on what makes F1 special. From Terry Lovell’s take on “Bernie’s Game” to my personal favourite Mark Gallagher’s “The Business of Winning” who knew that Eddie Jordan had a tattoo!

The Fastest Show on Earth’ acts as the perfect point of reference for someone looking to research or write about the sport, using myself as an example over this weekend I’ll be writing about the Bahrain WEC, GP2 and GP3 races with the intention of comparing each class to F1 performance at the track. Normally this would involve a couple of hours trawling the internet for data on historical F1 performance at the venue. Not anymore! The Fastest show on earth details all the technical data you could possibly look for from every F1 circuit on the calendar. This comes alongside a review of every team and driver participating in the 2015 season.

Another highlight in the guide is the collection of images taken from Lewis Hamilton’s 2014 championship campaign. There’s even a deliberate mistake in this section to make sure you are paying attention!

So if you are looking for  the perfect Christmas  gift for the F1 obsessive or looking to expand your F1 knowledge through those long winter nights… or if you just NEED to know what EJ’s tattoo means, this is the book for you!

Click here to purchase your copy through AMAZON

Click here to follow Chicane on Twitter

Formula One: #placesalonsowouldratherbe how Hilton not F1 got it wrong.

 

#placesalonsowouldratherbe

 

F1 news over the past 48 hours has been dominated with journalists commenting on how Formula One Management should wake up to social media and could have capitalised on the viral event that was #placesalonsowouldratherbe. In many respects the comments are correct; the viral event demonstrated that there is a quick thinking well humoured proportion of the F1 community with impressive photo editing skills. To have this level of engagement is something Formula One Management should be proud of and embrace. Perhaps, for example, through a 3 part competition run by sponsor Tata Communications (@tata_comm) evaluating the graphical content and future broadcast plans for the sport.

Putting the viral event into perspective, #placesalonsowouldratherbe saw 14,500 imprints on twitter; this is less than 15% of the total number of imprints from #BrazilGP, the event specific naming convention used by the Formula One twitter feed. Taking this a step further the Formula One Qualifying broadcast will likely have been seen by an audience of at least 20,000,000 people (a very conservative number even taking into consideration the current decline in F1 viewing figures) this would mean that 0.07% of the F1 audience participated in this viral event. Is this really an audience the Formula One Management Twitter feed should be seeking to capitalise on?

I’ve read a number of articles commenting that other sports or racing series do a far better job than Formula One on engaging with fans through social media, and whilst it can be argued that prior to the 2015 season this would be accurate it is no longer correct. The Formula One Twitter feed serves as an information point, providing exclusive pre and post-race content. It does not engage in conversation with followers, fans or teams, and why would it? Would it be an effective use of resources? I have read comments that Formula E and other racing series do a better job at engaging with their fan base through social media, on this point I disagree. The main twitter feed for Formula E operates in the same way as the Formula One feed. On occasion the individual maintaining the feed will acknowledge or respond to messages, but only in an informative style and this can only be achieved due to scale of the audience. The reputation Formula E has with respect to social media is borne out of the team and sponsor engagement.

Again some perspective @F1 has 1.68M followers on twitter, @FIAFormulaE has 76K followers on twitter. It is not realistic to expect Formula One Management to engage with fans in the same way Formula E can, the resource requirement is not realistic. @SauberF1Team has over 300K followers (the smallest of any F1 team) @AmlinAndretti has 13K followers (the most of any Formula E team) it is not realistic to expect the same level of engagement from teams in each series.

In my opinion, the #placesalonsowouldratherbe viral event served to demonstrate a failing not from @F1 but from that of @MclarenF1 and its sponsors. Many Formula One team sponsors have taken to live tweeting during on-track action, commenting on events as they unfold, commonplace with feeds such as Mobil’s @Grid1TV, or on the progress of their respective team or drivers seen with Force India F1 team sponsor @hypeenergy for example. I understand there are restrictions on the usage of team branding without agreement for fear or misrepresenting the team brand or ethos but imagine if the Hilton Group had taken the #placesalonsowouldratherbe viral event and placed Alonso in the lobby of their flagship hotel, or if they turned the hashtag into a discount code for online bookings.

For me the failing of the #placesalonsowouldratherbe viral was that sponsors did not react quickly enough. Perhaps it is time for the teams, not F1, to further adapt to social media. Give sponsors a freedom to engage in a way they believe their followers will respond.

 

 

As a side note, the image of Alonso used in this article, in every #placesalonsowouldratherbe tweet and subsequent article is the property of FOM. It was taken from their broadcast feed. FOM would be entirely within their rights to pursue copyright infringement cases for each use. The F1 of old may have taken this approach. F1 has is embracing social media.

Formula One – OPINION: Red Bull Racing to enter 2016 F1 season with Ilmor Engineering.

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Disclaimer. Views expressed in this blog are my own. They represent a rational pragmatic view of a situation.

I’ll kick off with the headline. Red Bull Racing will enter the 2016 F1 season with a self-funded engine program supported by Ilmor. Now I realise this view flies in the face of 90% of what the team and media are reporting, but hear me out. Why wouldn’t they?

