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Teams in limbo as deadline passes for 2013 rules agreement
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Darren Heath
Posted By: James Allen  |  02 Jul 2012   |  10:56 pm GMT  |  59 comments

[Updated 3rd July] Despite much talk and a lot of effort behind the scenes, the deadline for agreeing a new package of cost control rules for next season came and went on June 30. This date was important because it was the date by which things could be passed by a majority. After that unanimity would be needed.

There is talk of extending the deadline to a new one of July 24th. But if the original deadline has passed, many are asking what force a new deadline will have. And now the teams and the FIA are in something of a limbo. Most of the teams turned to the FIA to regulate the Resource Restriction Agreement from next year onwards because, as the F1 Teams Association, they had failed to do so itself.

The problem is now a legal one. The teams are looking to FIA president Jean Todt for leadership, while he is trying to avoid getting into a legal battle or putting the FIA in a position where it could be undermined. Red Bull are the ones sitting outside of this process. Todt is trying to draw Red Bull into the process, but other team sources say that Red Bull has taken to sending a lawyer, rather than a senior engineer, to meetings. Red Bull has denied this.

A lot of work has been done behind the scenes by people at all levels to try to move the agreement on costs forward. For some teams this matter is really urgent as they are close to the edge financially.

But despite the imperative, it’s stalled. It’s leading to a lot of frustration, while on Red Bull’s side it’s leading them to feel isolated, as shown by recent comments from Helmut Marko about the team being singled out for a rough time, with the safety car in Valencia and such like matters. They want to move away from the RRA method of comparing activities in different teams with different structures and focus instead on tangible things, like the number of components and engines a team can use.

There are two sides to the RRA process ongoing at the moment: the chassis side and the engine side.

On the chassis side there is quite some progress: some things have been agreed by most of the teams (with the exception of the two Red Bull owned outfits); measures on in season testing, reducing the number of days of wind tunnel and CFD as well as further cutting the number of team personnel at races. These were agreed by the seven FOTA teams plus Ferrari, Sauber and HRT. In fact they are mostly there on chassis and appeared to have the majority they needed to get it through, but no fax vote took place.

On the engine side things are more difficult, with manufacturers flat out developing the 2014 small capacity hybrid engines at great expense, but teams bridling at the costs they are likely to face for a supply of these engines. Teams currently pay around €5 million per season for 8 engines per driver plus some pre-season test units. The 2014 engines will be significantly more expensive at the outset, up to €10 million per car.

Clearly Red Bull is anxious here that if engines are to become a performance differentiator again that Mercedes doesn’t succeed in squeezing them on the chassis side, only then to make the difference with an expensively developed engine.

As the governing body of the sport the FIA could be considered to be in a position, with no Concorde Agreement in place from December 31 onwards, to impose whatever rules it thinks are appropriate for next season. But it’s concerned about legal threats. And Todt wants to find consensus.

Meanwhile the FIA is negotiating with Bernie Ecclestone for improved financial terms. It’s bound by the 100 Year agreement (which was made in the early 2000s, but only came into force in 2011) whereby the FIA sold the commercial rights to F1 to Ecclestone’s company for 100 years for $313.6 million. This contract is the cornerstone of the F1 business and the planned flotation.

Todt is trying to get a payment for the FIA to reflect the fact that things have moved on a bit since that deal was agreed, especially with a flotation under consideration, valuing the business at over $9 billion.

As for where it goes from here, some say the FIA has a lot of power and holds important levers which are needed for the new Concorde Agreement to be reached, the flotation to take place and the sport to be regulated.

Others feel that having done the 100 year deal it’s in a weak position, as a governing body that has no ownership over the sport and with others agitating to take on a rule making role.

These things will be tested over the coming months.

Some small measure are likely to be agreed over the coming months, like savings on wind tunnel use, but the big ticket items which could make a material difference in 2013, are now unlikely to happen, because the deadline for majority, rather than unanimity to carry the day, has passed.

