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Mosley's response to Montezemolo
Mosley's response to Montezemolo
Posted By:   |  01 May 2009   |  10:10 am GMT  |  43 comments

In response to the letter Ferrari president Luca di Montezemolo wrote on April 28th to the FIA president expressing concern about having two classes of F1 car and about a possible legal challenge to the budget cap, Max Mosley wrote back the following day.

He quotes FIAT boss Sergio Marchionne, with whom Montezemolo works closely and his belief that in an economic crisis such as we are in at the moment, only an extreme response will do,
“We are just going to slam the brakes on, cut everything back to essentials. It may be painful, it may be ugly. But if we want to do the right thing for this industry let’s do it now. Today my gut instinct is to be truly Draconian.” These are Marchionne’s words.

Mosley's letter to Ferrari

Mosley's letter to Ferrari

Mosley points out that the car industry is in serious difficulty and that F1, as an extension of it, is extremely vulnerable. Honda’s departure was a wake up call and another manufacturer could leave at any moment.

“If we are to reduce the risk of the Formula 1 world championship collapsing, we have to allow new teams in. We also have to reduce costs drastically. The matter is therefore extremely urgent.”

Responding to Montezemolo’s legal threat over rights that have not been respected Mosley writes,
“The only radical elements are those needed to close the gap that would otherwise exist between a low-budget team and other competitors. Thus if Ferrari chooses to continue with an unrestricted budget, the new regulations will not deprive Ferrari of any rights…I do not accept that these proposed regulation compromise any commitment that has been given to Ferrari in the past, unless Ferrari would somehow argue that it is entitled to prevent new competitors from emerging at a time when the sport itself is in danger.”

He ends with a flourish, “We are confident (as are our accountants and lawyers) that a budget cap will be enforceable. The cleverest team will win and we would eliminate the need for depressing restrictions on technology, which the existing teams are discussing with a view to reducing costs. I hope Ferrari will take the lead in agreeing the cost cap mechanism, thus freeing its engineers to work and preserving its shareholders’ money.”

Mosley has always wanted three things; to see the playing field levelled so small teams can compete with big teams, to have full grids and he has always felt that the costs were out of control, long before the credit crunch hit the global economy.

What he has done here, along with his technical strategy guru Tony Purnell, is to take advantage of the car industry’s troubles to create a window for killing those three birds with one stone. The two class F1 is not ideal for anyone, but Mosley is calculating that no manufacturer will go for the uncapped option it because it would be unjustifiable to shareholders.

Meanwhile the five independent teams, Williams, Red Bull, Toro Rosso, Brawn and Force India all welcome the budget cap at the £40 million level because to them it means survival, profit and the chance to compete against the big boys. It’s Christmas for them.

The teams formed their association, FOTA, to represent their rights, but here FOTA is in big trouble because the five independents are on a collision course with the manufacturers, so Max has also achieved a fourth aim, to undermine FOTA.

Many people dislike his methods, but think about it this way, if F1 didn’t exist and you were Ferrari or any other manufacturer and someone came to you and said, “I’ve got a great idea for a racing series; we’ll have 17 races in key markets around the world, great TV package giving your brand a media value in the hundreds of millions per year and it will cost £40 million and it capped, so you can innovate within that figure and beat the others.”

I’m sure if you started with a clean sheet of paper, in other words, you might well go for it on that basis. But it’s hard to see the Mosley/Purnell vision for F1 because we come from an era of £200 million budgets. But why does it need to cost £200 million to win?

Shouldn’t Ferrari continue to win races? If you have something very good and you distill it to its core strengths, you end up with something sensational. So surely the 350 best people at Ferrari must be the equal or better of the 350 at any of the other teams?

One of my readers, Martin Samm, made this very valid point today,
“What I (as a member of Joe Public) want is a series of interesting/exciting races – I dont care if they spent 40 million or 200 million, as I’m sure they’ll be as cutting edge as ever regardless; engineers tend to be cunning like that!”

