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Future of Formula 1: 2013 Concorde Agreement, Preferential treatment and IPO [merged]


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#1 ali.unal

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Posted 15 March 2012 - 22:43

The current version of Concorde Agreement will terminate at the end of this season. Teams, FiA and FOM will try to find a way to form a new agreement that will satisfy every party with teams now wanting to increase their share from 50% to 70%. However, there is a piece in Joe Saward's blog which is staggering. According to him:

The big whisper in the paddock is that there is about to be a big development in the Concorde Agreement negotiations. This can really only mean one thing: that the non-FOTA teams have thrown in their lot with the Formula One group and have done their own deals, rather than trying to get more from collective bargaining. I am hearing that Ferrari and Red have both agreed to be paid a premium, based on their importance to F1. With Ferrari one can understand such a deal. It is the only F1 team that Formula One needs to have on its side and in the past it has always done deals that suit it, rather than what is best for the sport. This is how the team ended up getting 2.5 percent of the entire team prize fund, in addition to the same breakdowns as the other teams. This equates to an annual payment of around $20 million more than the others. Ferrari has the power to negotiate such deals and one has to accept that this is perhaps a better idea than getting into a fight trying to reduce the sums which are ripped out of the sport by the financiers behind the Formula One group. It makes no real sense for the sport to allow the money to disappear, but as the teams are incapable of either working together or taking control of the commercial rights themselves then they must pay the penalty for their lack of nous. One cannot blame Ecclestone of trying to get the best deal possible, although one can argue that as a fan of the sport he really ought to be interested in putting something back to help develop it at different levels all over the world. He would argue that this is not his job and until someone else get control of the commercial decision-making that is how it will remain.

Red Bull has none of the historical clout of Ferrari, but it has been winning for the last couple if years, although no-one who has been around F1 for a while believes that the Austrian drinks company will stay forever. F1 is a means to an end but as money is no object and it is easier to win if you spend more than your opposition, Red Bull has positioned itself so that it can a better pay-off from the Formula One group. If the deals have now now been done, there will now follow the same process we have seen in the past with an announcement and then the crumbling of the other teams, who have no power without Ferrari. The irony of course is that the people who most need the money that F1 generates are the middle-ranking teams who would be much better off if they were getting a share of 85 percent of the F1 revenues, rather than the current figure, which is still less than 50 percent.

It means that a bunch of bankers will once again be able to suck money out of the business and put nothing of any value back in. Te next step once the Concorde Agreement is finished will be the sale to a new owner, or the launch of another massive loan that will result in F1 remaining a cash cow for the next five to 10 years. Timing is everything, of course, and a key deciciding factor in this will probably be Luca di Montezemolo’s desire to get Ferrari sorted out so he can focus on his nexty challenge, which is to be Italy’s Prime Minister. That programme is now gearing up and so it is the right moment for a deal to be struck.

http://joesaward.wor...k-in-melbourne/

Now Ferrari had done this before back in 2005 but Red Bull? It'll be a very interesting year to watch both on- and off-trackwise.

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#2 phoenix101

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Posted 15 March 2012 - 23:01

The current version of Concorde Agreement will terminate at the end of this season. Teams, FiA and FOM will try to find a way to form a new agreement that will satisfy every party with teams now wanting to increase their share from 50% to 70%. However, there is a piece in Joe Saward's blog which is staggering. According to him:


http://joesaward.wor...k-in-melbourne/

Now Ferrari had done this before back in 2005 but Red Bull? It'll be a very interesting year to watch both on- and off-trackwise.


I think Red Bull are getting a premium for their global marketing presence. The team's success is important, but the co-branding is worth far more. Breaking-away from FOTA is also critical.

I look forward to seeing what will happen from here. FOTA still have quite a bit of power b/c 2 teams cannot make a championship, but it will be difficult for companies like Williams and McLaren to resist big payouts. They still race for a living, though they have branched out into other markets.

#3 jamiegc

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Posted 15 March 2012 - 23:12

Saying Red Bull are not very important to current F1 is like saying Man City are irrelevant to the Premier League.

People may not like them, but Finance + dominance + marketing = a great package.

Its more likely than not that they are going to be there or thereabouts for the foreseeable future.