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  1. Irish Con says:

    I would of just let the engines be. Why change them when it was clearly working and spending all that money for a new one at this time and the way the world I’d doesn’t make sense to me.

    Also been watching the repeat of the 2007 f1 race at silverstone and I have to say I miss the flat out blasts the races were back then. Was great to see them pushing 100 per cent and those cars were much better looking back then tho I hated the grooved tyres.

    1. Wayne says:

      “On the chassis side there is quite some progress: some things have been agreed by most of the teams (with the exception of the two Red Bull owned outfits)” – so no progress at all then, the teams are not going to hand an advantage to RBR by imposing rules upon themselves.

      I have heard the teams say time and again that they want/deserve more of a say in F1 – but the simple fact is they are like spoilt, selfish children, too inwardly focused to be effective. The FIA should set the rules (having consulted) as a fait au complet and the compettitors should decide if they want to tajke part or not based on that. If the teams ever get a real share in F1 business the whole thing will collapse around them.

      1. JR says:

        The teams have the majority say, they have 1 vote each, the FIA only have 1 vote and so do FOM.

        I agree the FIA should set the rules and if the teams don’t like them they’re free to leave, that’d get things done on time and within budget.

  2. Justin says:

    Gonna learn a lot about where all the money comes from, and where it all goes real soon. hint: it comes from us, the consumers, and goes to Bernie at al, the sellers.

    1. Wayne says:

      How can a RRA work, James? How can everyone have confidence in its fair application? Are these companies going to open their accounts to full scrutiny by the FIA? Even if they do, surely some of the teams will simply buy or partner with suppliers and hide these costs under another company name? Then what about the manaufacturer teams? How can the costs of the F1 team be reasonably seperated from the development that goes on for the road division? Who is going to go through Ferrari’s road division accounts to ensure that development costs are not being incurred there that benefit the F1 team? Isn’t this whole thing just a bloody farce?

      1. James Allen says:

        Clearly it’s very tough.

        I can see Red Bull’s arguments and their concerns about why their competitors are pushing for RRA v2, while having their own reasons for doing so.

        There’s no trust there

  3. CurlyPutz says:

    Marco (Helmet) is just that IMO and Redbull appear to be spending a massive amount this year, how many different versions of their machine have we seen so far this season? From the pace they seemed to have last time out (before the alt failure) it seems to be working too but at what cost too the smaller teams without fizzy millions I wonder? I also read vodafone are considering their options too, interesting times for all teams and F1 in general, still at least Bernie is ok.

  4. AMSG says:

    Boring……..I know the politics of the sport can add something to the whole show. But this is really turning people off. To much big company and billion dollar money swilling around. Liqiudate everything and start from scratch. Lets get back to the early eightites style of going racing. Man and machine, not lawyer and computer geek……

    1. Andrew Carter says:

      Have you heard of FISA and FOCA, obviously you havent as F1 was possibly even more olitical in the early 80′s than it is now.

      1. Cliff says:

        And that’s the point that may people either forget or didn’t know!

  5. Ewan Marshall says:

    James there seems to be some confusion in regards to what parts of cost cutting falls under the sporting and the technical regulations.

    Other sources appear to be very unclear on the issue with some saying the deadline for the technical regulations have now passed but the sporting remains opens.

    I was always under the impression that the deadline both sets of regulations would be the same?

  6. phil says:

    How did the 100 year deal get through?

    I notice you say it was struck in the early 2000′s. Is this a case of Max Mosley and Bernie conspiring to stitch things up and get it through the back door by making it come into effect a decade later? I don’t remember much fuss at the time.

    1. Wayne says:

      Sometimes I feel for Bernie, he gets these agreements signed with the FIA, Circuits etc and then they all come back and want to renegociate; ‘I want to pay less to hold a gp’, ‘I think the FIA is entitled to more money’ etc. They signed a contract, they made an agreement now bloody live with it!

      New circuits are getting their place on the calendar by agreeing to huge fees and then, after a couple of years, deciding they can no longer afford to pay in an attempt to paint Bernie and the big bad wolf and get a reduction.

