Normand Legault speaks his mind (part I)

[BobHWS]

Normand Legault was the director and promoter of the Grand Prix du Canada for almost all the thirty years of its existence. He is most responsible for making Montreal into one of the best races on the F1 calendar. During the attempted blackmail, er, I mean failed negotiations, that led to the demise of the Montreal race last fall, Legault stepped down from his post to consider his options for the future. He has kept a low profile since then but he recently granted an interview to a reporter from the Montreal French-language daily La Presse. Here is a link to the interview:

Legault: «Montréal reste un excellent endroit pour la F1»

Though the interview contains no great revelations, I enjoyed reading his thoughts about the state of the sport, its current disfunctional business model and how things might change. So, for the benefit of those of you whose French is a bit rusty, here is my translation:

Legault: “Montreal remains an excellent place for F1”
Jean-Francois Bégin La Presse (Montréal)
March 28, 2009

From his office on the 45th floor of the IBM Tower in downtown Montreal, Normand Legault can take in all of Montreal. His work table is surrounded on three sides by immense windows. “From here, I could give traffic reports. I can see all the bridges from the Mercier Bridge to the LaFontaine Tunnel,” he jokes.
From this remarkable glass room perched between earth and sky, one can also see the Circuit Gilles Villeneuve, where the former promoter of the Canadian Grand Prix, also recently retired as NASCAR promoter, was a regular presence during three decades. “During thirty years in the business of sports, you acquire a lot of experience, and, I hope, a little bit of wisdom,” he says. You remain a passionate fan, but at the same time, you view things in a little more detached and clinical fashion. You view the same reality, but instead of being at ground level, you see things from the 10,000 foot level of altitude.”

On the occasion of the opening of the 2009 F1 season in Australia, La Presse talked with Normand Legault about the challenges awaiting the Big Circus – and the turmoil that could disrupt it.

Q: Is there a risk that the ongoing economic crisis could disrupt the world of F1?

A: Yes. F1 depends more on the automobile manufacturers than 10 or 20 years ago. Six out of 10 teams last year (now five with the withdrawal of Honda) were financed by car companies. These companies are not in trouble like GM or Chrysler, but they are facing significant financial constraints. In the world of luxury cars, sales have dropped about 25%. The BMWs and Mercedes of the world have been seriously affected.

Q: More so since new sponsors are not lining up at the door.

A: The F1 teams have been hit from two sides. During the last five years, they have all replaced tobacco sponsors with financial institutions, some of which are in serious difficulty. RBS, which was a Williams sponsor and had an important presence at the circuits, now more or less belongs to the British government. ING, a Renault sponsor, received $10 billion from the Dutch government. Crédit Suisse withdrew as a BMW sponsor. Banco Santander is not in trouble, but still it lost $4 billion in the Madoff affair. And so on. Now, when you ask the state to save you, it’s normal that you will be asked to be fiscally prudent. You don’t want to be seen drinking champagne in the Paddock Club and blowing 100 million on an F1 team!

Q: What do you think about the movement that has been taking shape in favor of cost reductions in F1?

A: Cost control measures are necessary. Extreme performance doesn’t mean anything. You have to remember that we do this for the fan. And the fan doesn’t care whether the engine revs to 18 or 19,000 RPMs. He would rather see two guys cross the finish line one meter apart at 17,000 RPMs than to see Michael Schumacher finish one and a half laps in front of everyone at 19,000 RPMS. Who gives a damn if it’s 19,000! Is it really important that they lap the Circuit Gille-Villeneuve in 1:21.430 instead of 1:21.628? I don’t think so. What fans want is a close race, some passing and that the result of a 70-lap race not be decided by the 43rd lap. Are economic circumstances forcing us to review the rules of the game? Let’s take advantage of that to make the spectacle more interesting – not for the engineers, but for the fans.

Q: What do you think about the FOTA (Formula One Teams Association), that the teams formed last year to defend their interests against the Fédération Internationale de l’Automobile (FIA) and against Formula One Management (FOM), the holder of the commercial rights?

