FIA and FOTA remain deadlocked on F1 governance and budget cap

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)

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67 comments on FIA and FOTA remain deadlocked on F1 governance and budget cap

  1. Now here’s something interesting regarding how the new teams were chosen, who by, and why FIA claim there hasn’t been new team arrivals for some years. Think back to the $40 million dollar bond imposed by who?
    Check the last sentence of the second answer, and the last sentence of the last answer.
    http://www.formula1.com/news/interviews/2009/6/9491.html

    • HounslowBusGarage said on 13th June 2009, 14:12

      So a short list of five was presented to Max . . .
      And I thought the bond was imposed by Max too in order to guarantee the ‘seriousness’ of the entrants.
      All roads lead to Max.

  2. VXR said on 13th June 2009, 11:17

    We should be careful what we wish for!

    It’s interesting that the ‘Le Mans’ teams are welcoming FOTA to their ranks,but have shown no interest themselves in ever wanting to ‘jump ship’ the other way.Why is that I wonder?

    My understanding is that FOTA will think twice before letting any other manufactures join their little band,private teams maybe,manufactures definitely not.Do we really want to see the same old manufacturer teams year after year?

    • persempre said on 13th June 2009, 11:58

      My understanding is that FOTA will think twice before letting any other manufactures join their little band,private teams maybe,manufactures definitely not.Do we really want to see the same old manufacturer teams year after year?

      Got a source for that, VXR?
      I`ve never heard FOTA discuss the topic of who in future should or should not be admitted.

      • VXR said on 14th June 2009, 1:36

        Got a source for that, VXR?
        I`ve never heard FOTA discuss the topic of who in future should or should not be admitted.

        My source is at Le Mans at the mo,I’ll be getting an update fairly soon though.

        How he laughed when ‘Monty’ said that “Ferrari’s heart and soul are with F1″ Enzo must be turning in his grave.

  3. F1Yankee said on 13th June 2009, 11:26

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

    i don’t understand how that adds up. keith, could you elaborate, please?

    • Tom Watson said on 13th June 2009, 14:50

      I think – prodrive is more of a serious threat to replace a team like bmw, rather than we will replace you with manor racing. So it is kind of like, we have teams of a good pedigree who can easily replace you, so replacing like for like instead of good replaced by not so good, if that makes sense

      • persempre said on 13th June 2009, 17:19

        Yes & also that by automatically entering 3 teams who don`t want to be there & demanding the others sign unconditionally within a week, Max is trying again to split FOTA.
        F1 doesn`t need Ferrari according to Max so why enter them?
        If he had treated all FOTA similarly he would have been able to fit 3 more of his new teams in.
        He may also have left out the bigger new boys to make a point.
        After all an F1 with only small outfits would be much easier to control. ;)

  4. matt said on 13th June 2009, 12:39

    I think that no matter how much Mosely insists F1 doesn’t need any established teams, most people with votes in the election will see that F1 can only exist with prestigious namess like Ferrari, McLaren and current innovators like Brawn and Red Bull. They’ll see that Mosely is being careless potentially losing them and the support of millions. The tifosi would leave, Alonso may leave meaning a lot of spanish fans would disappear. I may even stop watching. I’d have thought the BBC may have an escape clause too, otherwise they’ll be forced to spend a fortune filming an airing a series no one will watch.

  5. FLIG said on 13th June 2009, 12:47

    I understand that many people are angry and hate Mad Max, but I think that he has his merits too. F1 is not just a sport, not just racing. Like everything else in the world, it’s also business. And business changes all the time. I don’t understando why most people SIDE with FOTA. I’m not siding with Mad Max, but to say that we have to trust F1 to people like Briatore and Montezemolo!? What the hell is this about? Everyone says that Max is not thinking about what’s best for F1, just thinking about getting more and more for himself. And Briatore? Montezemolo? What are THEY trying to do?

  6. Accidentalmick said on 13th June 2009, 12:53

    @ Flig

    I think you are missing the point. “people like Briatore and Montezemolo” create the show for us to watch. Mosley brings no added value to the event.

    • FLIG said on 13th June 2009, 18:50

      I’ll have to disagree here. Maybe Briatore, yes, in 94/95. But they are actually trying to steal the show. They obviously DON’T want a big show, they want their very private show, among 3 or 4 rich guys to exchange championships. Who’s won since 90? Williams, McLaren, Briatore (Renault+Benetton) and Ferrari. No one else. And they don’t want Brawns and Jordans and and Campos and Epsilon Euskadis winning championships.

  7. b0son said on 13th June 2009, 14:04

    I’m surprised this hasnt been brought up, but…

    IF the budget cap comes in, be it staged ($100mil this year, $40mil next), or at once, that’s a MASSIVE cut in staff levels across F1.

