Ingram's Flat Spot On: F1's dilemma

Flat Spot On
by Jonathan Ingram

F1's dilemma

In the current discontent in Formula One over the 2009 schedule, Ferrari's relationship with F1's governing body is drawing even more scrutiny than usual.

Kimi Raikkonen, Stefano Domenicali, Felipe Massa, Luca di Montezemolo and Piero Ferrari.
Photo by Ferrari Media Center.

Ferrari and the FIA may or may not make a nice couple, depending on the eye of the beholder. Long scrutinized with microscopic intensity, this relationship may once again predict the future of the sport, according to some who are long in the tooth when it comes to soothsaying about the Machiavellian world of F1.

The battle lines are drawn among the manufacturers. Major players like Daimler, Renault, BMW, Honda (if it should stay in F1) and Toyota are unhappy with the exorbitant sanctioning fees exacted by the FIA's business partner Bernie Ecclestone. The high tax on promoters means races in Canada and France have been dropped for next year. That's like having a Major League Baseball season without games in New York.

The rich and powerful man who usually plays the devil incarnate in all the F1 operas, does Ecclestone still hold enough cards to quell yet another possible rebellion? If he holds the Ferrari card, will that be enough to outflank the other manufacturers?

Here's one writer's take.

Ferrari views itself as Formula One incarnate -- and has the championships to prove it. This makes the scarlet brigade a natural ally of the FIA and Ecclestone, because its prestige as the ultimate car company rests on this proud racing history in the world's longest running championship for single seaters. Ecclestone and his cohort, FIA President Max Mosley, find it easy enough to keep the red tide at their back as they move forward into the future for this reason.

That future has now excluded some of the world's major car and consumer markets -- the U.S. included -- in favor of oil rich locations in the Middle East, wannabe emerging markets like Turkey and Hungary and the well-heeled in the Far East like Malaysia and Singapore.

Alas, Ferrari has few hangups about extending its reach into locations where there is fabulous wealth among the upper crust who are capable of buying up the company's relatively small inventory, an inventory that is tiny compared to the other major manufacturers involved in F1.

Just as prior to the most recent signing of the Concorde agreement between the FIA and its participating teams, if Ferrari continues to back the organizers and majo domo Ecclestone, I doubt the other manufacturers would be willing to form a breakaway championship.

Emerson Fittipaldi and Bernie Ecclestone, President and CEO of Formula One Management.
Photo by xpb.cc.

That's the only card the manufacturers can play. Otherwise Ecclestone remains in charge of the schedule through a contract with commercial rights holder CVC Capital Partners. Not even comments during infighting this summer about Ecclestone's advancing age of 78 from the FIA's Max Mosley can shake that relationship.

What sticks in the craw of fans and participating manufacturers alike is the financial quicksand created by Ecclestone in order to further enrich his own already ample coffers. Having long since acquired them from the FIA, he sold 50 percent of the commercial rights of F1 for $1.65 billion in 2000 to EM.TV. The subsequent default gave new owners, CVC, significant interest rates on bonds and debt bought from creditor banks at a discount.

To make it all work, Ecclestone is now charging high fees to promoters to extract from F1 the money needed to pay off the exorbitant debt created in 2000 when he sold the commercial rights at a huge profit to himself. In addition to retaining control under the contract between his Formula One Administration and CVC, Ecclestone retains 25 percent ownership of the commercial rights.

Is the future of F1 at risk due to the alienation of fans in major traditional markets as well as participating teams and manufacturers, who might now see themselves as pack mules in somebody else's gravy train?

I doubt the manufacturers and teams really want to get into the business of running a championship, especially if they have to start from scratch and face a combination of Ecclestone and Ferrari, who will no doubt find a way to sustain the world's longest running bona fide championship for single seaters.

I suspect now long-suffering traditional fans will learn to live with F1 on TV more often. At least in Europe, travel to a neighboring country hosting a Grand Prix is relatively easy. As for North America, where the U.S. Grand Prix was dropped two years ago, it seems Ecclestone enjoys thumbing his nose at the continent for not being able to keep up with the cost of F1's now very expensive series.

Sadly, these divide and conquer tactics indicate F1 is now far, far more business than a sport, especially when one also considers the behavior of highly paid drivers. The fans are taken for granted and are the last consideration. It's enough to make one quit.

Max Mosley, FIA President.
Photo by xpb.cc.

There are two other key issues of disgruntlement for those who deign to continue following the sport.

As for Ecclestone's concept of awarding the championship to the driver who wins the most races next year, the opinion here is that it might increase much needed overtaking, given the prospect of podium finishes being the tie-breaker.

Careful observers, meanwhile, may note that the timing of this proposal was a backhand confirmation of Ferrari driver Felipe Massa's victory count being higher than the total of this year's championship winner Lewis Hamilton of McLaren-Mercedes. If this proposal makes Ferrari feel that much more appreciated by Ecclestone despite losing the driver's title, well, there you go.

As for the prospect of all manufacturers being forced to use spec engines from a single outsource, at first glance that appears to be anathema to the F1 tradition of technical innovation. But it also looks like technical rule maker FIA using an iron fist inside a velvet glove to encourage teams and manufacturers to accept other cost-cutting procedures -- or else. Come to think of it, a breakaway series would require those same manufacturers and their teams to sort out technical rules among themselves.

That could get even uglier than next year's schedule.

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