Daily #F1 News and Comment: Tuesday 10th December 2013

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Lotus gone very quiet

Double points poll

FIA invite critique

The Fat Hippo’s Rant: Why a cost cap doesn’t work


Lotus gone very quiet

Whilst the rest of the F1 teams are engaging in season reviews, prize give aways and general festive fun with their twitter and social media followers, Lotus have gone very quiet. The team that likes to present in social media as a bit risque.. out there… and cool…. are at present silent.

The last utterance was 8 days ago when Lotus fans were promised, “Our 2013 tour may be done & dusted [sad face] but we’ve got plenty of festive #F1 goodness on the way to brush away those off-season blues!”

8 days??? From a PR team who can’t hold their own water for 10 minutes?

Err… chaps and chapesses of Enstone, there’s only a couple of weeks before Santa comes – where are you????

Gerard Lopez has a big job on his hands to persuade the Genii investors to keep the faith even though the big hope of a return on their investment from Quantum Motorsports has gone west. Failure to pay to the rank and file workers their November pay which amounts to less than $1m demonstrates the problems the team have.

There has been a freeze on further cash advances from the Genii investors for several months and Maldonado’s cash has strings attached – ie that it does not pay current debts. It makes no sense for Lotus to fail to make the grid for 2014, as the Genii investors will get cents on the dollar as a return for their investment, though it will take time for this disparate group of people to be individually persuaded that further cash advances is the only sensible option.

That said, venture capital fund investors know full well, for every 3 fund investments, just 1 delivers a return and on the other 2 they lose their shirts – so these people are used to coming to a view when to cut their losses and run. This is most likely the reason Sauber are silent on their driver lineup, because it could be the case that ‘Crashtor’ and his gazillions may yet come their way.

Double points poll

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FIA invite critique

If you read the TJ13 piece from last evening, “FIA 2014 new #F1 regulations unpacked”, it has been updated several times up to 23:00 hrs GMT as the story broke – read here.

The FIA issued a tweet late on Monday inviting comment on the new 2014 regulation proposals. “For those who have not read the bio for this account, please address any complaints about 2014 F1 regulation changes to @FIA

I’m not sure which parallel universe I’m living in. The one that has given Jean Todt executive powers on most regulations, or the one that is awarding joker double points for certain races.

the social media response has been unanimous against double points for the last race, and TJ13 recommends you do make your voice heard. However, as the previous article suggests we as F1 fans have been lethargic over cost control and are about to suffer a raft of silly regulations such as double points races unless the competitive playing field is leveled.

So complain to the FIA as they invite, but don’t just bitch about double points – its time for F1 fans to unite over cost control. A sustainable F1 stops the powers that be chasing every last dollar and giving away control of our sport to those who contribute the most – the TV pay masters.

By the way. many TJ13 readers are not fond of ‘new media’. This is fair enough, but when the FIA invite comment via new media – its time to speak!!!!!!

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The Fat Hippo’s Rant: Why a cost cap doesn’t work

One thing that his Honour is endlessly harping on about, is cost control and levelling the competitive playing field. What the man in the black robe completely ignores in that endeavour, is that Formula 1 isn’t Waldorff school, where the clever kid gets hobbled, so that the feeble one can keep up without feeling bad about himself. There are no consolation prizes in Formula One and hopefully never will be.

About a week ago, Auto Motor & Sport‘s Michael Schmidt published an article, which claims that Red Bull’s 2012 titles came at a price of 278.4 million Euros. While those numbers would still be relatively tame in comparison to what teams threw at it in the early and mid 90s, it would mean the Austrians would’ve probably spent more than Caterham and Marussia did since their entry into the sport and if the man with the gavel is about to be believed, FIA should step in and put an end to such decadence, so that the other teams get a shot at winning, too.

Except, that it is all just hogwash and wishful thinking. When it comes to ridiculous spending, nobody in the last 15 years comes close to Toyota and we all know how many titles they got for all their big bucks. They had the biggest budget by a mile, a windtunnel so state-of-the-art it is still in use today and all they got for it were 12 podium positions in eight seasons and a grand total of diddly squat as far as wins are concerned.

The sheer futility of a Politbüro administered cost control becomes obvious if you look at how Michael Schmidt arrived at the conclusion that Red Bull spent almost 300 million quid in 2012. Although running on an Austrian license, most of Red Bulls operations are in Blighty, which has the positive side effect that one can look into their business balance at the Companies House in her Majesty’s Capitol. According to those numbers Red Bull Racing spent 211 million euros in 2012, made a profit of 840.000 Euros and employs 55 people. Say what? Marussia’s got more people than that!

You see, people like Adrian Newey and his staff aren’t actually working for Red Bull Racing. They are employed by a sister company called Red Bull Technology, which employs 658 people, which in wages alone cost 69.7 million funny € things in 2012. The overall spending of Red Bull Technology was the ominous 278.4 million with a profit of 5.5 million Euros. Now after you’ve washed the coffee that you just ejected through your nose off the monitor, let’s have a look at what these numbers mean.

Did Red Bull really spend 490 million quid in 2012? No they didn’t. The design, development and manufacturing of the cars by Red Bull Technology incurs a cost of X million quid and Red Bull racing pays them those X million quid plus perhaps a (very mild) extra charge, so the costs of building two functioning racing cars appear twice in those numbers. Also, whenever Seb Vettel hops into the simulator to adjust his driving style for the next race, Red Bull Racing will have to foot the bill, as the costs are incurred at Red Bull Technology, who own and run the simulators – another item that effectively appears in the numbers twice.

The next thing is, that Red Bull Technology does not work for Red Bull Racing exclusively. They produce gearboxes and KERS for Caterham, provide simulator time for Toro Rosso and developed the standard side crash structures for FIA. They don’t even work for Formula One exclusively. When Felix Baumgartner parachuted out of a balloon capsule at 39km altitude in October 2012, Red Bull’s involvement didn’t end at providing sponsor stickers. Red Bull Technology was involved in developing said capsule, so some of those 278 million were spent on things that had nothing to do with F1 at all. The development (without manufacturing) of the Red Bull RB8 cars cost 90.8 million Euros according to the numbers. That sounds quite a bit different from 278.4 million.

So as you can see, it’s all just a horrible mess of company-to-company business. How are FIA, who can’t regulate their way out of a paper bag, supposed to control the amount of money being bandied about? And it’s not just Red Bull either. According to the numbers in Blighty, Mercedes employs 612 people on a budget of 181 million Euros (only the team without engine department) and Woking burned 208 million Euros on development and building their 2012 challenger.

What about Ferrari? No idea. Since they are based in Italy, which doesn’t have a law that forces companies to publish their numbers, their numbers are secret and more likely than not close to or even higher than the Red Bull figures and – as we learned earlier that year – spread out over different companies, too. The ‘secret’ tyre tests at Bahrain and Barcelona at the begin of the season were run in 2011 cars, which were run by Corse Clienti, not the Scuderia itself for instance, so those costs are likely to be in Ferraris numbers twice, just like simulator costs at Red Bull.

Unless FIA thinks they can do what whole states have failed at – keeping track of money flow in big corporations – there is not a cat’s chance in hell to implement any sort of practical cost control measures. And there shouldn’t be. Formula One should be an all-out dog-eat-dog technological slug-fest. I want to return to the time when Mercedes built the best engines by using obscenely expensive Romulan alloys. F1 isn’t a welfare state. If you can’t pay the bills – don’t let the door hit you in the backside on your way out. And if we only have two or three teams left, unable to field a complete grid, then F1 doesn’t deserve to exist. No F1 is preferrable to the NASCAR-esque farce we’ve seen lately.

