Notes from the pitstop

IT'S THE FRIDAY BEFORE the 17th round of the 2012 Formula 1 World Championships. Six of the 12 team principals have gathered at the media centre in the Buddh International Circuit (BIC) near New Delhi. Bob Constanduros, who hosts these events, welcomes the team principals one by one. When he reaches the woman in the middle of the back row, he introduces her as “the first lady of Formula 1”. It’s a clever reference and one that Constanduros, who has been to every Grand Prix since 1985, is often using these days. It’s also a reference that Monisha Kaltenborn-Narang, team principal of Sauber F1, is getting accustomed to.

In 62 years of Formula 1 racing, no female has ever headed a team, so she’s used to raising eyebrows. And just a little more so in India—it’s not often that a woman from this country dominates a global multi-billion dollar sport. She’s flooded with requests for interviews and special press appearances, and admits that the Indian Grand Prix is the busiest time of the year for her.

It’s not just her gender that makes Kaltenborn-Narang stand out in the high-testosterone world of F1 racing. It’s also her story—how she moved to Sauber, saw it through its most difficult times, and now heads it. Unlike the sport itself, which is governed by formulae, there are no guiding principles for heading teams. Team principals come from all walks—drivers, engineers, mechanics, managers, lawyers—and have different strengths. The trick is in playing to these strengths. So successful has Kaltenborn-Narang been that word on the tracks is that she’s a strong contender to take over F1 after its legendary impresario Bernie Ecclestone calls it a day.

“It’s her strongest quality,” says Sergio Perez, a former Sauber driver, referring to Kaltenborn-Narang’s considered calm. “That’s what helped her climb the ladder.”

It has served Kaltenborn-Narang well over the years—from her days running the legal team in Liechtenstein-based Fritz Kaiser Group, a wealth management firm that was till 1999 co-owner of the Red Bull Sauber F1 team, as it was called then. At Fritz Kaiser, Kaltenborn-Narang handled the legal and corporate affairs of Sauber F1, and in 2001, joined team Sauber as head of its legal department. Her job: negotiating contracts with drivers, other teams, sponsors, and importantly, the sport’s governing body, the Federation Internationale de l’Automobile (FIA), and its commercial rights holder, the Formula One Management (FOM), all on behalf of team owner Peter Sauber.

Her big moment came in 2009, when she was very visible as Peter Sauber’s consigliere when the team went through a horribly rough patch, with its participation in the 2010 season in serious doubt. From 2005, BMW had owned the majority stake in team Sauber. Four years on, despite the team doing well, BMW decided to exit the world of Formula 1. Reasons given for the sudden departure include the internal politics of Formula 1, racing regulations, high costs, and bad marketing.

Whatever the reasons, team Sauber was up for sale. In September 2009, it seemed a buyer had been found in Qadbak Investments—a Swiss foundation registered in the British Virgin Islands representing West Asian and Europe-based investors. But that deal fell through. By November, BMW had formally pulled out of F1, and announced that it was selling back its stake to Peter Sauber. With its ownership in question, and the new Concorde Agreement (the commercial contract between all the parties involved in Formula 1 racing) still unsigned, Sauber found itself unsure of a place in the starting grid for the upcoming season.

In the weeks of negotiations with the FIA that followed, Kaltenborn-Narang was the driving force, with Peter Sauber taking the backseat. She helped the 66-year-old buy back the team at an affordable price while fronting negotiations with BMW. She also played a central role in ensuring Sauber’s survival. “For me, [the job] was making sure that the team and the name continued,” says Kaltenborn-Narang. “We just had a few hours to take a call on buying back the team, and we went for it. We were looking at the buyback, but we also wanted to keep our licence to race and retain all our people. It was a situation that could have disintegrated Sauber, but instead it kept everyone together and gave them hope and belief about where we were going.”

Even after the legal issues had been sorted out, Sauber looked to Kaltenborn-Narang to help take the team through the transition from being a manufacturer’s team with all its attendant benefits, to being independently run (without the clout of a manufacturer such as BMW). Without the backing of a large manufacturer, teams—especially those lower in the rankings—find it difficult to get enough funding to sustain operations.

Kaltenborn-Narang helped find stable sponsors, and struck several new sponsorship deals. Free of business anxieties, the team has gone up the charts—from an eighth-placed finish out of the 12 teams during the season when BMW exited, to sixth this season. Because it is privately held, the financials of the team are not in the public domain, but word on the inside track is that it’s in good shape.

“She knows business administration and law very well and knows how to manage the politics [F1 is intensely political, given its high profile and the huge amount of money involved]. She will understand its sporting side too, with the people around her,” says Stefano Domenicali, the team principal of Scuderia Ferrari, with whom Sauber recently signed an engine contract.
Damon Hill, the 1996 F1 world champion, says being a team principal is not just about understanding the sport. “It’s about design, manufacturing, planning, logistics, and managing a lot of money in the most efficient way.”

