Saturday, 20 June 2009
F1: The Case For Change
There are two real bones of contention here, one financial the other regulatory. Looking at the latter first, in previous years F1 was regulated by the Concorde Agreement, which very effectiely determined what could be changed about the sport and what couldn't. Primarily it required the agreement of all the teams for major rule changes. That agreement lapsed a couple of years ago and no replacement was ever agreed, which has meant that the FIA have been able to chop and change rules at their whim. For businesses making long term financial commitments to the sport that kind of governence is rightly unacceptable.
One of the results of this freedom to change things has been the contentious budget cap, restricting teams to spending an agreed sum (the actual figure seems to be a moving target at the moment, depending on where negotiations are at any time).
This directly relates to the second bone of contention - money. Approximately half the revenue generated by F1 goes directly to a mysterious company called CVC, run by Bernie Ecclestone to whom he sold the commercial rights to F1 for $2billion a few years ago. The teams (again rightly) argue that as the whole show depends on them they deserve a bigger cut of the revenue to help offset some of the costs. CVC are unable to support their current loan position on any lesser cut of the revenue so Bernie has brought pressure to bear on Max to cap the team's budgets purely to kill their argument for a greater slice of the pie. Don't be fooled that the budget cap serves any other purpose.
There are of course subsiduary issues, the loss of the North American races, which the manufacturers see as a prime market, the scaling back of European races - again prime territory - and the move to a less and less 'Premium' championship, making the link between road cars and F1 technology a lesser selling point and less recognisable as a benefit of racing endeavours.
The FIA have called FOTA's bluff on these issues and FOTA have reacted accordingly. Who has the strongest hand? I guess we'll find that out next Spring...
Posted by elbowz at 11:16