A1GP: The Second Coming

When the field took the start of A1GP's feature race in the Indian Ocean-bordered streets of Durban in for the city's third such event, the proceedings - from Ignition Party on Thursday evening right through to the post-race thrash at an upmarket nightclub - provided a marked contrast to the self-styled World Cup of Motorsport's first visit, in January 2006, to South Africa.

Series founder Sheikh Maktoum Hasher Maktoum Al Maktoum then looked markedly shattered as he met with dignitaries and politicians, but thereafter kept an ultra-low profile all weekend - which was hardly in keeping with the confident and perma-smiling demeanour he had displayed at the series' first race just five months earlier.

The word in the paddock was that Tony Texeira, the controversial Portuguese-born, South African-based businessman with mineral and energy interests across the Dark Continent, who had been persuaded to bank-roll the venture through profits from various high-risk ventures in Africa despite confessing to not being a petrolhead, had been forced to 'leave behind' $135m or face a threatened strike from participating teams, most of whom had not seen a brass bean.

Alas, it was not enough. A local insurance company with international affiliations secured an urgent interdict against the cars leaving the country, and visuals of the cars hit the newspapers of the world.

Already the series had attracted an enormous army of critics, most of whom giggled as an over-steroided hype machine pumped out suggestions that A1 Grand Prix was Formula One's equal (or better, for, after all, 'A1' alphanumerically six symbols ahead of 'F1', is it not?), and that the nascent series alone could cure all the premier formula's ills.

Worse had been, and was still to come: races were cancelled, in Dubai - Maktoum's desert city state, remember - the event attracted just 900 punters, most of whom were believed to have received complementary free hospitality packages, and by season's end A1 Grand Prix (note) was said to have burnt through $211m.

Shiekh Maktoum and Tony Teixiera © XPB/LAT

Yes, US$135m of that was set-up costs to be amortised over three years, but, still, a minimum of $80m worth of red ink is no laughing matter, and even the believers - who generally found themselves in the minority wherever motorsport fans met - found it well-nigh impossible to argue logically for A1 Grand Prix.

It could not, of course, last, and rumours linking 'Maktoum' and 'departure' in the same sentence steadily grew both in pitch and volume. And, so it came to pass in September 2006: the Sheikh, who had once proudly told an investment conference in his home state that he had started A1 'with only $10,000 and a laptop', had his shares dissolved and moved on to oversee his diverse ventures in the Middle East.

A period of frequently revolving doors in A1's management suites in Johannesburg and London ensued before A1GP - as it became officially known for reasons not unconnected with Maktoum's departure and growing wariness about going straight up against F1 - announced the appointment of Pete da Silva, fresh from his position as CEO of Siemens' Southern African operations.

The Brazilian-born naturalised South African's arrival served as a wake-up call: here was a 48-year old corporate careerist, with a host of board seats internationally, share options and well over 20 years' service in a blue-chip technology leader, throwing it all in to head a massively haemorrhaging racing series using an unproven 'Nations Cup' concept as draw card.

What did da Silva, with no track record in motorsport apart from deep-rooted enthusiasm, see in the series that the rest of the world had missed? Could his eagerness to head a racing series have got the better of his judgement; or was he possibly just doing his friend Tony a favour and risking his career in the process?

During an ad hoc interview given before the British Grand Prix in July the father of two boys - one called Ayrton, 'but my wife Shireen put her foot down when I suggested we call the second boy 'Nelson' ... - rapidly quelled both suggestions:

"What I saw was a series with enormous potential, but lacking in basic management and infrastructure. Obviously when Tony, whom I had met once before briefly and again when they pitched Siemens for sponsorship, asked me to join him, I looked at all the angles and saw the potential.

"However, I realised A1GP was an international brand which had grown enormously quickly, and in the process some fundamentals had suffered. So, whilst I am unable to contribute motorsport knowledge, I can bring management skills to bear. That is my function."

The first thing the fluent English, Portuguese and German linguist did was restructure A1GP's international operations by splitting the company geographically - Middle East/Africa; Asia; the Americas; and Europe.

In came Scott Hollingsworth, fresh from heading up the commercial side of the American Motorcycle Association as Chief Commercial Officer, with additional responsibility for operation in both Americas through an office in Florida.

Meanwhile, former COO David Clare, who has strong links with the Orient via his Korean wife, was sent to Singapore to manage A1's Far East operations. da Silva added the Middle East and his home continent to his responsibilities, with Bruce Holmes, Teixeira's brother-in-law, looking after Europe.

Mario Almondo in Durban © XPB/LAT

"We all wear two hats," explained da Silva, "with Bruce driving the Ferrari deal in addition to looking after Europe. Obviously we have a Ferrari committee (known internally as STAC), and Bruce heads that."

So, how did the Ferrari deal, which was announced in October 2007, but had been close to finality for at least three months, come about?

During A1GP's August pre-season tests at Silverstone, an interested party was Ferrari's now-Sporting Director Stefano Domenicali, who flew in immediately after the Hungarian Grand Prix to attend the two-day session.

The word at the time was that Kimi Raikkonen was thinking of putting together a Finnish team to be operated by his Double R Racing team, but this was a cunning smokescreen ...

