FOTA reeling as Ferrari and Red Bull pull out

The decision of two of the most powerful teams in F1, Ferrari and Red Bull, to quit the Formula One Teams Association over the 'stalemate' in the organisation, leaves questions about whether the institution will survive.

And if it does not, will F1 again descend into a spending arms race between a few wealthy teams?

FOTA was formed in September 2008 to represent the interests of the F1 teams in dealings with the FIA and Bernie Ecclestone's organisation.

It was designed to prevent a repeat of what happened in 2005 when Ferrari broke ranks with the other manufacturers who were trying to stand up to FIA and Ecclestone, and did a deal on its own worth €100 million to sign the Concorde Agreement.

Ferrari president Montezemolo, who cut that deal, was ironically one of the key founders of the FOTA movement. There have been rumours that Ferrari might have done a similar deal here but these were denied by a Ferrari source.

Nevertheless the way is open for Ecclestine and CVC to pick both teams off now with a golden hello payment to commit to F1 beyond 2012. This would leave the others in a weak position.

It is interesting that the two teams have left at the same time, although Ferrari claims it was on the move first, citing lack of trust (with Red Bull's spending) and paralysis at FOTA in terms of dealing with it.

Montezemolo has recently expressed concern about the direction the sport is headed in and the company blamed a 'stalemate' within FOTA as its reason for leaving. Ferrari feels FOTA has run its course and a new impulse is needed.

There is a lack of trust within FOTA which has spurred this decision, but it's important to remember that the RRA is a legally binding agreement which runs to 2017, so it is not as if Ferrari and Red Bull will be able to spend £100 million a year more. Meanwhile the testing agreement also involves the FIA, so this won't change overnight.

However with a new Concorde Agreement due to to be discussed and come into force in 2013, the separation of Ferrari in particular at this stage will weaken the teams' negotiating position.

It will greatly disappoint the other teams, particularly Mercedes and McLaren, and will lead to calls of "I told you so" from sceptics within and without F1, who thought that an alliance of teams was a waste of time.

FOTA has achieved some useful things in its time, mostly on the cost savings side; like the original Resource Restriction Agreement in 2008, the cutting back of testing, reduction in wind tunnel time, the rationalisation of engine prices to keep small teams in the game.

But that is now at risk from the split, with Red Bull and Ferrari unhappy about the next stage of the RRA, which the teams are finding it hard to agree on.

Both Ferrari boss Stefano Domenicali and Red Bull Racing boss Christian Horner asked recently if FOTA could not agree a new RRA, what was the point of having the organisation? That said, Ferrari retains close links with Sauber, which is still part of FOTA and Toro Rosso is part of the Red Bull empire.

Autosport broke the story today and got a confirmation from a FOTA spokesman, "FOTA confirms it has received the resignation of two teams. Whilst considering its next steps, FOTA will continue to work on behalf of its members to achieve the aims of the organisation."

The row has been brewing for some time but the split comes just two months into the tenure as FOTA secretary general of Oliver Weingarten, who worked previously as a lawyer in the English Premier League. He is in the process of learning the characters involved and the complex dynamics of the F1 paddock.

There have been suggestions that the top four teams, including Red Bull and Ferrari, were going to meet independently to see if they could agree a framework outside FOTA for a way forward on RRA.

Most teams don't have a large enough budget to be affected by the RRA, but it does place a ceiling above the big teams and stops them from engaging in a spending arms race which would skew the competitive balance of the sport and ultimately could lead to the failure of several medium and small teams who would be unable to compete.

It may be that Ferrari and Red Bull's move will focus minds and in the two month notice period they must serve, it will force agreement which saves the organisation.

But if FOTA splits, it would be a personal crisis for FOTA chairman Martin Whitmarsh, who has invested three years in the development of FOTA because he believed it was for the greater good.

“F1 has survived economic storm that began in 2008 better than we might have and I think that there are a number of teams that wouldn’t be around without that the spirit of co-operation we’ve had in many areas of FOTA," he told me in an interview last month at McLaren's factory.

"We have limited the arms race on wind tunnels by limiting the scale to 60%. Some teams were having to spend £50 million for a full scale tunnel to be competitive. We’ve limited the hours; it was getting to three shifts 24/7 and now our tunnel runs for half of that time. We had to also reduce the CFD time. We are spending less than half the money we used to externally and we’ve been through a painful redundancy process. None of these measures are disputed now and we may well use some of those mechanisms to further control costs.

“The teams have always fought each other on the track and off the track and not always recognised that we’ve got a lot of common interests in our core business.

“Do we have lots of challenges? Yes. Will we do everything we want to? No.

"I think FOTA has achieved more in its three years than the teams did in the previous sixty.

"We wouldn't be very smart if we don't stay together.”

That could all be in jeopardy now.