So after a great start to the 2012 season the F1 teams have left Melbourne and are on their way to (or have already arrived in) Malaysia. Aside from the racing, which is sometimes more interesting than the politics of F1, is a recent piece on the Autosport website by two well connected F1 journos: Jonathan Noble and Dieter Rencken. The piece is significant as it suggests the underlying reason as to why both Ferrari and Red Bull Racing left the team’s association: FOTA.

One of the perpetual tensions between Bernie Ecclestone’s Formula One Management (FOM) and the F1 teams, is that the teams feel that they are not receiving their rightful proportion of the media/ circuit revenues – as they are a key part of the show – and Mr E points out that they are taking none of the risk in running races and securing media deals and therefore do not deserve a more significant share of the benefits. The indications from the Autosport piece is that this could be the start of a process where some of the teams actually end up taking a stake in the commercial side of F1. They speculate that Ferrari shares could be transferred to provide them with a stake in the sport – you may have seen that the Lehman Brothers $1.5billion stake in F1 is up for sale, so ‘go figure’ as our American cousins like to say.

While the Autosport piece makes no direct reference to Red Bull Racing, or their owner Dietrich Mateschitz, acquiring a stake, they do mention RBR in the same piece with a quote from Christian Horner, so there is a certain amount of implication by association going on. An investment by Red Bull would make a lot of sense as Mateschitz currently owns two teams (RBR and Toro Rosso) and so, you could argue, is more exposed than individual teams and could therefore, like Ferrari, see the sense in acquiring equity in FOM. This provides a rather persuasive explanation for why they left FOTA, as presumably this placed some restriction on their flexibility in dealing with FOM, which could involve a range of issues, including share swops or buying shares for cash. Of course all of this is pure speculation at present, but I suspect the story will unfold simultaneously with the negotiations for the Concorde Agreement. I hope that the politics etc. don’t become more interesting than the racing, because I hope the racing will be fantastic this year, but I suspect that we will have a fascinating sideshow evolving that will certainly bring about some different arrangements than we have seen in the past. Don’t expect more of the same.

The Future of FOTA

December 7, 2011

The news that both Ferrari and Red Bull Racing are planning to withdraw from FOTA has led many to suggest that this is the end of the team’s association. Clearly it is better for the teams to act as one if they wish to get a bigger share of the FOM revenues, but as seems to always happen, self interest is the decider at the end of the day. They are all agreed that they want to reduce costs – doesn’t any organisation? The important question is therefore how do you do it? When you’ve got your own bespoke test track then a ban on testing means you can’t use one of your key assets to improve your performance, so you can see why Ferrari would feel that being in FOTA isn’t in their best interests, RBR are in a different situation where their business model is a very different one to the other teams, so, again it may make better sense for them to go their own way. Of course we also have HRT who were the first to leave FOTA back in January 2011. The other reason rumoured for the departure of Ferrari and Red Bull Racing is the issue of third (or fourth) cars where constructors are allowed to sell/loan their cars to other teams, a practice well used in the 1950 and 60s. Stirling Moss’s legendary victory for Lotus at Monaco in 1960 was not achieved for Lotus Racing, but for Rob Walker’s private team using a Lotus 18. This is an issue which FOTA has been divided on and it could be argued that building more cars would effectively reduce the costs of certain teams such as Ferrari and also for RBR, whose original concept was to provide cars for Scuderia Toro Rosso. It’s just a very different way of achieving the same objective.

However regardless of the reasons for Ferrari and RBR to leave the team’s association, does this spell the end of FOTA? As history has a habit of repeating itself, it is interesting to note that in the controversies around previous Concorde Agreements, there were three teams who were united in refusing to sign up to the fourth agreement which was due to run from 1997 to 2002. They were McLaren, Williams and Tyrrell. In many ways it was this stand that led to the financial demise of the Tyrrell organisation, a team who had dominated F1 in the late sixties/ early seventies. Eventually a revised, fifth, agreement was drawn up which included the three teams and was to run from 1998 to 2007. The current (sixth) agreement is to run until the end of 2012, and this is where the negotiations are focused. The point of history is that the three teams who resisted the fourth Concorde Agreement are very much at the heart of FOTA today, McLaren providing the chairman, Williams a committed participant and the team that was originally Tyrrell Racing has now morphed into Mercedes GP (sorry Mercedes AMG GP!), via spells as British American Racing and Honda, with senior management team Nick Fry and Ross Brawn very much committed to FOTA. So even if FOTA doesn’t represent all the F1 teams, it may represent a significantly powerful voice that can influence the terms of the seventh Concorde Agreement, if it holds together.

The Three Futures of #F1

December 1, 2011

With the 2011 season now at an end the teams are working even harder on their 2012 cars. We are also getting more clarity on driver line-ups, with F1 very much in tune with work practices in general - extending the retirement age with Kimi Raikkonen now returning to F1, this time with Lotus Renault, not sure if he’s having to make bigger pension contributions.

