FIA and FOTA remain deadlocked on F1 governance and budget cap

Posted on | Author Keith Collantine

Luca di Montezemolo will respond to the FIA in a press conference on Saturday
Luca di Montezemolo will respond to the FIA in a press conference on Saturday

Now the dust has settled following a day of remarkable developments we can understand why the two sides in the FIA-FOTA row remain deadlocked.

The two sides have moved closer together on the matter of how deep cost cuts must be. But FOTA’s demand for reform of how F1 is governed has received no recognition from FIA president Max Mosley, and fundamental questions remain about how a budget cap might be enforced.

And FOTa is set to apply more pressure to the FIA this weekend.

The FIA’s F1 entry list for 2010

Williams and Force India

Williams and Force India had already admitted they were willing to enter the 2010 season on the FIA’s terms, and have been suspended from FOTA as a result. As yet they are the only two teams to have defected.

Campos, Manor and USF1

Another three teams to have their entries accepted unconditionally were a trio of new outfits. These were chosen from a total of 15 new applicants and some surprise was expressed as to which ones were selected. Joan Villadelprat, boss of Epsilon Euskadi, one of the other teams to submit an entry, said:

I’m surprised by two of them. I don’t want to name anyone
Joan Villadelprat

Given that USF1’s application was first revealed five months ago, it’s safe to assume he’s referring to Campos and Manor.

The existence of Campos’s bid, submitted by former F1 driver Adrian Campos, was known.

Manor competes in Formula Three at present and ran Kimi Raikkonen in Formula Renault in 2000 (the year before he stepped up to Formula 1) and Lewis Hamilton in the same series in 2002 and 2003, and in F3 in 2004. Team boss John Booth gave a quote which hints at a possible reason why their application was successful:

We wanted to be independent of a manufacturer because we don’t want to be used as a political pawn ?ǣ it was a conscious decision not to approach them.
John Booth

Nick Wirth’s company Wirth Research will build Manor’s car. Wirth formed Simtek Research with Mosley in 1989 – the team later entered F1 from 1994-1995.

Brawn, McLaren, Toyota, BMW and Renault

Three of the manufacturer teams, plus manufacturer-backed McLaren and manufacturer-supplied Brawn, appear on the list with asterisks besides their name to indicate the provisional status. The FIA noted:

These five teams have submitted conditional entries.The FIA has invited them to lift those conditions following further discussions to be concluded not later than close of business on Friday 19 June.
FIA statement

What is telling is that the FIA didn’t call the teams’ bluff by leaving them off the list. And another three teams on the list might as well have had that asterisk besides their names:

Ferrari, Red Bull and Toro Rosso

The FIA is believed to have included Ferrari, Red Bull and Toro Rosso on its 2010 entry list because it believes these teams cannot back down from pre-existing agreements to compete in F1 next year.

But according to the trio, they have no intention of honouring any such obligation. They insist the status of their entry is the same as that of Brawn, McLaren, Toyota, BMW and Renault.

And it’s not as if the FIA can force them to get onto a plane to Melbourne next March, is it?

The ‘reserve’ list

Ten existing teams supplied entries, 15 new ones submitted applications and 13 were announced for 2010. So what has happened to the other 12?

Lola, Prodrive (Aston Martin), Lotus, Epsilon Euskadi and Superfund have all either expressed disappointment at not being on the 2010 list, and/or suggested they are among a list of ‘reserve’ entries that may step in if the FIA does not get 13 on board from next year. Some of these entries – particularly Lola and Prodrive’s – were widely considered to be among the most realistic of the new teams.

Lola’s Martin Birrane indicated how seriously his team are taking the prospect of being on the grid in 2010 when he admitted they have taken new staff on board:

We have a lot of staff. We’ve hired a couple of dozen top people in the past six weeks. All our engineers are current F1 engineers who have done a fantastic job.
Martin Birrane

We cannot rule out the possibility that some of the more credible-looking entrants were left out to keep the pressure on FOTA.

This leaves seven other entries which were put forward but did not make the ‘reserves’. These could include iSport, N Technology and Litespeed, among others.

Cost cutting

The FIA took the opportunity to reiterate the importance of cost-cutting in F1:

This exercise has demonstrated that the only reason there have been vacancies on the F1 grid for many years was the excessive cost of participation.
FIA statement

But the teams are not disputing this point – and the FIA are not blameless for so few new teams entering F1 in the last decade-and-a-half. The FIA’s demand that new team entrants lodge a $40m bond kept F1 team numbers depressed for years.

In the run-up to today’s announcement the FIA made a series of concessions to FOTA’s position (as discussed yesterday). In terms of the size of budgets F1 teams should have next year the two sides are so close it makes little difference.

The debate is now centred on two problematic points:

Forensic finance

Explaining FOTA’s position, John Howett of Toyota told BBC Radio 5:

We do feel that there is a risk of involving financial forensic control in the sporting regulations and deciding a championship.
John Howett

The fundamental question about whether a budget cap can be enforced has still not been fully addressed. Many of the teams that are backed by major car manufacturers are understandably concerned about the FIA trawling through their books.