"We worked with (ex-Red Bull) Dany Bahar because he is responsible for building Ferrari's brand, but now the basic details are sorted we are working directly with the technical people. You may have seen (Ferrari Operations Director) Mario Almondo and Jean-Jacques His here in Durban this weekend, plus I know you'll be speaking to Rory (Byrne) during the weekend."

A1GP appointed John Travis as Technical Director with specific responsibility for the Ferrari 430-engined car, with South African-born Byrne overseeing the project design in a consulting capacity.

The E85-fuelled V8 is currently being extensively modified to turn it into a full race engine - hence ex-Renault F1 engine guru His' presence at the event - but its roots will remain obvious, certainly visually.

But both da Silva and Byrne are adamant the car will be a Travis-led design, but one drawing on the former Ferrari Chief Designer's F2004 - the last Ferrari to win a world championship in Michael Schumacher's hands.

"Obviously I know the car," said Byrne in a separate interview, and with the FIA having specified 2005 F1 safety standards, it made sense to start with a car which met those.

"But, I am only a consultant and will guide A1GP where required or requested, but it is John's job to specify transmission, brakes, etc."

So, with a new car on the horizon and a new operating structure in place, what is next on da Silva's menu?

Before moving into that area, he leans across conspiratorially. "The Ferrari deal means we have Mugello in our sights for next season, which is great. It's a Ferrari circuit, and it will help us expand our presence in Europe."

Narain Karthikeyan and Team India © XPB/LAT

Although he admits that the 2008/9 calendar is far from firm, his demeanour suggests a done deal, adding 'early in our new season, September or October' when pushed for a date.

But, back to the question.

"Simply put, the first year was about getting the show on the road, the second was to ensure the sustainability of the series by optimising all opportunities, and the third - which we are now in the thick of - is about A1GP's commercialisation, in which the Ferrari deal plays a major part.

"One of the problems we had in the beginning as that we were setting up franchises, but you couldn't taste the hamburger. With all other franchises you can taste the product, and you can start with one outlet.

"In our case we needed at least 20 teams - 'shops', if we use our example - and the solution was to set up and fund teams which could then be taken over via an operation called Lyndhurst Racing (named after Teixeira's family trust). This is happening gradually. For example, Team India has now bought a shareholding in its operation from Lyndhurst, and is increasing it.

"We have set up a procedure for new franchises in our Franchise Department headed by Paul Cherry, and we are getting up to three enquiries per week. We now charge prospects a deposit before we begin our due diligence on them, and demand that they can come up with at least half the annual operational budget through external sponsorship."

Although da Silva did not expand, enquiries about the paddock indicate it costs approximately $4m per car per year, split equally between franchise fee (which includes the basic hardware, race entries, transportation and administration) and the operational budget. The latter includes wages/salaries, travel and accommodation, PR and marketing contributions, and car running costs and repairs.

In addition to the necessary liquidity, prospective franchisees are required to prove they are able to grow the A1GP brand in their territories, and exploit television opportunities. Although not said, it is obvious that he, Brazilian-born, is particularly stung by the fact that Team A1 Brazil has not managed to secure a TV deal for South America ...

He is, though, particularly proud about the recent growth in the series' television audiences. Where a year ago internal talk was of numbers 'south of five million' per race, mid-season figures show that events are now seen by an average of 7.6m fans, with a growth rate of nine percent per annum - faster than any other motorsport series.

"Plus our TV footprint has increased by 11 percent in the last year, and we are looking at moving onto a delayed broadcast free-to-air model in regions where we have satellite broadcasters carrying races live. But, honestly, TV remains a big challenge, particularly in Europe ..."

Although not firmed up (yet?) da Silva made no secret of the fact that A1GP is 'talking to Octagon', the sports marketing conglomerate which previously counted a Silverstone lease and the commercial rights to the British Grand Prix amongst its world-wide assets.

According to da Silva A1GP was on track to break even this year after posting operating losses of $35m last year, but the capital-intensive Ferrari deal put a stop to that.

The field in Durban © XPB/LAT

"There are two reasons why we are still in the red despite all the upward trends," he says before counting on fingers. "One, we moved our year-end out by three months to June as were still racing in April, and then we took the Ferrari decision.

"Had we kept with the current cars for another year, which we could have and had considered, we would have posted a profit this season. A small one, around seven million, but a profit nonetheless."

The commitment the Ducati-owning and MotoX-riding da Silva gave Teixeira and private equity company RAB Capital - which came into A1GP as major shareholder on the back of its relationship with Teixeira's listed Energem company - 'is that black ink will flow from Season 4'.

It seems on target to do just that. Yes, A1GP has had its ups and downs over the years, and if the truth be told, the downs certainly outdid the ups during the series' formative years.

But, the series must have done something right to have survived a time when another start-up formula (Grand Prix Masters), which included some seriously big names, couldn't outlive a winding up order in its second 'full' season.

GP2, too, has taken some A1GP concepts and incorporated them into the nascent GP2 Asia series, which some in the know swear was established on the back of A1GP's Asian successes.

Maktoum had the vision and Teixeira the readies, but it has taken a career businessman applying corporate skills to turn around a concept that was fast heading for failure. da Silva admits real success is still some way off yet, but all the building blocks are now in place for growth: management, proper hardware, growing public acceptance, and, above all, a plan.

Where once motor racing folk (including this individual) were wondering whether the series would get to stage another race, they are now eager to see the 2008/9 calendar...