Le Sigh. Hippo out

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120 responses to “Daily #F1 News and Comment: Tuesday 10th December 2013

    • Hi Nathan – thanks for that. I was told 1 in 3, but that was by an optimistic VC fund manager – accepted.

      but if you’re right Lotus investors may be running to the hills faster than we thought….

    • I read somewhere that CVC uses this calculation: money back in 5 years, plus 20% return per year.
      In order for that to work, they should make a profit almost each time they invest – otherwise they’d be better of with just stock or bonds.
      I guess they probably mix risks and accept that some high risk investments go bust.

      • I guess it all depends on the investment risk, proportion of fund capital outlaid and the type of investment. My background is ecommerce, so I think of VC’s from that point of view. From a WSJ article “The common rule of thumb is that of 10 start-ups, only three or four fail completely. Another three or four return the original investment, and one or two produce substantial returns”

        I am not fluent with the operating model of an F1 team, and whether they typically return a ‘net profit’ (as many teams are marketing machines, therefore may not make a profit on the books), but they may expect different returns. Interesting stats anyway!

      • “… CVC uses this calculation: money back in 5 years, plus 20% return per year. .. ”

        A source tells me that that is not far off what CVC’s investors
        http://www.cvc.com/About-Cvc/Our-Investors.htmx
        are told. I believe CVC expect ALL their investments to succeed, but consider anything less than doubling in value after 5 years to be a failure.

  1. FIA invite critique ?

    No doubt in the same vein that Tony Blair invited critique about the war in Iraq

    Thank you very much for your overwhelming feedback against this decision ….

    but we don’t care what you say, we are going to ignore you, and go ahead with whatever we want anyway.

    Or to put it more succinctly – f*ckyouverymuch 🙂

    • I’m afraid you’re right. I’ve visited about 10 different sites, who’ve been running the news about the ‘double points’ idea. The feedback from people is absolutely devastating. That idea sits less well with folks than a wet fart in church. Too bad FIA will just ignore it.
      Just imagine the temptation to have your team mate run your title rival off the road at the prospect of clawing back double points in the last race. No idea what the folks in Paris were smoking, but if it’s legal, I want some of that. Must be great shit *headshake*

      • I’m surprised they haven’t gone one step further and introduce double-points jokers for each team. With Hamilton going well in Hungary the past 2 seasons, maybe Merc can use its joker? And then we’ll have the crazy sprinklers, and laser guns and here come the wacky races!

      • “… That idea sits less well with folks than a wet fart in church. …”

        Asthmatic punters in brothels, and now wet farts in churches.

        You seem to get around quite a lot.

  2. At the very least, if they’re going to make a farce of the last race is may as well be for something interesting or exciting…like double the race prize money, or the winner gets the number 1 for the following season, or how about something worthwhile, like the drivers all nominate a charity to donate their race prize money to.

    • why dont they give away as many points as the leader has going into the last race for the winner, that way we will never know who will win before the last race, AND even a Caterham could win the WDC – talk about exciting…

  3. Ferrari’s tire test is not a good example.
    Ferrari used a 150° Italia chassis which last raced in 2011, this car was owned privately and operated by the Corse Clienti department, not the race or test team, and test driver De La Rosa was at the wheel.

    They did this because that’s what the rules say about such a test, a two year old car must be used, it cannot be operated by the teams F1 technicians and there cannot be one of the teams gp drivers at the wheel.

    So it was completely within the rules, and last but not least, Pirelli organized, payed for, and ran this test, not Ferrari, so the costs are not in Ferrari’s numbers, not even once and certainly not twice.

    • Sigh, enzo. Can you please please stop being paranoid? We don’t want to slag off Ferrari whenever we mention them 😉 There was no implication whatsoever in any shape of form, implied or expressed or even thought remotely that the Gestione Sportiva could have somehow, in any shape or form, engaged in anything that wasn’t in complete adherence to the rules.
      The costs for the test DO appear in Ferrari’s numbers, because there WERE costs to get to Bahrain and to run the car. That Pirelli paid them is a different matter, the costs were there, so they are in the balance. Also Corse Clienti will most likely have gotten an invoice for Pedro’s services as he’s an employee of the Scuderia, not Corse Clienti.

      • Paranoid? Like Ron Dennis, when cut, bleeds McLaren, i bleed Ferrari, and you, i’m sure, bleed Vettel.
        Apart from that, which part of ” Pirelli organized, payed for, and ran this test” did you not understand.

        • Pirelli paid for the test, that’s right. But that payment also includes reimbursement for Corse Clienti to get their stuff shipped to Bahrain and Barcelona, so the costs DO appear in the books, even though someone else paid them. Which part of that is so difficult to understand? 😉

          • Who tell’s me Pirelli didn’t pay DHL or TNT directly?
            Or Corse Clienti sends an invoice to Pirelli for making use of their equipment, facilities and know how, sounds like income to me.

          • If CC sent Pirelli an invoice. What did they send it for? Exactly to get paid the costs they had and an added bonus, known as profit.
            My brother runs a car garage. He sends invoices to customers for mending their cars. But that involves costs first. He has to pay the machanic, who works on the car, he has to pay the supplier for the spare parts and the electricity used by the tools. It’s all in the books. The customer pays the bill, but the costs occurred at the one, who did the work.
            Do yourself a favour and don’t set up a business. You don’t quite seem to have the knack for it. 😉

        • To late, i already run my own business, quite successfully if i may add 😉
          Corse Clienti has nothing to do with Scuderia Ferrari F1 team, so how can those costs appear in Ferrari’s numbers, let alone twice?

          • Very simple. The test was run by Corse Clienti, but not because Pirelli asked for them specifically, but because the Scuderia has ‘outsourced’ running their old cars to them. And the costs (at least for Pedro) appear twice – once in the books of Corse Clienti for having paid for Pedro and at the Scuderia for having received the money for Pedro’s services. Same way as it works with Seb’s simulator costs. And Corse Clienti has ‘nothing to do with the Scuderia’ in the same way as RBT has ‘nothing to do with RBR’. They’re independent entities, but obviously provide services for each other.

          • Ok, fair enough.
            But Corse Clienti is in now way to Scuderia Ferrari F1 team, what Red Bull Technology is to Red Bull Racing, so i don’t see how just Pedro’s (allegedly 😉 costs can have such an impact that Ferrari can benefit from it.

          • It’s not a matter of ‘benefitting’ from it. It merely used it as an means to show that costs within teams are spread over different entities. RB has RBR and RBT, Mercedes has Brackley and Brixworth, Ferrari has the Scuderia, Corse Clienti and probably other entities, too.
            What that is meant to demostrate is, that cost control is virtually impossible. You are still labouring under the assumption that any negative conotation against Ferrari was involved, which isn’t the case.

  4. “Now after you’ve washed the coffee that you just ejected through your nose off the monitor, let’s have a look at what these numbers mean.” was the phrase that launched my espresso! Hilarious!

  5. @Fat Hippo: Never thought I was going to say this, but have a look at pitpass. There was an article which said that the numbers for RBR and RBT are consodilated – so no, not ~550 million but ~275.
    The underlying problem is the way F1 divides it’s finances. Shame there’s no flotation, I would love it if the teams just went out and bought the sport.

