News and views on motorsports

Wednesday, October 29, 2008

Formula 1 Reloaded Part 1

Can you believe whats going on in grand prix racing these days? The world has turned upside down. The two senile old men firmly at the helm of Formula 1 is absolutely determined to destroy everything that made the series the obsession of millions of true blue racing fans worldwide.

The complexities of issues revolving around the grand prix circus are too numerous to mention. I've tried to articulate these over the years many a time, so I won't go into it again. I'm just so sick of writing about bad things. I think I'm not alone in this. Checkpoint10 has resorted to writing fiction such are the atrocities being committed these days.

So how to redress these problems? Well, given that "No bucks, no buck rogers", the fundamental thing, the start of many different measures that needs to be in place, is to address the problem of commercial ownership of grand prix racing.

As you may know, the Formula One Constructors Association (FOCA) was formed decades ago to further the interest of the teams, particularly the issue of commercial rights. Unfortunately the man that teams had left in charge of all this, one Bernie Ecclestone, for all intents and purposes usurped the association from right under the teams' noses. This is not a joke. Williams and McLaren were more than prepared to sue the solicitors advising them on this affair for negligence in carrying out their duties. Of course, Bernie made sure it was all settled out of court.

Consider that the commercial rights, once it became valuable, was flogged away by Bernie for a considerable amount. An amount so huge, Bernie ended up with billions. How much of that went back to the teams? A trickle, a drop in the ocean. And now, the commercial rights of Formula 1, after several rounds of ownership changes are in the hands of a private equity firm. Yes, those leeches that are partly the source of the world's financial troubles today.

Understand this. In the long run, when the chips are down, do you really believe CVC has the sports interests at heart? And by interests I mean the interests of the fans and the teams that go racing? Of course not. For thousands of years, it is the profits that are of interest to business. I'm not sure but perhaps you do know this, but what has CVC done for the sport? Half the profits of the sport goes to CVC. And why should it go to them or any other private or public shareholder? It should belong to the teams.

So thats the first thing to do. The next thing is to look into how the teams' share of the financial spoils are distributed among themselves. At the moment, the winning constructor gets the lion share, followed by the team that came in second and so forth. This of course is before the Ferrari "tax," the special payments to Maranello that guarantees them more money even in the years they do not win the world championship.

This system, like those of purely capitalistic (I say purely) countries, is deeply flawed. The rich get richer and the poor get buggered. And the gulf between the rich and the buggered grows ever larger each year. The successful teams get more and more money and that makes them ever more successful. The smaller teams in the long run are destined to leave. Minardi, Jordan and recently Super Aguri, the victims of such inequity.

And so to my proposal. That each year, the profits from commercial activities be distributed equally, regardless of championship position, to all teams. This may seem sacrilegious to some, but consider that all teams play a part in the show. The winning constructor needs teams to beat else whats the use of competing. And if you consider this a sport then everyone should start on equal footing.

Of course there would still be inequities. The large manufacturers, bent on winning at all costs, will still have more resources at their disposal than Toro Rosso or even Williams. The winning constructors will always attract more sponsorship for winning trophies than the team that came last. This should always be the case but for turning up to play, they all should get the same amounts. And therefore, winners will naturally and as a matter of course, gain greater financial reward. What I am proposing is that we close the gap between the teams out front to the teams behind.

If, the commercial rights really did belong to the teams and they retained 100% of the profits, then a share of the profits will amount to a considerable sum. Enough to keep all teams, large and small, on the grid, year after year. If allied to customer cars, and by that I mean being able to purchase chassis and engines from specialists like Dallara, Lola or Cosworth, then we would have a very strong field in grand prix racing. If the manufacturers or McLaren and Williams want to retain their manufacturing facilities then by all means. But a smaller team on a budget would still be able to compete effectively against them.

In any case, the objectives of teams competing in the world championship ought not to be making exorbitants amounts of money. Its to win. Win the world championship and through that job well done, gain their just rewards.

The commercial rights of the sports or the income generated therein is the key to a successful championship. Then we would have less of this silly talk about cost cutting and such, which to my mind, has no chance of succeeding. But what can be done, is to lessen the impact, not of money per se, but the lack of money. If measure such as these can generate a competitive championship, viewing figures will increase. And that will in turn bring in more sponsorship, increase the value to television rights, merchandising sales etc which in turn benefits the teams who can then spend as they wish on innovation (assuming more liberal technical and sporting rules) and development. In times of global crisis as we do today, such measures as above would go a long way to ensure that, whilst the smaller teams won't have the resources of the giants, at least they have a fighting chance to survive.

If you think carefully, it seems clear that the struggle right now is between the need to satisfy the insatiable appetites of private equity CVC and to ensure the survival of the teams that make up the sport. These are incompatible goals. And for the sake of the sport, the one that should be made redundant in the equation is CVC. That and the inequities of income distribution prevalent in Formula 1 at the moment.

1 comment:

Steven said...

Qwerty, thank you for writing this excellent commentary. I agree with you that profits from the commercial rights must be shared equally, and I don't understand why this is never mentioned as a way to make Formula One more "sustainable." And you're absolutely right, the best teams will continue to win, but the poorer teams will at least get to participate without having to worry about selling out. So why would anyone be against it?

As you correctly guessed, I am so disgusted by Formula One, I can't write about it anymore. I'm pissed off that every time I blog, all I can do is complain. As least through fiction I can do a little positive thinking.