Formula One in a spin as teams cry foul over governance

Who's going to win F1's bitter power struggle between the racing teams and the governing body?

by
Last Updated: 31 Aug 2010

The future of Formula One, one of the world’s most popular spectator sports, was under serious threat this morning, after the top teams announced they were pressing ahead with plans for a breakaway series. F1 is big business these days, and the teams complain that they’re not getting a big enough share of the rewards, or a big enough say in how the sport is run. This puts them on a direct collision course with Bernie Ecclestone, the commercial rights holder, and Max Mosley, the president of the FIA governing body. Both men have got very rich from the spoils of Formula One – but they can’t keep doing this without the best cars and drivers…

In the last few months, the FIA has been wrangling with FOTA, the Formula One Teams Association, about changes to the rules. Mosley rightly believes F1 needs to cut costs and wants to bring in a £40m budget cap from next season – but big-spending teams like Ferrari and McLaren insist that although they’re working hard to cut costs, they need more time to get down to the £40m mark (and that it’s not fair to restrict innovation like this anyway). But with their arguments having fallen on deaf ears: the teams said in a statement this morning that they had ‘no alternative other than' to go ahead with plans to launch their own breakaway series.

Governance is one big problem. Mosley is notorious for his dictatorial style; the teams argue that he’s done things his own way, without taking their (or anyone else’s) views into account. Hence today’s pointed assertion that the new series ‘will have transparent governance, one set of regulations, encourage more entrants and listen to the wishes of the fans.’ After Max’s infamous clash with the News of the World (in which he proved he doesn’t always like to be the dominant party – though of course he’s quite entitled to his privacy, your Honour), there was a move to oust him. But he still shows no sign of falling on his sword (so to speak).

There’s also clearly some deep-seated resentment there. FOTA’s statement also claimed that ‘tens of millions of dollars have been withheld from many teams by the commercial rights holder, going back as far as 2006’ – which points the finger firmly at Ecclestone. Clearly the teams have decided that they want a bigger slice of Bernie’s not-inconsiderable pie.

Ecclestone has so far kept his counsel, but the FIA seems determined to call FOTA’s bluff, threatening court action for anyone who tries to break their contracts. And since it has the deals in place with the TV companies and circuits, not to mention the licensing and marketing expertise, it will clearly be tough for FOTA to go it alone.

On the other hand, who’s going to watch a Formula One without Ferrari and McLaren, without Lewis Hamilton and Jenson Button? According to industry site Formulamoney, these teams account for about 47% of F1’s income. So we can’t help feeling they have the stronger hand here – and on the principle that turkeys don’t vote for Christmas, we wouldn’t be surprised if the FIA ends up backing down, perhaps at Mosley’s expense. But let’s hope they work something out, because Formula One is a big British business...



In today's bulletin:

Formula One in a spin as teams cry foul over governance
Should your business do more for working dads?
Undercover Boss finds bright ideas at the coalface
Nick Hood: Bankruptcy doesn't pay in Dubrovnik
Rehabilitate yourself, with YouTube

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today