Niki Lauda was expecting the call. Immediately after the San Marino Grand Prix in Italy on April 15, his mobile phone rang. The question was simple, the tone no-nonsense: 'Why can't we do this? What do you need to do this?'
The caller was Wolfgang Reitzle, head of Ford Motor Co.'s Premier Automotive Group and the mastermind of Jaguar Cars Ltd.'s participation in Formula One racing.On this day, a BMW-powered Williams won for the first time. Jaguar's highest finisher? Eleventh. 'Why can't we do this?' Reitzle kept asking Lauda, a three-time Formula One world champion who runs Jaguar Racing. 'Why can't we?' Reitzle's sense of urgency is understandable. Jaguar, hungry to promote its name to a worldwide audience, calls Formula One its top marketing tool.
Other automakers such as BMW AG, Renault SA, Honda Motor Co. and Toyota Motor Corp. also want to polish their image. Now that the European Union is about to slap a ban on tobacco advertising in the racing series, automakers are stepping forward as primary sponsors.
It is not hard to see why. The racing series claims it attracts 350 million television viewers per event, and there are 17 races a year. Moreover, it is a popular sport among high-income consumers - precisely the audience that Jaguar and BMW want to attract.
But Formula One is extraordinarily costly. Consider what it costs to run an F1 team. According to Formula 1 Magazine, Jaguar's 2001 race budget is $177 million, while BMW-Williams will spend $193 million.
Why so much?
Last year, Jaguar Racing used 952 tires costing $2,000 apiece; 100 sets of brake discs at $4,800 per car and 12 instrument-laden steering wheels at $68,590 each.
With costs so high, the pressure for a winning Jaguar season is mounting. Parent Ford Motor Co. stresses that Jaguar Racing is a new team and that it takes time to solve problems. But questions about the reliability and speed of its race cars, coupled with a series of high-profile management changes on the team, are not helping Jaguar. This is particularly true given the lavish promotion of its 2000 season launch, a complete contrast to the way BMW-Williams started.
There are two ways an automaker can tackle Formula One: Create a team, or form a partnership with another team. Last year, Jaguar chose to create its team, while BMW formed a partnership with established race team Williams. The startup strategies could not be more different. And so are the results: BMW-Williams has been racking up podium finishes while Jaguar struggles.
`Green with envy'
By mid-1999, Ford President Jacques Nasser was saying to journalists at Formula One races he was 'green with envy' about Ferrari's success. Ford had returned to Formula One racing in 1997 by bankrolling the new Stewart-Ford team, owned by three-time world champion Jackie Stewart and his son Paul.
Even though Stewart won the 1999 European Grand Prix with driver Johnny Herbert, the program had detractors. Too often, it suffered from that old racing joke: When the car wins, it's a Stewart. When it retires, it's a Ford.
In Europe, Ford has a strong racing heritage with production-based cars. Racing was an ideal way to promote the performance of its models. Enter Jaguar, with a planned five-fold increase in production and the new X-Type aimed directly at the BMW 3 series and Mercedes-Benz C class. It wanted to be seen as younger and more aggressive.
To accommodate its luxury-car division, Ford purchased the Stewart Grand Prix operation for $110 million. Ford's investment was approximately the amount it would have had to pay Stewart in annual title sponsorship under the Jaguar or any other banner. Stewart became Jaguar Racing.
`THE CAT IS BACK'
Jaguar Racing launched with fanfare in London. 'The cat is back,' touted advertisements. Never mind that the company had never been involved in Formula One before. Jaguar's sporting heritage came from its successes at the Le Mans 24-hour race in the 1950s. Jaguar signed former Ferrari driver Eddie Irvine for $12 million a year. Having already acquired engine maker Cosworth Racing, Jaguar had everything to build its own Formula One car. It would be the only team to do so other than Ferrari.
Jaguar Racing's management structure was a mess, though. The team lacked a vital wind tunnel - in an era when the Ferrari wind tunnel operates 24 hours per day, seven days a week. Jaguar used a wind tunnel in California. Modeling tiny parts for testing, combined with the time difference back to the home base in the United Kingdom, meant Jaguar's essential aerodynamic program suffered.
Over the first 12 months of the team's operation, dramatic changes occurred. Technical director Gary Anderson quit, as did aerodynamicist Eghbal Hamedy. Jackie and Paul Stewart retained high-profile roles. Ford's director of advanced technology, Neil Ressler - a man with no hands-on experience of Formula One - would take control of the team, before family circumstances pushed him to return to the United States.
One of Ressler's moves was to appoint former Indianapolis 500 winner and successful U.S. CART race team owner Bobby Rahal as Jaguar Racing's chief. Then Reitzle set up the Premier Performance Division and installed Lauda as boss of the Formula One team. He explained that Rahal would report to Lauda, who would have a broader long-term vision.
