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jpenston

Listed below are comments made by jpenston between Wednesday, 6th May 2009 and Thursday, 3rd December 2009.

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British GP saga close to conclusion 8:12pm on 03 Dec 2009 I think I need another "who goes where in 2010" summary. I can't keep up with which teams are in, let alone who is going to drive for them!

I fear we may have a three tier formula 1 next year with McLaren, Ferrari, Red Bull and Brawn in the top tier, Williams / Force India and Toro Rosso in league 2 and all the new teams in league 3, headed by Sauber and whoeverbuysrenault.

For the sake of getting them involved, maybe the BBC can run an unofficial mini-league for the new teams with their own 10-8-6-5-4-3-2-1 scoring? If any of these new and recycled "budget-cap" teams are within 2 secs a lap of the big boys, they will have performed miracles...
Your classic Japanese Grand Prix 09:22am on 30 Sep 2009 Watching these highlights with all these overtaking moves makes me wonder what has happened to the cars since?

I know that the changes this year were supposed to allow for closer running, but even watching 2005, they were much closer then than the cars are today.

Some people will probably say it's the track but look back to the classic tracks this year (Silverstone or Monza for example) and we have hadly seen a slipstream move all year. How can we get back to the cars making a hole in the air rather than a hurricane?
Has Arsenal borrowed too much? 1:43pm on 14 Jul 2009 For me Arsenal's only real financial problem is the number 5 you highlighted in the piece. The Highbury Square development was supposed to be contributing significantly to the group's cashflow over the next few years. Because of the property market this is not going to work as planned.

In my view though, this is not the structural issue that Usmanov would like us to believe. The problem is one of cashflow: the builders need to be paid but buyers are pulling out of or gazundering on the agreements to purchase.

Arsenal have a big number (£267m) in their Short Term Liabilities column of the balance sheet which is a lot of money to have to find if everyone calls their debts in at once. It is also worth noting the 6 month figure of £51m in operating cost associated with the property development business unit. In the quarter to Nov 30th this was covered by income of £58m from property sales.

This income is where the problem is and if it is not coming in to cover the costs as the work is completed, then there is a cash drain on the rest of the group. Do note however the £76m cash at bank.

It's a timing issue. At the market peak, the properties might have brought in £350m. Maybe it will only be £200m now, but much of those costs have been incurred and a lot of that income is yet to arrive. How long does the club need to hold the property for before starting to get the money back? In the mean time the club has to renew the loans at the best possible price. Usmanov casting doubts is hardly going to help the club achieve that...

Even so, £17m a year in interest is hardly punitive when your annual turnover is over £200m and you are sitting on assets of £800m.

From what I can see, there are resources there for the right player if Wenger wants someone but we know he is never going to a) pay more than £20m and b) pay more than £80k per week in wages because if you do, then everyone else will want to get closer to the new ceiling.

I really don't get Usmanov's proposal. Bring in more cash to spend on new players and increase the costbase further by upping the wages of those that you have already.

Pay off the loans? £150m saves you £7.5m a year, but that's it, £150m gone and what good footballers can you buy for £7.5m a year. £150m upfront to pay for 1 extra player's wages and you still have to find the transfer fee.

Then what? Where the revenue upside to this investment?

I have a better idea. If we need short term funding, how about we sell 1 player a year when their value peaks and use that to a) bring in more younger players and b) create a space in the team for those younger players to start increasing their own value. Sell Henry (+£17m), buy Adebayor (-£7m), sell Ade (+£25m) buy someone else (-£12m)... £23m up over a few years.

Walcott, Gibbs, Vela, Ramsey, Wishire... A production line of good players - ready for Barcelona, Madrid and Manchester's millions. When the cashflow is better you might even want to hang on to some of them and play the big boys at their own game but don't overstretch too early and follow Leeds and Newcastle into oblivion.

Arsenal are a very well run club. Look back 15 years... The Highbury Square venture has already given us the Emirates Stadium at no extra cost and the worst that can happen is that's all. As an upside it may provide a lump of cash when the properties are eventually sold. I would leave it to the people in charge today to keep going. From what I can see they know what they are doing.
The fallout from Setanta's collapse 10:33pm on 23 Jun 2009 I can't believe how short people's memories are. ITV Digital was less than ten years ago, and yet history was allowed to repeat itself.

The sooner that the people that matter realise that the sports broadcast industry is a natural monopoly the better (who want to buy a second subscription because a quarter of games are not on the channel you have already?)

How long before we see this crazy cycle of companies trying to (and being encouraged to) copy Sky's customer aquisition strategy again? What do we think will happen then next time?

Hint - look at what has happened twice already...
Weighing up the rivals in F1 row 4:31pm on 19 Jun 2009 There is an almost unanimous view that FOTA are in the right here. There is no doubt that without Mosley, there would be no crisis, but he is not going to vanish into thin air.