But while much of the media attention focuses on 2012, the movers and shakers: the Team Principals and FOTA, the FIA, Formula One Management and CVC are all focused on 2013. This is when a new Concorde Agreement should come into effect. Recently in the FT, Leisure Industries Correspondent, Roger Blitz aligned the politics of F1 to those of the Eurozone, with an intense battle emerging between the haves (Bernie and CVC) and have-nots (FOTA and FIA) – my definition not Roger’s. The complex web that is the governance of F1 is yet again going to be stretched and rewoven, and currently, no-one is quite sure how this will all end up. Certainly we will see Bernie at his best – he always enjoys a good fight – and will undoubtedly be focusing on divide and rule with the teams, not a new strategy, but always an effective one, but who knows perhaps Martin Whitmarsh and his peers will be able to keep FOTA united and carve out a good result? The key is going to be where the FIA end up. In the past they have traditionally aligned against the teams, but perhaps this time we will see a new permutation? Expect plenty of off-track fireworks during 2012.

However there are those in F1 for whom 2012 and 2013 matters not a jot: for the technical strategists in the teams work is well underway for the 2014 regulations which will require the cars to have 1.6 litre V6 power units and substantial Energy Recovery Systems (ERS) to harvest and reuse the energy to improve performance. The engine manufacturers are well underway with a variety of permutations and concepts and the teams will be keen to see how they can build the optimum package from this new powertrain.

All in all the next few years are going to be a busy time for anyone involved in F1, regardless of whether or not the Eurozone holds together.

I’ve just got back from Geneva where I gave one of my ‘Business Lessons from F1′ talks to the Young President’s Organisation, Alpine Chapter. What a great bunch of people. They decided to hold the event at a karting venue somewhere north of Lausanne, the original plan was for me to present then they would do some karting and finish with some Raclette: sliced melted cheese with gherkins, potatoes and wine -  great! Sensibly they decided to change the order as everyone really wanted to get on with the karting, so it was karting first. That gave me a bit of a dilemma as I had been invited to take part in the karting and my credibility as a motorsport speaker would now depend on my performance on the track as well as with the Powerpoint, I’m sure Martin Brundle doesn’t have these kind of concerns. Fortunately I managed to aquit myself reasonably well, winning my heat, but then declined to take part in the final as I had to (!) prepare my presentation, so all went well in the end, but racing before presenting was a first – I must do it again.

So after a very enjoyable evening I was driven back to Geneva where I checked my Emails to find that, by sheer coincidence, my good friend and co-author Richard West was also in Geneva. We met up on the Rue du Rhône the following morning and sorted out the global economy and the world of F1 over an Americano and Cappucino overlooking where the Rhône emerges from Lake Geneva. But the coincidences continued, on my stroll back to my hotel to get a taxi to the airport I noticed a small plaque on a building which somehow looked familiar. I looked more closely and saw the words ‘FOTA: Formula One Teams Association’, interesting. I wonder what role this organisation will play in finalising (or not) the next Concorde Agreement to run from 2013, there’s a lot at stake and it will be over the next eighteen months or so that the future face of F1 will be defined, so it will be fascinating to see what role the little office in Geneva will play.

Are we on the verge of another FIA, FOG, FOTA war?

There is no doubt that the 2010 Formula 1 season has been one of the best in the history of the sport. Five drivers and three teams all vying for the world championship, fantastic races (with the exception of Bahrain), the results very hard to predict and a paucity of the kind of off-track politics and scandal that dogged 2008 & 2009. However, I am sorry to say that I doubt that 2011 will be to the same standard, and I’m not referring to the racing here, but things are beginning to simmer gently between FOTA, FIA and FOG and are likely to start boiling over in 2011. The history of F1 can be described as brief periods of calm punctuated by major disputes and upheaval and such periods of upheaval are normally characterised by power struggles and it looks like we might be entering another one in the run up to the 2013 Concorde Agreement.

We essentially have three protagonists involved, FOTA, led by Martin Whitmarsh who represent all twelve teams (and the number seems unlikely to exceed twelve in the build up to 2013), FIA led by Jean Todt who represents the regulatory body and who ultimately control the sport of Formula 1 and FOG led by Bernie Ecclestone who are the commercial rights holders for F1, on behalf of FIA. A sudden peace broke out between the parties in 2009 when the threat of a breakaway FOTA series was averted by all three reaching agreement to move forward together on the basis of a variety of conditions, one of which was that Max Mosley, then President of FIA, would step down and not seek re-election. But that was last year and now attention is focused on the commercial and technical arrangements that need to be agreed from 2013 onwards. Given that it would be better for all  involved to get agreement in place sooner rather than later, that doesn’t leave a lot of time, and it is likely that 2011 will be the year that most things get agreed, if they get agreed.

Martin Whitmarsh has made an interesting statement to autosport.com in which he says:

“I think to now rewrite [The Concorde Agreement] is possible and, if you cannot get agreement, you have to look at all your options. Arguably the teams do not need the FIA, and the FIA does not need the teams. Arguably the teams do not need the current commercial rights holder, and the commercial rights holder does not need the current teams. We can all go our own ways. The FIA can have its FIA championship; there can be a GP1 with CVC, and F1 can go off and do Grand Prix racing; and the teams are big enough and ugly enough to do that as well. But to do all that would be counter productive – we should try and find a way of working together.”

So the message is pretty clear (he’s probably had coaching from Rob Smedley on giving coded messages), if we don’t like your terms FIA and FOG, we can go off an do ‘Grand Prix’ racing, and we’re big enough to do it if we want to. Let battle commence (or rather continue).

Follow

Get every new post delivered to your Inbox.

Join 1,229 other followers