Sauber F1 Team 2015

[turbof1]

Our article on the matter:
http://www.f1technical.net/news/19961

[Phil]

I think there are various factors at play here that are influencing how people (inside and outside the paddock) feel about the whole Sauber / VdG affair.

The way I see it, the main factor influencing this is based on two (three) plausible scenarios:

scenario A)
VdG (or his backers) have not only paid for his role as test-driver in 2014, but also for a 2015 seat. Lets assume 10 million was paid already to ensure his 2015 seat. This makes him essentially a customer who has invested and paid for an asset, namely the seat in one of the two cars and a spot on the grid for the 2015 season.

scenario B)
VdG (or his backers) have invested into Sauber for his role of being a test-driver in 2014. While some money was paid to Sauber accoarding to the contract, the payment for a 2015 seat was not upfront and would only follow after he'd be nominated to drive. Lets also assume in this scenario that the contract or "promise" for the 2015 seat is legit because upfront payment was never discussed or handled in the contract at the beginning of 2014 when it was signed. This essentially means VdG is not a customer per say, as the relationship between him and the team is more employer/employee.

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analysis A)
Scenario A and scenario B are different in the sense that in A.) one party has effectively 'paid' for a service that the other isn't supplying. In this case, there are only two real options: The supplier either supplies what was part of the agreement (that being the seat and a spot on the 2015 grid) or repay what has been paid plus damages + compensation. This basically means the 10 million that was paid as part of the investment for 2015 and damages + compensation is a complicated derrived figure on what is either in the contract (fine for breach of contract) or if not, perhaps a number a civil court may have to decide on.

analysis B)
Scenario B is different, as the "damages" part is smaller. While in this scenario we are still assuming a valid legit contract for a promise on the grid, the 'compensation' only extends to the 'damage' that can be assessed. If nothing is handled in the contract under "fine for breach of contract", one must assume that compensation or damages would be a legal matter and the height of the figure is dependant on odds that VdG would have gotten a different seat elsewhere, the value of not being able to participate in the 2015 F1 world championship and whatever investment was already made in regards to any 2015 participation. The assessed damage in this scenerio IMO is quite limited, as there is a slim chance that VdG might have found a different seat in 2015 if it weren't for Sauber. Many teams don't require the services of a 'pay driver' and those that do, already have their own under contract. The only team that may have been a realistic option is Manor - and arguably, upon Sauber nominating their drivers on November 6th, would have left VdG with enough time to persuit a contract there. The damage assessment is different, because per contract of a 'pay-driver', VdG can't argue that he has already paid for something he did not receive. So, the promised service has not been supplied by either sides (VdG hasn't yet paid for the seat, Sauber didn't supply the seat and vice-versa). Of course there is also the imaterial value one can argue - the fact that VdG felt he was under contract and chose not to persuit different options. This however is only valid to the point of November 6th when Sauber made it clear through nomination of two different drivers that he was going to be left out and that his contract and any promise he thought was going to be fullfilled would not be happening.

Concluding scenario B, it's not much different than ordering something online, but never receiving that product, and as a result, the product itself wasn't charged or billed. The result being again that neither party fullfilled their legal requirement. No service provided, no service paid and vice-versa.

conclusion
If people are assuming scenario A is accurate, then I understand some hostility towards Sauber. To sign multiple contracts and accepting payment is in this case commiting fraud. If this is really the case, the only explaination I can think of that would lead to such a situation is utter desperation in light of financial troubles.

If people are assuming scenario B however, I'm unsure to what degree Sauber needs to honour the agreement. It's technically like the classic scenario that can be applied in every day life: Financially healthy company A hires employee for salary of X that is paid monthly. Through circumstance, company A suffers huge losses and can't meet bills, so needs to re-adjust. As a consequence, they terminate the agreement with its employee, because they no longer are able to pay the agreed salary. Sadly, this happens more often than we think and we feel sorry for the employee in question. However, the same example can happen the other way around too, in which employee doesn't like working for company A and decides to quit.

Of course there is the notion that contracts must be honoured and anything other than that is ethically and morally wrong. In an ideal world maybe. But circumstances can change. For instance, in late 2013 or at the beginning of 2014, Saubers outlook was better. They weren't expecting to finish outside the points in every single race, thus lose millions (there's no precedent that Sauber ever finished outside the points, they've been an established midfield team for years now), so when they signed Sutil for a 2 year contract for both 2014 and 2015, they thought they had the situation handled. Any contract that was signed was, we can assume, in good faith with no malicious intent. Events during the 2014 championship changed that. The car didn't perform, they never finished in the points and Marussia going bust, changed how some suppliers do business, requiring upfront payment for their services. The prospect of finishing inside the top 10 in the WCC highly unlikely, resulting in expected further losses for the team (30 million for 10th?). At that point, you have to wonder to what degree Sauber is still under the moral obligation to honour those contracts (among also Sutils, who is/was bringing in no, or insubstantial money) if they can't realistically fullfill them because they can't meet their payments as a result?


scenario C
There's a third scenario that I've held back for arguments sake but could be just as valid. It's assuming that VdG (or his backers) did make some payments towards 2015. If this is the case, I would think that the amounts of payment is relevant towards the question on how much damages or how binding said contract towards the 2015 seat is.

However, neither scenario A, B or C have any influence on the 'promise to drive in 2015' and if that clause is binding or not. In that sense, technically, even Sutils contract would be binding, since a contract is a contract. The Swiss Arbitration Court has effectively ruled that the contract in VdG case is "legal". We can only speculate on what grounds the Swiss court decided that - did they have enough information to warrant it? Were payments made (scenario A or C?) or did that not have a bearing at all (scenario B?) to the verdict? The fact however remains that that case is still in process, with Sauber having appealed the decision, so when that proceeds, we will probably gain more information. The verdict in Australia is simply enforcing the first verdict by the Swiss court, so isn't adding anything new.


