It had been whispered in the Formula 1 paddock for at least 18 months that Ferrari team principal Maurizio Arrivabene would sooner or later be relieved of his duties, possibly during 2019.RaceFans described why Arrivabene’s days appeared to be numbered.
“The word is that ‘Marlboro Man’ – the self-confessed tifoso headed the tobacco brand’s marketing division before being recruited by Marchionne, a Philip Morris board member – will retire within two years,” we wrote, adding that Mattia Binotto would be appointed team principal, retaining overall responsibility for matters technical.
What no one could foresee, of course, was the tragic and unforeseen loss of Marchionne in July last year. But the subsequent arrival of Louis C Camilleri – a former long-time colleague of Arrivabene’s at Marlboro owner Philip Morris – did not grant Arrivabene a long-term reprieve. This is likely because the Maltese’s interim CEO position is under threat, if our high-placed Italian sources, who believe Camilleri is unlikely to survive, are correct.
It has been widely reported that Arrivabene’s departure was simply part of Marchionne’s master plan, albeit now executed by John Elkann, the chairman Ferrari/FCA’s owner Exor, with a total asset base of $24bn. In much the same way, Charles Leclerc’s arrival in place of Kimi Räikkönen and the elevation of Binotto formed part of the uncompromising Italo-Canadian’s grand strategy for Maranello.
Some have also linked Arrivabene’s downfall to his oft-gruff manner and unfriendliness towards the media, seemingly oblivious to the fact that Marchionne encouraged, indeed dictated, such a style. After all had there been issues with Arrivabene’s modus operandi then Marchionne, a long-time Philip Morris board member who had known the Italian for two decades, would surely not have appointed him, or demanded change.
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Arrivabene’s departure, albeit within the timeframe envisaged by Marchionne, remains highly significant for it leaves Ferrari without a heavyweight to fight its corner in the upcoming negotiations with Liberty over F1’s post-2020 landscape. This is crucial for the Scuderia, as it stands to lose the most from the planned introduction of a budget cap, equitable distribution of revenues and a participatory regulatory structure which does not include Ferrari holding veto powers.
Without Arrivabene, who will go in to bat for Ferrari? Camilleri faces major issues on the road car side: Share prices have fallen from heights of $140 prior to Marchionne’s passing to around $100; sales downturns are forecast in China, its second-largest market; and the brand has no major model introductions slated for 2019 in segments where it faces increased competition from Lamborghini and McLaren.
Therefore Camilleri is unlikely to devote much time to F1 politics. Elkann has a full plate, what with FCA’s restructure and Exor, while Binotto will surely spend the next six months – the crucial Liberty negotiating window – learning the team principal role. The Swiss is, in any event, a technician, not lawyer or accountant as was Marchionne.
Arrivabene’s exit points to fall-guy politics at Ferrari following their downturn in the final third of last season, rather than falling in line with the orderly, structured retirement planned for him by Marchionne. The short-term winner, once all the machinations have played out, is Liberty. The longer-term implications for Ferrari and F1 remain to be seen.
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38 comments on “Why Arrivabene’s departure from Ferrari plays into Liberty’s hands”
8th January 2019, 12:11
Ha ha, that caption of “Camilleri has pressing priorities outside F1” beneath him with Kimi’s wife had me chuckling!
8th January 2019, 21:53
Mee too! ;->
9th January 2019, 7:53
@phylyp Exactly! That must have been done on purpose! Now I understand why they kept Kimi!
8th January 2019, 12:52
Interesting perspective. Honestly, if Liberty can exercise greater influence on the budget cap and equitable distribution of wealth without Arrivebene, then this latest development is great for the sport. I still think Liberty will have their hands full with Mercedes and Red Bull, but a slightly less focused Ferrari is definitely some good news for them.
8th January 2019, 13:25
+1 on this, although Mercedes and Red Bull have generally been more open to Liberty suggestions and tended to be more willing to work with them than Ferrari. Definitely something good for the sport, although i personally really liked Arrivabene
8th January 2019, 12:55
So forget Ferrari for the 2019 season. So many changes in such a short time for an elite professional team isn’t going to work. Looks like panic.
