by Bower, Tom
The following morning, just before the Grand Prix, Lowdon took Tai to Lionheart, a large yacht moored in Monaco’s bay owned by Philip Green, the billionaire clothing retailer. He wanted a quiet conversation to secure an agreement. Tai, Lowdon realised, was ‘hotter than ever’. Enraptured by playing among the rich in Monaco’s sunlight, Branson’s envoy wanted more of the same. Lowdon played on the euphoria. To keep Branson involved, he maintained the fiction that Mosley’s $42 million cap would be implemented in the new season. ‘Richard won’t win next year,’ said Lowdon, ‘but we’ll be the challenger. That’s Virgin – the challenger brand.’ If Branson signed the deal, Tai was promised again, he would be Virgin’s team manager and receive shares in the company. Tai smiled and returned to shore.
At nightfall, after Brawn had won his fifth victory, Branson landed in Marrakech. In his last conversation with Ecclestone, he had been encouraged to fund a Virgin team and start on the grid at Melbourne in 2010. The negative voice was that of Gordon McCallum, the chief executive in charge of Virgin’s commercial investments. ‘This isn’t going to work,’ he repeated. But, gripped by Formula One’s marketing power and the parties, Branson ignored the advice and succumbed to Lowdon’s assurances that success was possible without spending $80 million. Neither Branson nor Tai seemed to have questioned whether Ferrari intended to design their cars by computer rather than in a wind tunnel.
Lowdon spent the evening drinking in Monaco, waiting for Tai to telephone. Eventually Tai called. ‘Richard really likes it,’ he said. ‘We’re on.’
‘Alex has been brilliant to persuade Richard to do it,’ Wirth sighed.
The sting was Branson’s refusal to pay any money. He offered only the brand. The attraction, Tai explained, was that the Virgin wrapper would encourage other corporations to pledge real money as co-sponsors, and Tai would deliver sponsors from Virgin’s 300 companies. With his dream of competing at next year’s Monaco Grand Prix in jeopardy, Lowdon accepted the terms. His vision depended on securing Virgin’s name. Wirth, he knew, could not solve the technical problems with a computer rather than a wind tunnel, but that was irrelevant compared to the glory of a guaranteed place on the grid. Tai’s personal commitment was the purchase of shares worth about £4,000. Branson himself believed there was nothing to lose.
‘They’ve certainly got me addicted,’ he said after the next race in Turkey – Button’s sixth victory. ‘We got in when it was very cheap and it’s been great for us with global coverage, but I suspect next year the price will be astronomical and we may have to look somewhere else with a smaller team. We at Virgin have most likely got the mileage we needed from it. We’ll have had a fantastic year with them, so it’d be a good time to sit down and have a word about upping my interest.’
Three days later, Lowdon’s application was submitted to Mosley. Virgin Racing was competing against other aspiring newcomers for three places on the grid. At the hearing, the FIA committee was sceptical that Virgin would want to be associated with losers, but Tai offered an Oscar-winning performance in response. ‘We don’t want to piggy-back on Brawn,’ said the team’s director. ‘Virgin likes taking risks and being the underdog.’
‘You were brilliant,’ Wirth told Tai, enthralled by the pilot’s eloquence. ‘You’ve got us on to the grid.’
‘With Branson’s involvement,’ he later said, ‘we stood half a chance to be successful.’
‘Super,’ said Ecclestone, delighted that another billionaire had joined the club. He assumed that Branson and the Virgin Group would invest about $80 million and raise another $100 million from sponsors.
Alex Tai was appointed director of Virgin Racing. ‘We’re the new car on the block,’ he told Reuters. ‘Hopefully we’ll be here for sixty years to come and making money during that time and not pouring money into it. It’s possible to have a Formula One team that actually makes money.’
In late June, Mosley was forced to resign, and the financial cap was buried. Lowdon and Wirth were now faced with what they described as a ‘nightmare’. Instead of telling Tai that their financial plan was wrecked, when Lowdon arrived at the British Grand Prix at Silverstone in July he mentioned his hope of getting the rules adjusted without Mosley. Tai wanted to believe that fiction, as did Darryl Eales and his deputy, Carl Wormald. Both had arrived in Silverstone to finalise LDC’s investment. The party atmosphere pulped the bankers’ commercial scepticism, and both accepted the assurances from Tai and Branson that Virgin companies would be sponsoring the team. Branson, Eales noted, spoke warmly about Tai’s close relationships with Virgin’s directors. There was sufficient money, everyone believed, for Virgin Racing. The payroll was increased from five to seventy employees.
