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F1 board meets today, but cost cutting is team’s priority
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Darren Heath
Posted By: James Allen  |  25 May 2012   |  4:55 pm GMT  |  27 comments

The board of Formula 1 met today in Monaco, with some of the teams represented and a new chairman, Nestle’s Peter Brabeck-Lemathe, at the helm. He is the chairman of Nestle and sits on the boards of other leading European businesses.

Ferrari boss Luca di Montezemolo was here in Monaco and met with Bernie Ecclestone and Mercedes’ Ross Brawn at length this afternoon.

Red Bull, McLaren and Ferrari are all promised seats on the new look board, however the teams will not be able to acquire shares until the proposed flotation on the Singapore exchange takes place.

There has been a lot of activity recently around the future ownership of F1 with 21% of the business already sold to three “cornerstone” investors and a further chunk worth up to $2 billion due to be floated on the stock exchange, possibly as soon as June.

However the problems surrounding the recent flotation of Facebook have give pause for reflection and Brabeck, 67, said after the meeting that there was no sense of urgency on the float, “It was the first time that the board had a report on the preparation, there was pre-valuation of the whole process. I think we made a step forwards but no decision has been taken.

“Within the board there is an IPO committee and the committee will come back to the full board when it feels that the next board meeting is necessary. We have not even fixed the next meeting. We left this thing open.”

CNN reported yesterday that F1 boss Bernie Ecclestone had said that the new Concorde Agreement had been signed, but if you listen carefully to what he said, he did not confirm the Concorde, but did say that everyone has agreed.

Most teams, with the exception of Mercedes, have contracts with F1 which will lead to signature of the Concorde Agreement. But as McLaren chairman Martin Whitmarsh told this site on Wednesday, no-one has signed the Concorde yet.

And it seems that FIA president Jean Todt is reluctant to put the FIA’s signature on it until a deal is worked out whereby the FIA can get some more revenue for the sport. The FIA sold its commecial rights for 100 years during Max Mosley’s tenure in a deal that is legally water tight, but now Todt wants a slice of the pie for the FIA to reflect the changing media landscape and business model of F1.

Meanwhile for the teams, cost-cutting is the number one priority at the moment with many teams struggling to balance the books, despite improved revenues from the commercial rights holders.

The cost of competing is still too high and there has been a lot of work behind the scenes with what remains of FOTA and the other teams, Ferrari, Sauber, Red Bull and Toro Rosso to find a formula for cost management that works.

Many teams favour a budget cap, possibly administered by the FIA, but Red Bull and Ferrari are opposed and it’s a difficult one for McLaren and to a lesser extent Mercedes.

The deadline for the eight teams to agree some new structure is June 30th, as up to that point they can win by a majority decision and get something in place for 2013. If that deadline passes then they would need 100% unanimity to get something through later in the year. For many teams the situation is quite acute.

You can see the important part of the CNN Bernie Ecclestone interview here CNN F1 Interview with Bernie Ecclestone

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27 Comments
  1. Stevvy says:

    Not meaning to be picky, but isn’t it meant to be the Singapore Stock Exchange, not the Singapore Stick Exchange?

    ‘$2 billion due to be floated on the Singapore stick exchange’

  2. Pman says:

    An RRA would allow teams to compete on an even playing field. However I wonder if that is what people will pay to watch. Like it or not, the fan following for Ferrari, Mclaren and Redbull (and to a smaller extent Mercedes) make up a a significant proportion of the fan base. It is the constant rivalry that is important to the fans. If tomorrow Ambrosio won for random team X, I’m not sure that the current fans will be able to make the switch to a smaller team that has a random chance of winning from season to season.

    1. Rich C says:

      … emmm.. there already is an RRA, though some supposedly cheated on it.

      So thats what fans are already watching.

      And ‘fans’ don’t ‘switch’ teams.

      If you are saying you want to go back to the old days when Ferrari and Toyota spent half a billion dollars a year to try to win, then you can expect races like the six cars farce at Indy in 2005, which NObody would like to watch.

      1. Pman says:

        the farce at Indy was due to tires!
        and Ferrari were one of the 3 teams to race while RL in a Toyota could not!!!
        It had nothing to do with RRA. I agree fans will not jump ship. That is my point. If Ferrari, Redbull and Mclaren were to have a 1/10 chance of winning a championship in any given year(now they have about 9/10) I wonder if fans will continue watching the sport hoping that they found the trick of the season. RRA may transform the sport. But there are also downsides to consider.

    2. rob says:

      Or Maldonado in a Williams… no wait, we already have that going on.

      1. James Clayton says:

        Maybe want to check up on the history of Williams…

    3. JF says:

      I agree. To keep F1 interesting with a budget cap, at least IMO, would have to unchain the tech regulations (leaving safety) to a huge extent to let innovation shine through.

      1. Wade Parmino says:

        Exactly! What this guy said! What this guy right here just said!

  3. Bring Back Murray says:

    Dear James

    Any chance a couple of jamesallenonf1 readers could win a place on the board?

    1. James Allen says:

      That would be some competition!

