Kneejerk calls won't solve F1's ills

One of the most mystifying developments during Formula 1's festive season was, without doubt, Ferrari president Luca di Montezemolo's stated desire to call a summit "to discuss the nature of F1 with the teams".

"We have to make proposals to do something, without putting anyone in the corner - and not [do deals] under the table. I want to do it in a very open way," the patrician Roman said at the Scuderia's select annual Christmas media luncheon.

"I want to have more dialogue between the teams - not about competition, but looking at the problems with F1."

While there is absolutely no denying that the so-called "nature of F1" is in dire need of urgent discussion - as this column has regularly made clear over the years - di Montezemolo's call to arms is rather baffling, not least because a forum to discuss precisely such matters exists, and was, indeed, created as a direct result of a similar battle cry from him in mid-2008.

Ferrari's boss became charter chairman of the Formula One Teams' Association, as the resultant body came to be known, with FOTA's founding secretary-general Simone Perillo being hand-picked from Confindustria, an employers' association di Montezemolo had previously headed.

Di Montezemolo went on to serve two terms before handing over to McLaren's Martin Whitmarsh (who heads the team alliance to this day) in line with FOTA's constitution, which prescribes that only bosses of championship-winning teams may hold the top job.

Thus, di Montezemolo knows more than most about FOTA's workings despite Ferrari, in common with Red Bull/Toro Rosso and Sauber, withdrawing from FOTA at the end of 2011, ostensibly after a row over F1's Resource Restriction Agreement.

At its 2009 height, FOTA was able to play hardball with the FIA and FOM, and had fans on its side © XPB

While the contentious RRA, whose validity and effectiveness is regularly questioned, carries the can for the defections, there is no doubt that Ferrari and Red Bull's withdrawal enabled them to negotiate preferential terms with commercial rights holder Formula One Management ahead of the expiration of the 2010-12 Concorde Agreement*.

Where 2009 negotiations had been on a (FOTA) group basis, FOM CEO Bernie Ecclestone shrewdly managed to divide the teams into two distinct groups - and it can be no coincidence that Ferrari and Red Bull managed to grab the largest teams' shares of F1's billion-dollar revenues through to 2020 for themselves...

It is this inequitable revenue distribution structure - which provides for an almost 1000 per cent difference between the top and bottom payouts over the 11-team spread - that lies at the root of the abyss the majority of teams are staring into.

By way of contrast, consider that in England's 2012/13 (football) Premier League the 20th-placed team (Queens Park Rangers) earned 60 per cent of that banked by championship-winning squad Manchester United.

Using the Premier League structure as a basis for F1's revenue structure and assuming the top team receives around £60m, it would mean the 11th-placed outfit pocketed £35m. Instead it receives a paltry £8m, and then only after a year-long campaign mounted by (mainly FOTA) teams.

Equally significantly, the shared Premier League 'pot' for the 2012/13 season amounted to almost £1 billion, whereas F1's 11 teams are fortunate if they currently carve up half that despite F1's revenues running at similar levels - providing ample proof of how much FOM retains, with most flowing to majority owner CVC Capital Partners.

The fortunes of Fernandes's sporting teams suggest that struggling in English football pays better than struggling in F1 © XPB

By the same token, FOM could stand accused of not maximising revenues: if, after all, a domestic football cup played on an island with a population of 60 million turns over more in nine months than does the world's (alleged) largest annual sporting block during the same period, somebody somewhere is clearly not delivering to full potential...

However, there is no doubt that said quadruple FOTA defections, plus the withdrawal by HRT over membership costs, wounded the association.

Still, the body continues to play active roles in cost-cutting programmes and further issues that affect F1, and diligently consults Ferrari (and others) over common issues such as FOTA Fan Forums. In fact, FOTA proposed a (stillborn) meeting with the Italian squad during the summer break to discuss F1's future...

This week FOM, which attempted to 'hijack' testing until it realised there was little money to be earned from the activity, advised the teams it had returned control of all pre- and in-season testing to them - for which read FOTA, which in the past negotiated circuit contracts and struck gate-share deals with circuits.