In 1997, Dietrich Mateschitz purchased a majority shareholding in the Sauber F1 team; this investment came only 3 years after Red Bull launched globally. Dietrich Mateschitz is a self-made billionaire who only a few years prior to his F1 involvement invested his entire life savings on buying a 49% share in Taiwanese Beverage Company bought to his attention by chance when travelling on business suffering with jetlag. It can be safe to say that the first significant investment Dietrich Mateschitz made with his new found wealth was into Formula One. The cynic could say it was simply because he saw the marketing potential of the sport for his brand; my personal belief is he has a passion for motorsport. Either way, passion and marketing potential do not disappear overnight. Walking away from the sport, I believe, is not an option.

Take a second to consider the success of Red Bull. This did not happen by mistake, the growth and development of the business has been carefully structured and strategically managed. This approach to business would not allow itself to be reliant on the goodwill of its peers to allow it to stay in the market. We cannot be expected to believe that Red Bull Racing truly expect Ferrari or Mercedes to supply them with engines, media coverage around these talks has been managed as a distraction technique. Something those with experience of Formula One Management will be well versed in.

The struggles Renault & Red Bull Racing have experienced in the hybrid era of the sport did not come as a surprise to the team. In 2013 the team, despite clinching their fourth consecutive constructor’s championship were making moves to streamline the operation. In the knowledge of a drop in competitiveness the team discontinued the contracts of a number of employees working on temporary contracts. With the knowledge that performances were unlikely to meet those of their competitors it could be argued that the team began considering the long term future of their relationship with Renault at this point already.

In the first half of the 2014 season the Red Bull Racing Renault relationship rapidly deteriorated. Before the first lap of the Melbourne GP Red Bull Technologies had already seemingly taken on some responsibility of engine development entering into an agreement with AVL, the world´s largest privately owned and independent company for the development of powertrain systems with internal combustion engines, to resolve immediate performance issues and use the company rolling road facilities. At this time there was a rumour Red Bull Technologies signed off investment in their own in house rolling road.

Later in 2014 Helmut Marko publically earmarked the Austrian GP as a milestone date by which time Red Bull Racing expected Renault to have resolved performance issues. There was no public statement around the consequence of failing to meeting this milestone, but it is my opinion that this was this point at which Red Bull Technologies green lit their engine development partnership evaluation between AVL and Ilmor. Renault, in my opinion, had full awareness of this project and the likely end point.

Moving further forward consultation between Red Bull Technologies, Renault and Ilmor was made public; the details of the agreement remained unclear, but Mario Illien (Ilmor co-founder) was present as a guest of Red Bull Racing  at a number of races in 2014. It was stated that Mario Illen acted advisory capacity providing direction on possible development routes for the Renault power unit, earlier this year it was announced that Renault had elected not to take the development path outlined through the Ilmor partnership. In my opinion this represented Renault allowing a contractual option defined by Red Bull Technology to expire.

It is my belief that the ‘messy divorce’ between Red Bull Racing and Renault is around the Ilmor engine development program. The Ilmor program uses Renault developed technology as a baseline. Red Bull will argue they have been involved and invested in the development since the beginning and as such lay claim to the rights to the engine. Renault of course will disagree. This disagreement will be concluded through a financial settlement, and the basis for future Red Bull Racing engine supply will remain the original Renault power unit with development direction becoming Ilmor’s domain. The project may latterly be badged by another manufacturer.

When I have discussed this option in the past I have lambasted on two key points. Firstly, the time it take s to develop an engine, and secondly Red Bull can’t afford an engine program. I don’t see either of these arguments as valid.  To support this I contacted a Cosworth representative some weeks ago to understand the time they believe it would take to develop a power unit compliant with current regulations, their response; 10 months. Red Bull Technologies and Ilmor by the start of preseason testing for the 2016 season may have had as much as 18 months (Since the 2014 Austrian GP), and will have been using an existing engine to base the concept on  which would serve to further reduce the development  time required.  To address financing, how much do we believe it costs to develop an engine? If we consider Red Bull Racing have been awarded $200M in prize funds over the past two years alone, and have an extremely healthy sponsorship portfolio minimising the investment Red Bull have to make into their own racing team, despite operating as a private company and as such not reporting profits, we can be confident Red Bull is a highly profitable organisation. Red Bull has the money. It should also be noted the cost of engine development may not be paid up front. The cost of capital could be shared over future years performances, with FOM heritage payment assured Red Bull could borrow money against his assurance to fund an engine program if necessary. So in summary, they’ve had the time and they can afford it!

If Red Bull pulled out of F1 they face significant penalties from FOM and will be left with extensive racing infrastructure on their books. The cost of leaving the sport is greater the than the cost of a self-funded engine development route.

So, to 2016 and the prospects for Red Bull Racing & Toro Rosso, it is my view that the current ‘negotiations’ or lack thereof with Mercedes and Ferrari are somewhat of a front. Red Bull wants to position themselves as the injured party with no other option than a self-funded program. This will go some way to once again endear the team to fans of the sport. Success with the Ilmor project will not come overnight, but that is fine. The teams can spend 2-3 seasons as a capable mid field entrants, focusing on restoring their reputation as a fun team with the fans, whilst using their clout with FOM and the FIA to restore an emphasis on aerodynamics in future technical regulations.  Success in Formula One is cyclical. Red Bull, despite what we see through the media appreciates this and remains fully committed to the sport.