      • oh, and cost caps work if the those subject to them actually abide by the rules. conspiring to subvert a cost/budget/spending cap or actively engaging in such trickery would not only be unethical, it would be illegal and against the rules, and the idea that fans should tolerate such chicanery and immorality and excuse it as resulting from hypercompetitiveness goes against the same honorable principles of sport that you suggested could be found holding up the pillars of your objection to doping in pro cycling, Danilo…

        • Personally Joe, I don’t have a problem with Lance and his gang of merry men. Ultimately, he what he did better than almost all others. I understand you have first hand experience of this so may have a different view….but if everybody was doing wrong, then at what point does it just become a level playing field and fair game?

          • hi adam,

            yes, pretty much you’re right that on one hand, b/c the other riders who were GC contenders were doped, and so didn’t lack access to the same medicines Lance used, his victories were relatively fair. I know from talking w/ him that his mentality has been that one, and it’s not difficult to accept that position.

            there is a more nuanced argument, however, and while i won’t bore you with it by laying it out in painful detail, it’s based on the realization that there are radical differences in each individual athlete’s ability to benefit from a given medicine, or their propensity to react positively to it. so a rider who naturally has a very low hematocrit or poor recovery ability (relative to his ultra-elite competitors, lol…) will get more of an advantage from doping than an athlete who has a genetically superior rate of recovery or a naturally higher hematocrit. The former may be transformed from one-day racer to TdF winner like we saw in Lance’s case, whilst the latter might experience only a very modest boost in performance from using the same doping products, and simply not be able to gain as much of a %-change in their performance capacity as the “ideal”-responder (to PEDs) or the athlete who starts from a low baseline.

            Basically think of it like this, using Hematocrit as a reference value. If my natural hematocrit is 41, but yours is 48, and we both use EPO to boost our values to 51 (the upper end of what’s safe), while we might still have the same performance capacity (assuming similar weight, comparable recovery, and control of other variables), I’ll have gotten much more value out of the doping and be able to compete at a level far above my normal position, while your performance gain is much less measured and relatively much less. And this belies the notion that if everyone is doping, the playing field is somehow level. And never mind the riders who would be competitive and able to beat the doped-GC contenders but who refused to dope entirely (of which there were quite a few) and so couldn’t even factor into the top-15 in the overall classification at the Tour.

            I honestly don’t care so much about this that I go around pointing it out in every interview or writing about it online but this is just a rare exception and I thought I’d take the opportunity to share that perspective w/ you.

            Why I mentioned it in the case of the cost cap in F1 was because I think reflexively rejecting a cost cap b/c you think it can’t be enforced is as self-defeating as rejecting anti-doping controls b/c you don’t think the Tour de France can be won on bread & water alone. And it was Greg LeMond himself who disabused me of that fallacious idea by kindly pointing out that if everyone in the race starts the Tour clean, w/o doping, while the average speed may be lower and the performances not as spectacular as during the Pantani (Marco)-era, still the first finisher in Paris w/ the lowest overall time will be a clean (non-doped) TdF-winner! They just need effective enforcement of anti-doping rules (something, admittedly, that isn’t easy/foolproof).

            Anyway, thanks for chance to discuss this.

          • Having been an amateur sprinter in secondary school (track kind), I had looked into this topic a bit and thought that, apart from the differences in reacting to the drugs, that the use of them had potentially harmful side-effects, pertaining to reduced ability to produce the affected hormones naturally etc. but that the main argument for banning PEDs is the potentially life shortening effects and risks to health. I don’t know if it’s different for cycling and EPO, but I read your blog to find out your story and almost dying seems to indicate more dangers from immediate usage than that found in athletics (but the case of eventual gender changing is quite compelling in itself).

            I know there has not really been scientific studies on it, maybe a bit like those stopped on certain drugs when all drugs were banned (now they think mushrooms and things could be a good depression breaker, cannabidiols in cancer shrinkage etc.) seemingly around 1970.

            An interesting analogy for this would be cars in F1 – Hulk would be near the front in a spec series, but when cars are taken into the equation he falls out about midfield, while even Chilton in a Red Bull could possibly beat him at some tracks. It’s a hard debate, as genetics will eventually enter the fray at some point.

            It’s interesting to see what someone who has been there and done it thinks of the topic, as I had previously only discussed it briefly with Danilo once when it came up a while back; personally, I always wondered what I could have done with proper training and some aids, but as it happens I didn’t even really do weight training, just had a few plyos to get down to 24.0 for 200m, and generally lacked muscle strength and got by with turnover. Perhaps with muscles I could’ve been like a slower Tyson Gay! But Bolt still seems uncatchable. To be honest, it would probably have been hard to get near an elite level as I never had the acceleration, and now I’d struggle to make 36 anyway 😛 and Bolt at a similar age was racking up World Records of something like 20.6.

            But as with anything, there can be speculation around Bolt. His rise to fame in the 100m after 3 or so years of plateauing in the 200m can be said to be an improving work ethic, co-incidence to the rise of Jamaican women from nowhere (Shelly Ann Fraser) over established stars from youth to Olympics (VCB), and/or PEDs to escape the Darrel Brown effect/linked to the country’s lack of anti-doping tests outside of competition. Bolt is basically the best ever (along with greats like Bob Hayes) or got there only after falling short and burning out as genetically pre-dispositioned to do (which would explain developing faster and setting junior WRs as Brown did previously, reaching adult height at 15 etc. and myself I am of a similar mould. SAFP and Jeter have more controversy about them than Bolt from the loose facts, but both have made comparable times to previous doping, however SAFP is consistent while Jeter’s was a one time thing (could indicate one time doping or one time all-out, or one sudden peak never rematched).

            Do you think cycling is now clean JP? If Wiggins is clean then perhaps I thought he could have won in 2009, when he was behind only a few people now suspected and Lance was 4th? It’s been said that this year speeds were very high, but could that be from technology improving? I would have thought with the blood passports coming in now that it would be harder to get away with doping in cycling. And it’s interesting in how Greg Le Mond (maybe the last great winner before doping came in hugely?) was seemingly not listened to while he was anti-doping in the 90’s and 00’s from what I have read on the net. In PE A level, Indurain was held up as the marvel to go after, with his resting heart rate under 30, but was he the first EPO era guy to seize the dope?

            The speed thing is correct – when F1 cars get slower/faster between rules packages how many people really notice? While the cars could cost $10m, $100m or $250m per season and all give the same general impression. Only the real aficionado will be able to tell the difference in speeds (hence my question on speeds being an murky issue in this year’s tour that I heard mentioned in debates on the validity of it).

            I think I outwrote your lengthy post! But half of it was my own garbage about athletics and how it compares!

          • This reply is for *Iestyn Davies*

            Iestyn Davies Iestyn Davies Iestyn Davies Iestyn Davies Iestyn Davies Iestyn Davies lol…

            since I couldn’t reply directly to your last comment, which was very interesting and I thank you for sharing the info on athletics and your personal experiences.

            Unlike usually, I only have a brief moment to reply so I’ll just try to hit the important points…

            I’d say your observation about the “danger” of PEDs when consumed for cycling vs. athletics and other more strength-oriented sports is valid. And while of course there are always exceptions, and I’m not a professionally trained scientist or doctor or blah blah…it’s important to understand that in cycling the doping is principally done to enhance recovery, improve oxygen carrying capacity and reduce body mass to improve power-to-weight ratio, w/o adding unnecessary muscle mass. So while testosterone is used for sure, it’s never w/ the goal of making big muscles so the quantities of drug used are so much smaller as are the dose periods. You’re just not taking enough usually to get the same negative long term effects as strength athletes (or American football players) who are using lots of exotic or super high toxicity anabolics. There are lots of acute dangers/conditions that can result, however, like what I experienced w/ the EPO/blood thinner mishap; then secondary adrenal suppression and other endocrine issues from taking too much cortisone (although that can also cause long-term damage if you ruin your connective tissue from localized injections); risk of diabetic coma if the athlete doping w/ insulin messes up; heart attack from blood that ‘s too thick; or infection and/or renal failure from a botch blood transfusion (blood doping) like w/ Ricciardo Ricco in Italy recently.