FOTA played active roles in negotiating the Pirelli tyre contracts and arranged the annual RRA audits to which all teams are committed in terms of the so-called 'Singapore Agreement'; thus there is no doubt FOTA plays a vital role - alongside the FIA and FOM - in contemporary F1, and, as any engineer knows, a three-legged stool provides the most stable platform of all.

That said, in December FOTA put its existence to the vote, giving members three choices: continue as is; downsize, providing services on a paid-for basis; and dissolution. The middle option seems to have got the majority nod, although a meeting is planned for late-January to define FOTA's exact future and its role in the sport.

With teams divided and weakened, Ecclestone has held all the cards © XPB

FOTA members thus have every right to be bemused by di Montezemolo's proposal, with cynics venturing that the August meeting failed to materialise because it wasn't invented in Maranello.

This perfectly encapsulates F1's biggest ill: the inability of team bosses to convene crucial meetings despite the enormous challenges facing the sport, in turn enabling the commercial rights holder to run rings around 11 usually astute businessmen...

A cert on the agenda - now doubtful, see below - would no doubt have been the question of cost saving, and here Ferrari (and Red Bull/Toro Rosso) remain at odds with FOTA, which favours, as does the FIA (which has formed a working group), cost caps.

Di Montezemolo suspects manufacturer-owned teams could be tempted to circumvent caps through having subsidiaries or associates provide advantageous goods/services, citing Daimler (Mercedes) and Fiat/Chrysler (Ferrari) as possible culprits. Further division...

However, he offers one example of the urgent need for cost control as "this year all the movements of the drivers" bar those at Ferrari involved pay drivers. Setting aside that this overlooks nemesis Red Bull, whose elevation of Daniel Ricciardo was hardly driven by his wallet, the Italian has a point, save that all teams afflicted thus do not benefit from substantial premiums paid by the CRH to Constructors Championship Bonus teams Ferrari, Red Bull, McLaren and Mercedes.

Ask any team boss whose performances are marginalised by lower annual payouts whether he/she would elect to appoint a superstar rather than begging for bucks in the back of beyond and the answer is surely a resounding "yes!". Look no further than Lotus, the highest-placed non-CCB team, which tried in vain to retain Kimi Raikkonen, yet was forced to accept his defection to Ferrari in the wake of unpaid salaries.

The well-funded Maldonado's pivotal role in the driver market rang alarm bells © LAT

Also up for discussion would have been the question of three-car teams, as revealed here.

During 2008-10, the very years di Montezemolo chaired FOTA, team unity delivered enormous benefits, not least a Concorde Agreement that treated all teams equally (save for Ferrari's 2.5 per cent premium) and equal input into a governance process that favoured all squads equally and vested over half the power in their hands.

After Red Bull and Ferrari exited FOTA, the CRH/team dynamic shifted diametrically, due largely, it must be said, to their defections. At least four teams are now said to be seriously endangered despite employing pay drivers, with this imbalance remaining thus until 2020.

In fact, there is currently no Concorde in place to define the rights of the teams, with a 'Strategy Group' - on which Ferrari and Red Bull plus FOTA members McLaren, Mercedes and Williams sit by 'right' (and to which Lotus is co-opted) - formulating F1's future in conjunction with the FIA/FOM. Crucially, though, six teams collectively hold but one-third of the vote...

As for summits, the FIA has called a meeting of all teams in Geneva on January 22, with matters to be discussed including cost control (the FIA in December announced the formation of a Cost Cap Working Group) and others matters of common concern.

This rather pre-empts di Montezemolo's plans, further compounded by FOM CEO Bernie Ecclestone's notice to the six chosen ones that he intends convening a subsequent Strategy Group session, during which the ludicrous double-points system is likely to loom large despite allegedly having been voted for unanimously.

Clearly, then, the answer to F1's current challenges lies not in kneejerk meetings to endlessly debate cost controls and points structures, but in structured forums plus a united FOTA able to secure equal benefits and revenues for all, and, equally crucially, a stable future for a (possibly undersold) sport with uncertain leadership going forward.

*The Concorde Agreement outlines the commercial, technical and governance obligations of the governing body (FIA), FOM and teams collectively. The 2013-20 covenant currently remains under negotiation.

An abridged version of this column appears in the January 9 issue of AUTOSPORT magazine.