      1. Rich C says:

        I’m in!
        I’ll run and heres my platform:
        A chicken in every pot; two cars in every garage; and… and a draft pick to be named later!

        Hows that?

  4. HFEVO2 says:

    It’s the spectators and TV audience that pay the money that keeps the show on the road yet we seem to be the last people to be considered.

    OK, we have some changes creating largely artificial overtaking but ticket prices are far too high and we are losing popular races in Europe in favour of sparsely attended circuits elsewhere.

    Surely there must be some way to get some representation for the audience ?

    And I don’t mean just another survey.

    1. Pman says:

      Wake up and smell the green tea. Europe is no longer/ will no longer be the primary market for these manufacturers for much longer.
      Ferrari, Mclaren, Mercedes and Renault, Cater(h)am have their brands associated with the sport because they believe that this will lead to higher road car sales.

      As for the middle eastern Gp’s that everybody is on about…. The sheikhs have petro $$$$. F1 needs it since part of it is passed to bankrupt teams (who need a return on investment now. They may not be in it for the long run). You could have only one in the region … but there are so many sheikhs and so much money to be made.

    2. Ohm says:

      Agreed, an audience rep on the board would be valuable. I’m from outside Europe and it’ll be a huge blow if we lose classics like Spa (even once every two years!!). I don’t mind new circuits as long as there’s clear improvement in attendance and awareness as the years roll by and doesn’t hamper already-established circuits like Silverstone, Spa, Monaco, etc.

  5. Nigel says:

    “Meanwhile for the teams, cost-cutting is the number one priority at the moment with many teams struggling to balance the books, despite improved revenues from the commercial rights holders.”

    If the teams were a little smarter, and able to act together (I’m not holding my breath), their priority ought to be increasing their share of the F1 revenues.
    To an outside observer (ie me), it seems very difficult to justify the cash taken out of the sport by the ‘commercial rights holders’. The ‘financiers’ don’t actually finance the sport in any meaningful sense, and their activities as promotors hardly justify taking half of its revenues.

    Btw, the FIA might possibly be able to throw a spanner into the works, as they still hold a veto on any change of control. Quite how that is defined is a bit of a puzzle.

  6. Chris_NZ says:

    I have previously heard rumours about lower performing teams being able to buy old cars, but i thought this would never happen. Is there any truth to this James for 2014 onwards?

    Also, Does anybody else think Bernie is really starting to show his age. Martin Brundle stopped him on the grid in spain for a quick chat, but hes not a quick whipped as what he once was.

    1. James Allen says:

      It’s talked about all the time, Montezemolo would like to sell a 3rd car to backmarker teams.

      1. Wade Parmino says:

        How would that work for the Constructors Championship? Teams should have to CONSTRUCT their own car, right?

    2. radohc says:

      you are right in the possibility the facebook will be gone in few years…

      however the advertising power of the facebook at the moment 24/7, with reported 900 million users…

      how many people follow F1? Add on top the limited advertising space (timewise).

      Btw. sometimes I don’t get why some companies sponsor F1.
      Getting tiny logo somewhere on the car for a load of money, which you never spot unless you are looking for it.
      And then they just run some stupid commercial in tv, which is absolutely disconnected with the F1, still they put the drivers in, a let them praise the products. Looks really silly.

      1. radohc says:

        ooops, this was meant to be reply to Wes in post#8

  7. Wes says:

    Hi James, I don’t really understand how a brand like f1 that has been around for decades and is associated with other powerful brands like Ferrari, Mclaren, Mercedes, etc. is worth only a few billions and a brand like Facebook, how just came around a few years ago and most likely will be gone in a few more is worth 100+ billions, that doesn’t make much sense for me. It seems like F1 is a bit under evaluated…

    1. James Allen says:

      Bernie probably feels the same way!!

    2. hero_was_senna says:

      They say everything is cyclical, it was only 10 or 12 years ago that we had the dot.com millionaires.

    3. Pman says:

      Its main market is bankrupt. So unless it finds new audiences in Asia (which it is trying) investors will not rush to pick up stock.
      This may infact hasten the reduction in European F1 races. The iconic ones will stay…maybe ….. the investors now call the shots.

  8. Tim says:

    The whole ‘cost cutting’ thing in F1, and the restrictions being put on it are just slowly getting more and more annoying. F1 was supposed to be about R&D.

    Why don’t they just remove all these cost-based restrictions and just say ‘The minimum weight of cars will be 590kg plus 1kg for every EUR1m spent.’
    So if Caterham only have the budget to spend EUR60m, they can run a 650kg car.
    If Ferrari want to spend EUR380m, then their cars will weigh at least 970kg.

    Then we can slowly do away with things like engine restrictions on capacity, numbers, gearbox development, windtunnel testing limits, test day limits – it might cost a team EUR2m to run a test. That’ll start getting them thinking in terms of penalties – suddenly that 2 day test is worth 2kg, which is about 0.2 seconds per lap.

    We’ll very quickly see which cars perform better at high and low budgets, and it will give them good reason to spend less money ;)

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