Earlier in the season, TJ13 reported that there was an impending complaint to be lodged with the European Union against Formula One’s owners, CVC Capital.
The reported complaint was to be lodged by a group of the smaller teams. At the time of publishing, the names of these teams were unknown, but many believed it to be either Sauber or Force India, both of whom have been struggling financially.
The main body of the complaint has to do with what they believe to be the unfair distribution of prize money by CVC Capital in favour of the larger teams.
Currently the five larger teams are receiving additional payments on top of prize money from the constructors’ championship. Last year that figure was reported to somewhere in the region of $249 million.
This disgruntlement almost lead to a few teams threatening to boycott the 2014 American Grand Prix at the Circuits of the Americas. It was however averted as a last minute intervention by FOM boss Bernie Ecclestone, who at the time promised that he’d review the payment structure.
Today Force India has decided to unveil themselves as one of the petitioners and has released an official statement siting the reasons for their complaint:
“Sahara Force India is one of two teams to have registered a complaint with the European Union questioning the governance of Formula 1 and showing that the system of dividing revenues and determining how Formula 1 rules are set is both unfair and unlawful.”
“Due to the ongoing legal discussions, it would be inappropriate to comment further at this time”
Sauber also revealed themselves to be part of this inquiry:
“The Sauber F1 Team is one of two teams who have submitted a formal complaint to the European Commission for violation of European Competition Law challenging the rule making powers and privileges, which are harming the sport.”
“The process has been initiated, therefore we cannot comment further at this stage.”
An EU Competition Commission Spokesman confirmed the statements by both teams shortly after.
“We have received a complaint and will assess it.”
When the threats of this investigation had reared their head around the time of the 2014 US Grand Prix, Bernie essentially called the small teams bluff, by saying:
“They (the teams) all signed contracts. I hope the complaint goes ahead and the competition authorities have enough patience and time to deal with it.”
Now that a formal complaint has been lodged, we will see if Bernie sticks to his story. The EU authorities sifting through CVC’s books, combined with the unpaid Tax bill Bernie has been dodging in the UK, should be enough to keep the owners of F1 busy with legal fees, investigations, and court hearings for the foreseeable future. One wonders if this will not be enough to see the sport finally go up for sale.
Adding to this enquiry, is the ongoing issue surrounding the threats from Red Bull owner Dietrich Mateschitz to withdraw both his teams for the 2016 season, if they’re unable to source a competitive power unit. There is ongoing negotiations with Ferrari to supply a full spec 2016, but as yet nothing as agreed as it’s believed that they’ve only willing to offer an updated 2015 unit.
The Japanese Grand Prix Illustrated Bernie’s way of getting back at those who dear to defy him. Both Silver Arrows were reported to have only gotten roughly 5 minutes of TV time during the race. Many believed that was this was in response to Mercedes refusal to supply Red Bull with power units for the upcoming season.
However one thing is for sure, Bernie will be looking to exact his own revenge on both Force India and Sauber teams, whether it will be at the upcoming Russian Grand Prix, one can only guess, but rest assured, Bernie will get his pound of flesh
Edited by TD
I have a feeling that Bernie knows something that makes this complaint more of a possible problem for Ferrari, Mercedes and Red Bull and perhaps Renault than a problem for FOM. According to Eurosport Bernie was fully aware of the complaint and which teams made the complaints, Eurosport also says that Bernie is alright with it. I have a feeling that Force India and Sauber will not put too much blame with FOM in their complaint because they kept FOM fully up to date with their intentions and subsequent actions (maybe because FOM tried to change the contracts with the constructors but failed)
I wouldn’t be surprised if he is hoping that all the ‘historic’ payments are ruled illegal so all teams go back to getting very little money and he keeps more for himself and his chums at CVC…
Bullshit. The Mercedes cars didn’t get any air time because of the fact that they drive around lonely at the top. Therefore boring as hell. When vettel had his 3rd race with a 30 sec gap to the first follower he didn’t get any coverage either. People want to see fights. If we’d see hamilton cruising all the time even hamifosi would get bored.
