KERS and the argument over costs

Posted on | Author Keith Collantine

Luca di Montezemolo and Bernie Ecclestone are in conflict over F1's revenues
Luca di Montezemolo and Bernie Ecclestone are in conflict over F1's revenues

Bernie Ecclestone has changed his approach in his ongoing row with the Formula 1 Teams’ Assoication over the distribution of money in F1.

When Ferrari and FOTA boss Luca di Montezemolo first pressed Ecclestone to incresae the share of money the teams received, Ecclestone’s response was to try to embarrass Montezemolo by publicly reminding him of the multi-million dollar bonuses Ferrari receive compared to other teams.

He has now refused to increase the money the teams receive and even suggested it should be reduced. Will he now use the KERS argument to drive a wedge between the teams?

“We’ve got to give them less”

Ecclestone stated his position in the argument over revenue in F1 in an interview with the Financial Times:

We don’t need to pay more. We’ve got to give them less.

In what I call the good old days, all we had to do was have a chat with the people who had all the money… But now they come along and they’ve got lawyers and masseurs and they can never agree on anything.

[The teams] could ask for more money, but they won’t get it.

Perhaps a lot gets read into Eccletone’s words because he never uses very many of them – or because he chooses them carefully.

With potentially nine teams instead of ten on the F1 grid this year, FOM could reduce the total money given to the teams yet still increase the amount received per team. So although Ecclestone is talking tough he isn’t necessarily ruling anything out at this stage.

In his spiel about the ‘good old days’ it’s not hard to imagine that Ecclestone is rueful that’s he’s no longer able to make the kind of quick deals that work out best for him that he used to – the sort of deals that gave him a personal fortune in excess of ??2bn. It doesn’t take a cynic to imagine he’s less concerned about the speed of conducting business and more worried about getting the best deal for himself and, these days, F1 owners CVC.

Alternatively, maybe he’s just bitter he hasn’t got a masseur…

Read the full original interviews in the Financial Times (free registration required):

Is KERS Ecclestone’s next bargaining tool?

It can’t have escaped Ecclestone’s attention that FOTA is presently divided over the introduction of Kinetic Energy Recovery Systems for 2009. On Monday Flavio Briatore joined Luca di Montezemolo in criticising the 2009 innovation on grounds of costs:

We know already that for 2010, with the option of the standard KERS, whatever money we spend this year is for one year only. And in this kind of environment I think it?s completely unnecessary. For sure BMW want to do it and so we will follow because it?s difficult for us to have one competitor to develop a programme and for us not to be part of it because we could lose performance.

But at the launch of the F1.09 yesterday Mario Theissen derided the cost argument against KERS:

We agreed that the cost of KERS was quite significant, but the real thing is that when we discussed it a month ago the money had been spent already on development, so it would be the worst thing to spend money on something you don’t use. Even if you delay the introduction, no development project has become cheaper by delaying the introduction. In effect, all the teams would have developed KERS for another year before making use of it and that, in our view, doesn’t make sense.

Ecclestone may see an opportunity to prise FOTA apart over the twin issues of KERS and costs. He has said in the past he’s no fan of KERS, and his retort to the teams when they demand more money may simply be that if they can afford KERS, they don’t need any more cash from FOM.

That argument could win over a lot of teams – especially Williams. It has already opted for the comparatively low-cost KERS solution of a flywheel-based device rather than an electrical one. It has insisted its budgets are in place for 2009 and 2010 – but the very fact they were moved to make such a statement illustrates the pressure they are under. It wheeled out its FW31 on Monday with a noticeable lack of sponsors, and its main backer RBS is all over the British newspapers having seen its value fall from ??75bn to ??4.5bn in two years.

In which case, should BMW offer to drop its opposition to deferring KERS (which it has said it may not use in the first race anyway) in exchange for Ecclestone sending a bit more cash the teams’ way – even if it is only the money Honda would have got anyway?

More on KERS and costs