A: It’s an interesting initiative. A few weeks before the meeting in Maranello where the FOTA was created, I made a presentation to the team bosses at the Montreal Grand Prix. I said to them, why don’t you reorganize yourselves like a North American sports league? When the [Montreal] Canadiens play the Boston Bruins, they don’t ask the International Hockey Federation to referee the match. In the world of North American pro sports, each league has a board of governors, a commissioner and vice presidents who manage the business. The owners of the sport manage themselves. The National Hockey League doesn’t have to ask anyone if it wants to increase the size of the net by six inches!

Q: Can the FOTA really become a vehicle for change?

A: I believe so. They seem to want to. A test of strength is taking place between the FOTA and Max (Mosley, president of the FIA) and Bernie. You can see that with the disagreements about awarding medals and the awarding of points. (Note to readers: Due to the objections of the FOTA, the FIA put aside the idea of crowning as world champion the driver who won the most races, rather than the one who had amassed the most points.) But I hope that the FOTA will go further than just worrying about the technical or sporting regulations. I would hope that they will concern themselves with the business model of F1. You must rise above the level of minor disputes to see what you would like F1 to become. It’s fine to think about whether the tire size should be 17 or 18 inches, but if you look up and the stands are empty, then the question of tire size becomes academic.

Q: Do the teams have the will to do it?

A: I don’t know if there is a will, but there is an inevitability.

Q: Why?

A: Because the financial structure of F1 is problematic and raises certain questions. Does the sport need an intermediary like FOM? What the teams object to is the 50-50 split of revenues between them and FOM. To go back to the model of the NHL, if the league administrative costs are $50 million, and overall revenues are $1.8 billion, then that amounts to 3%. In F1, the guy who manages the business costs you 50% of your revenues. You have to ask this kind of question.

(cont.)

[BobHWS]

Q: Is it possible to imagine F1 without Bernie Ecclestone?

A: As of December 31, 2007, there is no more Concorde Agreement. The teams could leave tomorrow morning. (…) They could call it the Grand Prix Championship of the World. If you have Ferrari, BMW, Williams, if you have Lewis Hamilton, that seems pretty much like the real thing. They would undoubtedly be free to do that.

Q: And what does your crystal ball say?

A: It’s an eventuality, but I don’t know if they’re there yet.

Q: Could you see yourself as commissioner?

A: I don’t know if they would see me as commissioner. Up to now, they’ve talked with me a lot about the concept, but I don’t know.

Q: But you’re not closing the door?

A: There is no door yet! (laughs)

Q: Does the uncertain future of F1 explain in part why the government refused to agree to the demands of Bernie Ecclestone in the bid to save the Canadian Grand Prix?

A: Yes. It’s fine to have a five-year agreement, but do you really know what product you will have to sell? What happens if the next Hamilton, Massa and Kubica are taking part in another championship? What are you buying for $30 million a year? What does that guarantee? It’s a little like if you signed a contract with Vincent Lecavalier [famous French-Canadian hockey player]. In the second year of the contract, you wouldn’t like it if he decided to send his brother-in-law to play in his place!

Q: What are the chances of seeing F1 return to Montreal?

A: I remain pretty optimistic. Over the 30 years during which Montreal hosted the Grand Prix, the United States GP took place in seven different locations without ever really succeeding. I feel that by 2001 at the latest, the Canadian Grand Prix can return to the calendar. Montreal remains an excellent place for F1. It would cost 50 million to construct even a temporary circuit in cities like Philadelphia, Washington or New York. In Montreal, the investment is already there. It’s an easy destination for the teams. The time difference means that the race is on during prime time in Europe. And there is a fan base that really knows auto racing.

Q: Except that right now it seems that having fans in the stands is not a priority in F1.

A: F1 has gone to Asia and the Gulf, it’s a little like the National Hockey League trying to put a team in Nashville. I read somewhere that the Bahrain Grand Prix generated revenue of $354 million. The Super Bowl generates $250 million and Bahrain, where the stands are empty, makes more than that? In Montreal, there were more people on Friday than some GP have on Sunday. And the spectators were not soldiers dressed in civilian clothes like in several countries that I won’t mention!

Q: Why this shift towards new markets like China, Singapore and Abu Dhabi?

