FOTA trouble is good for Bernie Ecclestone

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Christian Horner, Bernie Ecclestone, Red Bull, Interlagos, 2011

Christian Horner, Bernie Ecclestone, Red Bull, Interlagos, 2011

Ferrari and Red Bull have handed Bernie Ecclestone an early Christmas present.

The news that two of F1′s richest teams have left the Formula 1 Teams’ Association in a dispute over the Resource Restriction Agreement is a potentially mortal blow to FOTA.

With discussions pending over the new Concorde Agreement – the document governing how F1 is run – Ecclestone now knows the teams won’t necessarily be presenting a united front to safeguard their interests.

Yesterday both Red Bull and Ferrari issued statements stressing the important of controlling costs. It’s hard to take that at face value when they’ve abandoned the body which is best-placed to agree on future cost reductions.

Ferrari and Red Bull abandon the RRA

On the Friday of the Brazilian Grand Prix weekend Horner expressed hope that a solution could be found to the disagreement over the RRA:

“We met this morning and it has been decided that the RRA has effectively been taken out of FOTA for the time being, to try and achieve a solution.”

He added: “I think an RRA is important for Formula 1 and I think all the teams are unanimous on that. I think the thing that isn’t quite clear is how to achieve it in a way that fits everybody’s business models, that some of the teams are different, and I think the key thing for us is that the treatment and transparency of it is consistent and obvious and probably needs to go beyond the chassis and incorporate the engine as well.

“You can’t cherry-pick, you need to look at the package as a whole. Hopefully, in discussions prior to the end of the year a solution can be found but I think that inevitably we come more under the spotlight because, as I said earlier, perhaps if we hadn’t had as much success this year then it would be less pertinent but that’s the way of the world, but from a Red Bull point of view we’re keen to find a solution and we’re hopeful that one can be found between now and the end of 2011.”

Horner had previously played down the important of FOTA, saying in a joint interview with Bernie Ecclestone earlier this year he “doesn?t spend too much time thinking” about the teams’ organisation.

Whereas Ferrari’s hostility to resource restrictions such as limits on testing is no secret, on the surface it may not appear obvious why Red Bull might be dissatisfied with the status quo.

Testing and resource restrictions have not kept them from winning back-to-back constructors’ championships plus a pair of drivers’ titles for Sebastian Vettel.

As Horner alluded to, Red Bull have been vexed by insinuations (some originating in Maranello) that they have not respected the RRA and therefore have unfairly earned their success. None of these claims have been backed up by proof, but they highlight a fundamental weakness of the RRA – the difficulty of assessing who has stuck to the cost controls.

Engine development

Beyond maintaining the existing RRA, teams faced a further challenge in incorporating the new engine rules for 2014. We may be more than two years away from the first race with V6 engines and highly complex new energy recovery systems, but development of the units began months ago.

Under the current engine freeze the RRA has little effect on engine development. But the prospect of teams building new engines for 2014 presented a complicated challenge.

The difficulty of finding a fair formula to extend the RRA to include engine development beyond the current frozen-specification V8s is plain to see. Next year four teams will be supplied by Renault, three each by Mercedes and Ferrari and two by Cosworth. On top of that, Ferrari and Mercedes have their own F1 teams but Renault and Cosworth do not.

Renault’s Jean Francois Caubet explained last week: “We want to avoid the same situation we had three or four years ago.

“I think in the cost of engines, you have fixed and variable costs. All the people are selling the engines on the variable costs, so if you control the fixed costs it will be easier.

“We agree with Mercedes to share the same philosophy with Ferrari. It is a little bit late because all the investment for the 2014 engine has started, but the problem will be after 2013, probably, to accept the RRA.”

Advantage Ecclestone

Red Bull and Ferrari’s decision to leave FOTA and, therefore, ditch the RRA, leaves McLaren and Mercedes with little choice other than to follow their lead. The only alternative would be to tie their hands by continuing to restrict their spending, which looks unrealistic.

But the impending collapse of the RRA and FOTA has ramifications beyond just unleashing a fresh frenzy of spending by F1′s richest teams.

With the teams poised to negotiate a new Concorde Agreement, Bernie Ecclestone will be rubbing his hands with glee anticipating only having to deal with a weakened FOTA union.

If this all seems like history repeating it’s because it is. Past F1 teams unions – including one run by Ecclestone himself in his Brabham days – have always ended with a split.

