Schumacher set to go after 2004

[allen_overy]

Leaving aside arguments over whether MS is worthy of his heavy-weight salary, the situation for the five-time world champion is not bright after 2004.

In 1995, Weber negotiated with Marlboro for Schumacher to become one of Marlboro's "Driver Sponsorship Programme", alongside Irv and Rubens, and that Marbloro (then already a sponsor of about 6m of Ferrari) pulled out from Mclaren and supported Ferrari whole-heartedly. Among the clauses of Marlboro sponsorship contract drafted in April 1995 between Ferrari and Marlboro, there were provisions that dictate Schumacher driver of Ferrari and Marlboro would shell out three-quarters of MS's salary (at the rate of 25m/year, for two years; and there are bonuses for winning the world championship). MS renewed the contract twice, one in 1998 and then in 2001.

In the 1995 and 1997 negotiations, those representing Ferrari sPA (note: not Ferrari F1) are LdM(person who de facto makes the decisions) and Agnelli (as consultant) and the main difference between 1996 and 1998 driver contracts, salary aside, was WHICH PARTY is to pay MS' salary. In 1998 contract, Ferrari was insistent on its paying MS' salary, therby making MS' driver contract separate from Marloboro's sponsorship contract. This enables Ferrari to have more independence and more say on their driver, pre-empting any danger of the exit of Marloboro and thereby MS as well. This plot was supported by Ferrari SPA (note: not Ferrari F1) and therefore they increased their support of Ferrari F1 by approximately twice in 98 and 99. For "outsiders", reports in the news over the increase in investment by the big teams during the years 98-99 would appear to be coincident to the increasing dependence on technological advance. In fact, as seen above, it is not, for Ferrari.

After Ferrari had gained the say over the ownership of MS, and tehreby MS' technical troops, Agnelli's health dwindled in late 2000. His influence and power in Ferrari SPA and Fiat was reduced. Drawing on the popularity of MS' world crown, Weber noticed the change in the circumstances. He knew (of course he knew) that Agnelli was no longer the person as powerful as before in Ferrari establishment. Therefore he decided that it was the time to negotiate for a longer term contract for MS. Perhaps you still remember MS said(back in 2000) he would make up his mind over his future in mid-2002, but in the end the contract was quickly extended in mid-2001. This is the persuasive prowness of Weber, ladies and gentlemen, by proving to the Ferrari Board that Schumacher was good for racing and marketing, using rumors that MS would retire in the coming year end(as has been rumoured over the years...). The directors were rattled, of course....

From that point onwards Agnelli's powers dwindled more steeply and indeed there ARE partitions in the Ferrari establihsment that is in favour of placing the money on developing and training good engineers, instead of paying of to one single employee, but these did not go far--as the Person in charge thought otherwise. Now that the situation is more different, as one of MS' most avid supporters, was gone. Ferrari has developed itself into a highly-efficient, ultra-modernised enterprise which is more dependent on teh collective work of all employees. It also starts their own young driver development programme(the first member is Massa). So more and more people within the managerial ranks of the Scuderia would say that this is the time to show MS the door. This is very unlucky for MS but could very much happen in the next years.

[Peter Mallett]

Face it though. Would he want to keep going after 2004? I think he's as aware of the situation as you. however I doubt it will influence his form in any way.

[Valve Bounce]

allen, where did you get this story from? or did you make it up?

[Red]

Oh, yes, of course, and Ferrari Spa (note, not Ferrari F1 ) will no longer support Ferrari F1 (note, not Ferrari Spa )...

Whishful thinking guys. You only had to add that Schumacher was a paydriver and at Ferrari he's surrounded by persons who object at his presence. "to show him the door"...

[allen_overy]

Red: C' on, Ferrai Spa AND Ferrari F1 are two legal entities, and mind you, according to the House of Lords decision of Salomon v. Salomon, An incorporated company has a separate legal entity from its shareholders, so, Ferrari Spa and Ferrari F1 are DIFFERENT. Ferrari Spa cannot say since it owns 35.65% of Ferrari F1, so it owns the FACTORY of Ferrari F1. They are distinct legal "persons". Note the distinction.

VB: the source is from the chief editor of a famous paying F1-website.

[Peter Mallett]

My point was more about whether he'd be interested beyond 2004 rather than anything to do with contracts. Five or six WDC's might seem enogh for him.

[allen_overy]

The boys at the factory love him. yeah, really mean that.
But not exactly what the BOARD thinks. Do you know who is the paymaster huh??!

No matter how you make the boys laugh or how well your responses over new parts are, modern F1 is driven much by business decisions and these are made by a group of people called the BOARD OF DIRECTORS, who manage the daily running of the company.

Welcome to Introduction to Management, Lecture 1.

[Valve Bounce]

To be honest allen, my feelings are that SchM will stop racing in F1 when he himself decides to hang his helmet up. Of course this is only my own personal opinion, and you get this from our free site.

[allen_overy]

Yes, you are right peter.
If i were MS i may be quite happy, afterall i have come through the good tiems(2000), the VERY GOOD(2001-2), the OK times(1996), the unlucky times(1997-8) with Ferrari...

[Valve Bounce]

Originally posted by allen_overy
But not exactly what the BOARD thinks. Do you know who is the paymaster huh??!

No matter how you make the boys laugh or how well your responses over new parts are, modern F1 is driven much by business decisions and these are made by a group of people called the BOARD OF DIRECTORS, who manage the daily running of the company.

Welcome to Introduction to Management, Lecture 1.

The BOARD OF DIRECTORS are driven by the desire to succeed

Welcome to Famous Words by Confuscius, Lecture XII.

