Sunday, 30 January 2011

Put the kettle on. An unintended 2011 Formula One Preview

I know I committed to re-starting the blog last week, but it has been difficult to find something to comment on since then. January is my “hibernation” month. It’s a month where quite frankly, very little happens that interests me on the trading front. I simply plug myself into the re-charging unit to recover from a busier than expected December and to prepare myself for the upcoming Rugby League season.

From a sporting point of view, I enjoy the NFL Playoffs but that’s it. I enjoy the NFL playoffs. After 17 weeks of trading, I like to actually sit back and watch the twelve best teams go head to head. Of course, I might dive in during the games if I see a price which appeals to me, but I certainly do not study the markets and the games as I would during the regular season.

In fact, aside from one or two miniature forays into the Correct Score market on football, my only interest has been in studying the Formula One Drivers’ Championship market – a market which aside from a fruitless back of Fernando Alonso during the Abu Dhabi race I have never studied.

I have commented extensively in the past about the discrepancy in prices between a team’s number 1 and number 2 during races but this discrepancy seems even larger in the Championship market. Indeed, whilst I didn’t study the market last year, I would be nothing short of amazed if, at some points, a team’s number 2 driver traded at a lower price than their number 1.

Most noticeably, Ferrari’s perceived Number One driver – Fernando Alonso – is the favourite at 4 on Betfair. His team-mate, Felipe Massa, is eight times that price at 32. This is a gap which belies my understanding of the market.

The first issue is that Fernando Alonso is a ridiculous price. Last year, Red Bull had the greatest car advantage for quite some time, but it took the last race of the season to deliver the championship. Whilst the greatest cause of this delay was Red Bull themselves, it served as a poignant marker that having the fastest car, or the fastest driver, does not automatically provide a World Championship coronation.

Secondly, even at a time savings account are scarcely providing a nominal increase in the balance, I struggle to comprehend who would want to tie up money at 3 to 1 for eight to nine months. If this is considered the best value bet that you can find on Betfair throughout this period, then I would consider withdrawing whatever money you have left in your account.

As for Felipe Massa’s price – let us not forget that 2011 starts anew. 2010 performance is no more of an indicator than 2008 performance and this is especially true with Massa. 2010 was without doubt a comeback at 95% year as Massa fought to regain his confidence which had been understandably shattered following his 2009 Hungary crash. However, there were enough signs throughout the latter part of the year that Massa could regain the ability which took him to within 20 seconds of the 2008 Championship.

Fourthly, whilst there is little doubt that Ferrari are more likely to build a “Fernando Alonso” car than a Felipe Massa one, Ferrari equally will not be looking to put all their eggs in one basket at the start of the season. Team Orders will play a part in the second half of the season but this is no Michael Schumacher – Rubens Barrichello situation. Both drivers start on equal footing.

Fifthly, and finally, another reason for Massa’s struggles last year was the Bridgestone tyres. Well, they are gone in 2011 and the new Pirelli’s seemed to suit Felipe pretty well in the Abu Dhabi test after the last grand prix when Massa outpaced both Alonso and Sebastien Vettel. Of course, testing times can never be taken at purely face value but this was encouraging.

So – to sum up – the price on Alonso is too low. The price on Massa is too high. Yes, Alonso should be favoured, but by nowhere near as much as he currently is.

Two of the other big teams – McLaren and Red Bull also have sizable gaps between their drivers.

Again, at 4.1 Sebastien Vettel seems too short although given the World Championship in his back pocket, it is understandable. However, with Adrian Newey in the back pocket of Red Bull, the real value lies with Mark Webber. No designer has done more with less recently, and Webber will approach 2011 with the same fearlessness as in 2010 but with a greater knowledge base to support that. Of course, Vettel is the fastest driver but we have frequently seen that is only one variable in the Championship.

As for McLaren, I struggle to understand why their base price is so much higher than Ferrari and Red Bull. The re-introduction of Kers should help as that was the area they excelled at in 2009 whilst I think that Lewis Hamilton could strongly benefit by the move to a different tyre given that Hamilton frequently found himself in conflict with the Bridgestone tyres.

