1 September 2020

Green notebook from the Hautes Fagnes

The Emperor Joseph II of Austria was an enlightened fellow, so they say, and he described the town of Spa in Belgium as “the centre of the civilized world". OK, that was back in the 1780s and he probably quite liked rain, but this gives you an idea of what the town of Spa represented before motor racing came along.

 

The word spa derives from the town, which grew famous as a place to “take the waters” if you were an aristocrat or a royal who was feeling a little peaky.  The springs of Spa, known as pouhons, were rich in iron. The local streams can even appear red in colour sometimes, hence the name eau rouge (which translates as red water).

 

As a result of all of this Spa became the meeting point for emperors, kings and other influential and illustrious types. It acquired all the kind of things that such people wanted when they went for healthy holidays, including palatial hotels and grand villas, parks, bandstands, casinos, shopping  and so on… And, in the fullness of time, it became a centre for the automobile, which when it first appeared was a plaything of the rich, rather than something everyone had.

 

Water is a big thing in these parts of the world because the Hautes Fagnes, to the south of Spa, is an upland plateau of marshy heathland with some dense forests as well. It rains a lot. It is not exactly your dream holiday resort. Still, some marketing folk have started to try to promote the area as the Ardenne Bleue on the basis that water often appears to be blue and it is an area where water is part of the experience. 

 

There is a blissful irony in the fact that the region is using the circuit to try to attract more people when you discover that the track owes its existence to the fact that the town of Spa became too popular and so some clever entrepreneur concludes that building a fancy new hotel next to the first railway station down the line from Spa would be a good idea. It would allow people to have the peace and quiet of the country but also easy access (admittedly on a noisy steam train) to the delights of Spa. The Hotel des Bruyères in Francorchamps is still there today, albeit in a pretty poor state, but the station across the road has long gone and the railway track has been turned into a path along which cyclists and walkers can commune with nature.

 

There are ironies aplenty in fact. The peaceful hotel was the place where the circuit was first envisaged, bringing thunderous engine noise to the valley on a regular basis.

 

And what Spa could really use today, like most modern circuits, is a railway line to bring in punters, to avoid everyone having to queue up in cars for lengthy periods.

 

The other reason that there is a circuit in this rural location is that Francorchamps was once the last village in Belgium, while Malmedy was across the frontier in Germany. The border ran along the ridge where the Les Combes corner now is, which is why before the Eau Rouge corner was constructed the race track went through a slow climbing hairpin called the Virage Ancienne Douane (which translates as Old Customs). Very few people ever took the road into Germany, even after World War I when Malmedy became Belgian and there was free movement between the towns. Habits change slowly and the people on both sides of the border tended to use the same routes as they had before the war - and so the roads between Francorchamps, Malmedy and Stavelot were not much used. The population was sparse, the roads were quick and there was a railway station in each town. It really was perfect for racing in that era.

Anyway, one goes to Spa expecting rain at some point during every weekend, but it can also be blisteringly hot. I went one year for  the 24 Hours which started in teeming rain, had to be stopped several times during the night because the fog was too thick and finished in bright and delightful sunlight. That is Spa.

 

But there were always people and that was the weird thing this year. Without people the hills were soul-less. It was made a little worse, by all accounts, because the F1 teams got their motorhomes back, but it was like a ghost town, without the hustle and bustle that is usual in a Formula 1 Paddock. I don’t really know because the media is still kept out. It rained on several occasions during the weekend, notably on Sunday night after the race when we were royally drenched as we trudged wearily back to our cars.

 

The talk all weekend was of Williams and who the new owner might be and in this respect we were not greatly helped by Claire Williams, who gave scant details except to say that it was: a company called Dorilton; not Bernie; and good people. The used of the BCE Ltd name was an odd one – and even Bernie wanted to know who was using his initials – but one presumes that the moniker was chosen as a vertical digit to him, as he was by all accounts trying to help the Mazepin Family acquire the team, in competition to the winning bidder.

 

I reached the conclusion that identifying Dorilton is probably not that important because if they were really taking the team over they would not require the use of “an investment vehicle” and the best thing would be to discover who was behind BCE Ltd, as this was obviously the key company. I traced several BCE Ltds, the most likely one being registered in the British Virgin Islands, where taxation is looked upon in a rather relaxed Caribbean kind of way.

 

The other thing that intrigues me is that the buyer seems to have paid far too much for the team, given the debts involved. Oddly, I was discussing Williams the day before the announcement with a financial type who understands these things. His conclusion was that it could not be sold and would end up in the hands of the creditors (a la Sauber). I talked again after the sale and he was perplexed. This was a deal that did not make sense from an investment point of view - unless there were very specific goals that made it worthwhile. Yes, there was a new Concorde Agreement, but while that is better than previous deals, it is still not entirely generous to the smaller teams. With lowered costs and increased overall revenues the goal for F1 was to provide most of the teams with enough money to reach the budget cap, but post-Covid-19 that is not going to be easy.

 

Thus the thinking was that it was either someone doing someone else a favour; or that the buyer had a kid in a need of an F1 seat…

 

However, there is some logic in trying to develop the Williams brand. It is a strong brand with its own peculiar brand values. It is strong on integrity and fairness, very British, lion-hearted and passionate about racing. One of the team’s greatest strengths was that Frank Williams and Patrick Head were only interested in going racing and did not have the ambition to do what McLaren, for example, has done extending the brand in new areas. Thus, even allowing for the debt, Williams has valuable potential, although it will require different leadership to firstly rebuild the team, and then find ways to exploit the brand. But as the brand is essentially British, it really needs someone British to develop it properly. An American Williams makes no real sense to me…

The problem is that since Williams split with BMW, 15 years ago, it has ceased to be a manufacturer team and has been a team that has had to pay for its engines. And that makes F1 much harder.