A: When CVC Capital Partners bought Bernie Ecclestone’s company two years ago it took on debt of almost $3 billion. It still owes about $2 billion. That means interest payments of $240 million per year, plus principal payments of $300 million. That’s more than $500 million annually. To reach that, you need $50 million races. At that price, it can’t be profitable (for an organizer), no matter how the profitability is calculated. Australia has accumulated losses of $100 million during the last three years. The Australians know sport, they like to have a good time, but the organizers, who know what they’re doing, are losing $40 million per year. How long can that go on? Someone from the opposition or the population is finally going to ask if it’s all worth it. You have to wonder about the business model. If it costs too much, then you kill the goose that lays the golden eggs.

Q: Is that what’s happening?

A: You can already see the house of cards falling down. The French automobile federation dropped the 2009 GP. Hockenheim won’t have a race in 2010, Nuerburgring is in trouble. The Chinese have put in doubt their participation after 2010. If the economic crisis continues in Europe, that’s going to affect a lot of people.

[djb]

actually a very good translation, I read both.
Yup, he is saying what perhaps not many people are saying. Nice to hear. The idea of the teams heading their own series, who knows, but spot on with the pt that Montreal slash N America must come back, from the market side of things. especially with the pts of how the race is always a success crowd wise, and interest wise.

Makes me realize again how much of a kerschmozel all this cancelling was, and the now even more unrealistic demands by Mr. E.
The "Soldiers dressed in civilian clothing" comment really does sum up the situation at these races doesnt it?

I have met Legeault a few times over the years with work (not really met, but dealt with him) maybe three or four times, and he was always polite, patient, not a prima donna by any means. The first time was ages ago, and when I made a comment on the green wall in his offices about how it looked like British Racing Green/ a Jim Clark Lotus, he said right away how when he was young he had followed F1 with the Lotuses etc. So while he is obviously a real business guy, he does love motorsport. (at my suggestion, I put in a yellow gelled hightlight on the wall, so it made a good Lotus-esque background, the guy I was assisting didnt know Jim Clark from Jim Morrison, so I was happy with my lighting work, and I got a good in for a chat with him via the motorsport history angle)

[Dutton]

That appears to be a fabulous translation. I am only fluent in English, so will trust djb's judgement with regards accuracy. I can only assume Bob has been both English and French fluent his whole life? The English, in terms of fluidity, is fluent, uninterrupted, cohesive, and consistent.

I am rather impressed, .

Originally Posted by It Is Surely Obvious

Q: Is it possible to imagine F1 without Bernie Ecclestone?

A: As of December 31, 2007, there is no more Concorde Agreement. The teams could leave tomorrow morning. (…) They could call it the Grand Prix Championship of the World. If you have Ferrari, BMW, Williams, if you have Lewis Hamilton, that seems pretty much like the real thing. They would undoubtedly be free to do that.

Q: And what does your crystal ball say?

A: It’s an eventuality, but I don’t know if they’re there yet.

Q: Except that right now it seems that having fans in the stands is not a priority in F1.

A: F1 has gone to Asia and the Gulf, it’s a little like the National Hockey League trying to put a team in Nashville. I read somewhere that the Bahrain Grand Prix generated revenue of $354 million. The Super Bowl generates $250 million and Bahrain, where the stands are empty, makes more than that? In Montreal, there were more people on Friday than some GP have on Sunday. And the spectators were not soldiers dressed in civilian clothes like in several countries that I won’t mention!

Q: Why this shift towards new markets like China, Singapore and Abu Dhabi?

A: When CVC Capital Partners bought Bernie Ecclestone’s company two years ago it took on debt of almost $3 billion. It still owes about $2 billion. That means interest payments of $240 million per year, plus principal payments of $300 million. That’s more than $500 million annually. To reach that, you need $50 million races. At that price, it can’t be profitable (for an organizer), no matter how the profitability is calculated. Australia has accumulated losses of $100 million during the last three years. The Australians know sport, they like to have a good time, but the organizers, who know what they’re doing, are losing $40 million per year. How long can that go on? Someone from the opposition or the population is finally going to ask if it’s all worth it. You have to wonder about the business model. If it costs too much, then you kill the goose that lays the golden eggs.

Q: Is that what’s happening?