Hamilton, for mine has unnecessarily taken a bad rap in recent times with Alonso and Vettel appearing to be the “head boys” which is odd when you consider that as a rookie, Hamilton was more than a match for Alonso and that Vettel’s race craft, much like Hamilton’s admittedly, needs significant refining.

Again, it is hard to see Hamilton’s price representing value so to speak – but his current price does appear significantly too large in comparison to Alonso and Vettel.

If McLaren stands to benefit from KERS, then so should Mercedes and with both of their drivers in double figures, they could also be a good shout. We do have evidence of what Ross Brawn can do when his team focuses development on their car earlier than other teams.

The change in tyres and reputation probably explains Michael Schumacher being shorter than Nico Rosberg, although Schumacher has himself admitted he will never be what he was and I would look to price them the same.

However, all of this is pure speculation until the cars actually complete some laps and show how they have adopted the new 2011 rules into their cars and if you are looking for a high priced outsider, you could do a lot worse than Force India.

Of course, the gold standard in this area is the 2009 Brawn car which emerged from being a backmarker in 2008 to an unmatchable demon in the early stages of 2009. I’m not so sure that this will happen this year but it would be more than possible for a team to try to generate publicity (sponsorship) by running with minimum fuel like Sauber did last year.

With Williams and Sauber now having lucrative tie ups with Venezuela and Mexico respectively, the most likely candidate for this would be Force India who with the Mercedes engine and Adrian Sutil in particular, have the raw speed to pull off such a manoeuvre. At 250, they definitely look the best of the outside prices.

And to complete what has unintentionally become an analysis of the pre testing market, I would consider Robert Kubica’s price to be significantly too short. Kubica earned several plaudits for his performances in 2010, but I always wondered how well he was really driving. It is difficult to gauge one’s performance when their immediate competitor is a Russian rookie who would probably not be in the sport but for his nationality.

A key aspect to also consider is that even if Renault develop a superb car which seems unlikely – for all their front wings in 2010 they won’t have the most resources to build their 2011 car – Kubica is unlikely to have the consistent support any driver needs to win the world championship. Although just like Ferrari, the gap between Kubica and Petrov does appear to be overstated.

For Williams, Rubens Barrichello will provide excellent technical support in building their 2011 car but it is likely to be a season too soon to make the most of their Venezuelan money whilst the same is likely to be true with Sauber. Both teams also have one rookie driver and I believe that it is more likely that Sergio Perez will run his teammate close. For one, I have never gotten the Kobayashi hype. Indeed, he looked out of his depth at the start of the season until he then started passing cars on fresh tyres which was not as difficult as was made out.

Toro Rosso form the last of the experienced teams and that is likely where they will finish. Red Bull’s sister team seems nothing more than a breeding ground for young drivers but given the lack of progress made by Sebastien Buemi and Jaime Alguesuari, I wouldn’t be too surprised if one was unceremoniously dumped throughout the season.

As for the new teams, hopefully Team Lotus and Virgin will be able to catch the back of the midfield by the end of the season as they look to become established forces. Sadly, it is no longer as easy as it was back in the early 1990s when the Jordans and Saubers appeared on the scene. As for HRT, their hire of Narain Karthikeyan is only inspiring in so far as it is not Sakon Yamamoto and their presence remains a mystery.

Now watch them have the fastest car on the grid. Although as earlier advised, most of this is subjective nonsense – no-one knows how the teams will perform until testing and even during testing things are likely to be the British weather; cloudy and misleading as teams promote their own agenda.

Finally, no write up of the 2011 season can be complete without a comment on the 2011 regulations. Whilst the re-introduction of KERS is far from disastrous and has undeniable business relevance, the adjustable wing idea seems to be one which could have far-reaching consequences.