I personally think scenario A is unlikely and scenario B or C is. If there were payments made, I'd be surprised if we hadn't heard about them, since they would surely carry a lot more weight than simply insisting on a seat because there is a clause in a contract that said so. Some research into the decision making at Sauber from November 2014 reveals that both Nasr and Ericsson were most likely chosen over VdG because they offered upfront payment, compared to VdG who along with his backers signed a different agreement in 2014 where circumstances were different. This to me adds weight to the hypothesis that perhaps payments weren't made explicitly for a 2015 seat yet and why VdG - on the grounds that there are limited arguments for [financial] damages and non-existant compensation / depth payment - is suing himself into the seat with refusal to settle on compensation.

[turbof1]

Scenario C is very plausible. Usually a contract + option is valued higher then a just a contract. So while Giedo might technically not have paid for the seat in 2015, he will have paid for having the option there.

[Phil]

Indeed. I think the question on which scenario is accurate to be quite relevant (at least in how the business ethics of Sauber are judged). If it's scenario A (the seat was bought and already paid for), then I can see the headache as Sauber is perhaps unlikely to pay back so forcing the seat is the only viable solution.

Scenario B would mean it is just like any (driver) contract where both parties should be able to exercise the right to withraw from it if circumstances force them to. The question then becomes one of compensation and damages.

Scenario C would be somewhere in between. If the contract can't be upheld, prior payments should be paid back. If they can't be, the question then becomes to what degree is VdG entitled to the seat that was partly paid for. In either case, it seems forcing the seat at Sauber will most likely result in them going bust (charges by Nasr or Ericsson or both), which will result in a no-win situation for VdG (again; ignoring alterior motives for a hostile takeover).

Despite all these relevant questions, I somehow have the feeling that the arbitration court ruling in Switzerland had *nothing* to do with payments, but simply judged on the validy of the contract or the "promise" to drive for the team in 2015. It also raises the question if part of this mess is simply down to a sloppy written contract with loop holes that is now being exploited to the fullest.

[turbof1]

From what I gathered, a court can only rule a financial compensation if any of the parties asks for this. We can assume neither vd Garde nor Sauber requested this, both for their own reasons.

[Jonnycraig]

From what I gathered, a court can only rule a financial compensation if any of the parties asks for this. We can assume neither vd Garde nor Sauber requested this, both for their own reasons.

That is correct.

[naxzt]

According to Eje Elgh (Ericsson's manager) Van der Garde took Ericsson's overalls without asking which one to use. The reason was that he know Ericsson is about the same size as himself. Van der Garde also went to Ericsson's car without being directed to take place there. Apparently all mechanics left the Sauber garage once Van der Garde entered the garage, and once he left they came back to the garage. The question is if they actually made him a seat? Has it been confirmed?

[Jonnycraig]

According to Eje Elgh (Ericsson's manager) Van der Garde took Ericsson's overalls without asking which one to use. The reason was that he know Ericsson is about the same size as himself. Van der Garde also went to Ericsson's car without being directed to take place there. Apparently all mechanics left the Sauber garage once Van der Garde entered the garage, and once he left they came back to the garage. The question is if they actually made him a seat? Has it been confirmed?

Not exactly an unbiased source is it.

[turbof1]

Adam Cooper reported that vd Garde had his seat fitted. He can't do that on his own, so you can assume that Sauber is cooperating to a degree.

[Phillyred]

Here's how we can avoid this in the future- NO MORE PAID DRIVES. I know it's not that simple but.....

[Phil]

From what I gathered, a court can only rule a financial compensation if any of the parties asks for this. We can assume neither vd Garde nor Sauber requested this, both for their own reasons.

If that is the case, then perhaps (legally) the process looks to be as follows:

1.) establish if the contract is valid and legally binding or not (in process)
2.) if contract is established to be still legal, terminate / withdraw from contract
3.) upon termination / withdrawal of the contract, establish compensation + damages

From what I understand, the first step isn't handled by the Australian court, but is solely actively in process (so far) by the arbitration court in Switzerland. There the judge ruled in favour of VdG - but it's not "legally binding" yet based on the appeal Sauber has launched. It is therefore still in process. Before the final verdict there isn't reached, I guess no compensation settlement can commence? Until then, VdG is free to enforce the arbitration ruling as he is doing in foreign courts to secure his seat?

[notsofast]

This is the part I don't understand:

-On February the 6th, Giedo vd Garde's contract was terminated, allegedly due breaches to contract's confidentiality.

If Sauber terminated the contract, how can the court find that it is still a valid contract? Did the court find that the contract was not terminated properly?

[turbof1]

This is the part I don't understand:

-On February the 6th, Giedo vd Garde's contract was terminated, allegedly due breaches to contract's confidentiality.

If Sauber terminated the contract, how can the court find that it is still a valid contract? Did the court find that the contract was not terminated properly?

You are taking that moment in the timeline in isolation, which you can't. The contract was terminated AFTER the court in Geneva ruled that Sauber was in the wrong. The verdict is still valid hence forth.

Also, Sauber claimed this was the reason, but never came with proof of this in court.

[xDama]

Here's how we can avoid this in the future- NO MORE PAID DRIVES. I know it's not that simple but.....

+1

All this drama about a driver who paid for a seat and never ever looked like a potential F1-winner. It's all such a waste of time...

[notsofast]

If the grid were limited to potential F1 winners, we would only need about a dozen cars on the grid. All you need is three billionaires with two cars each, and let them spend as much money as they want.