Why it's '10 past midnight' on determining F1's future

There's optimism in the air as we head towards the opening grand prix in Australia, with what looks like a great fight for the world championship in prospect and some intriguing new driver combinations throughout the field.

But there's an elephant in the room. We are just over two years into Liberty's ownership of Formula 1 and yet there is still no clarity on how the championship will look in 2021.

Everything is still up for grabs - the technical and sporting regulations, cost controls, how the money is distributed between the teams, and the governance that will determine how change is managed.

The complication for Liberty is that in theory, as things stand the F1 business doesn't exist after December 31 2020, because the teams are not yet committed to competing. We've seen it all before, including threats of breakaways that Bernie Ecclestone fought off, and so we tend to assume that it will all come right in the end. Concorde deals haven't always been agreed early, after all.

The difference is that F1 is now a publicly listed company, open to the scrutiny of investors and analysts who are well aware that the clock is ticking. In the wider financial world people tend to want to deal with facts, which is why F1 CEO Chase Carey had to tackle the matter head-on in a phone call with Wall Street stakeholders last week.

"We continue to have discussions with the teams on a new Concorde Agreement which addresses cost structures, revenue distribution, regulations and governance," said Carey. "This new agreement will impact the 2021 season and beyond, and we are in constructive discussions with all 10 teams to finalise the details and improve the sustainability of the model.

"We understand that public markets would like to have all the terms as soon as possible. We're going to take the time necessary, and make sure that we get this right, and are in alignment with our partners."

No governance system is in place for 2021, and it's a chicken and egg scenario - how can teams participate in voting for regulations when they are not yet signed up to compete? But how can they sign if they don't know the ground rules?

The timing of when the 2021 regulations should be determined is referenced in the FIA International Sporting Code, which specifies this coming June as a deadline, one that Carey acknowledged when pressed.

"There are structures that lead us to want to have things in place by June," added Carey. "I'm not going to elaborate on specific deadlines for discussions with teams. They're active, I mean I had a number of meetings this week with teams.

"It's already 10 past midnight. It's getting very late, especially if you've got to restructure your whole organisation" Christian Horner

"We want to resolve these things. They are for 2021, so clearly there is still time, but I think all of us would like to have clear visibility to the future. So we're looking to conclude those as quickly as we can. It is true that there are components of it that we would look to have in place by June, although we certainly expect to advance things before then."

The teams are growing a little impatient. They have to know in what sort of world they will be operating in 2021. "There's an awful lot of things up in the air," says Red Bull's Christian Horner.

"Some of them have fairly significant consequences on the organisation, so it's vital that things are put on the table sooner rather than later that are considered and measured."

Is sorting out the governance the key? "First of all, something needs to be put on the table that's tangible, doesn't it?" poses Horner.

"Something that deals with governance, revenue distribution, sporting and technical regulations - and financial regulations.

"Really it all needs to come together. It's already 10 past midnight. It's getting very late, especially if you've got to restructure your whole organisation."

The question of cost controls vexes Horner more than any other: "I think the thing that concerns us the most is the application of the financial cap, that all teams are treated with equality, and you don't have a set of reporting regulations for one team as a manufacturer versus another as an independent. That's our main area of concern, an immediate redress that needs putting in place."

Horner agrees that the picture needs to become clearer in the next few months, to provide adequate lead time.

"You need to be giving the teams that kind of notice, depending on how significant the regulation change is going to be," he says. "Of course, if there are fairly draconian financial implications teams such as Mercedes, ourselves and Ferrari need notice to start restructuring organisations."

Alfa Romeo boss Frederic Vasseur is trying to upscale his team towards any potential cost cap limit - as indeed is Racing Point's Otmar Szafnauer.

"Nothing is clearly defined so far," says Vasseur. "If they want to move in one direction or the other, we need to know quite soon what it could be [in] the future.

"I can perfectly understand that you have 10 teams on the grid with 10 different views or approaches, and we don't have the same structures, we don't have the same facilities. At the end of the day they have to take a decision. If they want to listen to everybody, it will never work."

This is an especially complex time for the manufacturers, which have race team and engine divisions to consider and have to plan budgets and allocate resources years in advance.

"It's not the time anymore of debating, of exchanging and of making everyone 100% happy" Cyril Abiteboul

It's easy to lose sight of the fact that teams are not yet fully committed for 2021 and beyond. It still has to make commercial sense for them, and decisions could be made at way above team-principal level.

Don't forget that a decade or so ago Toyota, BMW, Honda and Renault all pulled out, although the latter pair have subsequently returned.

"There are two entities that we know will be here in 2021, and that's F1 and the FIA," says Renault Sport Racing managing director Cyril Abiteboul.

"Those two participants should now be making sure to implement their vision and explaining what are the rules of the game. If we like it then we participate, if we don't like it then we will do something else.