    2. nk says:

      the cause? eu said fia can’t run everything so they had to split the business bit out.

      after that? max and bernie cooked something up.

  7. JCA says:

    The FIA and tbe teams should buy FOM. The whole thing rests on bank loans anyway, so get a loan. Problem solved

    1. JCA says:

      Ment to tipe fia and/or teams

  8. Gate 21 says:

    What was that quote about the public not seeing politics and sausages being made?

    Note to F1 teams: keep the deals in the butcher’s shop until it is a completed, palatable item fit for presentation to the public.

  9. Elie says:

    Very testing times for F1 management indeed. We will see what kind of leadership Jean Todt has.

    If Red Bull want to sit on the fence and stay outside the agreement well I would be saying to them ” then you can stay out ” or you can stay in, spend your squillions but you don’t get 1 pence from the earnings ! Since they clearly have too much money !Although I suspect they want a more broader agreement on savings ie include engines.. Appreciate some updates on Red Bulls reasoning for not agreeing to terms.

    It’s kind of silly given that the engine discussion has been going for more Than 18 months and still another 18 months away. I do agree to an extent that a Resource Restriction Agreement should be broader and not single out components like engines- the new engines extra costs should be taken into account. Teams should have one budget and spend it how they see fit ..some teams spend more on drivers, aero others on Engineers, Components, etc At the end of the day they still have other regulations that bring them equal anyway.

  10. Brock Benson says:

    Love the way Helmut Marko blames all and sundry for the safety car last race, when in fact it was one of his drivers that caused it to be deployed. Is is my imagination or are RBR trying to take the WWC (whinging world championship) away from Ferrari!

  11. Nigel says:

    This whole process is incredibly messy, and there always seems to be at least one team (not always the same ones) which undermines the collective interest of the teams.

    Do you feel that Helmut Marko has any justification for his comments ?
    My own feeling is that Red Bull have isolated themselves – and the talk about the safety car smacks of paranoia.

    Joe Saward has an interesting article pointing out that unanimity might not be required despite the June 30th deadline:
    http://joesaward.wordpress.com/2012/07/02/deadlines/

    The biggest funding problem in the sport seems to be that so much of the revenue is now sucked out by a commercial entity which adds absolutely nothing of value in return.

  12. Nigel says:

    On a brighter note, I see the Silverstone model is up. It’s a great feature, though for the first time this season, it got caught out by the conditions in Valencia.

    The strategy calculator indicates that a one stop looks very attractive. Do you think that this will be borne out in reality (unlike Valencia) ?

    Less brightly, there’s a strong chance of a wet practice, qualifying and race looking at this morning’s forecast.

  13. Darren says:

    In my business you make a deal sign a contract and live by it until it comes up for again, same with my suppliers.

    FIA you have 99 years left ,

    1. James Clayton says:

      Your business is not F1, though.

      Contracts in F1 (drivers contracts, engine contracts, sponsorship contracts, etc…) are ‘renegotiated’ mid term all the time.

      Though it seems difficult to see how exactly the FIA can renegotiate. Corruption charges (whether related or not) against the person who the contract was signed with might be a starting block…

      1. Onko says:

        Jean Todt, what ever you may think of him be
        it a weak or strong, the bottom line says
        smart and successful.Look outside the squere
        no concorde agreement the FOM become a entity
        hardly of any influence FIA makes the rules and
        renegotiate agreement with FOM or who ever holds a controling share.
        As for RRB you can understand thair concern
        in 2014 Ferrari, Mercedes will hold the performance advantage, a free engine development with very much less ” Aero ” allowed.

      2. JCA says:

        FIA have veto power in a lot of contracts

    2. Rich C says:

      In business ppl renegotiate contracts all the time, whenever circumstances change.

      In “sports” a man’s signature on a contract means absolutely nothing.

  14. While I usually prefer to stay away from political comments, I didn’t understand what exactly Red Bull really want?

    They want to be able to spend more, uncontrollably? If that’s the case, make your own championship and race there.