Having dug himself into this position, he has to save face or he will ruin FIA F1 and FOTA F1. If he goes down, he will bring down the whole house of cards with him.

We should try and remember that Mosley is a lawyer by profession, so the FIA is not going to take legal action without a great deal of confidence in its contractural position with Ferrari, Red Bull & Toro Rosso.

Of course Ferrari have some great lawyers too as McLaren will testify, but they lost the case they brought in Paris recently. In that case they sought to use their veto to prevent the rule changes but the court ruled that they did not have a valid reason for doing so.

The FIA was then able to take the position that Ferrari are contracturally obliged to enter the FIA F1 championship. It may well be that in spite of what the world thinks, based on the contracts that are in place, Mosley is "right". Ferrari may be blocked from entering a breakway series which would leave FOTA F1 as dead as a dodo.

If Mosley wins in court and can hold Ferrari to F1, he is then in a position to cede ground in the other areas and still emerge the winner. If he gets his cost cap and a few other headline wins, he can gracefully retire in October.

FOTA can still get what they want, even by losing in court - in fact that result may make an amicable resolution much more likely. Like children, this lot need boundaries and then they will behave.

The neat little side effect of all this legal action is that the publication of the final entry list has had to be delayed giving everyone time to calm down a bit.
BT and the iPlayer 12:36pm on 11 Jun 2009 It has been a long time coming, but it was inevitable that BT would get involved in the cash for content debate.

Previous efforts to instigate changes to the business model by Tiscali, Talk Talk et al have largely been ignored and the BBC is clearly winning in the court of public opinion. BT Retail have to step in to avoid the rout.

What has happened is that unlimited* products have been bought by people who think there are no limits to how much they can use. How could customers be so naive?

Sarcasm aside, this market positioning was a huge mistake by ISPs when they launched broadband, and was compounded as they bought market share even as the problem of growing consumption was becoming apparent.

The ISPs biggest problem is that in a flat rate world, when new subscribers dry up, there is no new money to pay for new investment. As with all great commercial failures over the last few years, the ISP business model was a pyramid scheme - new revenues from new users meant you could price them all at marginal cost and win market share. This failed to take into account future investment requirements once subscriber growth stopped.

Then subscriber growth stopped. The money coming in paid the ongoing costs, but there was nothing in the kitty for upgrades.

I should make clear that the money the BBC pays for hosting does not flow to the ISPs. This money ends up paying Akamai and others for content distribution (data centres, distributed servers, power, cooling etc).

The traffic flows to the ISP because the content distribution networks (CDNs) connect to the ISPs in Transit or peering relationships. This is fundamental issue with internet economics as the ISPs started off many years ago paying to get content (Transit) because that won users who valued the faster links that could be achieved by peering.

Now the users are all there, ISPs are still paying to receive the packets their users request (at best it is free to interconnect, but that still leaves the ISP with the transport cost).

Whereas in the past, people would switch ISPs for quality reasons and pay a premium (fixed) price, users now see the content provider as the source of quality and the ISP as necessary evil. Failures are the ISPs fault and success is reflected on the content, device or application provider.

The problem is that for ISPs, higher bandwidths mean new equipment in the exchanges and more fibre to connect those exchanges to the backbone at a high enough speed to cope with the increasing peak aggregated demand. And yet the ISP is not seen as delivering value with these upgrades - it's the content working faster, at higher resolutions and utility.

But make no mistake, these upgrades need to be paid for unless we want our ISPs to end up like our banks. This can go in one of four main ways.

1. Everyone pays more. Regardless of what you user, your bill could go up by x% every year to pay for all the people that are hammering their connection.

2. ISPs introduce meetering. Just like we pay our electricy bill based on KW hours, we may end up with a seemingly random charge that we don't understand on our bills every month (or quarter).

3. ISPs charge the content owners or the CDNs for premium (unthrottled) content pass-through. The idea is that if it is important enough to publish a file that takes up 2Mbps solidly for an hour, then there must be some commercial value in delivering that file (ie the user will be paying you for it directly or indirectly). This value can be shared with those who have to pay for the networks.

The problem with this debate is that it is happening over a service (BBC content) with no commercial value because there is a wideheld belief that such content is a universal right. You might see the position slightly differently if we were talking about ITV Player for example, where the company makes money from advertisers for you watching the service.

4. ISPs can find other ways of recouping costs by using the data they have on you as a customer to deliver targetted adverts to you. If you don't like Phorm, the you need to vote for one of the other options.

So you have a choice: either you pay for the gluttony of others, you learn all about Gigabytes, Megabits per second, relative file sizes and the time you spend online. Or you can pay it as a lump sum (including postage and packing) when you buy the content, or you can be advertised to.

