> The Sport That Lost It's Mind.....

The Sport That Lost It's Mind.....

Posted on Tuesday, June 16, 2009 | No Comments

The sport that is business has lost its mind. It pains me to say it, but Formula One is in turmoil and the FIA (the sports Governing body), has gone mad with power.

For those who haven’t followed along, the currently situation is thus; over the years the FIA have been introducing radical new rules every year since 1994 in a bit to make the sport safer for its drivers, slow the cars down and reduce the costs involved for all, as the bigger teams increased their budgets year on year, making the race for the championship a financial battle (allegedly), rather than a on-track racing experience. More recently, the FIA have started to push some “green” credentials onto the sport in the form of an “optional” Kinetic Energy Recovery Systems or KERS (where by power is recovered from the action of braking and stored in a battery that then allows this stored energy to boost the engine).

The word “optional” is the problem here. Whilst the cost of developing a KERS system could be astronomical and beyond the scope of some of the smaller teams, the bigger teams who have invested are able to hold an advantage (although in reality, its become a fine balance trading off the performance of the boost verse the penalty of carrying the additional weight of a heavy battery system). Thus a two tiered system has been introduced into F1 almost by mistake (the haves verses the have not’s).

For next year the FIA hoped to introduce a budget cap on just how much each team can spend on their cars, originally allowing a maximum £30million cap (which was then increased to £40m – not including the cost for engines, driver salaries or marketing and promotional costs), and gave the teams the option to either adhere to this cap in exchange for complete freedom in the cars design - or - all the teams to opt out of the cap and spend whatever they liked, but have their cars comply to a strict set of rules, thereby in effect creating a two tiered championship and causing confusion amongst the fans.

The teams, made up mainly of big car manufacturers, rebelled against these rules and stated they would not agree to them, in the process forming a group known as FOTA (Formula One Teams Association). FOTA (chaired by Ferrari President Luca Di Montezemolo) argued that it was impossible to lower costs from their current budgets to the cap that was being introduced over the period of one year. Instead FOTA stated they would lower their costs and make engines and certain expensive parts (such as KERS systems, Gearboxes, etc), available for purchase by the less well off or new teams entering the sport, whilst also offering technical help and assistance. They have also stated that it may be possible to stage the lowering of costs over a number of years until the £40m cap is reached, but this has been rejected by the FIA.

The sport is in a stale mate situation with neither side willing to concede.

To further complicate matters, the introduction of a budget cap has attracted the attention of some of the lower formula racing teams looking to make the step up to the pinnacle of F1. With the number of cars allowed on the racing grid being 26 (comprising of 13 teams, as each team runs 2 cars), these places were applied for by a number of well funded hopefuls looking for entry into the sport.

The current F1 teams, all members of FOTA, had to submit their entries to the 2010 Formula One Championship by a certain date, which they did – only with a condition that they race under the current 2009 rules. Two teams, Williams and Force India, broke away from FOTA claiming that they were under financial obligation to race in the F1 series due to previously brokered agreements with F1’s commercial holder Bernie Ecclestone. Ecclestone claims other teams, including Ferrari (who have competed in the sport every year since the 1950s), are obliged to enter next years championship, Ferrari claim they don’t and are free to pursue other motorsport avenues.

Threats of a brand new, breakaway series consisting of the FOTA teams which, remember are made up mainly of the major car manufacturers, and therefore have a significant financial clout (as well as all of the current F1 drivers, including all of the big names, under contract), have been floated if an agreement with the FIA cannot be found. The FIA, however, are unwilling to back down, especially as they have been boosted by the amount of teams applying for entry into the championship.

It seems the resolution can go one of any number of ways;

  • The FIA back down and allow all FOTA teams to sign up to the proposed rules, written by the FOTA group
  • FOTA back down and agree to the FIA’s budget cap or something close to the £40m proposed
  • Neither side back down and Bernie Ecclestone’s FOM (Formula One Management), takes the teams who are “obliged” to race in the championship to court in a bit to get them to pay their way out of the sport (effectively ruining their chances of entering a breakaway series), or making them race in F1
  • Agreement fails to be reached and FOTA set up their breakaway series based on the rules the FOTA teams have been developing between themselves as the premise for their championship (which also assumes that the teams bound by agreement reach settlement with FOM)
  • The teams within FOTA who’s position in the F1 Championship are most under threat, defect from FOTA in a bid to guarantee their place on the grid, either forcing the other teams to sign up also or risk losing their place on the grid entirely (for example, McLaren is currently not guaranteed their place on the grid right now, and could be replaced by a new applicant – signing up early would secure their future in the sport; contrastingly Ferrari are “under obligation to race”, but failure to sign up in time could result in there not being enough places left for the marquee to retain its place in the sport if other teams are permitted to the sport).

In the past, every spat between the teams and the FIA has always been settled by the winning over of Ferrari; as the most famous, powerful and influential marquee in the sport it has a massive affect on what the sports rule makers are permitted to do and/or where other teams align their political allegiances. This is the reason why Ferrari have been able to secure additional funding from FOM, and being given the power of “veto” on the rules from the FIA – because the sports rule makers know they can make or break the sport.

Whether this approach of keeping Ferrari onside is right or wrong, especially over some of the other long term manufacturers and teams who have been around for a long time (McLaren, Williams, Renault), its not for me to say in this particular blog. But the historical and iconic significance of Ferrari in Formula One should be lost on no one, especially with the massive following Ferrari has in its tifosi (the name given to the die-hard fans of the cars adorning the famous prancing horse logo).

How this entire predicament ends, no one is sure of at the moment. What is assured however, is that the fans want a solution and for the future to be settled based on business decisions. My opinion is that, despite historically, the team reportedly being unable to agree between themselves on any rulings, the creation of the FOTA is now more organised, more diplomatic and more willing to discuss and compromise than at any time in the past – for example, they have already agreed, despite the millions they invested, to drop the expensive fan-unfriendly and complicated to explain KERS system for next year (something I believe agreement wouldn’t have been found previously before the creation of FOTA).

Time will tell......

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