Really ? I’m sure one of the Mercedes cars was in a fight with Seb for second place. Exactly how much air time did Nico get?
This is not some trumpeted up theory I’m putting out there. During and after the race both Brundle and Croft drew the same conclusion. It was even mentioned by a few of the visitors to the site, likewise there was various articles written elsewhere. Even Lauda was asked about it and he himself I would say was none too pleased about it.
The Mercedes have been winning by large margins since last season and at no time did they get that minimal amount of air time.
That was the general consensus after the race.
Really. I must have blinked and missed it – that trumpeted up theory you put up there, that is…..
As with all your pieces there is not any original thought – it’s all a mish mash of what can be read all over the web.
Have you offered your services to GMM or grandprix.com. Fit in well.
Given that this is just a follow up to an article written earlier in the year,( which I might add it clearly states) and not an op’ed piece. Then there’s no need for what you’re looking for.
But anyways, thank you for taking the time out of your busy schedule to read this thoughtless mish mash that can be seen elsewhere on the web.
All criticism be it good or bad, is always welcomed.
Cheers.
Don’t take it to bad, fortis. I like to read it. Even if I do not agree with it.
None taken….
If a fight with vettel means trailing him by 2 seconds, passing him with a pitstop and leading him with 2 seconds.
Bernie will be looking to exact his own revenge on both Force India and Sauber…
…and thus provide more evidence for the competition authorities ?
They all signed contracts…
Yeah, and the gangster holding a gun to your head can say exactly the same.
In any case, there are plenty of circumstances where competition law overrides contract law.
With any luck, Ecclestone will have expired of natural causes before this gets resolved.
A lawyer at another forum mentioned that if the EU decides in favour of Sauber and FI, that the fine could be 10% of the turnover of CVC and the teams involved and possibly the entities who own the teams as well as payback of received money.
My conclusion of this is that this will go to the highest levels in involved companies who have to consider the implications of continuing to race under these ‘rules’ and the chance that they will have to pay. Ferrari will have to mention this in their prospect when they want to put the company on the stock market and this alone will already cost them money because of lower value.
Renault might have to reconsider buying Lotus as the flow of historic money cannot be guaranteed at all.
Somebody also mentioned that the money could be put in an seperate account and not be paid out until this thing is settled. You can imagine what this will do to William’s budget for example.
Interesting times ahead. If the EU has the balls (and lack of corruptcy) to act.
If there is a redistribution of funds this will hurt Ferrari and Red Bull the most. An even split will have teams getting more like a Mercedes/Williams level.
I was a bit suprised that Sauber had dumped Ferrari in it but I suppose they’re not the number two Ferrari team any more. Wonder it there might be a chilling of relationship between Ferrari and Sauber now.
I really hope there is a opening up of technical rules and a fair distribution of “turning up” monies. It could help bring F1 back from the brink…
Do we know that Ferrari are so concerned? While they will lose the largest amount due to the various historic payments they are also one of the biggest spenders – partly to keep up with Merc / RB etc.
Ferrari is probably the most lucrative car in terms of sponsors. They won’t spend massively more than their immediate competition so if all teams are getting a similar amount from Bernie then the extra sponsor income will still mean they have an advantage and there would be less need to support the team from Fiat funds maybe?
At the moment they are spending big to compete with what Red Bull and Mercedes are spending. They will always spend as much or more than the other top teams, but if the other top teams are suddenly spending a lot less….
Ferrari has always been the top spenders in F1 until they were overtaken by Red Bull. It was not until 2013 did Mercedes outspent them both.
That sort of misses the point though. Ferrari won’t spend £500m if the competition are spending £100m. They might spend £150m but they will only spend as much as is needed to match the competition.
If the sums are lower then the amount that needs to come from Ferrari road car sales is lower so the company as a whole looks a better investment – important with an upcoming flotation.
I’m not sure if I understand your argument. If the teams wanted to keep up their current spending level Ferrari would need to spend $86m more of their own money, Red Bull $54m more of their own money, and Mercedes $5m more of their own money.