    It is true that no other team have been able to afford the luxury of having front wing ‘baked’ in Milton Keynes’ autoclaves and flown to the track urgently.
    Three different exhaust configurations?

    1. paul says:

      Agreed, Red Bull seem to forget that a few years ago they were a midfield team and wouldnt be greatly missed from the sport…

  15. Chris Brown says:

    James – Do you think the teams will start to miss Max Mosley?! He may not have been popular but at least he had the guts to try and push things through. Who in today’s F1 has those guts now?

    1. James Allen says:

      No, they don’t miss Max.

      I agree though that he had some of the right ideas and the strength to push things through. THe problem was that not all ideas were good and his methods rubbed people up the wrong way.

  16. MISTER says:

    Where are those who used to blame Ferrari for everything now? Looks like things have changed.
    Makes you wonder why RBR refuse to join the other 10 teams. Makes you wonder about their spendings habits and how they won the last 2 championships.

    Very interesting that RBR prefer to send a lawyer rather than an engineer. They are obviously concerned about the legal stuff rather than the cost of future developments.

    I hope all this gets agreed and we can move to racing again.

    1. James Allen says:

      BR deny sending a lawyer, as I have mentioned in the piece.

      A lot of what used to apply to Ferrari in 1990s now applies to RBR in 2010s. Suspicion and mistrust.

      But it’s also because they are winning….

  17. ian says:

    ‘ This date was important because it was the date by which things could be passed by a majority. After that unanimity would be needed.
    There is talk of extending the deadline to a new one of July 24th.’

    ER … how does that work? You would need unanimity on agreeing to extend the period of non unanimity .

    1. James Clayton says:

      I was confused by that too! I *think* this is broadly how it works (James, a clarification would be nice :) )

      The FIA are in charge of the rules. They have the ‘power’ (in a kind of British Monarchy kind of way) to impose whatever rules they like.

      However before June 24th, an FIA ruling can be overruled so long as the majority of the teams agree this is the correct course of action, essentially meaning the teams can ‘make’ the rules up until that date.

      After June 24th, FIA imposed rules can only be over ruled if there is unanimity amongst the teams.

      Could be totally wrong, but that’s the only conclusion I could come to!

    2. Rich C says:

      Simple.
      You adopt that old line from “Are You Being Served” :
      She always said: “blablablah … and I am unanimous in that.”
      Problem solved.

  18. Rob Newman says:

    F1 is the pinnacle of motorsports and it is about the fastest cars and latest technology. It is not for teams who ‘try to make ends meet’.

    But what is exactly wrong with F1? One needs to think why F1 is not attracting manufactures like VW, Peugeot, Audi, BMW, Porsche etc. They are the type of teams we should have in F1 or teams who can closely collaborate with them by using their engines and technology.

    Yes, costs needs to be reduced but where do you exactly draw the line? People are pointing the finger at Red Bull but this year Ferrari is spending like there is no tomorrow because by hook or crook they want to win the championship this year. But no one is really talking about that.

    If people don’t have the money and resources to successfully run a team, then they should not be in F1.

    1. Elie says:

      Uhmm.. On one breath you say effectively if you cant afford to be in f1 you should bugger off & on the other you say – wonder why teams like Porsche ,BMW , Peugot etc should be attracted back to the sport.. Then you say or well you know it should be more affordable… do you even know why multi billion dollar manufactures like BMW , Toyota pulled out in the first place… Yes cause of ridiculous budgets just to be competitive. So the teams & FIA took the first steps to agreeing on limitations and rule and here we are.

      There is still a way to go and to answer your question instead of €300 m or more for teams like Red Bull or Ferrari ! Maybe a € 100 million is about right ( only numbers people are estimating . Teams like Caterham or Sauber spend € 60- 80 m just as an indication.

      So maybe if Red Bull or Ferrari don’t like F1 they should go start their own formula (Ferrari have suggested before) and leave the other 8 or so teams who actually agre on what they have to do !!

    2. James Clayton says:

      “But what is exactly wrong with F1? One needs to think why F1 is not attracting manufactures like VW, Peugeot, Audi, BMW, Porsche etc.”

