Archives for posts with tag: Budget Cap
Will iSport and other new teams enter before the midnight deadline?

Will iSport and others enter before the midnight deadline?

This is it then. Friday May 29th. Deadline Day.

The prospective F1 teams of the 2010 championship have just over 12 hours (at the time of writing) to decide whether or not they will submit an entry… new and old teams alike. And if the existing teams are having a tough time making up their minds, just imagine how tough it must be for the new teams.

Let’s imagine for a moment that we are in Paul Jackson’s position. As head of iSport International you have a very tough decision to make. You currently operate a GP2 team on a rough figure of £5 million a season, and you have been working all winter on trying to find the backing to pull your annual budget up to the FIA recommended £30 million for a budget capped F1 entry.

A few weeks ago you were told this figure would rise to £40 million but that, regardless, you would still be afforded certain dispensations if you agreed to fall under that budget cap that would help you compete in Formula 1.

Now you’re not so sure. With just over 12 hours until the deadline for 2010 F1 entries shuts, there is absolutely no guarantee that the regulations as they stand today will stand by the time you enter the sport in 2010. Furthermore you don’t even know if Formula 1 as you know it, the Formula 1 with Ferrari, McLaren, Renault etc, will exist next year. You’ve had your entry mocked by the grandees of the sport and the very suggestion that you might consider putting an entry forward for Formula 1 cast aside as belittling the great name of the sport by some of those team bosses who would be your peers next year.

As the deadline looms, FOTA has apparently made suggestions to the FIA that next season should be run on a 100million Euro budget cap, on the provision of the sharing of technology between the bigger and smaller teams (similar to the current arrangement between McLaren and Force India,) with a budget cap of 45million Euros being brought in for the 2011 season. It’s not quite a reversion to customer cars for next year, but it’s as close as you’re going to get. It’s a one year deal, though. In 2011 you need to build your own car.

So do you risk it? Do you risk running a team on £30-40 million in 2010 when your rivals are spending three times that amount, on the off chance you’ll be able to compete in 2011? Sure, Bernie’s cash incentive will help, but with the financial world in crisis, is this the time to be taking such a huge risk? Afterall, teams like iSport, as teams like Williams, exist only to compete. They don’t make cars to sell them. They make cars to race them.

But maybe this has been FOTA’s plan all along. That by failing to reach a decision, they have effectively shown the FIA it isn’t as powerful as it thinks it is as with so much confusion over the 2010 regulations, there is the possibility that by midnight tonight only USF1, Campos, Williams and, we are hearing this morning, Prodrive-Aston Martin, will have submitted entries for the 2010 championship.

Knowing that it can’t run F1 on four teams, the FIA will have to either extend its deadline for entries, or slap fines on those who enter later on. Perhaps the FIA will be forced into a two-tier penalty scheme, whereby new teams are given a small financial penalty for late entry and those FOTA members who have caused this confusion by their reluctance to accept the FIA’s plans are handed a hefty fine.

Or will the FIA capitulate to FOTA’s suggestions and effectively smash any chance the new teams have got of competing?

Today’s the day when we learn if Max Mosley really is as politically strong-willed as his rhetoric has suggested. Can he really afford to stand up to the manufacturers? Can he really afford to lose them in favour of the promotion of the smaller independents?

If he stands his ground the small teams can not only afford to enter, they can afford to compete. If he capitulates now and gives in to FOTA, not only will the small teams stand no hope at all, but Mosley’s own position of power will have been seriously affected… if not terminally.



Yesterday’s news that Williams has entered its name for the 2010 Formula 1 World Championship caught many of us unawares. After a weekend of multiple meetings and relative media silence from FOTA representatives the media was, on the whole, fairly convinced that FOTA unity was tight. The teams had written to the FIA demanding the 2010 regulation changes be dropped and, from what I had understood to be true from a number of reliable sources, FOTA was due to enter its name for the 2010 championship as a block unit if their condition of a revision to 2009 regulations was met.

So why the sudden change in position from Williams? If the teams had agreed to make their demands known to Max Mosley and the FIA in writing, in return for the teams agreeing to sign a new Concorde Agreement, has Williams’ entry to the 2010 championship not seriously reduced FOTA’s bargaining position? Furthermore, does the action of Williams not call into serious question the unity of FOTA, and give us a true reflection of the divisions between the manufacturer teams and the independents over the issue of budget caps?

“The unity of FOTA is of paramount importance to Williams,” Williams F1 CEO Adam Parr told Reuters. “Yesterday [Sunday] we joined the other members of FOTA in writing to the FIA to request a continuing effort to find a compromise concerning the regulations for 2010.”

“We believe that under the leadership of di Montezemolo and John Howett, FOTA has extracted some very significant concessions from the FIA. These include not only the procedural aspects of the budget cap but also other elements that will enable the higher budget teams to participate. Having said that, Williams has, and has always maintained, that we have a binding contract with both FOM and the FIA to participate in the world championship from 2008 to 2010.”

