The future of Formula 1's strategy

On Monday, most of Formula 1's great and good will congregate at Sapphire House, situated in Churchill Way, just off the A233 on the perimeter of Biggin Hill Airport.

The complex, owned by the Ecclestone family's investment group, houses all broadcasting paraphernalia operated by the Formula One Group and associated companies. For example, feeder series GP2/3 are headquartered in Sapphire House, while FOG personnel and kit generally fly out from the adjacent runway.

Monday's meeting could prove to be the most crucial in recent F1 history, for it marks the first gathering of the sport's Strategy Group 'think tank', which has as members the four Constructors Championship Bonus (CCB) teams, namely Red Bull Racing, Ferrari, McLaren and Mercedes, plus Williams (on a heritage basis) and Lotus (as best-placed of the rest), with F1 boss Ecclestone and FIA president Jean Todt also in attendance.

The think-tank, which effectively replaces the (former) Technical and Sporting Working Groups, will formulate F1's future direction, their decisions then being escalated to the Formula 1 Commission and, if passed, be forwarded to the FIA's World Motor Sport Council for ratification and subsequent implementation by the governing body.

On paper, so far so good, except that by the nature of the group half the current grid is excluded from the strategic formulation process: where before, a Marussia enjoyed input equal to that of a Red Bull or Ferrari with regard to sporting or technical matters, now minnows don't even have a seat at the table.

In fact, about the closest they get is to have sight of the agenda - a bit akin to inviting orphans to go window shopping during the build-up to Christmas: toys are on display, but they know full well they won't be receiving them any time soon...

Rencken reckons Williams is the only team in F1 for all the right reasons © LAT

That said, the make-up of the Strategy Group is rather interesting, for, of the guaranteed seats, only Williams is in F1 for all the right reasons, namely to exist through selling on-track (sporting) performance to prospective commercial partners, and is likely to be in the sport for as long as it survives.

By contrast, Lotus was bought as an investment and promotional vehicle for the companies operated by entrepreneurs Gerard Lopez and Eric Lux, and co-investors are constantly being sought.

True, McLaren was once a pure racing team, but the company's motorsport programme has recently been diluted by such as Automotive (the road car division has now delivered 3000 cars), Applied Technologies and Electronics (with the turnover of the last two each exceeding £25m in 2012), so it can be argued that racing is no longer McLaren's primary focus.

Ferrari races simply to sell high-performance road cars at a premium - and has oft threatened to withdraw - while Mercedes is in F1 simply to move metal (plastic in the case of Smart). Red Bull? As one of its many on-edge activities to persuade consumers that to be seen to drink sickly-sweet liquid out of gaudy cans is dangerously cool.

Any of this trio could conceivably pull out of F1 (or switch to other series) without a moment's care - true, they hold contracts with Ecclestone, but in F1 the value of contracts is defined by break clauses and the ability to pay smart lawyers - whereas such as Force India and Sauber would lose their raison d'etre were they to leave F1.

Thus with one exception the very teams responsible for framing F1's long-term future are the very entities that could, by definition, be the most likely to withdraw from the sport - contracts or not - whereas dedicated outfits have zero say despite extensive (and expensive) track records.

Dougie Lampkin performs motorbike stunts at Red Bull's Monaco Energy Station © XPB

Already rumours are rampant that Red Bull could withdraw as team owner within three years - having ruled the roost for so long there's only one direction thereafter, namely south - with the drinks company signing title sponsorship and signage deals with Ecclestone for the 'Red Bull Formula 1 World Championship', and selling its team (to Infiniti when their partnership expires in 2016?) to recover costs.

That would be, of course, entirely consistent with Red Bull's strategy of being seen to own those activities in which it is active - Red Bulletin, Red Bull Air Race, TV station Servus, Red Bull Stratos, etc - while keeping Ecclestone sweet.

Monday's agenda is, however, intriguing, with the first major item (after approval of proceedings) being the structure and constitutionality of the Strategic Group, with particular reference to the Sporting/Working Groups, which will in future meet as informal committees/discussion forums to provide input to team principals on the Strategy Group - which has 18 votes up for grabs, with each team having one, and FOG/FIA six apiece on a simple majority (50 per cent + 1) basis.

However, the majority of teams favour retaining the TWG/SWG structure, for the working groups consist of duly qualified people able to provide the requisite levels of diligence, although it must be said that the voting system (70 per cent majority required for future changes; 100 per cent for immediate) proved unwieldy.

But why not simply change the voting system to simple majority rather than chucking the baby out with the suds?

Symonds reckons F1 will miss its working groups © LAT

Pat Symonds, the highly experienced technical director now restructuring the nuts and bolts departments of Williams, is anti their disbandment despite his employer being one of the privileged sextet.

"I think it's rather unfortunate that within the governance of Formula 1, one of the things that was always very successful were the working groups," he told this column recently.

"They were, particularly the technical one, pitched at the level where it was composed of a number of people who had the ability to make decisions, but were not divorced from what was going on."

Robert Fernley, Force India's deputy team principal, is another critic of the Strategy Group. "I think the process we've had of Sporting/Technical Working Groups has served Formula 1 well. Yes, it's got downsides, and it's frustrating sometimes in terms of its ability to deliver quick results, but it's a balanced approach in terms of measuring what the overall needs of Formula 1 are, as opposed to looking through the eyes of four very, very well-funded teams."