Which will it be? There is no such thing as a free lunch.
Storm clouds gather over F1 5:53pm on 05 Jun 2009 Any breakway series is never going to be ready for 2010. I agree with the commenter who pointed out how ridiculous it is to suggest that Toyota / BMW / Merc / FIAT / Renault would pay the startup costs and I have commented previously on this blog on the near impossibility of getting logistics in place.

So what is going to happen? Mosley is going to divide and rule once again. Williams and now Force India are FIA teams. It would also be the only sensible route for Brawn to go (as long as they can do so without being seen to stab FOTA in the back).

I wonder what Red Bull / Toro Rosso have to gain by sticking with FOTA? Perhaps they need the glitz of the Ferraris to make their marketing investment work but if there are no red cars, I can't see RB/TR joining the FIA group. There's nothing it it for them (in fact maybe they have the most to lose?)

I think, sadly, that Mosley may just be seeing through a self fulfilling prophesy. He thinks that at least one of Toyota / BMW / Renault are going to pull the plug at the end of this year (they may all have to with no results on the track to justify the spend). As a result he is putting in place rules that will push them over the edge and open the way for new entrants to come in their place.

My guess is that the Woking crew will be the last to fall in line with the FIA.

So what about Ferrari? Have they gone too far leading the FOTA revolution to save any face at all by falling into line? Will we really have F1 without them? I hope not, but fear so.

My predictions for 2010 F1 teams is: Williams, Force India, Brawn, McLaren, Toro Rosso (sold by Red Bull to new owners), US F1, Prodrive, Lola, Campos, Superfund, Brabham (who Bernie once had control of) and March (that Max once controlled...)

Note that I have left one team place open for Ferrari to come back once the egg has dried on di Montezemolo's face...
Rebel three seek breakaway support 10:42am on 22 May 2009 There was a similar breakaway threat a few years ago - remember the GPWC...? The problem then and the problem now is that all the half decent circuits (and most of the major broadcasters) have long term exclusive agreements with the commercial rights holder.

There are exceptions: Imola, Silverstone and Indianapolis - but getting from where we are in May 2009 to a whole new championship with TV deals, logistics etc by March 2010 would be a real challenge!

Much more likely would be a move to race in an existing series, perhaps in North America. It would change their model but there is also A1 GP. There are plenty of options that already have the infrastructure in place. The idea that Ferrari, Toyota and Red Bull would set up F1 2.0 is probably missing the point.
F1 battle lines are drawn 2:41pm on 13 May 2009 Great lunchtime reading Andrew. Thanks. And thanks also for comment 8 asking why F1 teams want to spend more money to go slower.

All this money the teams are spending is a brand investment validated by the fact that they can race with and occasionally beat the pinnacle of automotive excellence. Where else do you see a Toyota, a Renault or even a BMW compared with a Ferrari?

In the olden days when Ferrari would threaten a walk out, they were up against mainly privateer teams who wouldn't have minded - for them its about competition and beating whoever is put in front of you. Brawn and Williams at least might stay around, but not many others will.

Not now that a big chunk of the grid is funded by behemouths advertising their mundance product by racing against Ferraris.

It seems that F1 is united behing Ferrari. The drivers and teams know it won't be the same without them. Without Ferrari, there will probably be no F1 in 2010 because of the knock on effects.

As I said in one of my last comments on this blog before the new rules, it was a dead cert that there would be this two tier cat among the pigeons. The deadline to register was also an old trick of Mosleys too.

After the death of his son, there is probably a little less fight in him than there might have been, but he will get his cap. It might not be £40mil, but the teams will agree a bigger cap for one set of rules. That will feel like a victory for the teams...

It seems now to be time for Bernie to play his part in this whole ruse. My guess is he will go to FOTA and say something like "fine, if you want to spend £60mil go ahead, just don't ask me for any more money so you can. I'll fix it with Max".

Mosley gets a feather in his cap, Bernie keeps his money and the teams get to spend lots of money racing Ferraris. Everyone's happy - until the next time.
Man Utd pile on agony for Wenger 10:39am on 06 May 2009 re: Fletcher

A few years ago, there was a clear position: a tackle from behind was a foul. It was meant to protect players from getting mangled by defenders taking the ball and the man at the same time.

Now all of a sudden it seems that as long as you get the faintest of touches on the ball people think you can do what you like.

Fletcher's tackle could have broken Fabregas' leg(s). It also prevented him from reacting to the "movement of the ball" - it would not have taken much of an adjustment for the Arsenal player to pop it in the net. Except that would have been impossible because he had been bundled face first into the turf.

Well done United. They were by far the better team. Slips or no slips, Utd deserved to be at least 3 up from the Old Trafford game.

But let's not get carried away - tackles like that are dangerous and should be punished (ditto Adebayor on Carrick). I might be the only one but I think the ref got the Fletcher decision right.

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