Friday, April 13, 2012

REPORT: Daimler shareholder urges Mercedes-Benz to quit F1

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Formula 1 has become a very costly business lately. The last set of measures, designed to raise more awareness on the racing show, has failed to deliver the expected results. The involvement of politics into motorsporting have further affected F1 as the numbers of fans and TV watchers is constantly dropping while the total expense is growing rapidly. Furthermore, the cost-cutting programme implemented by the Formula 1 guru Bernie Ecclestone has created a lot of controversy and the lastly found solution, the Concorde Agreement,  could be the definitive argument for Mercedes-Benz to exit Formula 1.

To refresh your mind, the Concorde Agreement aims to pay more cash to the successful F1 teams that have managed to achieve at least one major title beginning with 2000. Mercedes-Benz has been present and active in Formula 1 for many years as motoring partner for McLaren and recently for Force India. Starting 2010, the former championship-winning Brawn GP, also powered by Mercedes-Benz, was acquired by Daimler and the Aabar Investment Group and turned into Mercedes GP Petronas. In the last two years, the Silver Arrows team was not able to meet the desired targets, given the inherent restructuring process following the acquisition. Team principal Ross Brown caused big sensation when he announced Michael Schumacher, all-time world champion in F1 having won no less than 7 titles in the 1991-2006 career, would join Nico Rosberg in a full German drivers' lineup. However, the initial anticipations were blown away by the modest performance of the team and the two racers. Moreover, as Mercedes-Benz has not won any title during 2010 and 2011 with its entirely-owned F1 team, there is an ongoing clinch at the moment between the Stuttgart-Brackley staff, who refuse to sign the agreement because it will not bring any benefits for them, and Bernie Ecclestone, who is well known for putting a lot of pressure when financial interest is high in the game.

The large amount of money infused by Daimler for keeping the F1 business alive in the last two years is causing tension among the shareholders of the German giant. During a recent press conference, Ingo Speich, manager of the Union Investment funding group, has urged Mercedes-Benz to take immediate action and quit Formula 1 in order to focus on the more crucial areas that help consistently grow the brand. His speech has reportedly received been received with applause, which is a clear indication of a general uniform opinion.

If the newly formed MERCEDES AMG PETRONAS and Bernie Ecclestone aren't reach any terms, then it's highly possible the Germans will leave F1, despite the encouraging start of the team in the 2012 season. Nonetheless, if done, it will be a tough move after the long-time involvement in Formula 1, but the resignation of other automotive manufacturers such as BMW, Honda and Toyota could serve as a strong example for Mercedes-Benz in the next period.

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