But is it not simply a matter of another layer having been added, slotting between the Working Committees and the F1 Commission?

"Yes, except that effectively the TWG and the SWG are now stripped of any decision-making in the process. They're now discussion forums."

However, in the first instance various teams doubt the legality of the Strategy Group, for its formation is not believed to have been allowed for in (commercial) agreements existent between (10 of 11) teams and the Formula One Group, the entity controlled by Ecclestone on behalf of CVC Capital Partners, the investment fund that acquired the (majority) rights to exploit the sport in 2006.

And, exploit F1 it surely is, as one peek at the profits CVC made from the sport in 2012 shows: a whopping £550m for the year, while Lotus and Marussia, last-named being the only outfit to not hold a firm deal with FOG, recently reported record (for F1) losses...

Marussia is among the F1 teams making a loss © LAT

Thus, observers fear that the FIA could leave itself open to legal (or EU) challenge, for exclusion from the Strategy Group of the smaller teams could be construed as abuse of monopolistic position - something the EU frowns upon, as Google and Microsoft know all too well.

Certainly, more than one team has indicated that it has reserved its (legal) rights.

How, then, did F1 get itself in this tangle? Is this just another example of it pointing both barrels of a gold-plated Purdey at its twinkling little toes and blasting forth?

"There was a situation where all the teams were together in FOTA, and at that point we had an opportunity to be able to collectively discuss the process with the commercial rights holder," believes Fernley.

"[We] had a certain amount of power as a combined unit. Red Bull sold out [to the CRH]. That undermined the position of Ferrari, who then had to recover their position. Once you've lost Ferrari and Red Bull, it's just a matter of time before the other teams are picked up."

Thus Ecclestone was able to cut preferential deals with Red Bull, Ferrari, Mercedes (after the F1 tsar 'ensured' his mate and former driver Niki Lauda was appointed non-executive chairman of the Three-Pointed Star...) and McLaren - who, to team boss Martin Whitmarsh's credit, held out to the last - with the rest more or less being forced to follow suit if they wished to remain on the grid.

Fernley believes Red Bull has damaged F1 © XPB

If the situation is as bad as Fernley believes, could Red Bull Racing be said to have destroyed the future of F1?

"Completely," he says without hesitation. "Red Bull looked after their interests, of what they wanted to do, over and above the collective interests of F1, which is how it was portrayed under FOTA. And FOTA had no idea that Red Bull was going to do that."

Sauber's Monisha Kaltenborn agrees that basically the lower-ranking teams had no choice but to accept what was offered: "We signed the commercial agreement to secure the financial income for the team. When you don't have the strongest negotiation position, you simply have to accept some things.

"But at the same time the wording was as such not anything detrimental, the way it was put. We understood that there will be some changes, which also makes sense, but to go this way which we have now has a lot of danger."

Back to Monday: assuming the discussion gets past first base - and is not fraught with legalities, as some fear - the next item is rather more mundane, being approval of [Pirelli's] 2014-18 tyre-supply contract, plus related nuances such as testing and compound selection (a proposal being that the Tyre Working Group be responsible for the process).

Nelson Piquet raced a customer McLaren run by BS Fabrications, before winning titles with Ecclestone's Brabham team © LAT

The next discussion point is contentious, for there are suggestions that F1's (cost-controlling) Resource Restriction Agreement be policed by the FIA, with sporting penalties being handed down for transgressions.

Again, one has to question whether RBR or Ferrari would vote for cost caps which favour Marussia or Caterham, particularly as overall caps of $250m are bandied about, three times independent teams' spend. The fact that $250m mirrors Red Bull's budget further fuels suspicions...

Items 5-9 are certainly interesting, but not of major strategic interest, but require discussion prior to being escalated to the F1 Commission - some thought the previous system unwieldy - being amendments to the 2014 Technical/Sporting Regulations, in-season testing/windtunnel trade-offs, single telemetry systems (from 2016 onwards) and engine homologation/parity.

Agenda items 11 and 12 fall into the same category, covering front-end driver protection systems (windscreens, anyone?), points for pole position (bound to find favour with Red Bull; not Ferrari), larger names/numbers on cars, appointment of permanent F1 stewards, increasing car weight (to cater for heavier drivers) and extending Friday's FP1 practice to two hours to allow substitute drivers, enabling teams to run rookies and regulars during the same session.

That leaves Item 10: Listed Parts, and arguably the most contentious point before the Strategy Group, for the term is a euphemism for Customer Cars, whereby the grid would be split into A and B teams, with (five or six) majors supplying customer cars to the minors - at a profit, of course - with the rationale being that supplying teams would benefit from income and spreading of manufacturing costs over a larger base, with customers being saved the development/manufacturing costs of their own cars.

Budgets would by implication be reduced, enabling CVC to retain a greater share of revenues - certainly in the long term, and such funds seldom think long-term, usually exiting their investments within five years - but in the process the very essence of F1 would be utterly destroyed, apart from the fact that thousands of loyal F1 workers would be dehired quicker than you can say 'CVC'.

More here from the FIA press conference in Japan in response to questions from this column.

X