Edited by jamiegc, 15 March 2012 - 23:15.


#4 Slowinfastout

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Posted 15 March 2012 - 23:13

Funny how history repeats itself...

When the economy took a nosedive the teams were all grouped tightly together, but now the money is flowing again, the heavyweights are breathing and they don't give a toss about those left behind..

No wonder they keep harping about third cars or customer chassis, their actions keep the small teams in a position where it is near-impossible to be a constructor.

#5 JRizzle86

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Posted 15 March 2012 - 23:16

Dear god if we have got to the point where Red Bull are important to the sport then the sport really has lost all grasp of values.

#6 dau

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Posted 15 March 2012 - 23:17

Not surprising after Ferrari and Red Bull left FOTA. I don't agree the rest of the teams have no power without Ferrari, but i don't expect them to pull together anyway. If it's true that two teams already have their deals done, the rest of them will just scramble now to get their own done as soon as possible, without any consideration of the sport as a whole. And Bernie wins again.

#7 chrisblades85

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Posted 15 March 2012 - 23:19

Dear god if we have got to the point where Red Bull are important to the sport then the sport really has lost all grasp of values.


What values does F1 hold? Not many. And of course Red Bull are important.

#8 ali.unal

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Posted 15 March 2012 - 23:27

Saying Red Bull are not very important to current F1 is like saying Man City are irrelevant to the Premier League.

It is important to current F1, but doesn't hold any historical importance whatsoever, which at the end of the day was the very reason why Ferrari had been and have still been paid extra. Then why would Red Bull be privileged? On what ground? For all we know, their rein could be ended come 2014 Season, where big changes on both chassis and engine side will come into force. So what happens then? If Red Bull is to be paid like the article says, then what should McLaren be given?

Edited by ali.unal, 16 March 2012 - 00:23.


#9 Fastcake

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Posted 15 March 2012 - 23:49

Saying Red Bull are not very important to current F1 is like saying Man City are irrelevant to the Premier League.

People may not like them, but Finance + dominance + marketing = a great package.

Its more likely than not that they are going to be there or thereabouts for the foreseeable future.


Red Bull may be important now, but as was Renault a few years back. But they'll only really be important to Formula One once they've been around for years and won again and again. That's what differentiates the likes of Ferrari and McLaren from Red Bull.

This sounds like a shockingly bad situation if true. Teams getting extra money for fairly poor reasons is a poor, unfair arrangement. I'm frankly surprised that no ones tried and got the EC to look into the whole Concorde Agreement before, I'd say there could be a case made against Ferrari's extra payment.

I do agree with Saward that F1 should be investing more into young drivers and lower level motorsport, as that is where their drivers are coming from, but the teams aren't going to do that anymore than Bernie will. They've never been the good guys and much rather have money going to the FIA than the teams. At least then the money could be put to good use - like expanding the FIA Academy project to provide financial support to a range of drivers struggling to race at low levels.

#10 Raelene

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Posted 16 March 2012 - 01:26

It's not the first time teams have been given a little "bounus" for signing early... Williams have in the past..

#11 ensign14

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Posted 16 March 2012 - 06:08

It means that a bunch of bankers will once again be able to suck money out of the business and put nothing of any value back in.

All thanks to those nice people in the European Union.

#12 Rob

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Posted 16 March 2012 - 09:02

The Concord Agreement encompasses all that is wrong with Formula One.

#13 jamiegc

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Posted 16 March 2012 - 11:06

It is important to current F1, but doesn't hold any historical importance whatsoever


Red Bull may be important now, but as was Renault a few years back. But they'll only really be important to Formula One once they've been around for years and won again and again.


With the kindest will in the world, the new Concorde Agreement relates to current F1, not historic F1. If we're going on history, Williams would have one of the biggest budgets and incentives around.

The sport is trying to encourage new teams to enter and compete. If you're going to chuck money at the old guard and a pittance at the new guys where is the incentive. Success is to be rewarded.

#14 bauss

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Posted 16 March 2012 - 11:14

If Red Bull were to pack up today to leave... it would be far less of a big deal than if Ferrari did... RB getting a premium is bulls**...just because they are winning now does not mean squat... they probably still still dont even have the fanbase of a Williams. They will be forgotten as easily as a "Brawn".