The next step is for Ecclestone to pull his usual trick of offering Ferrari a preferential deal to stay in Formula 1, eventually leading to the capitulation of the remaining teams. And don’t be surprised if a few more items on Luca di Montezemolo’s shopping list – more testing, three-car teams – appear as well.

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69 comments on FOTA trouble is good for Bernie Ecclestone

  1. Tom Bisset (@pianoshizzle) said on 3rd December 2011, 23:57

    Tell me if I’ve missed the point but I’ve had an idea:
    what if instead of RRA, there was a budget cap and fewer technical limitations.
    I.e every team can only spend X amount of money, but they have more technical freedom. Therefore, the big teams cannot outspend the smaller teams. (However, they would still be able to price them out by offering bigger saleries to the best engineers?) Thoughts anyone?

    • Keith Collantine (@keithcollantine) said on 4th December 2011, 0:04

      @pianoshizzle It would be a case of same problem, different name.

    • HoHum (@hohum) said on 4th December 2011, 23:43

      I want more development and less restriction but your suggestion wont work as teams like Mercedes are doing enormous amounts of research and development with forced induction for their road cars, that research will cost the race team nothing, Ferrari will no doubt have to place more emphasis on smaller forced induction engines but the research costs will not be in the F1 budget, other engine suppliers will have to do their own research and pass the cost on to the teams.

  2. wasiF1 (@wasif1) said on 4th December 2011, 4:32

    I can’t wait to see Bernie’s Christmas Card.

  3. Kolomino (@kolomino) said on 4th December 2011, 10:52

    If they want more testing, why don’t they just extend a few race weekends by a couple of days?

  4. Grammo (@grammo) said on 4th December 2011, 17:06

    Another way to look at it is to say that ultimately RRA has restricted team spending. It has bunched up the pack.
    Yes teams are bending the rules, I’m sure they all do. So in a way it balances. You bend to much it will fly back and hit you in the face. Plus the intrigue makes great publicity.
    In the end the best team wins.

  5. themagicofspeed (@) said on 4th December 2011, 23:06

    I think if you look at F1 teams spending, there is a pattern that develops.

    Top Teams – Ferrari, Red Bull, McLaren, Mercedes
    Mid Field – Lotus/LRGP, Force India, Scuderia Toro Rosso, Sauber
    Backmarkers – Williams, Caterham/Team Lotus
    Mobile Chicanes – HRT, Marussia

    Top teams attract more sponsors than lesser teams, get a larger share of the sport’s profits (Bernie), and have a higher budget available to them as a combined result.
    Midfield teams are the same except with all of these factors reduced.
    Backmarker teams sometimes struggle to attract comitted quality sponsors, have less disposable income, and get a much smaller, if any, share of the profits from FOM. Thus, the lower down the grid you are, the more comprehensively you are doomed to fail.

    The lower teams naturally want the spending of the bigger teams to be limited, so as to at least give them a chance, but the bigger teams will not accept this, and thus leave the RRA and the agreement is no longer worth the paper it is printed on. There will never, never ever be a way to make Ferrari or McLaren et al agree to budgetary parity with say, Virgin. They would have to make redundant hundreds of staff, possibly close parts of their factory, use lower quality components, hire lower paid drivers…the list goes on. This wil never be solved, imo

    • HoHum (@hohum) said on 4th December 2011, 23:47

      The way to make budget parity between the top and bottom teams is simple, just rename GP2 Formula1.

      • themagicofspeed (@) said on 5th December 2011, 22:19

        To an extent, i agree. There was a (breif) discussion a few years back about having a standard car, as in GP2, FR, etc, to even out the field and enable talented drivers to show the depth of their talent, but ultimately F1 is about constructors, making racing cars, and being at the cutting edge of technology and engineering – thats what F1 is all about. Standardised cars would not work for F1 as they do in other formulas because it would take away some of the DNA of what makes F1, F1.

        I do however, think it would be more beneficial to have McLaren, RBR, Ferrari run an extra car and dispense with Virgin + HRT, BUT, it would drive midfield teams out of business within a season or two due to their inability to compete for points. That would mean losing Renault, Williams, Sauber, to name a few.

  6. The Limit said on 6th December 2011, 18:21

    Quite true Keith. This news is also very damaging to the smaller teams in Formula One who don’t build expensive Italian sportscars or have energy drink money behind them. It just goes to prove the old saying that ‘money talks’ and F1 is most definately based on money. The teams, especially the big teams, have moaned about the restrictions on testing for years which is nothing new. I am not a supporter of Ferrari’s idea of three car teams, we would lose the smaller teams within a few years if that happened and no one wants that.

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