MARCH 18, 2009

The dangers of getting what you want

The Formula One Teams' Association had to react to the FIA proposals for 2010, but found itself in the very difficult position of having been given much of what it wanted. It is hard to argue against the FIA's moves when one has declared that one wants to reduce costs and maintain the DNA of modern Formula 1. The new proposals for a budget cap with more technology allowed is exactly what FOTA wants - at least in principle. In reality FOTA is not keen on such a drastic measure because of the vested interests of those teams that still have money to spend and have invested so heavily in the past. They want to continue with the current cars and be allowed to spend whatever they can get. It is doubly difficult for the manufacturer teams because the top management of the car companies are almost certain to look at the FIA proposals and see the logic in them so the teams will be squeezed from both sides into going down the alternative route. In the end, the FIA's right to balance the performance of the two kinds of car, means that the only logical route forward is to accept the budget cap and go for the high technology-low cost approach, rather than the high cost-low technology option.

"FOTA would like to express its disappointment and concern at the fact that these have been taken in a unilateral manner," said FOTA boss Luca di Montezemolo is a statement. "The framework of the regulations as defined by the FIA, to be applicable as from 2010, runs the risk of turning on its head the very essence of Formula 1 and the principles that make it one of the most popular and appealing sports. Given the timeframe and the way in which these modifications were decided upon, we feel it is necessary to study closely the new situation and to do everything, especially in these difficult times, to maintain a stable framework for the regulations without continuous upheaval, that can be perplexing and confusing for car manufacturers, teams, the public and sponsors."

The FIA argues that F1 is all about engineering skill and should not be about money and that the action was needed very quickly because of the global economic crisis. There is logic in both these arguments.

There was little more that Montezemolo could say. With $42m budgets and considerable income from the Formula One group, teams will now have to find very little cash in the future - and the Formula One group will have to worry less about having to restructure its debts because the teams will not need more money than they are getting. It may be that new holding companies will be organised to collect money for the teams and these will then pay out only what is needed, with the remainder being available to diversify into other businesses which can use the F1 technologies in other spheres, which may help the teams to reduce the need for redundancies. We may see a number of teams deciding to entire different formulae to use up the money and keep its people employed.

In any case, F1 teams can now become profit centres and they will thus have a greater value and will be much more attractive to other car manufacturers who were scared away by the scale of the investment necessary. The teams will be able to slash driver fees to nominal sums (the drivers can market themselves to sponsors and thus maintain their salaries). Thus efficiency will become a key part of F1, which will appeal to the car industry - which may find it can learn from the ideas developed in F1 - and this will help to change the image of F1 as being wasteful.

All things considered, the FIA has come up with a highly elegant solution to the problems of the sport. That may be a blow to the political ambitions of FOTA, but it is a sign that the FIA is still a powerful force to be reckoned with. The best way forward remains for all parties to work together for the good of the sport and we can only that this will be what happens.