The return of Porsche to F1?

The purpose of Mueller placement was to ensure a smooth transition for Porsche as it integrated itself with sister brand Volkswagen. No one quite expected him to announce that Porsche is considering a return to the expensive world of Formula One on his first public speech as chairman at the Paris Motor show.

F1 is regarded as being hugely expensive, with Toyota alleged to have spent $400 million per annum on their F1 team. During which time they failed to win any races and never finish any higher than 4^th in the constructor's championship. On top of this, the sport is regarded by some as being wasteful in this time of oil shortages and rising petrol prices.

Regardless of these flaws, F1 is still hugely popular, with a global TV viewing audience of over 600 milllion. Even long retired champions can still make money from having previously been in the sport, with Nigel Mansell appearing in the latest Moneysupermarket car insurance campaign in Britain. So why is Porsche thinking of an F1 return, eighteen years after their last disastrous attempt with the Footwork team?

New regulations

When Jean Todt became the new FIA president, it immediately became clear that he had two major challenges ahead of him. The first was to improve the transparency of FIA decision making in order to remove any suspicions fans had about bias in favour of Ferrari, with Todt himself being aware that his previous job as Ferrari team principal being a potential obstacle here. He did this by making more information available to fans via the F1 website and also placing a former driver on the steward's panel at each race. This appears to have improved the situation significantly.

The second task Todt faced was to overcome, or at least reduce, the sports wasteful image. He set about doing this by increasing the relevance Formula One had to the development of environmentally focused road car technologies. The first step in this process occurred this year, when refuelling during races was banned. This made fuel economy a massive consideration for the competing teams, as the amount of fuel you had to carry at the start of a race obviously affecting the weight of the car, and hence the pace of the car at the start of the race. F1 engine designers are now therefore forced to consider fuel economy whenever any changes are made to their power plants.

For 2011 the sport will make the Kinetic Energy Recovery System (KERS) mandatory. This system takes heat energy from the brakes and turns it into a power boost for the engine, which the drivers can use by pressing a button. Ferrari has already used this technology on a road car (the Ferrari 599 hybrid model) and therefore the potential for this to reduce fuel usage on road cars in general is there.

For 2013 the final push to increase the relevance of the sport to road car technologies will come into place, as 1.6 litre turbo engines with a fuel flow regulator will replace the current 2.4 litre V8's. This is obviously attractive to car manufacturers, as it gives them an outlet to design and test innovative ways of reducing fuel usage while at the same time benefitting from global TV coverage every other weekend.

Honda famously used F1 as a training ground for young engineers in the 1980's when it dominated the sport. These engineers would later go on to work on the company's road cars, and use their F1 technology knowledge here. The sport has subsequently strayed away from being relevant to the road car industry, which BMW,

Honda and Toyota all cited as being one of the reasons behind their withdrawal from the sport. These new regulations will therefore change all of that, and Porsche surely won't be the only car manufacturer considering involvement in the sport in the coming years, with Honda and Proton being just two manufacturers to have already joined Porsche in stating an interest.

Commercial considerations

One of the big problems F1 has had in recent years has been that sponsors have started to realise that there are simply too many logos on the cars, which has limited the value they get from involvement. This became more of a problem as companies had less resource following the credit crunch, and hence began to question any expenses they felt didn't deliver full value. Another development in the marketing world has seen companies focus on integration, which means that all outlets they use to market their brand must endorse the same message.

When Virgin sponsored the Brawn team for 2009, it perfectly matched their brand persona as the underdog fighting against better funded and more established companies. When Brawn won the 2009 championship and was subsequently bought by Mercedes Benz, who placed the most successful driver in history of the sport in one of their cars, the team was no longer and underdog and hence delivered no value for Virgin.

An association would only pollute the image that people have of them. Therefore, Branson set up his own team called Virgin racing which ran on the smallest budget on the grid, became the only team in the sport to design their car using only a computer, and hired two talented drivers who have yet to win a race. This ensured that their underdog image was supported. Virgin are not the only F1 sponsor to have realised the benefits of owning their own team, with Mercedes, Red Bull, Kingfisher and Air Asia all following the same route.

However, given Toyota's $400 million a year budget it would be easy to assume that running a team is too expensive. This all changed last year, when the teams agreed a resource restriction limit, putting a cap on their spending to enable smaller teams to compete on a smaller budget but still be competitive. This has allowed Virgin to operate this year on 10% of Toyota's budget, with running costs of just $40 million. It can be argued that the cap is not effective as Virgin Racing has failed to score a point, however it is the teams first year in motor racing and they have closed the gap between them selves and the race winning teams from 4.7 seconds per lap in March to just 3.8 seconds six months.

Showing that despite their smaller budget, they are developing at a faster rate than teams with more resources. On top of this, Bernie Ecclestone has agreed to give the teams a larger share of TV revenues in the coming year, which has led to Branson believing that F1 can become almost profitable for his team. This would make F1 team ownership one of the most cost effective marketing platforms available, and Porsche would be wise to follow Virgin's lead and set up their own team.

However, Porsche will not want an underdog image, and will want to win straight away. This makes it likely that the team will buy an existing team and re-badge them Porsche. One of the teams with which they have the closest connection is the Williams team, who has provided KERS technologies for Porsche's GT programme. New for 2010 Williams F1 shareholder Toto Wolff is also a former racing driver who competed in GT races for Porsche.

On top of this RBS and Phillips have withdrawn sponsorship of Williams for 2011 leaving the team with apparent financial worries, so much so that they are believed to be considering taking a paying driver for 2011 in the form of heavily sponsored Venezuelan driver Pastor Maldonado (someone who was once nearly banned from racing for running over a marshal under double waved yellows at a race in Monaco). A Williams/Porsche alliance would therefore surely suit both parties and it would allow Williams to continue to employ the highly rated young German driver Nico Hulkenberg, who Porsche would surely love to have in their F1 team.