No surprise that the teams are back to backstabbing each other, and given the way RB acted with the RRA issue, they fit right in and would probably make things worse than before when Ferrari were the only main "selfish" ones

Edited by bauss, 16 March 2012 - 11:15.


#15 Otaku

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Posted 16 March 2012 - 19:19

The Concord Agreement encompasses all that is wrong with Formula One.



#16 engel

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Posted 16 March 2012 - 19:28

If RedBull gets a premium they will get it cause as a brand they are high enough value to F1, cross marketing/image etc. Not because they won 2 championships in a row.
The most sought after eyes in the world are the 18-34 crowd, and Red Bull is tapped into them better than any car maker/garagiste/F1 team. That's what's valuable to Bernie.

#17 pizzalover

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Posted 16 March 2012 - 19:33

Ferrari have never believed in a level playing field. It's the reason for their success.

#18 Smile17

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Posted 16 March 2012 - 20:43

Ferrari have never believed in a level playing field. It's the reason for their success.


You think the rest does? Oh please... The 'sport' itself doesn't even stimulate this...

#19 oetzi

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Posted 16 March 2012 - 20:57

If RedBull gets a premium they will get it cause as a brand they are high enough value to F1, cross marketing/image etc. Not because they won 2 championships in a row.
The most sought after eyes in the world are the 18-34 crowd, and Red Bull is tapped into them better than any car maker/garagiste/F1 team. That's what's valuable to Bernie.

Yeah, that plus they're the current champions. Add to the only real global F1 brand, one of the world's real great brands, and that's it all done apart from the details.


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#20 kNt

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Posted 16 March 2012 - 21:04

You can see how popular RedBull is by the size of their threads.. relative to the success it is very small.

#21 oetzi

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Posted 16 March 2012 - 21:06

You can see how popular RedBull is by the size of their threads.. relative to the success it is very small.

It's true. They're not the forum darlings. Maybe you should let the youth of the world know.


#22 pizzalover

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Posted 16 March 2012 - 21:13

You think the rest does? Oh please... The 'sport' itself doesn't even stimulate this...



I'm pretty sure "the rest" think the Ferrari special fee is an unfair competitive advantage. It's all tainted, only some are more filthy than others.

#23 oetzi

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Posted 16 March 2012 - 21:15

If any of the teams don't like the terms, they don't have to do F1.

#24 FNG

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Posted 16 March 2012 - 21:20

No way Red Bull will get a premium. Who in their right mind think they are worth more to F1 than McLaren??? Not too many people would think twice if they left. They have only had good worth to the sport for the last 2 years. Them getting a premium is ridiculous

#25 Clatter

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Posted 16 March 2012 - 21:22

Saying Red Bull are not very important to current F1 is like saying Man City are irrelevant to the Premier League.

People may not like them, but Finance + dominance + marketing = a great package.

Its more likely than not that they are going to be there or thereabouts for the foreseeable future.


Poor analogy.

Man City are irrelevant. If they go down then another team will replace them and other than their fans no one will care or miss them. If any team leave F1 without selling then there is a good chance they won't be replaced.

#26 Sakae

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Posted 16 March 2012 - 21:24

Why are "nice people of EU" dragged into this money sucking scheme? Bankers associated with F1 have offices UK and US, unless I am badly mistaken.

#27 pdac

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Posted 16 March 2012 - 21:29

The Concord Agreement encompasses all that is wrong with Formula One.


Exactly. It's the concord agreement that changes it from a sport to a business.

#28 oetzi

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Posted 16 March 2012 - 21:32

No way Red Bull will get a premium. Who in their right mind think they are worth more to F1 than McLaren??? Not too many people would think twice if they left. They have only had good worth to the sport for the last 2 years. Them getting a premium is ridiculous

So the current champions (and marketing monster) plus the only really important team are signed up. Where's anyone else going to go? Of course you get a premium for signing early, and the more important you are, the bigger it is.


#29 oetzi

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Posted 16 March 2012 - 21:33

Exactly. It's the concord agreement that changes it from a sport to a business.