      Because it’s too expensive to justify participation to the shareholders

      So…

      “If people don’t have the money and resources to successfully run a team, then they should not be in F1.”

      …doesn’t really work!

    3. Rich C says:

      “F1 is the pinnacle of motorsports and it is about the fastest cars and latest technology…”

      Errr… No.
      The latest technology is on Grandma’s Cadiliac.
      The fastest cars race at Indy.
      LMP is the pinnacle of motorsport.
      F1 is only the pinnacle of insane spending on microscopic tweaks. Oh, and of world-class political BS.

      1. Rob Newman says:

        You may be right. Even when it comes to fastest drivers, they are not in F1 as proved in Race of Champions year after year.

    4. JCA says:

      BMW take part in DTM, SBK and GT3 series, all less expensive than LMP, F1 and MotoGP. All can be run as customer products (other DTM series are being planned, like in USA).

  19. Andrew Carter says:

    I’m really beginning to think it’s time F1 was scrpped and they start again with the FIA regulating the sport, a commercial management company leasing the rights for a much shorter period of time and putting in much more money to the sport than they take out and with the teams consulting on rules, but most certainly not making them as they can never come to an agreement on the sandwiches, let alone something important.

    A dream, I know, but it sure as hell beats reality.

  20. ArJay says:

    Long after the Middle East crisis is resolved…
    and the Eurozone has recovered economically…
    F1 will still be chasing its RRA/innovation tail

    It is ironic that when a fire breaks out in a competitor’s garage it’s a case of ‘all hands to the pumps’ but when the future of the sport is in question the management ‘hands’ quite happily put on their fireproofs and watch others burn.

    1. James Allen says:

      I think that’s right. If you started with a clean sheet of paper you could get F1 just right in this area.

      But everything is so entrenched and the competitors are set up so differently. Compare Mercedes -a leading automotive manufacturer with may different divisions and manufacturing facilities with Red Bull, for example. Hard to draw a line of equivalence there, which is what RRA seeks to do

      1. Elie says:

        Maybe when Bernie and CVC pull out ?

      2. Rich C says:

        No, because *somebody will still “own” it. *They will be in charge.

      3. Elie says:

        RIch C – who’s “they will be in charge” Bernie already has a succession plan in place.He’s not getting any younger & Especially if he is charged following the German banker case.Could be sooner rather than later.

      4. franed says:

        Ah yes but! Merc making huge losses and Red Bull making obscene profits.
        Much of the rumour about Merc quitting has bee because of their financial state.

        As James says, this is very reminiscent of Ferrari. When you have more money than anyone else and are winning, why agree to anything that detracts from your advantage.

        As for, “looking to Todt (the invisible) for leadership” first they have to work out if he is in the room! But most likely he will not say anything, in the same way as he disappointed over Bahrain when he sank out of sight. There are times when Max would do a better job, as Bernie once said “to get things done you need a dictatorship.” Ok not as far as Jean Marie, but they all need poking with a sharp stick and their heads banging together.
        :-)

  21. DB says:

    “There is talk of extending the deadline to a new one of July 24th. But if the original deadline has passed, many are asking what force a new deadline will have.”

    I’m no lawyer, but, the way I see it, the teams could now unanimously agree to extend the deadline to decide by a majority. ¦¬)

    1. James Allen says:

      That will not happen. Red Bull say the deadline has passed. Now any changes to rules has got to be unanimous.

      1. mattoz says:

        My understanding was that the FIA had extended the deadline for a majority (as opposed to a unanimous) agreement to the 24th of July. Then if this date comes and goes without a solution, a unanimous agreement would be required.

      2. James Allen says:

        Yes, but the point of the story is that this could be open to legal challenge. RBR say that the deadline has passed. End of story

      3. Nigel says:

        But what about the FIA’s claim that there is no Concorde agreement in place for next year, so they are not bound by it ?