By September, the truth was unavoidable. Designing and testing the car by computer rather than in a wind tunnel was technically impossible. ‘This is a crisis meeting,’ Wirth told Tai. ‘We’re exposed to failure. We’re going to be bloody slow.’ If Tai was confused, Wirth was forthright. ‘It’s not too late to change anything, but it’ll only get better if you get some money.’ The bankers were not told the bad news by Tai. Eales and Wormald only recall being told that everything was going to plan. To bridge the gap, Lowdon relied on Branson’s assurance that Virgin companies would sponsor the team. Tai repeated his pledge: ‘I’ve got a pipeline of opportunities I’m working on.’
‘The Virgin Group have the skills to get the jigsaw together in the right order,’ Lowdon reassured Wirth.
Many potential sponsors did listen to Tai’s pitch, but none committed themselves to what they considered was an inevitable loser.
‘There’s been a huge search for money,’ Wirth reported, ‘but we’ve got none.’ He was paying suppliers out of his own pocket, hoping that Virgin would at least lend $3 million. Tai refused: ‘I’ve got a pipeline of opportunities but it’s just taking longer than I hoped to convert.’
‘We’ll be at the back from the outset,’ Wirth told Tai. ‘You’re fucked. You’ll be there for ever.’
‘We’ll be racing with one hand tied behind our back and hopping on one leg,’ Lowdon warned Tai. With ‘Virgin’ emblazoned on the car, he imagined that Branson would spend some money to protect his brand.
On the eve of the season’s final race in Abu Dhabi, Branson jetted in to celebrate Brawn’s triumph in the 2009 championship, host a party and enjoy the last benefits of the publicity. Formula One sponsorship normally cost about £125 million. Branson had paid just £6 million. Among the visitors to his hotel suite was Darryl Eales. LDC was about to invest another £6 million in Virgin Racing, and Eales wanted to test Branson’s commitment. To his relief, Branson was reassuring.
‘I’m in,’ said Branson.
‘We need more money, and I wondered if you would mind if we found another investor?’ asked Eales.
‘I’m flexible,’ replied Branson. ‘Get someone else if you can.’
‘And can you get Virgin companies to sponsor the team?’ asked Eales.
Branson became coy. Stutteringly, he explained that while he personally would want Virgin companies to sponsor the team, he was having difficulty persuading members of his board. In particular, Stephen Murphy, said Branson, was proving to be an obstacle. In spite of Branson’s mumbles, discomfiting body language and failure to look him in the eye, Eales accepted Branson’s explanation without considering that, as the sole proprietor, Branson could do what he liked. With hindsight, Eales regretted falling for a Hollywood performance.
The formal unveiling of Virgin Racing was promoted by the FIA as a feature of the 2010 season, and Virgin’s publicists became unusually motivated. An all-night rock ’n’ roll party in Notting Hill Gate, hosted by Branson, was arranged for 15 December. The theme was ‘Virgin the Challenger’, and everyone wore leather bomber jackets adorned with the Virgin logo. As the champagne sprayed over the guests, Lowdon momentarily dreamt that Virgin’s billions would come to the rescue. Wirth was more realistic. Spotting that the alcohol, food and even the jackets were al
l provided free by sponsors, the engineer looked at Branson. ‘He’s not tight,’ he realised. ‘Just poor.’
In public, the story was different. ‘Richard Branson’, John Booth, the joint manager of the racing team, told journalists on the eve of presenting Virgin’s car, ‘will bring credibility to Formula One. To have somebody like Sir Richard and Virgin on board is a dream come true for us. He’s a global media figure and one of the most recognised faces on the planet. Sponsors want to be with him, and he brings a real buzz to the whole operation.’ Converted to Branson’s credo, Booth exaggerated Virgin Racing’s prospects, predicting that as the most advanced of the new teams, it was certain to have success in the opening race of the new season in Bahrain. ‘It’s great to have someone whose name is on the team, who is interested and passionate about it,’ agreed Wirth.
Privately, Branson understood the problem. Underdogs did not win motor races. He grappled for excuses. Formula One, he complained, should ‘reduce its embarrassing costs. You don’t need to spend hundreds of millions to have fun.’ Virgin, he promised, would ‘make Formula One sexier’. Without spending the same as Ferrari, he pledged to make the sport ‘even more of a sexy beast. The Virgin team will prove that you can have a really good racing team, running very fast, within a very tight budget.’ Then he slipped up: ‘There is no need to do massively expensive wind-tunnel testing or all the other things that they do to get an extra second or two.’ He had revealed his ignorance of the sport.