8th January 2019, 13:05
I thought that when James Allison left the team, but it led to two seasons of them being as competitive as they’ve been since 2010/2011.. so I guess we’ll see.
Ivan B (@njoydesign)
9th January 2019, 7:32
the guy who gave us first a competitive engine and then a competitive chassis is now going to lead the team. I don’t think the future is as bleak as you paint it.
9th January 2019, 19:08
Maybe not yet. By now design work is in the final stages and there is no reason to believe the tribulations of the bosses have had or will have a negative impact on design quality. The goods news is that bosses are no longer fighting. In theory everybody wins.
8th January 2019, 13:03
Perhaps Ferrari are not happy with Liberty’s visions for the future of F1 and this is the first step toward Ferrari leaving F1 and focusing on making and selling cars.
8th January 2019, 13:08
I don’t think Ferrari are unhappy with Liberty’s vision as such, I think they’re just tired of losing so consistently.
8th January 2019, 14:15
Anyone who thinks F will quit F1 has been knocking back too much Tignanello. They get a virtually ‘free’ entry and more free marketing than they could wish for. The idea that they wil go GT racing for the same PR instead is comical
8th January 2019, 22:29
They are a publicly traded company so if the board says stop they stop. If analysts see no reason for the share price to rise and/or sales decline, don’t be surprised if the board members put share holder dividends above expensive racing that has little if any benefit to their primary business which is selling cars.
8th January 2019, 23:49
100%, and I think its a concept a lot of people seriously underestimate. Without the circuits Formula 1 is nothing, without the teams Formula 1 is nothing, yet a 40% of the dosh is going to a listed media company in the name of maximising shareholder returns. All of this due to the obsession with the letter “F” and the number “1”.
I see Formula 1 at present like boxing in the 90s. A tarnished name riddled with self interest to the point it compromised the integrity of the sport. And then UFC came along….
People losing interest in Formula 1 and people losing interest in motorsport are two separate conversations. The best thing that could happen to motorsport is for a UFC solution to come along.
Does this site accept guest articles?
8th January 2019, 13:30
Unfortunate for Arrivabene to end his tenure with Ferrari in such a manner.
Sergio Marchionne’s untimely passing likely left him with more work than he was ever meant/qualified to do under the role; practically making him unqualified overnight.
If I remember correctly, the main reason he replaced Marco Mattiacci was because Marchionne deemed his knowledge of F1 politics as vital: (a) to further maximize the marque’s commercial position in the sport (and bolster the parent company’s IPO), and (b) to restore the F1 team’s competitiveness under the new hybrid regs effected in 2014; namely to lobby the FIA to relax rules on PU homologation (eventually altogether scrapped up in 2017) — something they were successful at doing almost right away (hence Ferrari’s upturn in performance in 2015, PU-wise).
His main purpose really was to help Marchionne navagate F1’s political waters (since the late Italian-Canadian was also new to the game at the time, having usurped veteran Luca di Montezemolo). On all the management/technical reshuffles happening in the team from 2015-2017, I got the impression they had more to do with Marchionne’s decision making rather than Arrivabene’s. So effectively, when he was still alive, Sergio was in fact the team principal of Ferrari with Arrivabene acting as his surrogate for the day-to-day running.
I don’t doubt that Mattia Binotto’s success since being appointed as technical director, eventually made his ascension to team principal inveitable. It just probably wasn’t supposed to happen this soon and/or in this way.
8th January 2019, 14:26
Good points in that comment @rafael-o. Arrivabene was clearly a man who knew the backrooms of F1 for years, and was well versed in both the politicing and the revenues of things.
It will be interesing to see what is ahead of Ferrari with Binotto having a more technical, and probably more “internal” focus and no clear “big boss” with a prominent role watching too closely, who knows maybe it helps the team focus on the tracks too :-)
Phil Norman (@phil-f1-21)
8th January 2019, 14:48
An interesting article. None of this gives the impression that Ferrari are redoubling their efforts to make F1 success their main goal and if anything, the oppositte. It does seem like quite a strange time to make this decision in view of the ongoing negotiations re post 2020 so maybe this is not their main focus.That would be quite a surprise.
However things are often not what they first seem. It could be that these changes improve their performance and Binotto turns out to be a more effective political operator than his predecessor. We shall see.
