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In the early years of the 20th century, Indian maharajahs would order lavishly equipped cars that kept afloat effete companies like Rolls-Royce. Last month Vijay Mallya’s decision to make a more than $108 million bid for Team Spyker—and use it to create Team India—could help the sports-car arm of the Dutch company to survive. But unlike in the past, it would be the Indians who would have the last laugh.
 Ever since his UB Group overtook Pernod Ricard to become No.2 in the world spirits market by buying Scottish distiller Whyte & Mackay, Mallya has been looking for the right vehicle to take his brands to the world. The bid with Michiel Mol, the team’s director, will put an Indian-backed car on the grid for the first time and create big marketing opportunities for Kingfisher, UB’s flagship brand. “I have been dreaming about owning a Formula One team—I was looking at the right opportunity at the right time,” Mallya, a showman known for his love of fast cars, race-horses and a good party, said.
The opportunity presented itself barely a week after he had sealed the £595 million whisky deal in Glasgow in May. By that time, Mallya was on board his superyacht Indian Empress in Monaco to enjoy the grand prix. It was there that discussions with Mol started as Spyker Cars, the Dutch maker of sports cars, reconsidered its future in the sport. Last week the company reported a €29 million first-half loss and confirmed that the team lost €13 million.
It is hardly surprising that Formula 1 founder Bernie Ecclestone was enthusiastic. He is moving into new markets in Asia and sees an Indian team—ideally with a driver from India—as a route to unlocking the untapped commercial potential in a country where half the 1.1 billion population is under the age of 25.
Mallya said: “This makes business sense because of India. Can you imagine how much the TV ratings are going to go up? Every Indian kid will tune into F1 because they now have ownership in it as a country. Bernie should be very happy that the viewership in India will grow by leaps and bounds.”
The takeover accelerated plans for an Indian Grand Prix (see box) and Mallya says it has already generated huge interest in the subcontinent. “The excitement was so huge that there are people waiting in line now with their cheque book in their hand trying to partner with us,” he told Formula 1’s official website. “I have not heard of anything like that in any other part of the world. And when we announced that the Indian flag would be part of the team colours and logo, there was an explosion of excitement romping through the country.”
Mallya believes the deal will be the catalyst for F1 to tap into a huge new market, one of the world’s largest and fastest-growing economies. “The real excitement with an Indian-owned team will be the 200 million new fans that India will add to the Formula 1 community,” he said. “That’s a big step forward for the sport.”
F1 hopes on track
What’s faster than F1? How about the race for the Indian Grand Prix in 2010? A few days after circuit designer Hermann Tilke went around proposed venues near New Delhi and submitted his report to F1 supremo Bernie Ecclestone, the F-1 management greenlighted two locations in the National Capital Region—one in Greater Noida and the other in Sohna in
Haryana.
Although the Indian Olympic Association is busy with the Commonwealth Games-2010 preparations, it will go full throttle for the big event in 2010.
IOA will be taking the final decision on selecting the final site for the 2010 race. It’s chief Suresh Kalmadi said the F-1 president has conveyed that the management is happy with the sites shown to them, and two drafts of contracts have been handed over by Ecclestone. Tilke is in favour of a street race (as in Monaco), with cars travelling around India Gate and Rajendra Prasad Road. |
Although it is a personal investment, UB will leverage value from Formula One eventually. The Kingfisher brand already adorns the Toyota team under a $5 million deal ending next year.
However, the ultimate motivation must be to promote Kingfisher—the Kingfisher beer that accounts for 60 per cent of the Indian market and Mallya’s two-year-old Kingfisher airline which growing rapidly. UB sells about 2.5 million cases of Kingfisher beer in Europe, mainly in the UK, and aims to double that by the end of 2009 on the back of Scottish and Newcastle’s distribution network. “I am all about building brands and in the context of young India this is a huge value-creation opportunity for me,” said Mallya, who claims that his first word was “car”. “Formula One is very relevant. I have done this absolutely at the right time and I intend to make money from it.”
Mallya added that he is realistic enough not to expect a major improvement in the struggling team’s performance overnight. “Sure, there will be no miracles in 2008—that’s simply not possible—but as we move forward you will see significant progress,” he said.
But he says he would be willing to ramp up the team’s budget if he is convinced it would deliver better results. “The deal will be completed by the end of September,” he said. “In between I will sit down with the team management to come up with a sound budget. “Just off the top of my head, in a very casual way, maybe yes, the budget has to be increased. And if it is justified and the money is spent in the right way, I have no problems in approving a bigger budget for the team.”
 "I am happy that Dr. Mallya is in the process of finalizing the deal to accquire Spyker F1 team. I am sure he would source the engineering from Tenaci because we understand the race car dynamics very well"
—Harish Mehta, Promoter Director
Tenaci Engineering Pvt. Ltd.
A Spyker Pronmoted Automotive Design Center
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And will Indian drivers finally get their dues? India’s two most high-profile drivers are former Jordan racer Narain Karthikeyan and GP2 driver Karun Chandhok, but Mallya said it was too early to say whether either would land a seat. But he left no doubt that he intends to promote home-grown talent in the longer term. “An Indian team with an Indian driver would be the ideal combination,” he said. “In the future I will look very carefully into our karting championship to identify talent that can be developed into potential candidates for the team.”
“I would like to say that it would give me immense pleasure to see an Indian drive an Indian Formula One car, but we have to consult with the team principal and the chief technical officer,” Mallya said, igniting hopes of the Narain
Karthikeyans.
Another issue that has yet to be settled is what the new-look team will be called although Mallya suggested that a name change is likely. “I don’t know if we can keep the name Spyker, as Spyker is a car company,” he said. “One thing is for sure, I want to put the word India into the name of the team, but I have not really spent time on the name so far.”
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