Why F1 has two weeks to decide its future

Two crucial summits spread over the next fortnight are expected to shape Formula 1's commercial, sporting and technical landscape, with commercial rights holder Liberty Media (operating within the paddock as Formula One Management) having beavered away behind the scenes for the past nine months to frame a series of schedules that will take F1 beyond end-2020, when current covenants expire.

At the first meeting, scheduled for October 31, FOM and the FIA will present their combined technical vision for the future, with main discussion points focusing primarily on post-2020 power unit regulations with amendments to chassis regulations being the logical next step. Also up for discussion are cost-control measures.

During the United States Grand Prix there was optimism that FOM and the FIA could pull off what F1's previous manager, namely CVC Capital Partners, had failed to achieve in over a decade. That the venture fund and F1 CEO Bernie Ecclestone were regularly at odds with the teams, the governing body and, at times, themselves hardly aided their cause. That, though, is in the past, and not a day too soon, either.

However, their combined legacy is an utterly dysfunctional (and lopsided) Strategy Group that cannot even agree on the time to serve tea, and a revenue structure that inequitably rewards historic performance while glossing over real-time results.

For further proof, look no further than the projected payouts to Force India and McLaren: the former, sure-fire fourth in this year's championship, will receive £54m in FOM payouts, while McLaren, battling in ninth, takes home £72m. Worse, Ferrari, which has not won a constructors' title in almost 10 years, pockets £20m more per annum than do quadruple champions Red Bull Racing and Mercedes. Blame CVC for this farcical situation.

The good news is that F1's revenue structure will change substantially - if for no reason other than Liberty understandably fears the potential penalties (and embarrassment) of an EU Commission investigation into F1's structures after Force India and Sauber filed complaints - while the Strategy Group will surely be disbanded after covenants expire. Its very existence has proven an extremely costly lesson in (non) governance.

The bad, though, is that the influence of the Strategy Group - and Ferrari's bewildering right to veto any regulation changes it does not concur with - will linger over F1 well after time has been called on the body, unless, that is, the privileged teams, namely Ferrari, Mercedes, Red Bull, McLaren and Williams, agree to voluntarily forfeit their right to approve rule changes before they reach the Formula 1 Commission.

These teams, plus the highest placed non-Strategy Group finisher in the previous championship (currently Force India) sit together with FOM and the FIA. Each 'faction' has six votes, and majority motions (ie minimum 10 of 18 votes) are escalated to the F1 Commission, on which all teams, plus race promoters, technical and commercial partners and the FIA/FOM sit.

Effectively, though, the Strategy Group has the right to veto any proposals before they reach F1's full voting forum, and even then Ferrari's historic veto, extended by FOM under CVC/Ecclestone, has the legal right to block proposals after the Strategy Group, the F1 Commission and before the final step in the process, namely the FIA's World Motorsport Council for ratification. Baffling, but true.

Worse, no one thought to restrict the Strategy Group's (and Ferrari's veto) powers to prevailing regulations - thus reserve the right to influence the post-2020 process. There are, though, caveats to this statement: as stated above, they may elect to forfeit the right(s) and the combined voting block of the FIA/FOM can 'overshadow' the teams, assuming, though, the two entities are totally aligned.

The success of the post-2020 rule-making process depends on 10 teams, the commercial rights holder and the governing body all being aligned, AND Ferrari then not electing to invoke its regulatory veto...

Even then there is no guarantee that Ferrari will not invoke its veto, having already threatened to do so exactly two years ago when the FIA and FOM in a show of (then) rare unison announced plans to introduce a lower cost alternative to the current hybrid engines. The word in the paddock at the time was that the engine suppliers, aware they had been out-voted by the FIA/FOM, aided and abetted Ferrari...

Will it come to that given the contentious nature of the topics, particularly with regard to revised power units (with four-wheel-drive?) and a redistribution of F1's billion-dollar fund? First consider: which commercial entity would forfeit a hundred million dollars - and all the attendant lay-offs and downscale - 'for the sake of its industry'?

Then consider: which elite group voluntarily forsakes its preferential status, a status it believes to be its divine right? No royal family abdicates without pressure, and forget not that Ferrari views itself as F1's first family, while Mercedes is the sport's captain of industry. Both are listed companies; both have shareholders and board members to whom they are beholden, so the ultimate decision does not rest on the pitwall.

The last magnanimous gesture taken for the 'good of F1' ended in tears and heartbreak - and ultimately cost the team concerned millions (if not a billion) in lost revenues: at end-2008 then-McLaren managing director Martin Whitmarsh waived the team's veto over Mercedes engine supply, and agreed to permit a supply to the remnants of Honda F1 Team.

Renamed to Brawn GP, the team dominated the 2009 season, in the process shading McLaren and eventually becoming the Mercedes "works" team, which in turn relegated McLaren to customer status - triggering a subsequent sale by Mercedes of its then-40% shareholding in the team. In its desperation to regain "works" status McLaren entered into its disastrous partnership with Honda.

Any wonder 'for the good of the sport' has become a phrase synonymous with 'expensive lesson' and 'sliding backwards', making it unlikely that Ferrari and/or Mercedes will relinquish their privileges, certainly not in wholesale fashion. In any event, why should they, given the contractual obligations in place? Contracts may only be waived with the agreement of all signatories.

A senior F1 source confirmed to Autosport that the current governance structure will continue to dictate the rule-making process for the post-2020 period unless all parties agree to change, and, worse, will continue to dictate the process in the absence of any agreed changes thereafter.

The way things stand at present, the success and speed of the post-2020 rule-making process depends on 10 teams, the commercial rights holder and the governing body all being aligned, and Ferrari then not electing to invoke its regulatory veto. You, the reader, may decide on the chances of that occurring.

Asked what the chances were, a team boss smiled, then said softly, "Ask Ferrari..."

Already there is dissent amongst the ranks, with each team having different "wish lists". This became evident during the FIA Friday team principals' press conference at Austin, where four team representatives were asked by Autosport what progress they hoped to see come October 31 and November 7.

One sought clarity (Mercedes), another sought action (Force India) and a third (McLaren) sought better collaboration between the players. The fourth, Haas, is not even represented on the Strategy Group.

The previous regulation change was originally framed during 2009 for 2013 implementation. Despite there being a largely equitable revenue structure in place at the time - for which fourth place paid the same whether a team's cars were painted red, pink or blue - with the only exception being a modest premium for Ferrari, so contentious was the topic that the regulation changes were pushed back a year to 2014.

Yes, you read that right: three years did not suffice, and that was before the introduction of the Strategy Group, the concept of (the ultimately doomed) 'resource restriction' had been agreed by all, and the money was being shared on a pure performance basis.

Now consider the difference to the current situation, and ask why the process should be any shorter. Yet, just three years remain to end-2020.