No, it was the independent constructors' hunger for cash.that led to it becoming a business.


#30 Clatter

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Posted 16 March 2012 - 21:37

Might not matter if these teams have done a deal as any favorable rates have to be offered to the rest of the grid.

http://joesaward.wor...orde-agreement/

#31 oetzi

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Posted 16 March 2012 - 21:46

Might not matter if these teams have done a deal as any favorable rates have to be offered to the rest of the grid.

http://joesaward.wor...orde-agreement/

It's as simple as that?



#32 Fastcake

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Posted 16 March 2012 - 22:11

Why are "nice people of EU" dragged into this money sucking scheme? Bankers associated with F1 have offices UK and US, unless I am badly mistaken.


I'm not sure what you're saying, but if you're referring to Ensigns comment it was the EU who made the FIA flog the rights off in the first place...

It would be far better if the FIA had more money instead of the teams of the bankers behind Bernie.

#33 Clatter

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Posted 16 March 2012 - 22:16

I'm not sure what you're saying, but if you're referring to Ensigns comment it was the EU who made the FIA flog the rights off in the first place...

It would be far better if the FIA had more money instead of the teams of the bankers behind Bernie.


Blame the FIA (or more correctly MM) for that state of affairs. The rights weren't flogged off, they were given away.

#34 Fastcake

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Posted 16 March 2012 - 22:31

Blame the FIA (or more correctly MM) for that state of affairs. The rights weren't flogged off, they were given away.


I know he practically gave them away for nothing, but I was fairly certain the EU was forcing the FIA to let go of their rights anyway.

#35 Dolph

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Posted 16 March 2012 - 23:29

I know he practically gave them away for nothing, but I was fairly certain the EU was forcing the FIA to let go of their rights anyway.


Why?

#36 D.M.N.

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Posted 17 March 2012 - 18:37

Sky News Newsdesk
Sky Sources: F1 owner to offer shareholding in sport to Ferrari as part of new commercial deal from 2013-2020
6:17 PM - 17 Mar 12

I suspect this is to do with the concorde agreement.

#37 Rob

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Posted 17 March 2012 - 20:49

Blame the FIA (or more correctly MM) for that state of affairs. The rights weren't flogged off, they were given away.


Bernie and Max got the sport to bend over and then rogered it until its eyes started bleeding.

#38 dau

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Posted 17 March 2012 - 21:44

Blame the FIA (or more correctly MM) for that state of affairs. The rights weren't flogged off, they were given away.

I remember Mosley saying that he offered the rights to the teams for the same price back then, but they weren't interested. I mean, of course, it was a bad deal for FIA and F1 as a whole, but i'd say the teams carry their fair share of responsibility for the current situation as well. Bernie is always easy to blame - not saying it isn't justified - but it's his job to make money out of F1 and he's actually pretty good at that.

If the teams aren't happy with anything, they could change F1 to whatever they wanted if they would manage to work together and not against each other for once. Instead, they let Bernie play them like a violin every time a new Concorde Agreement is due. Maybe we need to wait for a new Ecclestone.

#39 Clatter

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Posted 17 March 2012 - 21:52

I remember Mosley saying that he offered the rights to the teams for the same price back then, but they weren't interested. I mean, of course, it was a bad deal for FIA and F1 as a whole, but i'd say the teams carry their fair share of responsibility for the current situation as well. Bernie is always easy to blame - not saying it isn't justified - but it's his job to make money out of F1 and he's actually pretty good at that.

If the teams aren't happy with anything, they could change F1 to whatever they wanted if they would manage to work together and not against each other for once. Instead, they let Bernie play them like a violin every time a new Concorde Agreement is due. Maybe we need to wait for a new Ecclestone.


The FIA should have put it out to tender, but instead handed it BE for next to nothing. The fact that the teams may not have wanted the rights at that time is not a good reason to fail to follow proper business practice.


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#40 Stormsky68

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Posted 17 March 2012 - 22:03

Yeah, that plus they're the current champions. Add to the only real global F1 brand, one of the world's real great brands, and that's it all done apart from the details.


Mercedes Benz not a global brand then?

#41 oetzi

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Posted 17 March 2012 - 23:31

Mercedes Benz not a global brand then?

