Honda F1 website

FEBRUARY 4, 2006

Mosley's big opportunity

FIA President Max Mosley is often accused of playing political games in Formula 1 because he cannot play in real politics. Mosley was made for politics. His father Sir Oswald Mosley was a brilliant man in many ways and Max inherited many of his talents. Alas, Sir Oswald's involvement with the British Union of Fascists in the 1930s ruined his political career and turned the name Mosley into electoral poison. That taint endures, as was proven a few weeks ago when 10 historians were asked by the BBC History Magazine to compile a list of the 10 "worst" Britons of the last 1000 years, picking one Briton from each century. Mosley was chosen for the period 1900 to 2000 and Professor Joanna Bourke of London University's Birkbeck College said that Mosley continued to have "a pernicious impact on our society" as an inspiration for extreme nationalist groups in the UK.

Growing up with such a taint on the family name cannot have been easy for Max and it frustrated any hopes he had of a political career in Britain. At Oxford University he was secretary of the Union, one of the posts which is often used as a starting point for a successful political career. Past officers of the Oxford Union have included Prime Ministers William Gladstone, Herbert Asquith, Harold Macmillan and Edward Heath plus an impressive list of government ministers.

Alas, in Mosley's case his father's activities meant that British politics was closed to him and so he gravitated to motor racing and ultimately became the leading politician in a sport which, some would argue, could survive perfectly well without such political upheaval. The politics is based on who gets the money and if there was a fairer system of distribution there would be fewer arguments.

When he was standing for election to the FISA (a division of the FIA at the time), Mosley argued that "the only area that works properly is F1 and, at the moment, that is the area where most time tends to be spent. I think that's a great mistake. There are so many things in the FISA which don't work that I would be devoting most of my time to them. I think if you had a similar system to F1 in other areas the whole of motor sport would be much stronger. F1 gets on and runs itself. I see no need for the FISA president to become involved in the thing at all."

And yet since he has been FIA President Mosley has been anything but shy and retiring in F1 matters, particularly in the last two years. One area which he is not allowed to get involved with is the financing of the sport. The European Union reached a settlement with the parties involved in F1 in October 2001 and there followed two years of monitoring. Since October 2003, therefore, there has been no scrutiny from Europe but under the terms of that agreement the FIA agreed that its role would be "limited to that of a sports regulator, with no commercial conflicts of interest" and that it would have "no influence over the commercial exploitation of the Formula 1 Championship".

The Evening Standard reported yesterday that "Mosley has recommended to F1's commercial supremo Bernie Ecclestone that he scrap an income sharing deal to the teams owned by BMW, Mercedes, Renault, Toyota and Honda. Instead Mosley is proposing that those teams rely solely on sponsorship for their income, with the money saved from the new deal being ploughed back into supporting smaller independent teams" and quoted Mosley as saying that "I believe it would be entirely reasonable to offer the manufacturers that join the Formula 1 World Championship no income".

Our sources say that Mosley also told the journalist in question that the saved money "should go either to all independent teams equally or be weighted in favour of the least successful independent teams. This is because the unsuccessful teams get a disproportionately small share of television coverage. For example, they might have only 5% of the TV coverage (and thus sponsorship income) of a front-running team, but are faced with far more than 5% of a leading team's costs. These costs are difficult to meet with insufficient sponsorship."

The reaction of the GPMA is thus not at all surprising, citing surprise at Mosley's comments, "in view of the EU ruling on the role of the governing body" and saying that it is continuing its discussions with the commercial rights holder.

The distribution of money is a very important question in motor racing, not simply in Formula 1. There are arguments that manufacturers have more money and thus have an advantage over the smaller teams and that in order to compete the smaller teams should be given more, but the problem with that is knowing how to define the term manufacturer. Any company that builds road cars is by definition a manufacturer. If ownership of teams was the criterion then inevitably manufacturers would play with shareholdings and get around the problem. McLaren, for example, is a private team on paper but stands with the manufacturers. Ferrari is owned by Fiat but claims not to be a manufacturer team.

The fact is that no-one outside the group of F1 players cares a jot about who gets what because none of it helps the sport in general.

Much more interesting is the fact that in the 2000 deal between the FIA and the Formula One group to lease the commercial rights to F1 until 2110 there is a clause which allows the federation to take back the rights in the case of a change of control. The details of this clause are not public but Mosley has often told journalists of its existence. The control of the Formula One company has been with Bernie Ecclestone in the six years since that deal was struck. He has retained a shareholding in the company and been the chief executive.

But the sale of the business to CVC Capital Partners, a deal which is currently being considered by the European Union, would seem to constitute a clear change of control as the majority of the shares (86% of the company and 100% of the voting shares) have been acquired by a company called Alpha Prema UK Ltd. Bernie Ecclestone is still involved in this new business but in legal terms there will be a new owner and the FIA will thus have the right to say yes or no to the new ownership. This is thus an opportunity for Max Mosley to redefine the terms of the agreement in the best interests of the sport. The commercial rights to F1 until 2110 were leased for the sum of $360m. Given that the Formula One group made a profit of $447m in 2004 (its last publicly-available accounts) this means that profits from that deal will be enormous in the course of the next 104 years, particularly as the repayment of a bond issue will soon be completed, and so the annual profit will increase. It can be argued that the FIA leased the business far too cheaply and that this allows too much money to leave the sport.

With the change of control clause, however, this can be renegotiated and it must be in the best interests of the sport for Mosley to work a deal which would see some of the money being put back into the sport. CVC Capital Partners is still going to make vast sums of money from the deal because to date large areas of the commercial rights have not been developed to the extent that they might have been. Formula 1 is a money-making machine and careful nurturing will mean that this will continue for many years to come. The manufacturers are part of that success and it is not wise to make life more difficult for them. What would be right would be for the FIA to win back a chunk of the money to help the development of the sport so that each national sporting authority could invest in the sport in its individual country.

Mosley's goal has always been to use his talents to re-establish the family name by doing something positive. He has achieved much at the FIA as his appointment to France's Legion d'Honneur last week attests but he could achieve so much more if he were to use his position and power to restructure the funding of global motorsport. Mosley is now approaching his 66th birthday. He will retire in 2009 because he is not allowed by statute to stand for another term of office (although, of course, powerful rulers have been known to change laws in such matters) and his opportunities to change the world are limited. In terms of his personal quest for family redemption, rethinking the 100 year deal should be more tempting than messing around with the motor manufacturers.