“We have been paid in full for our participation and we feel both morally and legally obliged to make it clear that we will participate in Formula One in the future as we have in the past 30 years. We owe this to our employees, our sponsors and the fans, all of whom are affected by statements that the teams may not enter next year’s championship.”

“We will continue to work within FOTA and with FOM and FIA to find a compromise but no one should be in any doubt about our commitment to the FIA F1 world championship.”

Williams has long been known to have been in favour of a budget cap in Formula 1. Indeed, there have been very few public comments from Williams, Brawn or Force India over the past few weeks over the subject of budget caps. Quite simply, it makes an enormous amount of sense for independent F1 teams to agree to the budget cap. They cannot compete forever with the big spending of the auto manufacturers.

A division was always going to occur within FOTA at some point, and Williams’ decision to enter its name for the 2010 championship could yet come to be seen as a pivotal moment in not only the future of FOTA but the future of Formula 1. Williams, in citing its contractual obligations to F1 and in not wishing to let go of its 30 year history in the sport, is drawing a very clear line in the sand, as the team is displaying a position completely at odds to that of Ferrari which is claiming that all deals are off in F1 as the 2010 regulation changes breached Concorde, and that they have no qualms in breaking their 60 year history in F1.

It is widely rumoured that two of the major manufacturers will pull out of F1 regardless of what happens in these negotiations, at the end of 2009. Why then would Williams wish to align itself too heavily with a group whose own members do not even know if they will be around in 2010, if Williams itself is already certain that F1 is where it wants to be next year?

Williams may not be the powerhouse it once was, but its place in Formula 1 is no less important. It is the third most succesful team in F1 history. Its name is as synonimous with the sport as that of Ferrari and McLaren. Indeed, in both historical and emotional terms, Williams falls behind perhaps only those two teams in the heirarchy of Formula 1 public perception.

It’s also worth noting that in the top six most succesful teams in F1 history, only two (Ferrari and Renault) are motor manufacturers. The rest are independents.

Independent teams then have formed a critical part of this sport’s history, and could yet play a decisive role in its future. Williams’ decision to enter for 2010 has seriously weakened FOTA’s position. If they are joined by another independent team over the next few days, FOTA’s bargaining position will be weakened still further, particularly if Williams is joined by the championship-leading BrawnGP team.

Also, don’t rule out McLaren from splitting with FOTA’s bigger picture plan. Already under pressure from the FIA following the lie-gate scandal, Martin Whitmarsh has already claimed today that McLaren is playing peacemaker. The point at which the peacemaker does a deal to save its own skin may not be far away.

Shock news from the Monaco Grand Prix.

Formula 1’s problems have not been resolved by a four hour meeting on a yacht.

This incredible non-development in the ongoing saga didn’t happen yesterday afternoon, following two meetings of F1’s decision makers.

In all seriousness, F1’s problems at present are so deep seated that they were never going to be resolved in the space of one afternoon and two meetings. The FIA will not budge over its plans for a budget cap, nor its intention to rigorously check the teams’ accounts next season. FOTA, on the other hand, will not budge over their insistence for a heightening of the budget cap, the dropping of the two-tier 2010 technical regulations nor the requirement of the FIA to check their accounts.

Interestingly, all these three points fall almost into insignificance when one takes into account potentially the most telling line from FOTA President Luca di Montezemolo yesterday, when he declared that all the teams were united in their insistence in a change of governance at the FIA.

That’s a huge statement, because it isn’t just aimed at questioning the way in which the regulations have been changed, it is essentially calling on Max Mosley, as President of the FIA, to stand aside. By saying that FOTA will not be happy until the method of governance has changed, they are leaving a very clear decision.

Either Max goes, or they go.

It’s therefore no shock that FOTA and the FIA failed to find an agreement yesterday. And in the current political climate, it looks unlikely that any agreement will be forthcoming in the short term.

Two immovable political objects have met head on.

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“There cannot be a crisis next week. My schedule is full.”
Henry Kissinger – New York Times Magazine – 1 June 1969

For the rights or wrongs with which Henry Kissinger’s role in International Politics will come to be viewed by history, he certainly came out with some great quotes… and ones which, this week, relate all too closely to the power plays afoot in Formula 1.

The sport sits just a week before its most famous and glamorous race, with not one but two crisis talks being held today. The first, this morning, is between the members of FOTA as they discuss their stance on the 2010 budget cap and two-tier F1 of the future. Later on this afternoon, FOTA President Luca di Montezemolo, whose Ferrari team has threatened to quit F1 along with Toyota, the two Red Bull teams and Renault, was due to meet with FIA President Max Mosley and F1 Commercial Rights Holder Bernie Ecclestone*. As far as the latter two are concerned, Formula 1 simply cannot have a crisis next week. As Kissinger so beautifully stated 40 years ago, their diaries are pretty tied up.