A: You can already see the house of cards falling down. The French automobile federation dropped the 2009 GP. Hockenheim won’t have a race in 2010, Nuerburgring is in trouble. The Chinese have put in doubt their participation after 2010. If the economic crisis continues in Europe, that’s going to affect a lot of people.

Q: Can the FOTA really become a vehicle for change?

A: I believe so. They seem to want to. A test of strength is taking place between the FOTA and Max (Mosley, president of the FIA) and Bernie. You can see that with the disagreements about awarding medals and the awarding of points. (Note to readers: Due to the objections of the FOTA, the FIA put aside the idea of crowning as world champion the driver who won the most races, rather than the one who had amassed the most points.) But I hope that the FOTA will go further than just worrying about the technical or sporting regulations. I would hope that they will concern themselves with the business model of F1. You must rise above the level of minor disputes to see what you would like F1 to become. It’s fine to think about whether the tire size should be 17 or 18 inches, but if you look up and the stands are empty, then the question of tire size becomes academic.

A: [T]he financial structure of F1 is problematic and raises certain questions. Does the sport need an intermediary like FOM? What the teams object to is the 50-50 split of revenues between them and FOM. To go back to the model of the NHL, if the league administrative costs are $50 million, and overall revenues are $1.8 billion, then that amounts to 3%. In F1, the guy who manages the business costs you 50% of your revenues. You have to ask this kind of question.

A: Because the financial structure of F1 is problematic and raises certain questions. Does the sport need an intermediary like FOM? What the teams object to is the 50-50 split of revenues between them and FOM. To go back to the model of the NHL, if the league administrative costs are $50 million, and overall revenues are $1.8 billion, then that amounts to 3%. In F1, the guy who manages the business costs you 50% of your revenues. You have to ask this kind of question.

I don't really have anything to say. This is a great interview that gets to the heart of it all.

Originally Posted by It Is Surely Obvious

Q: Is it possible to imagine F1 without Bernie Ecclestone?

A: As of December 31, 2007, there is no more Concorde Agreement. The teams could leave tomorrow morning. (…) They could call it the Grand Prix Championship of the World. If you have Ferrari, BMW, Williams, if you have Lewis Hamilton, that seems pretty much like the real thing. They would undoubtedly be free to do that.

Q: And what does your crystal ball say?

A: It’s an eventuality, but I don’t know if they’re there yet.

Every enigmatic dictator has is time. Sometimes it is overthrow; sometimes it is death. The seeds of change are usually long in the ground before The Figurehead departs.

Change is an inevitable part of existence.

The FOM reign over F1's commercial considerations is not eternal.

[Kiwi3]

Thanks so much for translating, it's a great interview.

While you would normally think that keeping the same person would help stability, I think a line has been crossed and Bernie's untenable financial model and short sighted initiatives such as medals and evening races in monsoon territory, is now more a source of instability.

I lived in Shanghai from 2004 until last year (now in Beijing) and can tell you that if the Chinese GP was discontinued absolutely nobody would miss it. For the locals who turn up it's a novelty, and if it left it would simply be replaced by a different novelty. Is this the kind of place where you want to anchor F1 or would locations where you have a passionate and loyal customer base be a better long term bet?

The financial crisis has taught many that a return to common sense is necessary, I hope FOM take the same lesson onboard.

[rayburn]

Another vote of thanks here! What a lot of common sense this guy talks, and that is what has been largely absent from F1 in recent years. We need this guy in F1 now - hope the FOTA has the vision to stand firm against Bernie, and get some people in like this to run the sport. Everyone would benefit long term (except Bernie of course), and we could look forward to some real racing at proper tracks, not ones built in the desert that few spectators want to watch.

[Satorian]

I can't but agree. I'm a long-time proponent of the teams taking charge of the business side of the series they are running in, instead of the series management filling their own coffers by strangling teams and bleeding dry host countries.

FOM/CVC/Ecclestone need to go, or rather be left alone with their worthless yet overpriced properties.


Go FOTA!