            There are long-term risks however but they’re less obvious and include such things as long-term mood disorder like depression resulting from doping and also risk of heart attack later in life; and also of course risk of cancer, especially as more exotic peptide hormones are abused. But this is anecdotal b/c you’re right, science cannot ethically explore these risks in controlled studies…

            One thing w/ doping for me personally was that I now know that I couldn’t have gotten any better or fitter or performed at a higher level than I did at one particular race in Italy. It was funny, on that day I knew that I had extracted 100% of my natural potential + whatever % came from the doping and it took me like 5 days to recover! And it was a one-day (Single) race only! lol…not a stage race. I won’t say that I’m glad that I doped but I can take some satisfaction in knowing that I explored the limits of my athletic potential and it was sufficient to at least exist in the lower half of the elite, professional class. Though I never could’ve ridden the Tour b/c inconsistent recovery was a huge problem for me…

            Cycling is definitely cleaner for sure, and there is almost no organized, systematic doping like what existed through mid to late 2000s … but of course there is still doping done by individuals at a very high level. But yes it’s much cleaner. I can’t speak to Wiggins and Team Sky however and don’t dare try to b/c there are so many conflicting bits of circumstantial evidence.

            Yes, it’s very very poignant to basically realize that Greg LeMond was right, and was treated like shit and so it’s impossible for me to fully defend Lance as a victim of system when I know how he pursued Greg & his family. Eek.

            And yes, you’re RIGHT about Indurain…very good observation. Imo LeMond was the last rider to win consistently at Tour who was not using oxygen vector doping products, and Indurain was probably the first, unfortunately. But that’s’speculative on my part so let me be clear about that. Indurain is innocent or at least not proven to have doped, but it’s logical to mark the start of that era to his rise and LeMond’s fall.

            I’ve gotta run, so I can’t tie all this back to F1 but I thank the Judge for humoring us and tolerating our doping discussion here in the F1 comments! 😉

            Cheers.

          • Joe, it has been a pleasure reason your opinions and insights into this. I’ll drop you an email shortly with an idea I have if you are interested…

  6. “I want to return to the time when Mercedes built the best engines by using obscenely expensive Romulan alloys. F1 isn’t a welfare state. If you can’t pay the bills – don’t let the door hit you in the backside on your way out.”

    F1 might not be a welfare state, but it’s certainly administered like a gross hybrid of neoliberal economic policies and predatory, monopolistic market abuse, with a shamefully unequal distribution of revenue to the entities that actually produce the sport’s “product” – the teams – thereby ensuring F1 is not sustainable at current levels in the long-run.

    I hope you’re looking forward to watching eight teams running three Romulan-alloy cars each…

    • Joe, my simple view on the matter is – we either have F1 as an all-out technological competition or we don’t have it at all. This hunkered down, gimmick-ridden spectacle it has turned into over the last decade is far from what F1 always was supposed to be – the pinnacle of motorsports.

      • Yes, I can agree w/ that sentiment and acknowledge its legitimacy, Danilo. It’s not an easy balance to strike b/c it’s inevitable that some compromise must be made to factor in the needs of the sponsors, the desires of the fans, the competitiveness of the teams and the needs of the promoter(s) to present not just an engaging “show” but one that at least offers the illusion or a semblance of competition, something that unrestrained spending and/or significant disparities in team wealth and/or access to sponsorship greatly distorts.

        I don’t think this issue has been well-managed by the stakeholders during the past decade, that’s for sure.

        BTW: I changed my (gr)avatar from a headshot of Joe Papp to a picture of the ass-end of an F1 car, looking up at the underside of the wing. Can everyone see that’s what it is and should I stick w/ this F1 car or go back to a profile pic?

  7. Danilo, I think it’s a bit simplistic looking at F1 costs this way, we can’t go back to the 80s and 90s, not in this economic climate. And we don’t want to see F1 going the way of several incarnations of GT racing or sportscar racing. The Judge’s idea is also a romantic one, it would never work, this is F1, not GP3.
    Some kind of cost control should exist, as a framework, and then the big teams will find a way to move money around from company to company. It’s just that before the ‘dog’ need to have more brawn (money) than the other, now, some business acumen and corporate flexibility is also needed.

    • If we can’t go back to what F1 was once supposed to be, we have to abandon it as such. If the ‘current economic climate’ doesn’t allow F1 anymore, it must go. If I can’t afford my big car anymore, I have to let go of it, too. Trying to ‘modify’ it to become cheaper so I can keep it is only going to ruin it.

      • The answer very often is to embrace the change and within that you’ll find ways to foster innovation yet again. It might take time, but it’ll happen in the end. Nothing is ever black and white and F1 was not the same in the 60s as it was in the 80s, it had to move with the times.
        And at the end of the day, when economies start to boom again, you want to still have that car, because you loved it and had good times at the back seat, not go buy a new one!

        • Wait for tomorrow. ‘nother Hippo rant coming with my idea how to fix it 😉 But not today. In these times of little news, we must spread out our material best we can 🙂

  8. Umm, bit awkward this – but that wasn’t the FIA tweeting!

    It was an unofficial automated service that screenscrapes FIA press releases from the website and posts links to them on twitter. That’s explained in the bio of the Twitter Account. Hence the reference to “those who haven’t read the bio”

  9. This Darwinistic approach to the running of F1 is both terribly macho and misguided.

    The logic is that an industry worth billions of pounds that directly, and indirectly, employs tens of thousands should be allowed to spend itself into non existance if it wants to?

    Todt my be doing a pretty poor job, but after reading the rant I’m almost glad he’s in charge!

    • Colin, this ‘Darwinistic approach’ is a fact of everyday life. If I don’t have the money to buy something, I can’t buy it. Simple. And if I don’t have the money to keep my business afloat, I have to close shop and people will lose their jobs. That’s the society people wish to live in, else they would change it. Everything else would be Socialism and take it from someone, who was born in East Germany, you definitely don’t want that.

      • “If I don’t have the money to buy something, I can’t buy it. Simple. And if I don’t have the money to keep my business afloat, I have to close shop and people will lose their jobs.”

        Mmm, not sure this applies to our lovely bankers, that was the problem in the first place that caused this economic meltdown. They didn’t adhere to your statement. So this is obviously not the society we live in. It’s something more complex and stranger.

        • Well, there would have been an alternative to let a bunch of bankers run roughshod over the whole economy. Why did people stand by the side as the gouvernment let them all go? We didn’t get rid of the Berlin wall by standing around and doing nothing.
          First of all, they (the bankers) could only do what they did because of the stupidity and greed of many a person.
          I’m in the lucky situation to be a very well paid IT expert, so I would have plenty of money to go speculating with stocks, funds or whatnot to make more money out of it and if I would believe the marketing blather of my bank 5%-10% profits on my investments would be the norm. Unfortunately for my bank, I have a functioning brain and my money is merely lying around on my account to be withdrawn whenever I need some. Every penny you earn on the stock market has to be lost by someone else as nothing is produced at the stock market, so basically you earn money by stealing it from others. As long as such an asocial behaviour is accepted practice, this society won’t change and corrupt bankers will continue to screw over whoever they can.