8th January 2019, 17:54
I don’t have illusions about this, I pretty much believe that Ferrari has already a plan to keep their benefits for 2021, I think it’s a bit naive to believe the negotiations will be mishandled by Ferrari. This is a shark pool, there’s none that will be given lightly. Every million counts in this business. I expect them to be fierce as ever, they won’t be distracted.
Stephen Crowsen (@drycrust)
8th January 2019, 20:21
I see a relaxing of the rules regarding customer parts as being essential to Liberty’s plans for the future F1. I’m not sure exactly how that will play out for teams like Ferrari, but I think Haas show their exploitation of the customer parts rules works, and obviously there is a benefit to Ferrari as well. Haas’s arguable 5th place in the Constructors Championship isn’t an accident, they achieved the second best performance gain for the 2017-2018 season comparison, being beaten only by Sauber. Haas did this by relying upon Ferrari and Dallara for products and services they don’t have the skills to make or do themselves. This gives Ferrari a source of income for their power unit manufacturing and aero-design units outside of their own racing team. They get money from Sauber too, so Ferrari are making money from other teams for these products and services. A budget cap would restrict Ferrari’s ability to make and sell those services, but maybe they can reduce the effect of the budget cap by making those portions of the team into independent companies, then selling services to their own and other teams.
Haas had a budget of around $150M. In the Constructors Championship they beat Williams (budget $150M), Toro Rosso ($150M), Sauber ($135M), arguably beat RP-Force India (arguably $120M), and McLaren ($220M), and finished not very far behind Renault ($190M). All these other teams used the traditional F1 “build it yourself” approach, yet were beaten or just beat Haas who doesn’t use the traditional F1 approach.
So while having the traditional F1 approach is good for some teams, it isn’t for others. The trick then is for teams that are good at something to try to keep that operating. On the other hand, for those operations that are below average at some of the essential manufacturing, as Williams and McLaren are finding, getting chassis and aero-dynamic work done outside the team could be a cheaper option that gets them the on track performance they want. This not only gives them more money to spend elsewhere, but it makes that team more competitive, which is good for F1. I see this as being the important point about customer parts and services: F1 can benefit from using them.
So while a budget cap will affect Ferrari, it could be they can spin off some portions of their team as independent subsidiaries to make money for them.
8th January 2019, 20:54
@drycrust, with regards to aerodynamic development, there has already been a tendency for the teams to subcontract part of that work out to third parties over the past few years.
The majority of the teams in the field will be spending at least some time in the Toyota Motorsport Group wind tunnel over the season. Although it is many years now since Toyota last competed in F1, they’ve kept investing in those facilities for their WEC project and have a fairly steady stream of customers from a wide chunk of the motorsport world using their wind tunnel, since it is widely held to still be one of the best in the motorsport sector.
Even several major teams have made use of the TMG wind tunnel – Ferrari, for example, have confirmed that they have used the TMG wind tunnel in the past. Whilst Force India have been looking at investing in their own wind tunnel, they have traditionally done most of their wind tunnel testing at the TMG facility – it’s been one factor that has helped them keep down their costs, although it does come with limitations in turn on when they can test and how frequently.
Stephen Crowsen (@drycrust)
8th January 2019, 21:33
Thanks for that information. It definitely sounds encouraging for the future of F1.
10th January 2019, 2:30
Hi Stephen – I’m not sure how far back you’re going with your definition of “traditional approach” but go back, say, 30-40 years and it could be said the Haas approach is acceptably ‘traditional’… Maybe…
8th January 2019, 20:37
Good article. Now, when it paints a grim picture for fca, it should also note how well its Jeep brand is doing in the USA, ram is also doing pretty decently so bear that in mind
8th January 2019, 22:08
I’m not sure Marchionne knew Arrivabene just because the former was on PMI’s board. The latter was certainly not and it’s not known if SM knew what MA has done in the 25 years before joining the Scuderia. SM never worked for the car industry before joining FIAT. I’m also not sure if MA has ever had some sort of negotiating power with Liberty. It’s Ferrari’s board that decides, not the racing team’s boss.