[Marbot]

Whole heartedly agree.Particularly with:

"A: Cost control measures are necessary. Extreme performance doesn’t mean anything. You have to remember that we do this for the fan. And the fan doesn’t care whether the engine revs to 18 or 19,000 RPMs. He would rather see two guys cross the finish line one meter apart at 17,000 RPMs than to see Michael Schumacher finish one and a half laps in front of everyone at 19,000 RPMS. Who gives a damn if it’s 19,000! Is it really important that they lap the Circuit Gille-Villeneuve in 1:21.430 instead of 1:21.628? I don’t think so. What fans want is a close race, some passing and that the result of a 70-lap race not be decided by the 43rd lap. Are economic circumstances forcing us to review the rules of the game? Let’s take advantage of that to make the spectacle more interesting – not for the engineers, but for the fans."

[Oldtony]

Seems like 10/10ths is doing the research for F1 Live and other sites.
Thanks Bob for getting this great interview in front of a wider audience.
Marbot, while agreeing with you, and Legault, that costs have to be cut why does everyone start with engines and engineers? There are areas which are related purely to the inflated pay packets of the "celebrity" side of the show which could be cut as well.
The whole future of the top level of open wheel racing, be it called F1 or something else, is in the hands of FOTA.
If they work together as a group we will continue to have that sort of racing in spite of the GFC.
If they let CVC and FIA stay in control we will be waiting a few years to see what sort of racing rises from the ashes.

[djb]

Originally Posted by Dutton

The English, in terms of fluidity, is fluent, uninterrupted, cohesive, and consistent.

boy, you really got the Thesaurus out didnt you? (wink wink)

and yes, the reign is hopefully nearing the end

my comment on the translation was more thinking of often translations are very, well, you know, "Oriental instruction manual-ly" if you know what I mean. I read the French one just to see if the gist is right and it is.

it shall be interesting to see how things change in the next 5, 10years.

[Burnsie]

That's a very interesting article, many thanks for taking the time to translate it for us Bob

[Teretonga]

If you took the revenue that comes in from trackside advertising (part of the CVC/FOM revenue gathering department, you would probably have enough to fund a significant portion of the teams regular expenses, let alone TV revenues.
Then promotoers could also put a sum into actually upgrading permanent facilities.

However when you realise the actual size of the deficits picked up by state and governmental contracts each year you begin to realise the size of the actual problem.

F1 is far from self sufficient. If Melbourne is sunsidising the event to the tune of 30-40 million a year and there are ten tracks with similar deficits we are talking about a 300 million a year deficit to run the races..... let alone pay for the teams.

If the teams moved to their own model the events wouldn't have anything like the largesse flowing around them that the present circus does. It would all be a lot more down to earth and austere than what happens at present.

Some states would continue to support their events but in the long term they would probably need to become self sufficient. However tha would be far healthier for the long term future of the sport than the present situation.

[BobHWS]

Originally Posted by Oldtony

Seems like 10/10ths is doing the research for F1 Live and other sites.
Thanks Bob for getting this great interview in front of a wider audience...

Thanks to everyone for your show of appreciation for my French translation skills.

English (the American dialect) is my native language. I also speak French fluently, a skill which comes in handy when I visit France and Montreal, but one that is not very useful where I live. So it's fun to put my skill to good use when I'm not in a francophone country.

I enjoyed seeing the story make its way to F1-live.com. They obviously got it from f1sa.com which obviously got it from here. I don't mind, though I did send an email to the editor of f1sa.com asking him to at least give me credit for the translation.

But the real credit belongs to Normand Legault and the reporter who gave him a forum to express his thoughts. As has been noted, Legault's thoughts about F1's business model and governance structure are widely shared by many fans and many F1 insiders. Now that he is retired from his role as an F1 promoter, it's good that he feels free to speak his mind without fear of retribution from Bernie.

Who knows, maybe Legault can become the Thomas Paine of the world of F1. He could expand his thoughts into a short book and use the same title as Paine's famous pamphlet, Common Sense.

I'm glad that I could play a very small part in helping to publicize the interview, though Legault (who speaks English better than I speak French) could easily have spoken the same thoughts just as well in English, had he chosen to do so.

[Bononi]

Thanks Bob, nice work.

[gringottsdirect]

Thanks very much for taking the time to do this.
Hopefully we will return to Montreal soon.

[JeremySmith]

Thank you Bob, that must have been a great deal of work..

[Born Racer]

Sadly I don't see much change forthcoming, until Bernie dies.

Most teams and drivers appear too afraid to criticise him.