A crisis at Monaco is just what the FIA and Bernie don’t need. As the most watched race of the year, it remains, however, the best possible canvas for FOTA to paint their political landscape.

That political landscape is in flux. The teams at the centre of the controversy have made this battle about much more than budget caps and two-tier systems of technical regulations. Perhaps sensing an opportunity for change, the teams who have threatened to pull out of the sport now seek a clearer and fairer system of governance. With a new Concorde Agreement a long way from being agreed, they are using their political weight to readdress the political balance in the sport.

“History has so far shown us only two roads to international stability: domination and equilibrium.”
Henry Kissinger – The Times – 12 March 1991

Formula 1 has existed for almost 30 years, since the end of the FISA/FOCA war, with the domination of the FIA and Commercial Rights Holder over the teams. It was a fair deal… the organisers created a unified and strong championship and sold it to the highest bidders, while in return mechanics and engineers became wealthy men… some of them millionaires.

Times have changed however, and the percentages at play are no longer viewed as fair by those who argue they make the sport what it is – ie, the teams.

And yet, even amongst the teams there is the threat of a split between those who can conceivably pull down to the budget cap and those who can’t. Perhaps this morning’s meeting then is about much more than simply maintaining the unity of FOTA and the unity of the teams who are against or for the budget cap. Perhaps it is about rallying all of the teams to the same cause, that for the first time in almost 30 years there exists a very real possibility for the teams to make big changes to the way the sport is run.

The budget cap and two tier system of F1 is no longer the bigger picture. It’s about politics and who runs what and how. It’s about replacing dominance with equilibrium.

Neither side will want to budge however. Neither side will be willing to give an inch. The powers that have ruled F1 for 30 years will not want to see their authority nor their slice of the commercial cake reduced. At the same time however, the teams are aware now of just how much power they hold.

Neither will be willing to give that up.

For, as Kissinger stated in 1971, “Power is the great aphrodisiac.”

* Di Montezemolo will not attend today’s meetings following the death of his father. His place will be taken by Ferrari Team Principal Stefano Domenicali.

The fallout over the FIA’s plans to introduce a £40 million budget cap in 2010 continues unabated today as Renault has become the latest team to announce its intentions to pull out of Formula 1 at the end of 2009, joining Toyota, Red Bull, Toro Rosso and Ferrari in its disillusion with the 2010 regulations.

But this is all just politicking, right? There’s no real danger that F1 2010 could be run without Renault, without Toyota… without Ferrari?

Those who assume so are quite wrong.

These are troubled times for the world of motorsport, and for the automotive world as a whole. Financial belts are being tightened the world over and Formula 1 can no longer continue at the levels of expenditure to which it has grown accustomed. So why has the notion of a budget cap caused such unrest? Part of the problem lies in the “two-tier” system of competition that the FIA has decided upon for 2010. But the greatest problem of all is the emergence of FOTA as a powerful force in F1 politics.

As far as the FIA is concerned, the tail is now wagging the dog and it is time that the normal order was restored. But just as the FIA moves to take its position of power back from the teams, so the teams themselves can now see the power that they hold as a united body. With both parties emboldened to stand their ground, we are facing a civil war between two factions who each know the power they hold and where neither one of them will be willing to show the slightest sign of weakness, nor give an inch in any potential negotiation.

Formula 1 last underwent a revolution back in the early 1980s, again a time of financial and political upheaval. The FISA/FOCA war as it was called almost 30 years ago gave us the system of governance we have today. It gave us a constitution, of sorts, under the Concorde Agreement. It gave us Max Mosley and Bernie Ecclestone as the power brokers and ultimate rulers of the sport.

Formula 1 today faces new dilemas and new issues, and the old Concorde Agreement is in dire need of rewriting. But as the FIA, Commercial Rights Holder and the teams stand their ground, there is no sign of a new constitution being written. Under increasing pressure from their boards, the car manufacturers have had to ask themselves if the sport is giving them fair reward for their services, and if they should stay involved. Over the past few days, Formula 1 has received its answer.

With just two weeks to go until the deadline for entries to the 2010 championship, Formula 1 finds itself at an impasse.

If the FIA buckles to the demands of the manufacturers, then the governing body of the sport will lose any semblance of authority.

If the manufacturers buckle, the FIA will be empowered to force through any regulation changes it sees fit in the future.

Thus the battle lines have been drawn. While FOTA President Luca di Montezemolo is set to meet FIA President Max Mosley next week, the result of the meeting will not resolve every issue that currently stands between the warring bodies. 

The threat of division in Formula 1 is very real indeed.

The FIA may have opened up three new spots on the 2010 F1 grid, but as things stand now, it has to face the very real possibility that it may struggle to fill even the ten that exist today.