Martin also points out this is all happening at a time when races are being won by two independent teams, Brawn and Red Bull. Most people find this very refreshing and a good thing for F1.

It’s really hard to know which way to go on this one, because it represents a huge cultural shift in F1. You can see Ferrari’s point and they believe that they have right – and the law – on their side.

The way is clear for a summer of messy legal challenges, which would throw 2010 into chaos. Ferrari will not go quietly on this one and they have gathered the other manufacturers around them for a council of war. They make the engines, of course, so the independents are dependent on them.

That is why Cosworth is sitting on the sidelines, waiting.

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A budget cap of some sort will happen.

One interesting aspect of the budget cap regulations is that it does not include engine costs. If you are sitting in the boardroom of a manufacturer, spending hundreds of millions with no successes to show for it, it might be very tempting to go to/ go back to only supplying engines to a highly competent racing team. It would appear that you would have no cost constraints on engine development and with a little skill and advertising nouse you could take a lot of the credit for winning.

There seems to be a long list of teams willing to enter Formula 1 at present so finding a chassis or two to hitch your engine to would present no problem.

Also, a manufacturer not currently involved might see Cosworth as a good purchase under these circumstances.



seems Max one upped the entire paddock when he proposed customer engines from Cosworth or other outside sources. he was able to foresee the “manufacturers” hold out on the customer teams and wanted to give them a viable alternative.

the cap is a good thing, and will boost the profits for not only the indies but the manufacturers as well. clearly they must see that as an advantage and a perfect way to maintain their operation. it’s too bad for Honda as surely they would’ve survived.

spend less, make more. hire the right people to make it happen, those will be the “clever teams”


Do you have any idea how much old school teams, such as Lotus, Tyrrell and Brabham, spent in inflation adjusted pounds/dollars to develop their cars? They delveloped innovative and winning cars, and given the controversey surrounding budget caps, it would be interesting to know if they could have developed their cars within the proposed cap.


I find this developing storyline about the budget cap fascinating.

Personally I can’t help but think there’s a bigger move in play here from Bernie & Max … my own view is that the budget cap is a (clever) negotiating step to try and blunt FOTA’s argument about how much of the commercial revenues the team’s receive (“Hey, you’re only spending 40m quid, so if I give you just 60m quid each then you should be grateful. Never you mind what I do with the rest of the money.”).

But it’s a very clever gambit. As much as the manufacturers might rail against it I really doubt that their Boards will agree to spend the current amounts when there’s a clear support in the rules to spend just 40m quid and make the team directly profitable … with all the marketing coverage they receive a complete bonus on top of that.

My own view is that FOTA and the FIA will eventually agree to a higher budget cap (50m?), that is compulsory for all teams, and with significant new technical freedoms.

If the rules were really freed up a lot then that could lead to some great racing. Which after all is what we fans want to see.


Can anyone show me where the manufacture’s have said that unless cost’s are reduced we will leave the sport.The only team to leave is HONDA and they have a history of this the only independent team is william’s and frank has alway’s been tight. So what can be achieved with all of this a dumbed down series team’s breaking there budget cap’s every second week oh yes Im sure the manufacture’s will be more than happy to open all there book’s to the FIA that will go down really will with the board’s of these companies.

Now is the time for then to break free set it up themselves and run the circus there way get rid of these clown’s and all the talk of budget’s.

What will the public watch brawn, william’s,force india,lola,prodrive,yeah Im sure these countries are going to pony up with $50mill a race to see these guy’s race of a weekend,and the TV companies will be just falling over themselves with ship load’s of money

Or will TV execs think that FERRARI,MCLAREN,TOYOTA,BMW,RENAULT,RED BULL be a slightly better bet. It’s time for FOTA to cut free get rid of the middle men and give the paying public what they want instead of this political bs.