 

My conclusion in all this, after much consideration, was that Dorilton may be run a British person but that’s not really enough and that the deal looks more like some kind of mates deal with Dorilton coming up with the cash required to help BCE Ltd get hold of the team. I reckon that this is a deal that will allow whoever is running the team to gradually pay back Dorilton and gain equity as the team moves forward.

 

The name that I find interesting is former racing driver James Matthews who my sources say is the person who I should be looking at. Matthews is best known for being married to Pippa Middleton, the younger sister of Catherine, the Duchess of Cambridge, Prince William’s wife. So he’s British and part of The Establishment. He owns his own asset management and investment company called Eden Rock Capital, which is run by managing-director Edward Horner. If the name sounds familiar that is because it is Christian’s cousin.

 

Matthews has been around racing all his life and, to some extent, motorsport – and F1 - is unfinished business for him.

 

James is the son of David Matthews, a successful car dealer who raced Fords in the British Saloon Car Championships in the early 1970s, until he had a very hefty accident which meant he returned to business. He set up the original Eden Rock business, which is a very flashy resort on the island of Saint Barths in the West Indies, where the rich and famous go on their holidays. They pay a lot for the privilege. David is now sufficiently wealthy to also own a 10,000-acre estate in Scotland and when James set up his hedge fund he decdied to use the Eden Rock name. Before that James was a racing driver, and a rather good one. He was so good in fact that he dominated the British and European Formula Renault championships in 1994 before moving to Formula 3, where he failed to shine and finally decided that a career in finance was a better idea. He walked away from the sport and never really knew what he might have achieved if he had kept going.

There is another link with the F1 world that is also worth considering. James raced for John Booth’s Manor Motorsport in Formula Renault with David investing in the team and being a director from 1993 to 1995. He is also believed to have helped fund the team’s move to British Formula 3 a few years later that led to titles in 1999 for Marc Hynes (now Lewis Hamilton’s right hand man) and Antonio Pizzonia in 2000. The team also won the British Formula Renault title with Hamilton in 2003 and ran him on the Formula 3 Euroseries as well.

The historic link with Manor is interesting but there is nothing as yet to suggest that there is a link between Matthews and Manor. John Booth is now 65 and may not be that interested in further F1 adventures, but his business partner Graeme Lowdon has been working quietly in recent years to get a new F1 venture up and running.

We will see how it all works out…

In the interim, we have finally got a calendar for the rest of the year and that means a return to Turkey. This is no bad thing although the ambition in Istanbul of hosting 100,000 spectators is rather unwise for all concerned and I am not sure that is the kind of message that F1 wants to send out right now. We are all living in F1 bubbles which can be very inconvenient at times and to throw open the gates in Turkey and let everyone in is a bit of a slap in the face of all those who have worked to make F1 safe in recent months. Can it be done safely? I doubt it. Having said that I believe that the 100,000 figure is an aspiration rather than a fact and it is pretty unlikely that F1 will let them go that high. I should think that half the number is a wiser expectation… with the actual number probably being smaller than that. Still, as we have seen in the past, the Turks have funny ideas about things F1 as was noted back in 2006 when the organisers made the really bad decision to sneakily organise for one of the trophies to be presented by Mehmet Ali Talat, who was introduced as the “President of the Turkish Republic of Northern Cyprus”, a state that is only recognised by Turkey. The FIA concluded that this breached the federation’s rules about political neutrality and there was a hefty fine. This action overshadowed all the races that followed and the Turkish GP dropped off the F1 calendar in 2011 when no agreement could be found over money.

Hopefully the Turks will be more sensible this time around and not try and silly stunts.

Dabbling in things unrelated to the sport in a public way is never a very wise idea and while I fully support the principle of ending racism I am still not sure if the current “taking the knee” concept is the right way to do it. It is a minefield and there looked to be some discomfort in Belgium when Lewis Hamilton was asked whether he intended to boycott the race after a further flare-up of racial tensions in the US after the shooting by police of Jacob Blake in Kenosha. Lewis said that that there was no reason to call off the Belgium Grand Prix, although he expressed support for the boycotts in the United States.

“I don’t know if me doing anything here will particularly help ... we’re in Belgium, we’re not in the United States,” he said.

This is true but then one might use the same argument about the F1 drivers “taking the knee” at each race. We’re not in the United States at all this year so why should  that happen and boycotts not happen?

I am not trying to stir up controversy, I just don’t see the logic.

Anyway, the best way to cause controversy appears to be to say anything bad about electric mobility and thus it is interesting to see Volkswagen’s big boss Herbert Diess last week saying that Formula E, in which Volkswagen runs team under the Audi and Porsche banners, only makes snese if there is “carbon-free electricity” soon. He noted that Germany does not intend to exit coal-powered electricity in 2038 and said that as far as he is concerned “F1 becoming CO2-neutral, using synthetic fuels, is much more excitement, fun, racing experience, tech-competition than Formula E driving a few laps in city centres in gaming mode.”

This presumably means that there is some potential for Volkswagen brands to be in Formula 1 in the future, if the sport chooses the right paths for regulations in the future. Politicians, notably Britain’s Boris Johnson, are arguing that cars in the UK should be all-electric in 2035, overlooking the fact that the national grid could not conceivably cope with the demand and it would require a bunch of new nuclear power stations to get to the levels required…

Volkswagen’s brands include Volkswagen, Audi, Porsche, Seat, Skoda, Bentley, Bugatti and Lamborghini.

Interesting stuff.

 

 

 

 

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