"It's not the time anymore of debating, of exchanging and of making everyone 100% happy. If we want to impose a change, we have to have a degree of compromise and trade-off accepted by everyone.

"So hopefully the vision is sensible. And from what we've seen the vision is sensible, but now we need to turn that into a reality."

Abiteboul acknowledges the challenge that Liberty has given itself. Ecclestone had some juggling to do over the years, but he never had so many financial and technical unknowns coming together all at once.

"I think I've always said on behalf of Renault that we think it's a bit adventurous and challenging to try to fix everything at the same time," says Abiteboul. "We would be a bit more pragmatic and maybe try to fix what are the priorities.

"The priorities in our opinion are three elements - the governance first, because you need to understand how that works, it's money distribution secondly, and it's the financial framework. Because what you need to understand basically is the economic model of F1.

"In my opinion it's based on those parameters that we decide whether we are in it or not. Once all of that is defined, then the technical regulations, the sporting regulations, the calendar, all of that can follow, because we are protected - the business model is protecting you.

"You could not suddenly go to 40 races if you have a budget cap, because the level at which the budget cap is fixed would not be working. That's a way to remove the exposure to a certain number of parameters that need to be fixed in priority. That's where I would focus the efforts right now."

Naturally, Renault also wants firm news on 2021's power units. "The history of F1 has demonstrated that until a set of regulations is completely signed off by everybody, it's still very much in the air," adds Abiteboul. "So we've got one option, which is we increase fuel flow, we increase revs, removing the fuel quantities, the rest of the technical spec being what we have now. That's one option that we support.

"We've made investment, we've made plans in relation to this regulation. A change of regulation will not be a great sign of the capacity of the promoter and the FIA to impose their vision.

It's not just the manufacturers who could disappear if they are not happy

"Having said that, we are also open-minded, if something better needs to be realised, then why not? But we believe that this is ticking all the boxes, all the objectives that have been set at the start of the process."

Abiteboul's major concern is that with so much up for debate, there could be some horse-trading behind the scenes, with teams supporting a technical change in return for more favourable financial terms.

"That's exactly what we need to avoid, we need to avoid the situation where one participant is bargaining prize fund distribution against an engine regulation, against a gearbox, against another standard part," Abiteboul says. "We need to focus on what matters, and that's the economic framework.

"I would defy anyone saying that it's not important in today's world, given the sum that we are talking about. We should focus on that, and then the rest can follow. If that means delaying some stuff, then it means delaying some stuff, but the financials cannot be delayed.

"My priority is on the business case of F1. Is F1 a compelling business case for the future?"

It's not just the manufacturers who could disappear if they're not happy. Consider the impact should Red Bull boss Dietrich Mateschitz, who landed a favourable Concorde deal from Ecclestone last time around, decide that he's had enough. Horner acknowledges that his boss could pull the plug.

"Absolutely, and that's his right," says Horner. "He's passionate about motorsport, he's passionate about F1, he's enthusiastic about the new engine partnership with Honda and the potential that brings, but of course F1 has to deliver for the Red Bull brand as well.

"It needs to be exciting, it needs to be cost effective, the racing's got to be great and we need to be able to play on a level playing field with OEM and manufacturer teams. I think like all of us he's waiting to see what is F1 post-2020..."

So would a good start with Honda power in 2019 boost Mateschitz's motivation?

"He's never lacked motivation," Horner insists. "Through good days and bad days he's always been tremendously supportive, and invested probably more into F1 than anyone: two F1 teams, a grand prix, plus all the promotion that Red Bull does around the world supporting F1, it's enormous. He wouldn't do that if he didn't believe in the sport."

Talk of teams or manufacturers quitting the sport might sound alarmist - as noted earlier, Ecclestone always somehow managed to sort things out and the sport carried on. These days Bernie is on the F1 sidelines and, like us, he's watching developments with some interest.

"What concerns me a little bit is that contrary to what people think, I want F1 to progress, and not go down," he says. "When I'm lying on my death bed I'd like to think to myself it's a bloody good product and it's now getting better. I don't want to think to myself it's gone. It's my life's work. I hope they all get their heads together and start thinking properly."

And he issues a warning that's chilling in its stark simplicity: "The longer they leave it, the more chance there is of some of the teams stopping. Maybe Mercedes will be stuck into Formula E, because they think Formula E is more in line with the way the car industry is going.

"Red Bull don't need to be in it. They get so much publicity from all the other things they do. If they stopped, it's not going to damage them at all. People think Ferrari would never stop, but the Ferrari brand is so, so strong it would be difficult to damage. They could easily do something else in motorsport.

"The longer they leave it, the worse it is for everyone - it's worse for the teams, worse for Liberty. From what I understand, nobody has said the most important thing, which is this is what we want to pay you guys. We'd like a much better show and we're prepared to pay you this.

"I think if I was a shareholder I'd be happier once all that got put to bed. Five years, everyone's happy, the teams are happy, the promoters are happy, and get on with it..."