Ingram's Flat Spot On: End of F1 as we know it?

Ingram's Flat Spot On by Jonathan Ingram End of F1 As We Know It? It's a day early to tell if the political stalemate in Formula One between sanctioning body FIA and its manufacturers will result in new opportunities in North America.


Ingram's Flat Spot On
by Jonathan Ingram


End of F1 As We Know It?

It's a day early to tell if the political stalemate in Formula One between sanctioning body FIA and its manufacturers will result in new opportunities in North America. Sanctioning bodies like NASCAR and IndyCar, teams, drivers, American and Canadian promoters could all be affected by either a split or a compromise.

The F1 crisis will come to a head with this week's meeting of the World Motor Sports Council on Wednesday, where both sides in the dispute will be present. If no compromise is reached the teams of Ferrari, BMW, Mercedes, Renault and Toyota will formally split to form their own championship in 2010 in a meeting scheduled for Thursday.

If a split comes to pass, it's certain that two series will result.

Unlike the FIA, which is heavily indebted to bondholders, a new manufacturers' series would be in position to sign up the promoters at the Indianapolis Motor Speedway or the Circuit Gilles Villeneuve in Montreal. Those facilities are effectively locked out of the F1 schedule currently by the outrageously high sanctioning fees required to pay off the bond debt of the FIA.

Under a split, teams such as the Charlotte-based USGPE team co-owned by Ken Anderson and Peter Windsor would be sought after by both sides. Theoretically, this new team could participate in the FIA's championship, where it is currently contracted for 2010, and simultaneously accept an engine contract from one of the breakaway manufacturers as incentive to switch sides in 2011.

In any event, the timing for Anderson's USGPE team and a potential American driver appears to be good. Even under a compromise and no split, USGPE would be wooed by current manufacturers. Also, the team could anticipate some budget reductions to be put in place in the case of a compromise, which would be helpful to a start-up operation.

The cost of F1 racing is at the heart of the dispute. FIA President Max Mosley, who initiated the plan to reduce costs for participants with a budget cap, continues to tack politically on a daily basis, alternating between defiant and conciliatory.

The Formula One Teams Association, led by its chairman Luca di Montezemolo of Ferrari, will apparently follow the lead of the Italians. In the minds of many, Ferrari is Formula One and vice versa. That's why the stalemate between the two sides has reached a crisis. In almost every dispute in the recent past, Ferrari has sided with the FIA and against other participating teams. As Ferrari goes, in many respects, so goes the prospects of any world championship for single seaters.

In his own eyes, Mosley's effort cannot fail. So it's a referendum on his credibility as the leader of the federation that sanctions the world championship. Forcing teams to either reduce their operating budgets or accept new teams that will run to a different set of more favorable rules by accepting a budget cap has not worked so far. It remains to be seen if the members of the federation recognize the end of F1 as it currently stands and decide to withdraw support of Mosley.

Currently, teams are spending as much as $200 million per season or more and the figure used for a budget cap is $60 million.

Mosley has offered to compromise if the teams agree to sign on for the 2010 season, a contract process that is rarely pro forma but usually gets executed annually by the deadline, now passed. The teams apparently do not trust the man to compromise after the fact.

It appears that Ferrari is orchestrating a change in power at the FIA as part of any compromise. In recent years, Ferrari signing up with the FIA has quelled any insurrection among the other manufacturers on the long-simmering issues of rules and who benefits how much from the income generated by F1 -- the teams or the organizers?

Involved in the bizarre sex scandal last year that he believes was designed to chase him from office, Mosley has once again taken an all-or-nothing stand. In other words, he stayed on as president despite the scandal because he had nothing else to lose. Now, for the sake of a positive legacy, he's banking everything on bringing in the reduction in cost and the arrival of new blood in F1 with the rules changes resisted by FOTA.

The two circumstances -- the scandal and the seeking of a positive legacy -- are inextricably linked, making Mosley's position one of forcing the federation to see him as it sees itself. It's all rather graceless and presents a large target for Ferrari.

Part of any compromise would concern a new Concorde agreement, the contract that has bound teams and the FIA together in the past. Currently, they are operating without a Concorde agreement due to a dispute over whether the teams will receive 50 percent of the income generated by F1.

Formula One Management boss Bernie Ecclestone, like Mosley, has antagonized the manufacturers. At the same time the FIA is pushing for lower budgets by teams, Ecclestone is pursuing more income with out-of-sight sanctioning fees, a situation created when he sold the marketing rights to F1 for a hefty fee while retaining control.

That process has further rankled manufacturers as traditional circuits in major automotive markets that draw crowds in the 100,000 range like Silverstone in England, Indianapolis and Montreal are replaced with new ones in the Middle East that are practically vacant on race weekends or filled with non-paying guests. Governments foot the bill.

How will any of this affect NASCAR or IndyCar? Conceivably, either one or both could gain new manufacturers in the course of events. Honda is already in play for NASCAR as a result of dropping out of F1. On the other hand, Honda currently provides spec engines to all teams in the IRL. If it is joined by more competition in the IRL as a result of the fallout in F1, the Japanese manufacturer is more likely to stay in the IndyCar series and less likely to be interested in NASCAR.

It's possible that a Ferrari-led breakaway group could suddenly have a total of three events in North America, including an East and West visit in the U.S. to fulfill the manufacturers' longstanding goal of better exposure for their race teams in the American car market, one that is now more vulnerable to market share increases by foreign brands with the bankruptcies of GM and Chrysler.

I wouldn't bet against Ferrari in this case. Either the reduction in budgets as it stands will be rejected and there will be a new president of the FIA after the October election. Or, there will be two series next year.

Jonathan Ingram can be reached at jonathan@jingrambooks.com.

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About this article
Series General , Formula 1
Drivers Luca di Montezemolo , Gilles Villeneuve , Bernie Ecclestone