    Has Max considered the impact on all these workers and their families? It astounds me that anyone could be so insensitive. Shouldnt they be adopting measures to MAINTAIN employment during an economic downturn?

    • HounslowBusGarage said on 13th June 2009, 14:18

      b0son, yes this has been mentioned on various threads on the blog. And I think it was one of Ferrari’s arguments too in that personnel plans had already been made for 2010 and changes of the magnitude proposed would take another season to implement.

      • FLIG said on 13th June 2009, 18:52

        I remember once, I read that the F1 was, on a single event, the thing that circulated more money in all the world. No event is bigger, financially speaking, than F1. In times of crisis, it’s just OBVIOUS that things have to change. The whole world’s priorities are changing, it’s not just a question of how fast cars can go or how many britons can win championships.

  8. Keith Collantine (@keithcollantine) said on 13th June 2009, 19:00

    Another thought on why the FIA picked Campos, USF1 and Manor to be promoted. Manor boss John Booth said in an interview:

    It’s really the budget cap that’s enabled us and other new teams to come in and compete.

    Did the FIA prefer to promote the new teams that would need the budget cap to compete, rather than those who might need only need a cost reduction of the order promised by FOTA?

    Or, to put it another way, might Prodrive and Lola be persuaded to compete in a potential FOTA championship?

    • VXR said on 14th June 2009, 1:46

      Or, to put it another way, might Prodrive and Lola be persuaded to compete in a potential FOTA championship?

      Why would they want to spend more money on not being in Formula One ?

      I think that the FIA held them back to say: Look,if you think that there are only three new teams capable of coming into F1 then you’d better think again!

  9. theRoswellite said on 13th June 2009, 19:01

    Only one problem really…the Berniemax. In this case the Second head seems to have seriously gone astray.

    My apologies for any French diction errors.

    OUR TWO HEADED MONSTER

    From open beak one tongue extending
    Repeats in call the shriek pretending,
    “I am the law, I am the ending,
    I have your heart, I have your spending.”

    L’etat c’est moi.

    While the second head in tilt displays
    An eye transfixed in stolid gaze,
    Upon the knot where it doth sit
    With claws sunk deep in legal writ.

    L’etat c’est moi.

    This bird of body girth unending
    Can only flop in flight pretending.
    While it’s two heads on necks entwined,
    Spin round about, unravel then rewind.

    L’etat c’est moi.

    Is this our future, this our past,
    To stand forever with pleas held fast,
    And our reward, just duff and feather dander
    Falling from our own, this Uber-Overlander.

    L’etat c’est moi.

    “THE STATE, IT IS I.”

  10. Xibi said on 13th June 2009, 19:01

    With the way things currently are, a split would be the best thing.

    But since when Formula 1 and Cost cutting started going together. They are an oxymoron as much as saying Fernando Alonso enjoyed his time at McLaren. Cost cutting and Formula One simply don’t go together. If they did, we wouldn’t have the inventions we have today and I can safely assume that some commodities in our lives wouldn’t exist.

  11. Chaz said on 13th June 2009, 19:44

    I’m looking forward to seeing who’s still standing at the beginning of round two on the 19th…

    • VXR said on 14th June 2009, 1:55

      I’m looking forward to seeing who’s still standing at the beginning of round two on the 19th…

      Someone is definitely going to be bringing out the big guns on that day I can tell you!

  12. F1Fan said on 14th June 2009, 16:43

    The hell with Mosley and the FIA. The teams make the racing. F1 should remain about the best drivers and technology. And that can only come from the manufacturers. And while we are on this, the FIA has royally screwed up several key decisions on regulations, venue selection, etc.

  13. Ronman said on 15th June 2009, 7:41

    With all Due respect Keith, i didn’t bother reading the post, as I’m really sick of this dilemma…

    Although i have respect for both Fota and Mosley, i think ultimately, the deadlock is solely for the redistribution of the earnings. For Carlos Ghosn to bluntly go out in public and say we need to get more of the pie summarises everything.

    when the economy was well and automakers were making money no one really cared that Ecclestone was reeling in the dineros, now that the Proverbial S**t hit the Fan(no pun intended),everyone wants in… and Both Mosley and Ecclestone don’t want that to happen.

    i understand their reasoning, why do you want more of our money, with lower costs, you wont need that extra 100 million because you will be cutting 400 million in costs (Ferrari’s case).

    in any case, i have a feeling this will end in one of two ways. FIA bends over and gives Fota what they want for the sake of the show, OR which i think will happen, FOTA will split, the FIA will carry on with F1 and a bunch of new teams. sue the FOTA members for breaching contract take millions out of their accounts. FOTA will try to establish a split run series, but FIA will not make it easy. hence a new F1 Era will emerge…. and the de-restricted Formula X we all dream of will be gone for good.

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