That’s pretty much what Peter Sauber saw in Kaltenborn-Narang; after the BMW deal, he made her CEO in 2010 (he was then team principal). By May last year, he had decided to step down, transferring a third of the ownership of the team to her. It was not just a reward: as owner-manager, her fortunes would be tied closely with the team. A couple of weeks before the Indian Grand Prix, he named her team principal. The job of team principal for an F1 team doesn’t call for any specific qualifications. Kaltenborn-Narang is a lawyer, Cyril Abiteboul of Caterham F1 was a business development manager, while Martin Whitmarsh of McLaren Racing is an engineer.

It’s no surprise that a lawyer should do well in Formula 1. The sport is a labyrinth of rules. The word ‘Formula’ itself is a reference to the set of norms that all cars must adhere to; for instance, the minimum weight for a race car is 640 kg, the engine capacity is capped at 2,400 cc, and the engine speed itself must not cross 18,000 rpm.

Even as a business, Formula 1 is dictated by negotiations and minutiae in contracts. But, as in any business, there are people who scrutinise all regulations—mechanical, legal, contractual—to figure out if there are any loopholes that will give their team an advantage. One such loophole was regarding diffusers (located at the back of the car between the rear wheels), which is one of the vital single parts that determines how much downforce (the force which keeps the car on the track at high speeds) is created. The guidelines for designing diffusers were ambiguous (the rules only stated that the height of the diffuser had to be limited to 175 mm above the floor of the car with no bodywork above it) and the engineers and aerodynamicists at teams such as Brawn GP, Toyota, and Williams were quick to exploit them. They tweaked the design by introducing a new structure into the diffuser design, thereby resulting in a 5% boost in downforce. Little wonder that Brawn clinched the constructer’s championships (awarded to the top-ranked team at the end of the season) in 2009. (Brawn’s interpretation was banned for the following seasons.)

So, while it is up to the engineers to design and develop a car, it’s the lawyers who pore over the regulations and come up with the right arguments to the FIA; any deviation from the regulations will have to be approved by the FIA, and these approvals often depend on how a request is phrased. “It’s important that I listen to the technical experts because this is not an area I’m used to,” says Kaltenborn-Narang, who admits that she is still learning the ropes.

She is also careful that the team doesn’t over-spend in its effort to get results. Kaltenborn-Narang points to the improved track position and claims that this is a result of balancing performance with efficient spending.

“If you look at a normal team [Ferrari, McLaren, Mercedes, or Red Bull aside], it comprises around 500 people with a turnover of $100 million-plus (Rs 550 crore-plus). So, you govern a Formula 1 team just like any other SME: looking at new ways to generate and invest money,” says Caterham F1’s Cyril Abiteboul.

It’s a Catch-22 situation in the F1 world: The larger the budget, the better a team can prepare to compete for a podium finish—but the size of sponsorships depend on the number of successes. A typical budget of a large team (Ferrari, McLaren, Red Bull, Mercedes) is between €180 million (Rs 1,306.4 crore) and €200 million. A team such as Ferrari typically has around 20 sponsors. Compared with that, Sauber’s budget of €40 million to €70 million seems minuscule. And this is from a larger base of 29 sponsors.

To ensure some parity in the sport, Kaltenborn-Narang has been calling for a cap on spending—including on drivers’ salaries and the fee paid by the teams to the F1 authorities. Smaller teams such as Caterham are clearly aligned with her views. Abiteboul says: “Formula 1 is full of people who are able to pick up the small details but forget the big picture. I think she has the ability to see not just her own interest but also the greater interest of Formula 1.”

At the same time, Kaltenborn-Narang knows that team Sauber will only benefit from better infrastructure, which will come with better funding. That’s why she’s investing strategically. The TeleMex sponsorship she negotiated in 2010 will ensure stable, long-term involvement. TeleMex, a Mexico-based telecom giant, is owned by Carlos Slim, whose net worth is estimated to be $69 billion.

TeleMex had supported Mexican driver Sergio Perez during his early days in the junior formula. Kaltenborn-Narang’s decision to hire him in 2010 proved wise; Perez has consistently scored points in the driver’s rankings—and his long-term association with TeleMex has helped Sauber. Even when Perez switches to rival team McLaren next season, TeleMex will continue to back Sauber.

Also, another Mexican, Esteban Gutiérrez, has taken over from Perez. With Austin, Texas, the host for the U.S. GP, close to the Mexican border, Sauber’s connections could be crucial in establishing the sport in that part of the world. This year, as many as 40,000 of the 120,000 who turned up to watch the U.S. GP were Mexican, supporting Perez’s Sauber.

Kaltenborn-Narang’s willingness to think long term, experiment, and work on out-of-the-box ideas in growing the team and its footprint has also resulted in some new partnerships that aren’t seen in F1. For instance, Sauber has tied up with London’s Chelsea Football Club; no money exchanged hands, but the club’s crest is on the Sauber cars and the Sauber insignia flickers on the advertising hoardings during Chelsea’s English Premier League matches. But beyond sharing advertising space, the idea is to tap into the overlapping global fan base through tools such as social media.

As one of FIA’s Women in Motorsport Ambassadors, she has the added responsibility of ensuring the “creation of a sports culture which facilitates and values the full participation of women in all aspects of the sport”—something that is obviously close to her heart. “It is not about what a woman can do. There are enough women out there with education, confidence, and competence. But it is about that thinking that you need to give somebody that chance,” she adds.