The FIA’s “Cost Cap Regulations Handbook” makes clear just what this would involve. The proposed regulations state (emphasis added):

7.4 Each CRT [Cost Regulated Team] must comply fully with any request for information from the Costs Commission. Such requests may necessitate, inter alia: (i) the provision to the Costs Commission and/or its auditors of information of any type (including internal correspondence) in written or other forms; and (ii) the provision to the Costs Commission and/or its auditors of access to its premises and to all employees involved directly or indirectly in the CRT’s participation in the Championship.


7.6 In addition, where the Costs Commission in its absolute discretion considers it necessary in order effectively to monitor a CRT’s compliance with the overriding objective of the Regulations, it may require that auditors identified by the Costs Commission, and independent of the CRTs, be appointed to work with any CRTs for any period during with the CRTs in question are subject to these Regulations. In the event of any such appointment, the CRT in question shall be liable to pay for the auditors’ fees.

It’s not difficult to imagine why teams might object to such invasive scrutiny and sharing such sensitive information with the FIA. After all, the governing body has a poor record of keeping teams’ confidential information secret when conducting its investigations.

FOTA’s solution to this problem is to scrap the budget cap and agree to other cost cuts. It has already offered the FIA a three-year commitment to F1 if it accepts this deal. If that seems short, it is no less than the duration of the Cosworth engine deals signed by the three new teams announced today.

It remains to be seen why Mosley has not accepted this offer. But there is one other serious bone of contention:

Governance of F1

Perhaps the most significant development of the day was how FOTA reacted to the developments by mobilising the next stage of its effort to address the problem of how Formula 1 is governed. It is taking three steps:

Explaining its objections

As usual FOTA couched its statement in carefully judged words, to counter the fire-and-brimstone belligerence of Mosley (and Bernie Ecclestone):

Regrettably FOTA is being forced to outline in detail our objections to the new arbitrary FIA proposals and we will release details of our concerns in the near future which will constructively explain why the FIA’s proposals are bad for the future of Formula One, the jobs of those employed within the motor-racing industry and especially the millions of loyal fans who are dismayed and confused at the internal bickering within our sport.
FOTA statement

We await the details of their complaint with interest.

Formal complaint to the WMSC

FOTA has written directly to the World Motor Sports Council asking them:

We would urge your support to ensure the outcome of these meetings achieves a solution that allows long established competitors to continue in their sport within a framework of sound governance and stability that will ensure the future and sustainability of Formula 1.

I think we can interpret this as an open challenge to Mosley’s authority within the FIA. It is, in effect, turning Mosley’s tactics of divide-and-rule on the governing body, inviting anyone within the WMSC who disagrees with Mosley to take him on.

The next FIA presidential elections are in October, and it’s worth remembering that when striving to win a vote of confidence last year following the sadomasochism scandal, Mosley stated he would not stand for re-election this year. He has since indicated he is considering putting himself forward again after all.

Support from the ACEA

In an unexpected development, FOTA has also called upon the support of the European Automobile Manufacturer?s Association. It issued a statement which read:

ACEA has come to the conclusion that the FIA needs a modernised and transparent governance system and processes, including the revision of its constitution, to ensure the voice of its members, worldwide motorsport competitors and motorists are properly reflected. The ACEA members support the activities and objectives of the Formula One Teams Association to establish stable governance, clear and transparent rules which are common to all competitors to achieve cost reductions including a proper attribution of revenues to the F1 teams, in order to deliver a sustainable attractive sport for the worldwide public.
ACEA statement

The ACEA chiefly represents European car makers to the European Union. Of late its business has largely involved reaction to the recession and lobbying the EU for state funds to support the manufacturers. Prior to that it was involved in discussions to reduce the emissions of cars sold in the EU.

It represents several manufacturers which have F1 teams – BMW Group, Daimler (Mercedes), Fiat Group (Ferrari), Renault and Toyota Motor Europe – as well as DAF Trucks, Ford of Europe, General Motors Europe, Jaguar Land Rover, MAN Nutzfahrzeuge, Porsche, PSA Peugeot Citro??n, Scania, Volkswagen and Volvo.

Conveniently for FOTA, this year’s head of the ACEA is Carlos Ghosn, CEO of Renault, who said earlier this week that badly reform is needed in F1:

Today we pay to be in Formula One and that is not normal. Intermediaries have made enough money. We want to take back control of Formula One.
Carlos Ghosn

It’s not clear what kind of impact ACEA might bring to bear on the situation. But the FIA has had run-ins with the EU in the past.

What the FIA say

FOTA’s grievances about governance have so far been met with stony silence from the FIA. But how much longer can it ignore this issue, which has become the core part of FOTA’s objections?

The war goes on

Expect another salvo to be fired on Saturday when Ferrari chairman Luca di Montezemolo holds a press conference before the 77th running of the Le Mans 24 Hours begins.

F1 may have finally reached a watershed moment. We have become used to seeing disputes over the future of the sport – customer cars in 2007, the GPMA in 2005-6 – but this crisis is taking on a different feel.

Perhaps it’s the lateness of the hour and the constant postponement of deadlines, or the irreconcilability of the FIA and FOTA’s positions, or Max Mosley’s failure to even acknowledge FOTA’s complaints over his style of governance.

But it is beginning to look like this situation cannot be resolved without drastic change – either at the top of the FIA, or with several major teams departing to form a new championship.

Read more comments on the news as it broke in here: 2010 F1 teams list to be announced (Update: FIA has revealed list)