Marussia: a small F1 team with big dreams

Marussia F1 may only have a few seasons under its belt, but its ambitions run high – with a master plan to turn traditional sponsorship on its head. Simon de Burton reports

Marussia F1 driver Max Chilton qualifying in the Indian Grand Prix, Buddh International Circuit, Greater Noida, October 2013
Marussia F1 driver Max Chilton qualifying in the Indian Grand Prix, Buddh International Circuit, Greater Noida, October 2013 | Image: Getty Images

Among the expensive yachts moored up in Monaco’s harbour for this weekend’s Grand Prix there should be one called Mac Brew, a relatively modest 40m number worth around €11m and with accommodation for up to 18 guests. The person using Mac Brew as his “race base” is a short-term tenant rather than an owner, and someone who clearly sees the sense in the well-worn adage that things which “fly, float or fornicate” should be rented, not bought.

Although if the man in question, 47-year-old Andrey Cheglakov, really felt the urge to own Mac Brew, it seems likely that he could afford the upkeep. After all, he hasn’t made the effort to go to Monaco simply to watch the Grand Prix from the back of a boat like lots of other well-heeled punters, but to keep a weather eye on Marussia F1 – the contender in which one of his companies owns a majority stake, thought to be in the region of a not insignificant 93 per cent.

Regular followers of F1 might be aware of the short and somewhat chequered history of the team, which entered the sport in 2010 as Virgin Racing. By the end of the year, it was renamed Marussia Virgin Racing, after Cheglakov negotiated the majority stake in the team, ostensibly as a means of promoting the fledgling Russian supercar maker Marussia Motors – a company in which he invested in 2007, along with Russian television presenter and car enthusiast Nikolai Fomenko and brand strategist Efim Ostrovsky.

Last month, however, it was made known that Marussia Motors was closing its doors with only a small number of cars having been made, at which point it was announced that the F1 team – said to be run as a completely separate entity – was owned by a company called Marussia Communications.

Andrey Cheglakov (left) with Marussia driver Jules Bianchi at the Singapore Grand Prix, September 2013
Andrey Cheglakov (left) with Marussia driver Jules Bianchi at the Singapore Grand Prix, September 2013 | Image: Marussia F1 Team

Such developments notwithstanding, the team has remained relatively stable throughout, save for making the headlines in 2012 when the glamorous Spanish driver María de Villota sustained serious head and face trauma after crashing into a stationary truck during a straight-line-testing session for Marussia at Duxford airfield in Cambridgeshire. Although she appeared to make a good recovery, de Villota died in October last year from injuries thought to have been sustained in the incident. The car was not found to have been at fault.  

Since it was established, Marussia F1 has remained at, or close to, the bottom of the grid and is, relatively speaking, run on a shoestring budget – reportedly less than £70m in 2011, according to The Guardian, considerably less than its nearest rival, Caterham. Despite this, Marussia achieved 10th place in last year’s championship, one ahead of last-placed Caterham. And if it finishes 10th or better this year or next, the team will qualify for a useful $40m or so in Formula One management prize money in 2015, depending on the F1 Group’s earnings this year.

But you don’t need to be terribly good at sums to work out that, on the face of it, running a back-of-the-grid F1 team at a cost of around £1.5m per week seems to make no financial sense at all. Ironically, however, Cheglakov is known for being a decidedly talented mathematician. Born on Christmas Day in 1966, he showed an aptitude for figures early on, and by the age of 19 had already established and sold his first IT company for $1m. By the age of 21, he had created and sold another company for $10m and then, in the 1990s, he brought to the market a video-game console that was bought in vast quantities throughout Russia and won him a state award for science and technology.

He has since continued to build on his fortunes by developing computer systems that deal with everything from railway e-ticketing to call centres and passport identification. Perhaps most lucrative of all, however, is the point-of-sale terminal that Cheglakov devised. It is used extensively in Russian retail outlets – and Cheglakov is believed to earn a small percentage on each transaction.

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The relevance of all this to his foray into Grand Prix racing is that, according to Marussia F1 CEO Andy Webb, Cheglakov’s belief in small-profit-high-turnover business models has brought him to a plan that could very well turn the traditional notion of teams being financed by conventional sponsorship completely on its head. He is also keen to demonstrate that it really is possible to run a team on a budget that is a fraction of the size of the £200m or so spent annually by major players such as Red Bull, Ferrari and Mercedes – although, in the opinion of many F1 pundits, Marussia is simply underfunded.

Webb, a banker and accountant who also runs a business sourcing homes in Mayfair and Knightsbridge for wealthy individuals, met Cheglakov through a property deal in 2009 and, when Cheglakov invested in the F1 team, was invited by him to come on board as CEO. He now runs the operation from the team’s futuristic-looking headquarters in Banbury, Oxfordshire (the former base of the now-defunct sports-car-maker Ascari Cars), with a staff of 198 people – meaning it has one of the smallest payrolls in Formula One.