          • “Why did people stand by the side as the gouvernment let them all go? ” —–

            whoa! Danilo, i’m NOT picking on you, and I know that you’re tough enough not to be picked on anyway, but I must call you out for this statement and remind you of the TRULY MASSIVE “Occupy” movement in the USA that spread across the entire country in response to the global financial/economic crisis, the first genuine grassroots protest movement in the USA since the anti-war movement during Vietnam War.

            And I must remind you that the USGOVT, acting in concert with domestic law enforcement and the intelligence and security services (Federal) BRUTALLY crushed this movement b/c of the threat it represented to established power structures, deploying Stasi/NKVD-esque tactics that included widespread violations of Constitutional rights, interference with the functioning of a free press (detaining and intimidating journalists), penetrating the Occupy movement with agent provocateurs and undercover LEOs who sought to subvert it, discredit it, undermine it and delegitimize it, and abusing anti-terrorism conventions/laws to facilitate and support the aforementioned tactics, for example by making possible even more invasive surveillance and anti-protest action.

            Much of this was covered by media such as The Guardian and Democracy Now!, both of which of course you can access online.

            You are right though that the greed and stupidity of people is a fundamental component of exploitation and dominance by the power elite.

            I reiterate that I’m neither being argumentative nor courting conflict with you, and I completely understand the desire for F1 to prove itself repeatedly as the pinnacle of motorsports and a realm of technological and engineering, materials science and human performance excellence…

            Good for you too that you’re a well-paid IT expert. I’ve really struggled to re-establish my financial health and well-being since getting in big trouble for doping and trafficking and sometimes wish that I had a more “practical” university qualification now that I’m barred as a result of my criminal conviction from many of the fields I could’ve pursued after sport (ironically, in the intelligence services or diplomatic service, for example).

        • “If I don’t have the money to buy something, I can’t buy it. Simple. And if I don’t have the money to keep my business afloat, I have to close shop and people will lose their jobs.”

          ‘Mmm, not sure this applies to our lovely bankers, that was the problem in the first place that caused this economic meltdown…’

          Firstly, can one use any kind of mark-up in these comments to offset quoted text or otherwise visually enhance it?

          Secondly, in regards to the above, this would be ‘moral hazard’ that was not respected or permitted to impact the financiers/bankers/fraudsters, no?

          I can completely sympathize w/ Danilo’s expressed desire to see F1 as an engineering/tech arms race, but even in geopolitics “the show” wasn’t sustainable and eventually the CCCP cracked and buckled under the weight of its economic inefficiency and the Iron Curtain fell, bringing an end to that interesting Cold War-era bipolar world.

          While perhaps not the best analogy for F1, what’s happening in our sport that corrupts the vision Danilo would have for it are the structural inequalities in revenue distribution that DISTORT the competition and ensure the biggest teams continue to dominate on the track. The inequities in revenue-sharing (made worse by CVC’s rapacious extraction of wealth to a degree not seen in ANY OTHER sustainable professional sports league, anywhere that I’m aware of) ensure the Big-3 (big-5? RBR, Ferrari, Merc., McLaren … then WilliamsF1 on “heritage” basis) will continue generating more media exposure, better servicing the investment of their sponsors, scoring more points, attracting more sponsorship, securing more money (including more prize money and Bernie money (to the degree there’s a difference, which we can all read Rencken to learn about if it’s not somewhere here w/in the Judge’s Chambers)), etc – thereby perpetuating a vicious cycle.

          Why this should matter is b/c of what I spoke of earlier (above): that the value of “the show” (the “spectacle” as someone else called it) is harmed when fans begin to perceive that the competition is inherently unfair and the playing field not level and that money and resources have skewed performances so much that the smaller teams (which include both midfield and backmarkers) have no hope of running at the front, ever. And this is clearly illustrated by the fact that neither Caterham nor Marussia have scored points…not one point. And while maybe very few F1 fans root for Caterham or Marussia in the first place, the “average” fan whose interest FOM depends on to justify the broadcast rights fees they claim (which is the sport’s primary source of revenue) is empirically shown to be negatively influenced by the extended dominance of the sport by very few players. It’s simply “bad for business” (to quote Mercedes engine manufacturing chief whose name I don’t recall but who gave an interview on a James ALlen podcast) for Vettel and RBR to continue dominating F1 b/c the audience viewership declines, which means FOM can charge less for TV rights which means there’s less money coming in which means there’s less money to distribute to teams while still CVC is going to cream off half-a-billion if they can…money that should be returned to the sport to support it in the long run so we can enjoy F1 for many years to come.

          • …the difference between F1 now and yesteryear is the ability of the big spenders to spend….

            Ferrari blew what they could afford in the 60’s and early 70’s, they just got their asses whipped by a bunch of garagistes – 2 titles in 15 years

          • To be fair TJ, Ferrari in the 60’s and early 70’s were pretty successful in sportscar racing.
            That was their focus until Le Mans and only then would they turn the attention to F1
            Once they stopped long distance racing in 1973, they were pretty successful in F1 after that…

      • That’s not how it works.only for small amounts of money. Did you pay for your house without any help from a bank? Than you’re a lucky man, cuz i couldn’t do that. And in f1 everything is a bit more expensive than we are used to.

        • You will not get a loan from a bank without being financially solid enough to repay it. If you can’t repay, you’re going down big time.

          • Au contrair my friend. In america, land of the free, you must make debt in order to get money. If you paid for everything with your own money the bank never allows you to get a loan cuz you did not prove to them that you can handle the loaning money, paying back money situation. And here in europe you get that loan. If you are at the time financial stable. But who can prove that you’ll be stable 10 years later? It’s not that because you’re now on the top of your game you’ll be there for ever. Remember williams? A championship winning team, now struggling. You’d rather have 2 teams on the grid, fully technoligic developed.and no other cuz they cant afford it. Or 12 teams doing the best they can within their boundaries? I know what I’d watch. If seen Indianapolis with 6 cars on the grid. Not much fun. And the richest won that day.

          • …presumably the only reason either Red Bull company makes a profit is from the money from another red Bull company – which sits in that companies accounts spend as ‘global marketing’.

          • Which is why America is basically bankrupt and some countries in Europe are not.

          • ” …. Which is why America is basically bankrupt and some countries in Europe are not. … ”

            I thought they were all bankrupt. As far as I can see, none of them have a hope in hell of repaying their national debt. Never, ever.

          • You’re right, they’re all pretty much bankrupt…apart from Germany and the Scandinavian ones

          • ” .. apart from Germany and the Scandinavian ones … ”

            I think Norway is the only one without a debt mountain. They have a surplus probably due to oil/gas revenue.

          • There was a BBC documentary about the ” scandinavian ” countries economies, which showed they totally dissimilar and should not be lumped together under this heading ….

            Norway IS the only country without a debt problem.

            However this is due to a very strange but unbelievably wise and farsighted policy.

            ALL of the revenue from their oil & gas is invested – but ONLY abroad.

            It CANNOT be invested in Norway itself – by law.

            They use a percentage of the interest earned – the capital in never touched – on government spending.

            As of September 30th 2013 its total value is $783.3 billion …. !

            Holding one percent of global equity markets. With 1.78 percent of European stocks, it is said to be the largest stock owner in Europe.

            http://en.wikipedia.org/wiki/The_Government_Pension_Fund_of_Norway

      • Danilo, its too extremist for my liking. Not everything is black and white, and there are many shades of grey.