  22. Wade Parmino says:

    James,

    Regarding the 2014 engines.
    Who are the manufacturers? Obviously there is Ferrari, Renault and Mercedes but are there any other manufactures? and is Cosworth still going to bother?
    I heard that Volkswagen are interested but not until about 2018. Do you know of any others?

    1. James Allen says:

      I’m not sure if Cosworth will continue, but PURE is offering an engine for 2014. It’s run by Craig Pollock, ex of BAR.

      1. James Clayton says:

        McLaren talked about building their own engine once, but it’s been quiet on that front ever since.

        Do you think they might see how PURE do and then just buy them out if they’re any good. I remember Pollock saying that they had at least one big name team on board (though that could, of course, just be Pollocks!)

  23. Jeroen says:

    Hi James,

    I don’t get it. In effect Red Bull are saying they don’t want a spending cap and certainly not on human resources. Are they seriously thinking they can outspend Ferrari or Mercedes in the long run?

    Also if Renault starts to see they can win with Lotus or Renault as well, that surely weakens Red Bull’s position overall against Ferrari, Merc and McLaren, because Renault don’t need to rock the boat and square off against other manufacturers?

    How much is Bernie willing to help Red Bull at the expense of some older friends is the question imo, what do you think?

  24. franed says:

    Shirley if there is no CA the current rules will just be extended for another year. The rules are the easy part, here is a chance to un-couple the rules from the commercial side.

    However the teams are not going to race with no CA.

    Can the FIA hold Bernie in default and cancel the 100 year agreement now?

    Ok this would put the FIA back in the anti-trust Euro court again. (That caused them to rent out the commercial rights in the first place) Would love to read the small print of that 100 year deal.
    (It was 100 years to compensate and allow Bernie to recover the years of investment he had put into digital tv and digital broadcast, which was too soon for most countries. Since then it may be said that he has made a small profit on the deal! :-))

  25. jpinx says:

    Several points spring to mind – mostly to do with the futility of expecting fiercly competitive teams to regulate themselves. Would you expect 2 football teams to agree a set of rules before playing and then expect some unfortunate guy to referee the game?

    It is mighty dissappointing that Jean Todt did not grasp the nettle and regulate these impetuous children (the teams) when he took office. Now is probably his last chance to get F1 onto a level playing field and stop the endless bickering – no matter how amusing it is at times. All the fans I know want flatout racing only controlled by the limits of the driver, the strategy and the technical inventiveness of team engineers. The costs do need to be controlled, but more importantly, the money that is allowed must be allowed to be spent on what the teams wish. It’s their team, their money and their loss if they get it wrong. In parallel with that the teams have to be encouraged to innovate in areas that are relevant to us. Putting a hole in an endplate is just not exciting, but a new suspension-linked braking system is great for all of us. Equally so would be unlimited kers. It is unfathomable why the pinnacle of motor racing should stifle the inventiveness of the guys. The tyre situation would be solved easily by using low-profile road-relavent tyres.

    We accept that Ferrari and MacLaren make both racing cars and road cars, so there will always be a crossover of expenditure, but that is no detriment to F1. Similarly a team that does nothing but race F1 will have to buy in both components and expertise to stay within the 107% rule. If a blanket budget ceiling is imposed on a team’s total expenditure that is easier for the FIA to monitor. Ferrari and MacLaren will benefit (rightly) from their positions as manufacturers while new teams will have to be better funded before entering, thereby avoiding the somewhat sad situation of teams being bought and sold as ill-experienced individuals get cold feet when faced with the reality of F1. We have truly amazing people in F1, but a special mention must be made of Sir Frank WIlliams and Peter Sauber, and the FIA would do very well to look at how their teams manage to make it in F1 without being a manufacturer. Once the other mess of teams identities/names is sorted out there should be a budget relief allowed for teams who have been in F1 according to consecutive seasons. Sorry for Mercedes, but they dropped out and lost their status a long time ago. Now they have to re-earn it if they are serious. It is possible to do this if the FIA stop thinking that the teams can self-regulate. The only thing a team will agree to is what suits them!

    Thanks for your great forum James.

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