As I read through these different posts I’m writing this in another program so that I can pick up the points I’d like to respond to, as well as check my spelling so you more educated respondents don’t think me an idiot.
Firstly, I’d like to say that my favorite F-1 car was the second Lotus ground effect car, as the body work was absolutely gorgeous. My second favorite race car was Jim Halls Indy car that was driven by Johnny Rutherford, and if I’ not mistaken, it was designed by Allen Jenkins, but I could be wrong.
I also agree in the most part with those that say the teams should take control of Formula one. If the teams could somehow get up financing to buy out the present owners of the franchise, they would be in a position do make a number of improvements that would be of huge benefit to the fans.
1. promoters would ,as stated by others be able to actually show a profit.
2. A more diverse group of fans would be able to actually enjoy seeing the racing in person. I’ve only been able to see one race in person, but the sound of the cars I’ll never forget. As a bonus I was actually able to walk through the pits, at a reasonable added cost, see Ayrton Senna, Gilles Villeneuve, and Niki Lauda at little more than arms length. Another thing I’ll take to my grave.
3. I’m not opposed to manufacturers being involved in Formula 1, but I disagree that it is a showcase for their products. It’s a showcase for their technological abilities, but nothing more that I can see. I’d hate to see them leave, but I think that their involvement is what has cost the costs to skyrocket in the first place. As of yesterday, this new cost cap gives them $59 million to spend. That’s a sh-t load of money. Max’s an others argument that redundant employees would be able to find work at new teams, but not all. This is sad, but so is the fact that so few can attend the races.
I’m sure that in the not so long run, those that don’t find employment with a new team, will still find new employment. Think about it. They are hugely talented ,driven people. They won’t be out of work long. they will probably be able to find work in racing as well, just not F-1. Not the end of the world. I
Actually agree with MM about the cap. I’m absolutely opposed to the two tier proposal, though, as I rather enjoy watching apples race apples.
4. I feel that the FIA’s demand for KERS was so costly to the various teams, that it’s use should be continued, and if not that FOM and FIA should somehow make compensation to the teams if it is discontinued. I think that KERS should continue to be used, as Max is right in that it is very relevant to the cars we will be driving in the future. But I think the battery recycling issue needs to be addressed.
5.Lastly, I personally would like to see the re-emerging of ground effect. It could be controlled or limited by revising the sizes of the wings, or better yet , by allowing movable surfaces and eliminating wings altogether. Surely with CFD. The wind tunnels the each team has, it could be made to work very well.
The reasoning behind it banning is no longer valid. Suspensions are far stronger now than they were back then. The cars are much stronger than they were back then, and computer capability now is so far advanced, that it should be able to deal with the ride characteristics that were complained about by the drivers of the era. my guess is that the cars ride just as hard now as then.
6. Oops. I have another thought. Increase the size of the wheels. Benefit; cheaper breaks. It seems to me that one reason that the breaks are so expensive is the they are so small. Increasing the size might make them easier to cool and tire wear would be improved by the increase in the size of the contact patch.
What do you think?
Am I wrong on all points? I honestly would like your views.
Thanks for reading this. Barry


Accountants being the most important people in F1. How exciting. Wasn’t this whole world recession thingy created by these very same people? I would trust a second hand car salesman more than any accountant.


Tend to agree with most of the above posts.

It’s time. It really is time.

The world has changed fundamentally in the past year.
We are not in the era of vast wealth any longer and it’s going to take a while for most people in the west to get used to the idea that the champagne and caviar are gone.

Ferrari and other giants may make seductive road vehicles maginally similar to F1 cars, but the reality is, the only reason they are in F1 is to sell their business model to the world. And F1 , for all it’s current obcene costs is one hell of an advertising bonanza at rock bottom prices for the giant manufacturers. They’ll fight through every damn court in the world and they’ll fight dirty.