        Where does it stop. Business? Health? Economies?

        Look at the credit crunch in Europe. If we applied your logic Germany would be bankrupt due to defaults from Ireland, Spain, Portugal and Greece.

        Should individuals right to health only be linked to their ability to pay for it?

        Like it or not, allowing F1 to spend itself into oblivion impacts on an awful lot of people. Regulation is there to stop people from themselves.

        What red bull et all are doing is financial doping (to borrow a phrase from Mr Wenger). Its no different from doping in sport. The person \ team with the best talent is not recognised due to the doping of the others.

        The FIA could set up a financial WADA. It won’t stop everything, but teams will be caught. As time goes by they’ll get better at finding the breaches.

        Otherwise we have anarchy.

        F1 has never been Darwinistic. As long as Ferrari get their 50 silver coins for being Ferrari its always a less than fair system.

        For people who don’t know better Ferrari are one of the top performing teams. Which is crap, due to their massive budget. Lotus did a significantly better job this season, yet only educated F1 fans would know this.

        • good point, Colin. Spending/budget/cost caps can be analogous to anti-doping rules and policed similarly, and violators punished similarly. Obviously there are those teams that may be willing to unethically and illegally attempt to subvert rules on spending limits, but if there is reasonably-effective enforcement (and I am NOT qualified to speak in detail as to how forensic accountants operate and so don’t know exactly what the enforcement regime would look like), then at least some of them will be caught and hopefully punished very, very severely. And I definitely agree w/ you that, while the FIA might be the entity that would establish these parameters, they should not be the enforcers, and that function should be carried out by independent forensic accountants who would audit the team’s books.

          What’s the alternative? Do nothing, right? And allow the present distorted system to continue stifling competition by inequitably distributing resources to further strengthen structural inequalities?

          I’m glad there are (hopefully) ppl smarter than me trying to finally figure this out.

  10. Ok, first, I say look to baseball. Teams spending over a certain amount pay a penalty and that money is then redistributed to the smaller teams.

    Second, I say look to “Moneyball” by Michael Lewis. It’s the story of how one of the teams in baseball with the smallest budget manages to regularly dispatch teams with gargantuan budgets. Eventually one of the teams in F1 will cotton to it and then you will see a proper disruption. BTW, if you want a very good overview of the whole financial crisis from beginning to end, just work your way through Lewis’ catalog, he was there through the whole thing and actually worked at Salomon when the whole mortgage backed securities first started.

    Finally, forget double points. Give each team a resource budget for the whole season, fuel, tires etc, and let them bring and use whatever they want at each race, requiring only two different compounds (minimum) at each race. First, could see some fantastic season long strategic thinking, surprising results by teams willing to run a two stopper with a pair of supers for the last set of laps etc., and rather lot of drama as we discover whether or not the teams have saved enough fuel to finish the last race(s).

    • Basketball has the budgeting cut out as this: you may spend (idk the exact figure, lets say) 100 million dollar.
      How you do it we dont care but dont get over it. So if you want a star player who earns 50 mil a year. Tough tittie for the rest of your players. They’ll have to ear much less in order for you not to spend too much.

      • The difference is that in baseball, as in American football, these budget / salary caps are fairly easy to police & enforce.

        As the Hippo pointed out – not so with a web of interconnected companies, shell companies, etc. – whether that be F1 or multinationals …..

        • @manky, policing does not have to be perfect. Anything over 75 million, 10% goes back to the redistribution pool. Anything over 150, add another 5%. Anything over 250 etc., and so on. Hire an independent accounting service to value indirect items and you’re done.

          No it won’t be perfect, but it will be better. Until the teams are forced to get the most out of their dollar, euro, pound or whatever, we’ll continue to see what we are getting for the most part right now, only teams with the top budget are truly competitive, and in some ways a lack of real innovation. Again I refer you to Moneyball. If you’ve not read it, have a go, it’s quite entertaining. And if you have, you’ll understand the point I’m making.

          • …and that’s the point – policing doesn’t have to be perfect and it is not the FIA’s responsibility to add up and take away the value of every transaction a team makes during a year. Make them each produce a single standardised set of accounts (income and expenditure) for scrutiny to independent accountants.

            …just find one transaction that is ‘omitted’ from the teams list of spend – then hit them with a McLaren spygate like penalty…

          • Exactly this x 1,000. This excuse of we can’t do it perfectly, therefore we won’t try has got to be done away with by those (supposedly) running the sport.

          • @ Mattpt55

            I’ve read Moneyball. It is NOT about a CAP – but about working within a cap – BIG DIFFERENCE !

            An F1 analogy would be for example – instead of Ferrari employing Alonso, for the same money ( salary ) they could have Hulkenberg, Di Resta, Bianchi, Verne, Bottas & Grosjean – who would score more championship points combined than Alonso alone.

            The same could be done with Raikkonen for another 6 good drivers.

            Plus you have to dispense with the Drivers Championship because it would be only about the teams entering – as in baseball.

            And since you can’t enter 12 cars as a team – your reference to Moneyball is totally invalid.

            @ TJ – on the policing point

            ” Make them each produce a single standardised set of accounts (income and expenditure) for scrutiny to independent accountants.

            …just find one transaction that is ‘omitted’ from the teams list of spend – then hit them with a McLaren spygate like penalty… ”

            This is EXACTLY what companies in the UK have to do.

            And still you have companies like Google, Starbucks, Amazon, etc. – producing accounts that are so opaque that they pay little or no tax.

            No matter what the FIA introduced – as with technical regulations – accountants would fine loopholes.

            As I’ve said before – forget about cost capping – and look at cost reduction.

          • …and that was how the Swiss banks clients avoided scrutiny, because no one believed they could change the state of affairs.

            Now the UK and US governments have decided something can be done and are acting..

          • You seem to have missed my point entirely then. First Moneyball is about working within a budget, the Oakland A’s specifically.

            Second, Major League Baseball does not have a CAP. Yes, that’ squire correct. Instead, they have what is termed a “luxury tax” which is meant to discourage teams from large markets from spending smaller market teams into permanent oblivion. In fact it is technically done to ensure “competitive balance”

            Third, the techniques in Moneyball the A’s use would (rather obviously I thought) apply to situations far beyond which driver to choose. After all, given that the Constructors are the ones who win the money, it might make a certain amount of sense to know if it’s better to spend money on race engineers or mechanics. Is a pay driver with one or two good results worth having and spend the savings on the aero, or will they get more points by hiring extra help for in season development. How can they deploy their budget too bring the most points for the least currency. That sort of thing.

            These are the sorts of questions the A’s sought to answer with new data analysis techniques, and that makes your critique of my post (please Dear God, forgive me) hopelessly OFF BASE!!! xD

          • Judge – totally different scenarios.

            Clients hid money in Swiss accounts.

            Companies like Google, Starbucks, Amazon, etc. aren’t ” hiding ” money – they’re using creative accounting practices.

            One is evasion – the other avoidance ……

          • …and google et al can do this because of competing jurisdictions who fail to act in unity… they just shift income through inter company accounts to the most favourable tax regime…

            If the FIA stipulate that the teams must submit a single set of standardised accounts detailing all income/expenditure and benefits in kind… There is no competing authority/jurisdiction/economy where the teams can run to…

          • … and Luxembourg will still continue to produce 99% of all the coffee in the world

            😉

          • @ TJ

            ” … detailing all income/expenditure and benefits in kind… ”

            Can you define these exactly ?

            Simple answer NO – there’s your loopholes straight away.