Yeah, sure, they're a big brand. But say 'F1' to someone and they won't usually think 'Mercedes', will they?

#42 oetzi

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Posted 17 March 2012 - 23:33

The FIA should have put it out to tender, but instead handed it BE for next to nothing. The fact that the teams may not have wanted the rights at that time is not a good reason to fail to follow proper business practice.

But if they didn't want the FIA to do it, who else was there? Bernie was (is) on their side.

You reckon they could do this on their own (collectively)?

#43 Ferrari2183

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Posted 19 March 2012 - 07:14

http://www.f1zone.ne...op-teams/13103/

Some interesting news...

Many team bosses reportedly left the Melbourne paddock angry late on Sunday, amid claims Ferrari and Red Bull have agreed special deals for F1′s future beyond the current Concorde Agreement.

Rumours of the top teams’ deal – part of a reportedly planned $10 billion stock market floatation of the sport – began to swirl following the publication and then retraction of a Sky News internet report.

The report was reportedly based on a leaked copy of the draft 2013 Concorde Agreement, which according to London’s Telegraph newspaper “could hand Ferrari a direct stake in the sport”.

Red Bull, the reigning champions, “also stand to make a huge sum”, the report claimed, adding that the energy drink-owned team as well as Ferrari will be asked to nominate directors for F1′s holding company board.

Team boss Christian Horner revealed Red Bull is “in discussions with FOM” about a new Concorde Agreement, adding that talks are “progressing reasonably well”.

How the other major teams – like FOTA members McLaren and Mercedes – fit into the picture is unclear at present, but the Times newspaper reports that there are “no seats” at the boardroom table allocated for them.

An unnamed senior team executive described the rumoured special deals for Ferrari and Red Bull as “outrageous” and “against every facet of European competition law”.

Ferrari declined to comment.

Horner added: “We want one (a Concorde Agreement) which reaches into the future … a floatation is really down to the shareholders.

“It is not really the teams’ business,” he added. “It is more of a question for Bernie (Ecclestone) or CVC.”

Many paddock insiders, however, believe the deals are already done in principle, leading one angry rival team boss to blast: “Formula one stopped being about racing a long time ago”.

“There will be an end game to this,” he added. “We just have to figure out what it is and what it means for the people in the teams who want to go racing and not be involved in this kind of thing.”


I said last year that Ferrari and Red Bull leaving FOTA could mean only one thing. I think I described it as a sweet deal... Other teams seem upset!

#44 pingu666

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Posted 19 March 2012 - 07:23

they should be.
I guess redbull are there because they pour so much money in with there 2 teams, and ferrari is pretty big, plus can strong arm sauber



#45 Ferrari2183

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Posted 19 March 2012 - 07:41

they should be.
I guess redbull are there because they pour so much money in with there 2 teams, and ferrari is pretty big, plus can strong arm sauber

I'm a Ferrari fan and think that only certain teams having an interest in the sport is very, very wrong.

This is, though, what Bernie wanted all along. To cause unrest between the teams... FOTA will crumble now.

#46 freya

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Posted 19 March 2012 - 07:47

I'm a Ferrari fan and think that only certain teams having an interest in the sport is very, very wrong.

This is, though, what Bernie wanted all along. To cause unrest between the teams... FOTA will crumble now.


I think it means nothing. Bernie isn't that stupid to mess with mclaren and mercedes so blatantly. Also RBR will never, ever get a better deal than mclaren.

#47 george1981

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Posted 19 March 2012 - 07:52

I'm surprised Redbull are getting a good deal, although they're doing well lately they don't have an F1 pedigree and their long term committment is questionable.

#48 Raelene

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Posted 19 March 2012 - 07:53

one other year Williams got a sweetner (as well as Ferrari - who weren't aprt of the GPMA) for signing on early and leaving thre GPMA . it's nothing new. It's the way the FIA break the "teams"

Edited by Raelene, 19 March 2012 - 08:02.


#49 Ellios

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Posted 19 March 2012 - 07:57

divide and conquer



#50 Raelene

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Posted 19 March 2012 - 08:02

exactly - same as what they did in 2005..and it worked