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HindustanTimes Fri,11 Jul 2014
A sport where promoters make over 50%
Joe Saward
June 26, 2012
First Published: 23:36 IST(26/6/2012)
Last Updated: 23:40 IST(26/6/2012)

The European Grand Prix in Valencia was great entertainment and while the sequence of different winners came to an end, Fernando Alonso's great drive kept us on the edge of our seats until the chequered flag. It was exactly what one wants to see from Formula 1.

What we don't want to see so much, is the off-track activities that are currently going on. The suggestions from Germany that the Formula One group was sold with a deal that included massive bribes is not great publicity.

Nor for that matter is the consistent bickering that goes on between the players in the sport as they try to figure out who should get what under the next Concorde Agreement, the commercial contract that binds them all together and divides up the revenues.

The fastest way for F1 teams to improve their balance sheets would be by working together and telling the Formula One group (led by Bernie Ecclestone) that 15% is a much more sensible share for a promoter. The current lot do no real promotion and take more than 50% of the money generated.

That only makes sense for Ecclestone and the private equity people behind him, who take the money instead.

It is hard to be sympathetic for the teams because they are incapable of getting together and stopping that happening.
 
FIA playing the rule making card
What is really interesting at the moment is that the FIA has yet to sign the new Concorde Agreement, which will govern the sport and split up the money between 2013 and 2020.

The federation wants more cash in order to fund its good works and it has a most interesting argument as to why the sport should listen.

The federation owns and controls the rules and regulations. It is currently arguing that as there is no Concorde Agreement in place for next year, it is not bound by the terms of the existing one, in regard to 2013 and beyond.

So, it reasons, it can do whatever it likes with the rules and the teams will either have to agree to that or get lost.

This puts pressure on the Formula One group to offer the federation a more suitable financial arrangement, in order to stop it imposing rules that it would like to see. One idea that would really throw the cat among the pigeons is a regulatory budget cap, written into the F1 rules.

The FIA would need to pay someone to police this, but teams would be very unwise to overspend because that would then be deemed to be cheating and the FIA would then be allowed to impose penalties and cause substantial image damage to any team that was deemed to have overspent.

The case for budget capping
A regulatory budget cap would make F1 a much more profitable businesses and the sport would be more attractive to newcomers, but it would also mean that the teams could get over their disunity and work together to force the Formula One group, the holders of the commercial rights of the sport, to do some promotion and/or give the teams a bigger share of the revenues.

In most sports the promoter not only does promotional work, but also accepts between 10-15% of the revenues as its reward. In F1 it is all messed up. It would be so much better if the teams got 80%, the FIA 10 and the promoters 10.

That way the money going to the FIA could be used to build the sport, to ensure that the best talents are able to get through to F1, rather than only those who have rich fathers, or have been spotted and developed by the F1 teams.

So it is not just about money. It is about creating a more democratic sport - and that has to be a good thing.

How not to discuss budget capping
* Back in 2009, Max Mosley was on his way out as the FIA president. Before leaving, Mosley tried to force the teams' hand by imposing a $60 million budget cap where teams that adhered to it would be given more freedom in the technical regulations while those that chose to ignore would have to compete to an entirely different set of rules.

The proposed 'two-tier' F1 was not received well and Red Bull, Ferrari and Brawn GP led eight of the ten teams at the time in a threat to form a breakaway series.

* In the backdrop of this fiasco, which was finally resolved by that year's British GP, was the ongoing election for a new FIA president. Jean Todt ultimately came to office and restored some much-needed calm to the sport.

The writer has covered every Grand Prix for the last 25 years.


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