            I could easily as an accountant, even under the single jurisdiction you propose, drive not just a horse & cart – but a whole Roman chariot race through your legislation and provide accounts that show that team “X” did not exceed the budget cap.

            If you wish further proof – please see RBR / RBT accounts as an example …. 😉

          • …I beg to disagree. Having a post graduate degree in finance and accounting together with an early working life in that field, I believe I’m adequately qualified to comment.

            I’ve just posted an article on this… so better we continue the debate there….

            my point is, make the teams do the work and if they lie and get found out – exclude them from a constructors title……

            that is a massive penalty – only the FIA can make that happen… and it will work….

          • “No it won’t be perfect, but it will be better…”

            This!

            Those who reject some kind of cap or resource restriction or spending limit b/c they believe it can’t be enforced are self-defeating…if such a system isn’t established then it has no chance to improve conditions, but if it’s intelligently crafted and effectively enforced, it could be a big help. It’s outside my area of expertise to suggest the details, but I’m in favor in principle to measures that ensure the long-term sporting and economic viability of the sport of F1 (considerations that dont have to be mutually-exclusive!).

        • ” Can you define these exactly ?
          Simple answer NO – there’s your loopholes straight away.
          I could easily as an accountant, even under the single jurisdiction you propose, drive not just a horse & cart – but a whole Roman chariot race through your legislation and provide accounts that show that team “X” did not exceed the budget cap.”

          Oy! MANKY, rather than telling us then that this that or the other thing won’t work, would you please explain what can be done effectively to limit the distortion of competition that results from structural inequalities that currently favor the top-tier teams, who capture the lion’s share of the F1 revenue redistributed to the teams?

          • I like it Joe.

            Less of the ‘no, because’ and more of ‘we can if..’

            If the glass is half empty refill the damn thing!

      • BaSEball, where there is a cap, but if you spend above there is a penalty. Not BasKEtball. 😉

        • There will always be a way around this. Take the example of Rugby League in England paying the family members instead of the player directly (employing them as “administrative” support) therefore avoiding them coming under ‘player salary’.

          • “There will always be a way around this”

            Do you argue then, Adam, that the measures should not be implemented, that cost-management (or spending management or whatever form it takes or term used to describe it) should not even be attempted b/c there are historical examples of accounting chicanery in other sports/endeavours?

            Surely you’re not that cynical, right? B/c it would be the equivalent of saying that we should abandon anti-doping (which, you may not be aware, also applies to F1! something I think is great! Fernando and I are subject to the same out-of-competition anti-doping controls hehehe), b/c there are ways for a determined and extremely unethical cheater and his enablers to subvert the testing regime and evade detection?

            No system is perfect, that’s just reality, but we work with the best we can design and implement (hopefully, as long as political will is there – and it sounds like finally in this case there is political will, perhaps encouraged by economic reality, to implement some limits on spending or reduction in costs…speaking of which, I would like to read here in the Judge’s courtroom, exactly what is meant by “spending cap” budget cap “cost reductions” etc so that F1 fans are using the right terminology and understand what is meant exactly.

            Would also like to read about potential impact on sponsorship of spending limit – or I guess a “global cost cap” as proposed by FIA.

          • I’m afraid I have stated what I meant clearly enough then. Baseball uses a luxury tax on payroll, but what I was suggesting is that could very easily be extended to total budget. So that any spending above a certain level is taxed and ploughed back into the sport.

            So in your example, the fact that the salary was paid to someone other than the athlete would be irrelevant, as long as it would still show on the bottom line. FIA has a form of this in terms of how it changed entry fees, but there the money simply flows to the FIA, not back to the sport itself. Which is in itself one of the problems.

    • Maybe not, the money could go directly to other places instead of team spend on racing side.

  11. Todt has no idea how to govern the sport. Pirelli came up with the only sensible idea of a rule change (extra tyre test) and he then came up with another four crap ones to show he’s doing something as he was newly elected.

    Double points: Joke – will be dropped
    Cost cap: Can’t be policed – will be dropped
    Permanent numbers: Mute point, just a bit of fun and for marketing’s benefit
    5 sec penalty: There’ll be double standards here and there – rules will get refined multiple times
    Extra tyre test: Only sensible idea

    Best comment I’ve seen around was from James Calado:
    “Liking the new rules.. But I still need millions of pounds, Euros or whatever”

  12. COST CAP NO

    COST REDUCTION YES

    @ Hippo – I totally agree with what you said ( and others )

    However, that doesn’t mean that cost reduction should be a priority.

    MotoGP is a perfect example of this.

    A brief history for those that don’t know 🙂

    A few years ago you had to spend mega bucks to have a chance of winning. As a result they lost many manufacturers until all that remained were Ducati, Honda & Yamaha – plus a few other non-works teams entering with second rate equipment, and a smaller and smaller grid.

    Ducati were like Toyota in F1 – spending millions and, with the exception of Casey Stoner – a total failure.

    So basically you had two manufacturers Honda & Yamaha – therefore only at best 4 riders – constantly fighting for the championship – and nobody else had a chance …..

    So the governing bodies have changed the regulations to reduce costs AND introduce the chance of someone other than a Honda or Yamaha works rider winning.

    The have even managed to tempt back Suzuki and Aprillia – and hopefully Kawasaki will return too – so more manufacturers are coming onboard again, which can only be good for competition and good for the sport 🙂

    So many of these changes could be adopted for F1 to reduce costs and increase completion – especially to the benefit of smaller teams.

    The difference is that in MotoGP there was a consensus to work together for the benefit of the sport.

    The result has been to the detriment of Honda & Yamaha – but even they saw that change was necessary and went along with it – coz the alternative was likely to be a vastly reduced grid, and a sport that no one was going to watch.

    With all the changes – I can’t wait for the 2014 MotoGP season 🙂

  13. As a former reader / contributor to this site, I thought I’d take a look and see what was being on the judge13 site said about the new FIA regs.

    Clearly most posters can’t see the forest for the trees. What the FIA are doing now is merely applying band-aids to a problem that was caused when “Spanky” Mosley gave the FIA’s commercial rights to Ecclestone for effectively nothing. Had the money being siphoned out of F1 by CVC and Ecclestone been equitably distributed amongst the teams there would be no financial crisis. No legitimate sports organization / league ever sells off it marketing rights – they retain them and whatever profit is generated flows back to them, not to a third party. Whether Todt is an effective FIA head is largely irrelevant as unless he can undo what Spanky and Ecclestone did the FIA will never be in control of F1’s financial situation. Readers in the UK, more specifically England, find it hard to accept that F1 is sliding towards irrelevance because two Englishman decided they could asset strip the sport. Five years from now F1 will look like a cross between NASCAR rules and IndyCar specs.

    Merry Christmas and a Happy New Year.

    • Well as far as the Commercial rights go, Joe Saward summed it up nicely back in July – http://joesaward.wordpress.com/2013/07/17/what-does-it-all-mean-2/

      So If Bernie were to be found guilty of bribery charges in Germany, then it’s possible that the FIA could cancel it’s contract with FOM and take the commercial rights back. That is the crux of the problem with F1, the commercial rights are of no benefit to the FIA or F1 teams. We could see the house of cards that Bernie has built up fall down in the next year or so. Or at the very least see him removed from running FOM via Ferrari.

      As far as the double points go ? Lets see how it pans out next season, could be an entirely moot point if Vettel has another vintage year.

      • … Agreed on the commercial rights – TJ13 did a piece back last year on the FIA’s potential opportunity to re-claim the rights should it be proven corruption was involved with the sale.