Lauda had been a consultant to Ferrari. He had a deep understanding of what it takes to win in Formula One. And he had a business background, spending 15 years running a successful Austrian-based airline called Lauda-Air.
One of Rahal's key decisions was to abandon plans for a new team headquarters at Britain's Silverstone racetrack. The scheme highlighted the grandiose nature of Jaguar Racing's ambition. This plan was budgeted at $400 million - the cost of a midlife facelift and freshening for the X-Type, for example. Yet, unlike a wind tunnel, it would not offer any measurable performance advantage on the racetrack.
Instead, Rahal chose to keep the team at its modest Milton Keynes factory and speed work on a wind tunnel, a $30 million investment. He hired ex-McLaren designer Steve Nichols as technical director. Politics remained rife, with influence being wielded by Jaguar Cars Ltd., Jaguar North America, the Premier Automotive Group and Ford headquarters.
By the close of the 2000 race season, Irvine had scored one fourth place and one sixth for Jaguar Racing, whose cars had mechanical problems. By contrast, BMW-Williams driver Ralf Schumacher scored 24 points, his rookie teammate Jenson Button, 12.
BMW's approach to Formula One has been the inverse of Jaguar's. BMW has a longer continuous history in international motorsports than Jaguar. The German automaker viewed its return to Formula One - where it won the world championship with Nelson Piquet and the Brabham team in 1983 - primarily as an engineering exercise. But BMW knew it also offered a profound marketing benefit.
BMW's chosen partner was the Williams team, owned by Englishman Sir Frank Williams and technical director Patrick Head. Over the past 20 years, Williams Grand Prix Engineering created successful technical partnerships with Renault and Honda, winning championships with both manufacturers. And it raced with customer engines from specialists Judd, Mecachrome and Supertec in years when no major technical alliance could be found.
Williams exemplifies an English, utterly pragmatic strain of top-level race car engineering and team structure. The bottom line mattered. How much? Williams paid second driver Button just $480,100 last year.
The first project that Williams and BMW collaborated on after the contract was signed in 1997 had nothing to do with Formula One racing. The BMW board sanctioned a return to the Le Mans 24-hour race. Williams would design and build the team cars. Williams and BMW engineers would learn to work with each other, away from the pressure of the Grand Prix paddock. When BMW won Le Mans in 1999, Williams claimed no credit. The car did not bear a single Williams logo.
BMW ADDS TECHNICIANS
Formula One was never too far from BMW's attention. As early as 1987, BMW had begun work on a speculative Formula One engine. After Mercedes-Benz took a stake in the early 1990s in British Formula One engine specialist Ilmor, BMW started to look at Formula One seriously.
Reitzle - who worked for BMW at the time - began negotiating with McLaren, whose engine deal with Peugeot was about to end. In short, before BMW even made a decision to return to Formula One with Williams, a special department had been created and funded for about five years. From a group of 23 technicians, BMW's Formula One operation would grow to 229 technicians by this year. That is a greater number than that of Cosworth, which also competed in America's CART series and World Rallying.
BMW, too, made some key decisions about positioning its return to top-level racing. BMW would be modest, always underplaying its ambitions.
The message to the news media? Year 2000 would be a test-and-development exercise and engine blowups could be anticipated.
BMW also invested cleverly. Former Formula One racer Gerhard Berger was appointed motorsports boss. Berger understood racing and could operate effectively within BMW. Berger not only controls the Formula One operation but, significantly, the promotion of the Formula One program. No local market could use any race success as a marketing tool without permission from Munich.
BMW made an unpublicized investment of $60 million in a new foundry to make engine components. Its engine strategy was different than Mercedes-Benz, with its race engines made by Britain's Ilmor, or Jaguar's collaboration with Cosworth.
Made in Germany
BMW decided its race engines would be designed and manufactured in-house. Made in Germany was to be a cornerstone of BMW's Formula One program. Never mind that two of its most-successful vehicles - the Z3 sports car and X5 sport-utility, are manufactured in the United States.
That attention paid off. In its first year back in Formula One, rookie driver Jenson Button shook the racing establishment with two strong BMW-powered performances. He qualified third at Belgium's Spa-Francorchamps and fifth on Japan's demanding Suzuka circuit.
Teammate Ralf Schumacher would take three third places. As it turned out, BMW-Williams finished the 2000 season in third place with 36 points. Jaguar finished ninth.
Other carmakers have done what BMW and Jaguar are doing, and others will follow. Renault tried to win the World Championship with its own team in the 1980s. But it did not succeed until it joined with Williams in 1992. Renault left Formula One after that, but next season will have a factory team when it takes control of the Benetton outfit.
BMW chose to partner with an established team. Jaguar went the buyout route. Each approach has its merits. But BMW is achieving better finishes.
The cat might be back - or at least the name. But BMW's more conservative approach to Formula One already has beaten Jaguar to the top step of the victory podium. As Niki Lauda knows only too well.
E-mail writer Russell Bulgin at [email protected]