News and views on motorsports

Wednesday, July 06, 2005

When Will It End?

Hot on the heals of the drivers' letter to Max Mosley, now comes this article in that tells the story of the rebel alliance of manufacturers and teams meeting in Munich today. Also in today is a story in The Times in London, telling the tale of a possible breakaway series to start in 2006.

Update: Not entirely correct here. In actual fact, there was talk of a 2006 start 2 years ahead of schedule if sanctions were imposed on the teams by the World Motorsport Council. My bad.

I'll start with the GrandPrix article which mentions a few interesting things. I guess I'm so obsessed with Formula 1 but apparently discontent is brewing not only in the sport's pinnacle but also in world rallying, trucks and raid rallying as well. Among the agenda of the Munich meeting, is the possibility of picking a candidate to run against Max Mosley for the FIA presidency.

But that's going to be difficult because as I mentioned in my previous post Mad Max has been consolidating his position in the FIA.

The GrandPrix article states: "it is going to be a bitter campaign because Mosley and his supporters have turned the FIA into a fortress. The electoral system was changed just a few months ago to favour the incumbent and all internal resistance to Mosley seems to have been crushed, or at least has gone underground. The current structure exists because the people involved do not want things to change. There is nothing wrong with such a system as long as people outside are happy but increasingly, and particularly in the high profile world of Formula 1, they are not."

Both The Times and GrandPrix do mention that the manufacturers are finalising plans for a breakaway series. The rules package for that series will be shown to the FIA as a matter of course, but as the Times mention, "the teams remain determined that they will race without him (Mosley). If that means ditching the FIA, which has governed the sport throughout its 55-year history, they seemed resigned to that outcome."

Interestingly enough the latest proposals from the FIA for the 2008 rules contain a copyright clause, obviously to protect against anyone seeking to start a breakaway series. But really that is a small deterrent to the big boys in the Rebel Alliance.

If a breakaway series is to begin in 2006, I think it just might trigger a series of massive lawsuits because if I'm not mistaken the teams are contractually bound by the Concorde agreement to race until the end of year 2007.

Update:>A 2006 start is unlikely to happen. Again, my mistake. But a 2008 breakaway looks increasingly possible and I still stand by what I wrote below.

Another consideration is television coverage. Bernie charges an arm and a leg to people like ITV for the rights to the Formula 1 coverage. Would TV stations pay for covering yet another grand prix series, albeit one that promises potentially better racing? On the flip side, the manufacturers are big advertising spenders. And so are the sponsors whose names adorn their cars. Those sponsors are going to want to spend money on adverts in the breakaway series. That just might force the TV stations to pick the breakaway series over Bernie's Formula 1.

In a season thats given us a better spectacle than ever, structurally, its deteriorating by the day. I wonder what Bernie will do now. In a recent interview, he seemed to be on the side of the teams and Michelin. But in actual fact he is caught in the middle between the FIA and the rebels, as Frank Williams mentions in this article in the Guardian.

As far as the commercial side is concerned, one of the GPWC's aims is to get a better and more equitable share of the revenues of the sport. If Bernie wants to sign them up, thats one of the things he'll have to agree to. Not merely being greedy as many publications are trumpeting, but in fact Formula 1 is an incredibly expensive business.

To put things into perspective. I believe the cost of building Sepang was roughly around USD 100 million (I may be way off here). That was a one time cost. Teams like Ferrari spend more than USD 400 million PER YEAR. And the rest ain't that far behind either. Of course, teams are going to want additional revenue shares. They've pumped in a king's ransom into the sport year on year.

But what did our Bernie do? In the new Concorde agreement, he promised Ferrari greater share of revenue than the world championship winner even if Ferrari came in dead last in the championship. More than just the teams being greedy as many like to mention, the sports commercial structure is just plain unfair.

Thats why blokes like Paul Stoddart is willing to flog his team off in disgust. Now if a reconciliation is to happen, Bernie might just have to tear up that new Concorde agreement with Ferrari. And Luca ain't going to be smiling then. Especially when FIAT is being taken to the cleaners financially.

Although if we look at this whole situation from another angle, the Banks that hold the majority controlling shares in SLEC, Bernie's family trust that controls F1's commercial interest, must be getting very very nervous right about now. I mean, the value of their investment must be seen to be in serious jeapordy.

Could all this be a simple ruse to get the banks to sell their shares back to Bernie at rock bottom prices? It seems like a big ruse if that is so. But look at it this way. Bernie as yet has said very little. Its as if he's simply letting it go all to hell. Funnily enough, he has most to lose if it does. Or should I say the banks have most to lose.

I'd like to point to the reader to this article in It brings up a lot of interesting point to whet the appetite of conspiracy theorists everywehre. The article asks, why didn't Coulthard sign the second letter from the GPDA to Max Mosley? Why did BMW and Honda mysteriously drop the arbitration case against the FIA over the 2006 engine regulations? Why did Paul Stoddart suddenly drop his case at Melbourne?

But the most intriguing point was this. Apparently in the Concorde agreement, a provision is made so that the race organiser has the right to take decisions that cannot be influenced by the FIA, if it pertains their own event. So, in the case of Indianapolis, it was well within Tony George's right to overrule the FIA and force a compromise that would have allowed all the teams to participate. When asked why he did not do so, he reply was: "I can't do it. I just can't do it!" Why not?

What mysterious force moves behind these unexplained series of events? Whatever it is, it was strong enough to influence heavy hitters like BMW, Honda and the Indianapolis Motor Speedway. The last one being the most surprising to me. I always thought American organisers placed fans above any other consideration. And I've always thought and respected them for not taking any cattle manure from anyone. And yet in this case.....

All this intrigue, mystery and secrecy brings us to another point the GPWC members are particularly concerned with. That is, the need for transparency in the financial, operational and commercial governance of the sport.

So back to my original question, when will all these current politics end? I suspect the answer just might be this: When the banks sell their shares back to Bernie. Otherwise, I doubt if anyone has the answer.

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