        We also pointed out secret sales of shares by CVC to 2 North American pension funds… which I’ve yet to see anyone else report.

        Why have CVC reduced their holding by 50% over the past 18 months – they are very worried over the possibility of a ‘corruption’ verdict and the subsequent FIA actions….

        • Prudent course of action to minimize potential losses by CVC. I’d expect nothing less from venture capitalists/hedge funds if they see a possible threat to an investment. This could end up as one big legal mess with the end result being the FIA having the commercial rights back and Bernie being sued all over the place. I do wonder if Brawn would take a job up at the FIA if it meant he had free reign to sort the sport out. That has to be the biggest challenge facing F1 – The post Bernie era. But as Bernie has shown in the past, he’s adept at getting himself out of trouble.

          Well I only discovered this blog in the last few months, but between you and Joe Saward (who is very cautious about what he says) you can pretty much discern what’s going on in F1 with varying degrees of accuracy. Rather than have to wade through the muck on other sites….

        • The problems is FIA won’t re-claim the rights, constructors will, then they will take as much money as they can, destroy F1 and eventually dissapear when they can’t get more.

        • The gist of the claims against Bernie:
          ” German media firm Constantin Medien are accusing Ecclestone and three other defendants of deliberately undervaluing Formula One in the 2005 sale of the sport to CVC Capital Partners.

          Constantin Medien, a former shareholder in F1, stood to gain a hefty commission from any sale that valued the sport at over $1bn (£620 million).

          The company believes Ecclestone paid bribes amounting to $44 million (£27 million) to German banker Gerhard Gribkowsky who facilitated the sale of his bank’s shares to CVC at a knockdown price, CVC having agreed to retain Ecclestone as CEO.”

          So IF the claims are proven, it is all to do with the value of FOM at the time of sale to CVC.

          What has that got to do with FIA and the contract it had signed with FOM?

          The link to Joe’s blog takes you to an article where the author says:
          ” ….This could, for example, result in the FIA deciding to cancel the 100-year commercial agreement that it has with the Formula One group. No-one knows the clauses in that contract, but the FIA rules forbid corruption so the clauses of the deal might not even be required if corruption was proven. That would be a massive step and a huge undertaking by the FIA, but many feel that it would be in the best interest of the FIA as the current arrangements mean that too much money is disappearing to financiers and the federation cannot do half the things it wants to do as a result… ”

          Could, for example, no-one knows, would be a massive leap, many feel, etc. etc.

          Nothing of any substance there then.

          • …there are anti corruption clauses – Mercedes spat with Ecclestone made that clear last year… I need a better archiving system as again we had a quote from a Mercedes lawyer to that effect in a news posting in 2012…

        • In regards to the pension fund sales, I saw that information in numerous places (but don’t ask me where – it was too long ago). Sorry Judge, not an exclusive.

    • Okkkkk…but given that the FIA DID sell the commercial rights of F1 to FOM/Bernie, that’s the reality we have to deal with now. Thank you for pointing this out, Cav’, but now what are we going to do about it? And the only answers can be somehow reduce or limit spending on the teams’ side and reduce the monies being extracted (stripped) out of the sport by CVC, money that should be reinvested to ensure the sustainability of F1…

    • This is very relevant given the events that have unfolded in the last few days. Given that the FIA have suddenly woken into life and started to use the powers they have (and it’s about how you play the game, right?), they suddenly look like they could have some balls and make some brave decisions (well, if these knee jerk rule changes are anything to go by)..

      Is it just co-incidence that the Bernie trial result comes in January? I’ve never seen the FIA so pro-active in enacting rule changes immediately, effectively giving us what could have been written down on the back of an envelope 5 minutes earlier now a bona fide rule for the finale that they will have to actually change to not make happen in 11 months time.

      It’s been said that Bernie will get off from the charges somehow, but if he is not looking great, no wonder that CVC have been getting rid of shares and wanted to get their money back, even though they’ve profited handsomely already even if they lost their remaining stake in F1 for nothing. But it remains to be seen if a Todt who didn’t rock the boat in Term 1 will be able to do such a swinging change in Term 2, as he has to be re-elected (seems easy though to get that done) once more, unlike Obama.

      Re-seizing the F1 commercial rights, when they’ve already just negotiated for a comfy next few years with more income from Bernie and the teams (and a potential small % of an F1 float), may still be a step too far for such an organisation as the FIA.

      • “Re-seizing the F1 commercial rights, when they’ve already just negotiated for a comfy next few years with more income from Bernie and the teams (and a potential small % of an F1 float), may still be a step too far for such an organisation as the FIA.”

        very good point, especially as you’re right that Todt recently negotiated that new F1 series mgmt contract w/ FOM in order to secure revenue to meet half the projected FIA budget shortfall…

    • Hmmm …..

      Sport Bild quoted Red Bull motorsport consultant Helmut Marko as saying his team had been against the change but were overruled.

      The Austrian added that an initial proposal had been to award double points for the LAST FOUR races.

      • …as I wrote last night… This is the thin edge of the wedge…

        TV masters will win out as they want close competition, so does Ecclestone….

        So F1 will either end up with some kind of NASCAR chase/double points for last 4 races etc… or improve competition by reducing the amount the big spenders blow each year…

        Then again, they could redistribute income better… Or kick out the commercial rights holders…

        So many options….

        • More than likely we’ll see drivers taking more risks in the final race in an attempt to secure those precious points, which may turn the race into a demolition derby.

          We are just going to have to wait and see what happens to Bernie in the German Legal System as far as the commercial rights go.

          • Remember the last race of IndyCar from 2012? That demolition derby ended with Dan Wheldon’s death. All because another genius wanted high ratings for the race and offered 1 million dollars for winning starting last in the grid.

  14. one thing that i am very concerned about is using cost capping as a means for CVC to avoid sucking out as much money from the sport as it currently does, thereby forcing teams to radically cut staffing levels by up to 50% or more, whilst CVC rapacious horrible venture capitalist scumbags don’t have to take any less than half-a-billion in profit out of the sport each year!

    CVC should take less money out of the sport, and the revenue should be distributed more fairly, before teams are forced to lay off staff…

    • typo: “…means for CVC to avoid sucking out as much money…” should’ve read:

      “…means for CVC to avoid not sucking out as much money…”

      That is, instead of reducing the amount of profit it takes from the sport, and better redistributing the revenue to the teams to ensure the sustainability of F1, CVC can keep sucking out huge amounts of money and force austerity upon all the teams at the expense of staffing levels, putting hundreds out of work, possibly.

    • $1.5bn in revenues could be split between 13 teams as roughly $100m each and $200m left over as profit/running costs of the sport/better marketing of F1 and online development etc.

      As it is now I think the WCC winners can get near $100m but I forget if that includes the $30m from column 2 or not. But a more equitable breakdown of prize money equates to better competition, more staff employed at smaller teams, a similar situation for big teams as now anyway..

      But there’s no incentive for this to happen when even impoverished small teams can survive anyway with paying drivers and investors like Lotus to come in and try and make a go of it! Same model as used on the expanding new tracks! But it works…. especially as the teams currently only get 49% of the revenue in the prize pot! $750m! $750m to owners.. Shame for Bernie he lost overall control some years ago… Hopefully the new CA should be 62% for prize money.. but if the small teams are still living off bare bones ($14m for Marussia this year, up from $10m), the situation isn’t going to get much better…

  15. Pingback: Daily #F1 News & Comment: Saturday January 4th 2013 | thejudge13·

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