Quite frankly, I loathe the idea and suspect that other Formula 1 fans will also hate it. Likely, gone are the days of superb defensive driving and thrilling overtakes. Rather, the race is likely to be controlled more than ever by car quality than driver skill as faced with a difficult opponent, a faster car can just hit a button and artificially move past. This may appeal to more casual fans but could cause significant resentment amongst more hardcore fans. Let us not forget, such an add-on would have almost definitely created a different end to the 2010 World Championship and 2011 races could present a situation where it is better to be second on the last lap – and just pass a helpless opponent on the last straight.

I only hope that turns out to be hyperbole. I felt similarly, but nowhere near as strongly, about the refuelling ban in 2010 but last year wasn’t too bad eh.

P.S. – Another reason for not updating the blog is the fact that what was meant to be a simple update has turned into a two hour writing session which has gone on and on and on. It may have been quicker however, but for my attempts to look for the television remote whilst stabbing myself in the eyes. Yes, that’s what Dancing on Ice can do to you.

Monday, 17 January 2011

Coming off Life Support

Like a 1990s Pop Music band who have recently fallen on hard times and who need some cash, I have returned.

When I first started blogging, I never imagined it would be so difficult to maintain but it really is much harder than it looks. From past experience, I may return in a blaze of glory only to then flicker for a while before being removed by the rain which masquerades as the British summer. (The end of the Rugby League season is surely little more than a co-incidence.)

Anyway, enough of me. How have you been? From the looks of things, pretty bored if
you’re still checking this out. I’m not sure I can change that but I can try.

As I enter my third year of trading seriously on Betfair, I continue to be astounded by
the events of the past two years. For all my diatribes and rants, and having looked over this blog there have been many, I have earned far more than I could ever have expected although I remain a small fish who continues to focus on avoiding the great whales more than anything. Quite frankly, earning anything from watching sports which I did for 22 years for my own amusement continues to astound and bemuse me in equal measures.

A quick recap of the events of the past five months which I have been absent from would read trade Formula 1, made some money, traded Rugby League, made some money, traded American Football, made some money, traded the X Factor, poked my eyes out with sticks, filled my ears with cotton and made some money and traded Cricket and lost some money.

But that sums up why the blog became quiet. No one cares in a Profit and Loss blog and no one would really want to say I did A, B and C and earned £1,000,000 because why would you want to give up £1,000,000. (Ed – Writer does not earn £1,000,000.) Sure, it might be nice to follow someone’s story but that can be followed without a I backed D and laid E factual analysis.

The blog also became quiet because well, quite frankly, it usually takes me pretty much in the region of somewhere approaching fifty words to merely illustrate a point of such basic simplicity that the length of time it takes to make said point irritates me greatly.

So that leaves the dilemma of what to do with the blog and the options are plentiful.

The first option would be to simply delete the blog and give up blogging. However, if I were to do this there would be little reason to make this post in the first place so that can be quickly dismissed. (If that disappoints you, click that little X in the top right corner of your screen.)

The second option is to make this blog a Profit and Loss one but I’ve ruled that out so if you want to know how much I’ve earned you will need to develop psychic powers.

The third option would be to make this a poor version of Cassini’s blog – Green All Over – a blog that is without compare (Unless it’s actually a meerkat in disguise). This option appeals but I’m not sure I have the imagination or inspiration to find so many diverse topics to write about. Still, it is an option that intrigues me and ideas permitting, I will certainly be looking to make general comments about topical issues

The fourth option is to make the blog much more of a sport orientated blog and when I say sport, I mean Rugby League with a dash of Formula One where the posts are more analytical of issues not directly concerning themselves with trading. This is another possibility. I am fairly au fait with writing extensively about Rugby League as my irregular previews which can be found in the archives attest to. The slight down side to this however though would be that such posts would pretty much be of limited interest to the current target audience whilst the presumed audience would similarly be put off by the more regular trading posts which would appear so whether this would be a worthwhile approach is unlikely.

The fifth option would be to take a combination of three and four, add in some one when I can(‘t?) be bothered.

The sixth option? Well, I don’t so much write this for me as I already have these thoughts on my mind, so I would love to know what you think.