Dieter Rencken (@dieterrencken)
9th January 2019, 15:16
Actually, Maurizio was on the PMI board – so unless they went out of their respective ways to avoid other, I’m sure they knew each other. This is what Marchionne said after he appointed Arrivabene to the job:
“We decided to appoint Maurizio Arrivabene because, at this historic moment in time for the Scuderia and for Formula 1, we need a person with a thorough understanding not just of Ferrari but also of the governance mechanisms and requirements of the sport.
“Maurizio has a unique wealth of knowledge: he has been extremely close to the Scuderia for years and, as a member of the F1 Commission, is also keenly aware of the challenges we are facing. He has been a constant source of innovative ideas focused on revitalisation of Formula 1.
“His managerial experience on a highly complex and closely regulated market is also of great importance, and will help him manage and motivate the team.”
I doubt he would have said that about someone he didn’t know…
9th January 2019, 19:15
Thanks, Dieter, much appreciated. What about the negotiation with Liberty? Is it really the TP who who’s in charge? Or is it the president and his board?
Dieter Rencken (@dieterrencken)
9th January 2019, 21:48
It is up to the team, company, owner or whoever has the ultimate authority to decide. Bernie would negotiate (mainly) with TPs, who would talk to whomever they reported to, if anyone.
The crucial point is that TPs understand the business better than corporate lawyers of accountants who may watch a race once or twice a year.
Lawyers can put the words into legal speak – but are hardly qualified to discuss the implications of whatever is in the table. Talk to them about MGU-H, DRS, listed parts, and their eyes glaze over.
The last (2010-12) Concorde was primarily negotiated on behalf of the teams by John Howett, Toyota TP. He then referred the final agreement to FOTAs lawyers for legal speak.
8th January 2019, 22:18
Is Luca available for the role of Liberty negotiator?
8th January 2019, 22:33
I had thought that when the time comes for serious negotiating the big team owners would send in their professionals (lawyers, accountants etc) and not leave it up to their Team Principals to agree and sign off on deals.
Does F1 have regulations buried somewhere that only allow for TP’s to be part of the meetings when trying to iron out new agreements?
9th January 2019, 10:25
I don’t know the answer for sure, but I am sure the lawyers and accountants would play a very large part in these negotiations where TP would have a lot to say at the board table but owners/shareholders signing off on it.
I am not sure if it was mentioned but if this seems to be a weaker negotiating power from Ferrari (if that is correct) could it means they lose their voting veto?
9th January 2019, 16:14
Ferrari will lose their veto anyway, no matter what and probably some of that historic money. Team principals at Ferrari look like they’re just muppets. They have to act and do what is told from above.
8th January 2019, 22:57
Mr. Binotto may yet surprise us all and become like the mighty lion now that the spotlight is upon him.
9th January 2019, 0:59
I hope Liberty is smart enough to understand their investment is worthless without Ferrari. The sooner those two parties come to an agreement, the better Formula 1 will be. Liberty’s path to profit is to have Ferrari winning championships again.
9th January 2019, 5:04
Great balanced article. Other reporters are harping on and on about Arrivabene’s attitude towards media and somehow that is the reason why he got fired.
I remember reading somewhere that Camilleri, Arrivabene, Raikkonen were all close friends (please correct me if required) and Marchionne’s tragic passing away had strengthened their position. On the other hand, 2 of the 3 are gone and 3rd one also seems to be in danger.
In the end, things are happening as per Marchionne’s wish – Leclerc and Binotto for Raikkonen and Arrivabene.
Who is it that is carrying out Marchionne’s wishes from the grave?
9th January 2019, 8:26
John Elkann, it says so in the article.
9th January 2019, 13:26
Hmm, just read John Elkann’s email / semi-obituary written to FCA employees when Marchionne fell ill, there is genuine respect, admiration he has for Marchionne.
Reading that, it is clear that he would take Marchionne’s wishes very seriously and he Elkann obviously has the power to implement them.
10th January 2019, 7:52
F needs a politic man, Marko and Lauda likewise for FIA rooms, as the job is not Binotto skill. G.Berger could be a good choice.
11th January 2019, 12:58
Some reporters’ arguing Camilleri could be replaced with.. Domenicali.
If real will be a shocking comeback.
Comments are closed.