Formula One races are decided by fractions of a second. Each season, every leading team employs around fifty PhD graduates and spends upwards of $300 million to shave a fraction of a second off their best times. Virgin Racing was ignoring the sport’s fundamentals, but Branson demanded to be heard as an equal. He wanted Virgin Racing to get the same publicity as Ferrari, for no money. As the master of so many arts, he persuaded himself that teams who had been racing for forty years would welcome, as he put it, ‘Virgin as a valuable marketing tool for our partners.’
Darryl Eales spotted the looming calamity. Ever since Mosley’s removal, his disillusion had grown. ‘It’s become a tough deal,’ he said, admitting his mistake. Lloyds had agreed to increase its loan to Virgin Racing from £12 million to £30 million. Eales’s attempt to persuade Branson that Virgin should contribute some money had left him with doubts. In one-to-one conversations, he noted, Branson was ‘enigmatic and not so sure-footed’. Eales’s faith in Alex Tai’s assurance of the Virgin Group’s support had also been mistaken. Other than a solitary advertisement in Australia, no Virgin company would agree to sponsor any race. Outsiders could not imagine the stubborn rivalry among Virgin’s executives. Eales was unaware of a recent admission uttered by David Baxby, a senior Virgin executive based in Geneva: ‘We don’t have a grand vision joined up where everything has to work at the group level.’ Every Virgin company, Baxby explained, was expected to swim or sink on its own by making itself ‘relevant’.
‘Tai is a good self-salesman,’ Eales decided, ‘but over-optimistic. He’s not a hard-nosed racing man. We need a professional CEO. He’s inappropriate.’ Before delivering the news, he consulted Gordon McCallum over a cup of tea. ‘You must do what’s right for the business,’ said Branson’s chief executive.
In a brief, emotional meeting, Tai was removed and replaced by John Booth. ‘We now need to find an investor with deep pockets,’ said Eales.
In the test runs during the weeks before the first race of the championship, Ferrari’s managers watched their rivals. ‘Virgin cars will limp to the starting line,’ they agreed.
‘Ferrari is sad,’ countered Branson, stung by the criticism. ‘Ultimately, I think the new teams will give Ferrari a run for their money. I didn’t want to write a very large cheque for an established team,’ he added. ‘Virgin is Formula One’s last 100-per-cent-owned British team.’ McCallum was more realistic. ‘We shouldn’t risk the brand unless we know the team can complete a season,’ he told Tai, asking a member of the team, ‘Can you guarantee that no Virgin car will stop in the middle of a race?’ The question dangled, unanswered.
The Virgin team arrived in Bahrain in early March 2010 for the season’s first race to discover that Ecclestone had turned against Branson. Slow cars, in Ecclestone’s opinion, cluttered the track. Branson was dismissed as a whinging loser. Branson understood Ecclestone’s message when he was led to Virgin’s motor home in the paddock. Every team was assigned a minimum fifteen-metre plot for their mobile headquarters and hospitality suite. Red Bull’s and Ferrari’s were thirty-five metres long. On Ecclestone’s orders, Virgin’s frontage was reduced to five metres and located at the very end of the parade. Branson had been exiled.
The reality of Virgin’s disarray dawned on Carl Wormald and Darryl Eales as they looked down on to Bahrain’s track awaiting the first practice session. Suddenly, two Virgin cars roared out of their pit. ‘Fuck me,’ exclaimed Wormald. ‘I didn’t realise we had two cars.’
To celebrate the beginning of the season, the team owners were invited to dinner by Bahrain’s crown prince. Branson was placed at the far end of a long table. After an abrupt end to a desultory meal, the prince’s favoured confidants were invited to a glamorous party at a palace on the beach. Branson looked forlorn. The following day, after bantering in the pit with the mechanics, he took a pair of headphones and gazed over the wall for the start of the two-hour race. As usual, Ecclestone watched the contest on television in his hospitality tent. After forty minutes, he saw Virgin’s cars pull out. ‘A nickel-and-dime operation,’ Ecclestone jeered.
‘It’s the rigid budget,’ said Wirth.