Whilst I’m sure they are capable of doing that I’m sure those who’ll be getting less in their pocket will be miffed.
BANG!
I think this will be the end game for F1. It’ll make manufacturers jump and we’ll end up with customer cars.
It wouldn’t surprise me if Bernie didn’t put them up to it. His hands are tied, big teams won’t renegotiate lower money and he won’t give small teams any of his. So let the EU force the contracts to be destroyed they reallocate money more fairly. Plus he also gets rid on the committee who won’t agree on upcoming rules.
So if EU do find against F1 Bernie and small teams will be winners!!!!
Reading the two statements carefully it’s clear both teams have registered complaints about two different aspects of the sport.
The wording of both statements suggests that they’re looking to have the way regulations and rules are made investigated. The power of the strategy group. The equitable and fair governance of the sport. Stuff Adam Parr has spoken about before. This is perhaps a concern for the FiA, more than FOM – hence why Bernie doth not give a shit. These processes are ones he dislikes anyway.
The second aspect of each complaint is in relation to the inequality of revenue flows and commercial agreements. I think it’s assumed, possibly incorrectly, that there being an inequality must therefore equal an inherent “unfairness”. That may, or may not, be the case.
FOM might need to simply show that there are mechanisms by which any respective team can traverse the revenue grades based on certain mechanisms. These mechanisms might be performance related, as measured by the WCC, and historical status, as measured by whatever the fuck; carbon dating, who knows. But there’ll be some verbiage and logic to it…
Now the question for me is this… would one aspect of the complaints being proven to be in breach render the entire contract teams have void ab initio? Would a proven breach of, as an example, the regulation creation process / strategy group make the commercial streams void too? Or visa versa? It’s hard to tell on this matter, but my guess is no.
So, what do we have. A positive Bernie; one that’s either bluffing or confident.
Let’s assume his positivity is based on confidence for the moment. He would be IF he knows that the FiA related aspects to these complaints are likely to be investigated, found in breach and reengineered. He might also be confident because his commercial agreements might not be too dissimilar to that of other sports, like MotoGP, and that he can adequately show all mechanisms in which to show “fairness” based on Performance and Historical Status.
To me, it seems Bernie is comfortable and it’s not difficult to see why. I think he knows his revenues are safe, and that this puts the FiA in the shit. I won’t say that he’s the driving force, but it wouldn’t surprise me. He’s certainly not concerned and I think happy to let it play out. In the end, the FiA’s removal his regulatory power might be returned and worst case scenario, even IF the revenues are drawn up different, it doesn’t mean FOM have to give up anymore of their share of the pie.
If I’d been taken to court on a bribery charge and my legal team had worked out a way I could legally bribe my way out of it, I’d be pretty comfortable going into this scenario too…
Well, here’s the thing though. The previous EU judgement required that regulatory and commercial arms of F1 to be divorced. Hence the Concorde agreements and Bernie quitting all his FIA posts to run FOM. all the hullabaloo over FIA taking a percentage of FOM and the Strategy Group. To an outsider, this would seem to directly the previous settlement with the EU. Thus I see almost no way that FOM and Bernie will wind up with the ability to regulate the sport.
The current allegations are different however and concern the fact that F1 is being run as a cartel, IIRC. Having not seen the docs, I can imagine that the likeliest outcome would be abolition of the strategy group and a remit to end historical teams payment. A settlement is by far the likeliest of outcomes, and given the shenanigans FIA were up to last time, I think it unlikely that a serious financial penalty is coming for CVC. One never knows, though, and perhaps Vestanger is more of a hard ass than I know. Certainly a calculated gamble on the part of Bernie and CVC.
Judge,
Completely off topic,
Scarbsf1 had tweeted that the additional exhaust for 2016 would benefit honda to redesign the configuration without using tokens… can somebody analyse in detail
It seems this site has really dropped off since the summer break. It used to be that I couldn’t wait to read the daily news, now with the exception of actual race weekends were are lucky to have a J13 staff posting.
What’s happened?