Think Formula 1 and it’s not long before a short man with a terrible haircut and an unfeasibly tall wife comes to mind. But while Bernie Ecclestone is very much the face of the world’s premier motor-racing series, it’s a different story with A1 Grand Prix. This weekend the upstart rival to Formula 1 will be staging demonstration races in Manchester to promote the alternative high-octane racing series it holds in the Formula 1 off-season, the northern hemisphere winter.
A1 has a short but intriguing history. It was inaugurated last year by one of the younger members of Dubai’s ruling family and a controversial South African entrepreneur who made a small fortune from a transport company in the post-apartheid era. The royal backer is Sheikh Maktoum Hasher Maktoum Al Maktoum, a nephew of Sheikh Mohamed, crown prince of Dubai, and his partner is Tony Teixeira, president of a large energy and precious stones company called Energem.
The two seem an unlikely pairing. In his late twenties, Sheikh Maktoum is a relatively inexperienced businessmen who claims to speak seven languages, including French and Urdu, but is in love with the glamour of the motor-racing circuit in much the same way that his uncle adores horse racing. Teixeira, meanwhile, is a tough-talking South African who, since graduating from his home market, has established himself as a player on a bigger stage.
Both had high hopes for A1 in the run-up to its launch. In October 2004 Sheikh Maktoum said, ‘I believe that in the long term we’ll see a bigger audience than Formula 1. I believe we’ll break into the US market, plus Japan, Pakistan, India, Malaysia — there’s huge untapped potential there.’ He has also been quoted as saying the enterprise would be worth £2 billion at the end of its second year. His thinking was that fans were becoming tired of a form of racing that relied more on the engineering of the car than on the skill of the driver, a view apparently borne out by the fact that so many Formula 1 races were proving to be processions led by Michael Schumacher’s Ferrari. The sheikh reckoned the answer was a series in which all drivers used identical cars and raced in the colours of their home nations. The fact that no driver would draw any advantage from the car he was driving would make races more competitive — and the creation of national teams promised to introduce a certain jingoism into the sport, something that the constructors’ championship lacked.
That may sound reasonable enough, but the origins of Dubai’s determination to set up a rival series to Formula 1 may lie in rather less high-flown motives. It was in 2002 that Ecclestone decided he wanted to add a grand prix in the Middle East to his annual line-up. There was much enthusiasm for the idea in the region and many assumed that Dubai would win the concession. After all, it already hosted a number of blue riband sporting events, including the Dubai Million horse race and prestigious tennis and golf tournaments. The crown prince appeared to think the deal was in the bag and began building a motor-racing circuit before he had even been given the nod.
In the event, Ecclestone stunned Dubai by opting instead for Bahrain and within a year the crown prince’s nephew was touting the alternative A1 concept to investors. Having obtained the backing of Teixeira and his fellow South African Brian Menell, who is chairman of Energem, the young sheikh set about spending money with a will. One of the first things to do was to develop the car that all the teams would use. The result was a sophisticated piece of engineering incorporating a 600kg monocoque chassis and a performance-limited 3.4 litre V8 engine.
The next step was to sign up the national franchisees, the companies that would run the races in each country, and negotiate contracts with media outlets to ensure the races were screened worldwide. This start-up exercise wasn’t cheap. Sheikh Maktoum and his investors are believed to have spent £44 million getting the idea off the ground, and prize money alone will bleed £39 million over the first three seasons. Such an outlay called for a swift return, but the first season’s racing failed to take the world by storm. While Formula 1 races command global television audiences in excess of 350 million, the final A1 race in China last season was watched by just ten million worldwide.
This disparity is reflected in the state of the respective bodies’ finances. It is the size of the television audience that attracts car sponsors and circuit advertisers, and so while Formula 1 announced profits of £240 million on a turnover of £379 million earlier this year, A1 ended last season in the red to the tune of between £25 million and £100 million — depending on who you talk to — with no funding in place for this year’s competition.
Fortunately for Sheikh Maktoum, A1’s rather desperate situation was rectified at the end of May when it was announced that Nomura and a group of institutional investors led by RAB Capital had put in £120 million in debt financing in return for a 34 per cent equity stake. According to the Financial Times, this was designed to cover debts left over from the start-up, and to fund the company in advance of an initial public offering in November to raise between $600 million and $1 billion. Meanwhile A1 announced an expanded roster of 28 teams — up from 25 — for the 2006–2007 season.
If the Nomura deal allayed the crown prince’s concerns about the finances of A1, he might also be concerned at controversial allegations about his nephew’s partner. On 18 January 2000, the then British Foreign Office minister, Peter Hain, denounced a number of individuals who, he alleged, were supplying the Angolan rebel group Unita in defiance of UN sanctions. Speaking in Parliament, he said, ‘It is widely known in the region that Jacques “Kiki” Lemaire flies in diesel fuel, landing on Unita airstrips, in a Boeing 707 or Caravelle aircraft. Tony Teixeira has been supplying diesel fuel to Unita, again flying it in by plane….’ The Tony Teixeira named by Hain was subsequently identified as Antonio Teixeira, chairman of the Central African Mining Company. A1’s Teixeira has vigorously denied the allegations, claiming the Tony Teixeira referred to is someone else of the same name; he has complained that his business activities have suffered as a result but he has no recourse to sue Hain as the minister was speaking under the cloak of parliamentary privilege.
The spectre of the Unita affair reappeared in 2004 when a Kenyan newspaper ran allegations about Teixeira and mercenary activities. Teixeira’s name came up because Energem had acquired a controlling interest in a company which had bought a Kenyan molasses plant in disputed circumstances. The company’s legal adviser issued a statement which said that ‘Neither Energem nor its subsidiaries has been involved in mercenary activities, blood diamonds, paramilitary firms or any related activity. In particular there are no facts which would suggest that Mr Teixeira has ever been involved with gun-running mercenary action or contravened UN sanctions.’
It is also interesting to note that the A1 China racing team is run by the state-owned Chinese International Trust and Investment Corporation (CITIC), which, through the Chinese National Petroleum Company (CNPC), owns an oil exploration franchise called Block H in Chad — where Energem says it owns adjacent blocks.
All this sounds rather more exciting than anything that happened on an A1 race track last season. There’s a possibility that Teixeira will emerge as an even more colourful character than Bernie Ecclestone. Now that really would be an achievement.
Dominic Midgley is associate editor (features) of thelondonpaper.
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