‘Shit or get off the pot,’ Ecclestone told Branson as they passed in the paddock. The ringmaster disliked men who lacked conviction. Branson lurked around his cramped headquarters, pondering his future in the sport. Formula One was everything he loved: speed, risk, glamour, beautiful women, parties – an extraordinary business enriching many people. He wanted to share the cake. How he hated raw competition. There was no place for the underdog punching above his weight. ‘One day hopefully Virgin will overtake Red Bull,’ he told an aficionado. Formula One, he added, could only prosper if the teams’ budgets were forcibly reduced to $40 million.
Two weeks later in Melbourne, Branson’s embarrassment grew. During the practice sessions, Virgin revealed that Wirth’s computer design had produced a car with fuel tanks which were too small to complete the distance at full speed. ‘Fuck me,’ exclaimed Branson, visualising the effect on Virgin’s image as a spluttering car was pushed off the track. Pulling out of Formula One was not an option. Delivering a positive message while drowning was, however, Branson’s accomplished art. ‘We’re still hoping to be the best of the new teams,’ he told sceptical journalists at the track. ‘We know we have a fast car.’
The next humiliation was in Monaco, the scene of the previous year’s Brawn triumph. The wheels of one of the Virgin cars came off – literally fell on to the tarmac. A mechanic had failed to properly tighten the wheel nuts. ‘We can’t even finish the fucking race,’ a Virgin executive told Wirth. Ecclestone dismissed Branson as a nonentity.
In their dreams, the Singapore race in September should have been a climax for Virgin. As usual, Asia’s richest power brokers had arrived on the island for a weekend of business and partying. For ten years, Branson had tried to build an airline and telephone business among those inscrutable billionaires, with mixed results. If Virgin’s car could be successful, his status would rise. Instead, he was mired in embarrassment. ‘It’s been a fun season,’ he said, watching the practice sessions. ‘We knew we were the underdogs again and we went into it with our eyes open, and it is fun building a team from scratch.’ At that moment, a computer glitch was disrupting Virgin Blue’s flights in Australia, and thousands of passengers were stranded. Branson always delighted in his rivals’ misery, but he could not understand it when others shared that sentiment about him. Before leaving, he was asked whether he was fully committed to Virgin Racing
for next season. ‘Yep, for sure,’ he replied.
Branson cut an isolated figure as he walked through the paddock before the last race of the season in Abu Dhabi. Ignored by journalists and TV cameras, he had no excuses for the Virgin cars being ranked at the bottom of the table. The team’s debts had risen to over £60 million, with LDC owed £44 million. Eales decided to sell Lloyds’ shares to Andrei Cheglakov, a Russian electronics millionaire whose ambition for Marussia, his motor company, was for it to compete at Sochi in 2014, in the first Formula One race ever to be held in Russia. Branson agreed that the new team would be called Marussia Virgin; naturally, Virgin would not pay anything. Through Cheglakov, he hoped Virgin might finally develop a presence in Russia. ‘This cements our place on the Formula One grid,’ said Branson, before heading to a party with King Juan Carlos of Spain and Niki Lauda, whom he had persuaded to buy a ticket for Virgin Galactic.
Nick Wirth did not party. A bitter row was brewing between himself and Lowdon over Wirth’s claim that he was owed over £15 million. ‘Graeme Lowdon’, claimed Wirth angrily, ‘is one of the nastiest men I have ever met. It took every molecule of my life to avoid the train wreck they tried to bestow on me.’ Although Wirth received some money, Lowdon strenuously denied any wrongdoing.
At the end of 2011, contrary to Branson’s statements, Virgin abandoned Formula One. Branson extricated himself, leaving a legacy of resentment. ‘I got in at the right time and then got out,’ he told his executives. ‘We didn’t risk or lose any money.’ Like all Virgin’s casualties, Lowdon did not want to be identified as the loser. ‘We didn’t get more from Virgin than we expected or was promised,’ he said.
Soon after this latest setback, Branson posted a message on his blog: ‘After reflecting across forty years and thinking about what characterises so many successful Virgin ventures, I have come up with five secrets to business success: enjoy what you’re doing; create something that stands out; create something that everybody who works for you is really proud of; be a good leader; and be visible.’ Joining Formula One had breached several of his own rules, but there was always an antidote. Days after leaving Abu Dhabi, Media Control, a German data corporation, awarded him a prize previously won by Bill Clinton, Nelson Mandela and the Dalai Lama. ‘The jury’, read the citation, ‘is honouring a globally active businessman whose creativity and innovation has become a force for good in international co-operation, human development and preservation of the environment.’