[Red]

Allen, Ferrari F1 and Ferrari Spa are NOT different entities. Anyway, Peter and Bouncey's points are valid. Schumacher is not a teenager anymore and he will retire, eventually. That will happen when he decides to do it, not when (and I quote) is shown the door, especially for financial reasons!! This is ridiculous!
PS:

Originally posted by allen_overy

[..]
and indeed there ARE partitions in the Ferrari establihsment that is in favour of placing the money on developing and training good engineers, instead of paying of to one single employee[...]
So more and more people within the managerial ranks of the Scuderia would say that this is the time to show MS the door.
[...]

Where did you get this from? "Indeed" and "more and more", not one or two! I presume that you can provide some names, who said before and who says now?

[NiceGuyEddie]

Of course Ferrari F1 is as an legal entity separate from Ferrari SPa. Just as BMW Motorsport is separate from BMW AG. Its no surprise that racing departements are setup separatly from the manufacturer itself (which no longer makes them departements in the legal sense), yet there will always remain a managementstructure and a cashflow between them. Legally separate? Yes. Factually separate? No.

[Valve Bounce]

Originally posted by NiceGuyEddie
Of course Ferrari F1 is as an legal entity separate from Ferrari SPa. Just as BMW Motorsport is separate from BMW AG. Its no surprise that racing departements are setup separatly from the manufacturer itself (which no longer makes them departements in the legal sense), yet there will always remain a managementstructure and a cashflow between them. Legally separate? Yes. Factually separate? No.

This is spot on. Most large corporations do this to protect one arm of the company from financial and legal problems which might affect another arm. Just look at AMP? Yet when the Board got fired, that was the board members that controlled the whole shbang. Same with HIH.

allen, please don't throw those Management courses gibes at us; you are leaving yourself wide open to being laughed at by some very knowleable guys here. Not all of us are freshers.

[allen_overy]

Very true, the Board intends to succeed, yet this is subject to the profitability of the whole operation. There is no point to achieve success while leaving your company in red at the end of the year. The thinking is, if winning can still be sustained without Schumacher and at the same time make a more couple of millions, it would be the best way to go. Unless Ferrari did go for an IPO, we will not get to know Ferrari's accounts and whether it's making a profit with the present income/expenditure settings.

And if Ferrari did go for an IPO, from the viewpoint of the SHAREHOLDER, if the car can still win without MS (while get more PROFITS with the saved expenses), axing MS is the way to go.

[Peter Mallett]

What you are suggesting is that this is not a sport anymore and you are right. So taking your point further the same philosophy applies to all the teams except Minardi, Suaber and Jordan.

No more F1 after 2003 or June 2003 anyway.

[Valve Bounce]

Nobody is going to axe Michael Schumacher.
First Lesson in Reality.
The Ferrari boys are trying to be polite to you, so take the word from one of the non Michael admirers, me! If there was any chance that Michael Schumacher will be released by Ferrari because of lack of funds, Frank and Ron will be in there with their credit cards at the ready. And they would have to fight their way past Flav.

[Red]

Allen buddy, what the future holds is, of course, uncertain. There is one thing I am sure of: you will NEVER be a member of the Ferrari Board!

[Red]

Originally posted by allen_overy
There is no point to achieve success while leaving your company in red at the end of the year.

2000: the global sales turnover totalled € 893.3 million: an increase of 17.9% over 1999’s results. Profit € 45.6 million (last year € 23.5million)
2001: Ferrari turned over slightly in excess of € 1bn, 17% up on 2000, making an operating profit of € 62M

(figures include investment in Maserati)

I say that the company is Red, but not the way you suggested..

[allen_overy]

Red: No question about not being able to become a board member of Ferrari. Neither will you be! I am not an ITALIAN, that's what it takes!

But I shall rise to become the next Max Mosley--my training allows me to step into HIS shoes.

I will make a better president, though: i will not be biased towards Ferrari

[Red]

So THAT was all about...

Fear not, you won't take his place either..

[TeddyG]

Now I don't pretend to understand the corporate mentality of Ferrari's board of directors but I think it's patently absurd that some of you think Schumacher alone is immune to a) the tailspin cum crash of the worldwide economy or b) Gianni Agnelli's death and the crisis at FIAT auto group. I think Allen brings up a good point and the fact that it comes from a chief editor of a supposedly reputable pay-site makes it all the more creditable. In all probability MS will retire at the end of the following year (2004) to make way for someone deemed more marketable by the boffins at Marlboro and Shell in oh say South America ... perhaps Massa.

[Valve Bounce]

And I say again - the only way Michael Schumacher stops racing in F1 is the day he decides to hang up his helmet. If Ferrari is too poor to pay enough to keep him, and the championship for the following year, then Frank, Ron and Flav will be rushing over to sign him. Maybe even Toyota. Some of us may not have the greatest admiration for this person's persona, but let's not kid ourselves, he is a great driver, and will bring sponsors to the team like no one else can. allen, you'd have a better chance of firing Tung Chee Hwa.

[MiniMe]

Schuie will only be 35 in 2004 - if he's still got some more in him, he'll carry on - probably with the team of his choice = Ferrari.

His options are to retire on top with a squillion dollars, or risk losing it all (and his life) if he continues.

Although I barrack for other drivers now, I still admire MS, and would really prefer not to watch his decline.

[Valve Bounce]

I'lll go along with that 100%.

[TeddyG]

Valvebounce: the point was about the Ferrari/Schumacher relationship not whether MS could get a drive if he left Ferrari. You're only stating the obvious. The simple truth is that someday in the future Ferrari will pat themselves on the back after the 4th or 5th title on the trot and scale back their F1 program. MS will be the first thing to go or he will be lured away by larger pay cheques dangled before him by, as you say Frank, Ron and Flav, or he will simply retire.