So what, I ask Webb, is Cheglakov’s master plan for Marussia F1? “After becoming one of the co-investors in Marussia Motors, Andrey wanted to bring the marque to market internationally,” says Webb, “and the ideal way of doing that and giving the name recognition around the world seemed to be through running a Formula One team. But being a serial entrepreneur, he now sees potential for further opportunities.

“Firstly, he wants to demonstrate that it is possible to compete in F1 on a relatively low budget, something that is completely in accordance with what many people involved in the sport think should be happening. However, the 2014 season has already proved to be the most expensive yet in the history of motor racing, because of the need to develop entirely new engines and powertrains in keeping with the major rule changes that saw the 2.4-litre V8s replaced by 1.6-litre V6 turbos with energy-recovery systems.

A Marussia car in the pit-lane at the Indian Grand Prix, Buddh International Circuit, Greater Noida, October 2012
A Marussia car in the pit-lane at the Indian Grand Prix, Buddh International Circuit, Greater Noida, October 2012 | Image: Virendra Singh Gosain/Hindustan Times via Getty Images

“The change has come about partly for environmental reasons, and we can’t ignore those. But what team owners have to ask is, ‘Why do the people running the sport keep on pushing prices up?’ For the top three teams, which earn between $80m and $100m in prize money and have products that get a big sales boost from F1, such as Red Bull’s drinks, Ferrari’s merchandising or cars made by Mercedes-Benz, continuing to be involved clearly makes sense. It is also important from the point of view of race technology filtering down to road-car use. But the fans want variety in racing and that means the continued participation of privateer teams such as Marussia, because they maintain the diversity that makes the sport what it is. Without that, it would just become a money battle between the major manufacturers. Andrey therefore has a five-year plan to create a sustainable mid-grid Formula One team on a budget lower than that of all its current competitors, culminating in a profitable motor-racing enterprise.”

And although that profitability has yet to make itself evident, the team – reported by The Guardian to have made a £49m loss in 2011 – is now claimed by Webb to be “virtually debt-free” and he believes Cheglakov has already benefited substantially from being involved in F1, simply by using Grand Prix weekends to establish and nurture contacts around the world, potentially bringing huge additional revenues to his various businesses.

Any returns achieved to date, however, could be a drop in the ocean compared with what Cheglakov stands to make if his F1 master plan comes to fruition. “Marussia F1 is certainly not just a toy for Andrey,” says Webb. “He is a man who specialises in doing things in large volumes, and when he sees that each F1 race can attract a global television audience of up to 600 million, he inevitably wants to find a way of monetarising those numbers.

“Andrey also believes that the current sponsorship model that is in place, whereby brands simply pay teams or do deals in exchange for being able to display their names on cars, has little future in the present global economy.”

Marussia driver Max Chilton at the Australian Grand Prix, Melbourne, in March
Marussia driver Max Chilton at the Australian Grand Prix, Melbourne, in March | Image: William West/AFP via Getty Images

With that in mind, says Webb, Cheglakov is working on an idea that aims to get as many of those 600 million television viewers as possible actively involved in every F1 race throughout the season. He says that Cheglakov plans to market a Formula One computer game that could be downloaded from the internet for free. The basic package would provide users with a virtual car and driver, with which they could “take part” in live races using their tablet devices – but should they wish to move up the field, they would have to individually purchase information about the condition of the driver, the state of the tyres and engine, the fuel level and so on, in order to decide on the best strategy to enable them to do well in the race.

Webb also talks of the possibility for the people of Russia – or anywhere else – to effectively “own” a Marussia F1 driver by paying a small amount of money for a minute share. Such a feeling of ownership would, he believes, enhance the thrill of watching the race. “Formula One is essentially an exclusive sport – but what people really want is to be given some means of feeling more involved in it, other than through just watching it on television,” he says.

The ideas might seem far-fetched at the moment, but if they prove successful they could make Marussia a real rarity in F1, that is, a team that actually makes money, since the prevalent thinking is to spend whatever it takes to climb the rankings, with the best-case scenario being simply to break even at the end of the season.

It is fair to say, however, that judging by the performance of Marussia to date, the likes of Infiniti Red Bull Racing, Scuderia Ferrari and Mercedes AMG Petronas F1 Team have little to worry about, despite Cheglakov’s intriguing visions for the sport’s future.

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But with Russia now set to stage its first Grand Prix for exactly a century in October, at the Sochi International Street Circuit, there seems little doubt that Marussia is in an unrivalled position to attract investment from more of Cheglakov’s equally wealthy countrymen. Add to that the fiercely competitive President Putin’s desire for Russia to demonstrate its ability to match the rest of the world on all fronts, and Marussia F1 could feasibly be moving up the grid rather faster than its rivals might have ever thought possible.

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