( just remember the diabolical insults hurled at Ross Brawn by Ferrari’s ‘respected lawyer’ when they knew damn well the evidence was stacked against them in the diffuser row. )

So of course the big battallions are going to make one hell of a fuss. Mosely is attacking a fundamental of their whole raison-d’etre. The reason they are in F1 is light years from the reasons the independents like Williams and Brawn are in F1. And F1 desperately needs loads of new blood. New independent teams. And it needs them now.

Yes, there will be problems about customer engines when and if the big guys pull out. But there is, as James mentions….Cosworth and perhaps other suppliers will emerge.

And for all the I never liked Mosely, or his machiavellian schemes; at this time in F1’s history: at this bloody awful time in world economic history, sadly he’s dead right.

The Fomula One we love will die if it does not evolve damn quickly in these survival conditions. Bring on the budget cap with all speed. It’s going to get bloody cold for a few years !


My initial reaction was if the budgets are cut to £40 million there are going to be a lot of job losses – never nice if it’s your job that is cut.

However on reflection with the grid being increased to 13 teams hopefully the losses will be mitigated by most if not all finding employment in the new teams that join the grid.

Also ban any body explain what “Ferrari’s status meant it had guaranteed rights within the sport” means in plain English – what are these rights and guarantees Montezemolo is talking about ?


James, thank you for your always very interesting insights into the modern F1 world.
Following the developments over the last days, I wondered how the commercial basis for the circuit organiser, from 2010 onwards, may change? We all know, today there is little room for revenues and most of the tracks suffering under the heavy weight of the F1 fees, and are more or less bankrupt.
What are the plans in that direction? Will F1Org. pay less to the teams in the future? Ergo will charge less for staging a F1 GP? Perhaps giving the organizers some breathing space will help to keep some F1 races in good old Europe.


A budget cap is a joke. The creative accountants will always find a way to defeat it. The true costs will be hidden somewhere else in the financial statements of a very large company. Who suffers? The independant teams like Williams and Brawn, who don’t have a large company behind them. The large teams will have to sign off on financial statements showing a capped expenditure.

Now for the cynical part. Max and Bernie know this and they don’t care. Why? Because when the teams ask BE for more money, he will reply “I’m already paying you more than you spent. Get lost!”


While Mosley’s intentions may on paper seem noble, his Machavillian methods will lead to one serious problem nobody has picked up on. The reason we are all enjoying this year’s F1 racing so much is not because the grid has merely been mixed up. It is because the restrictions on areas to innovate on has closed the whole field up. The twenty cars are separated by a mere one and a half seconds. This plus KERS and the ability to follow each other closer has led to more overtaking and closer racing, which is the whole point of watching F1.

If the technical regs are no longer as restricted, we will be back to the days when one team could very easily dominate the field and the races become a snooze fest. I don’t care about budgets or which engineer’s brain is the biggest. The average race fan (for whose benefit apparently all this is for) just wants close competitive racing and the current regulations achieve that. The budget capped regulations will destroy it.


Probably the simple fact is that a budget cap is the only way for F1 to survive. The big teams might not like it but without it they would be quite alone with only 4 – 5 teams being able to stay in the game. Now there will be 13 teams and all will be able to compete on a much more level playing field than otherwise would be the case. Max Mosely may be criticised for many things but this time he is right.


Hi James,

I am new to this blog so I don’t know if I should have put this post elsewhere.

I’ve been watching Formula 1 for about 15 years and I have always admired the enthusiasm you put into your commentary. It is not easy to follow Murray Walker and I personally think the BBC are missing out big time on your knowledge and enthusiasm for the sport.

I was wondering if you were going to do a piece on your blog about the late great Ayrton Senna seeing as it is the 15th anniversary of his death. The tragic race of Imola 94 was one of the first I watched and it broughy a timely reminder of how dangerous F1 can be.




At last sanity is threatening to break out in F1, although the road ahead is still fraught with pitfalls. What is more in the public’s interest, a formula in which only (say) three teams can effectively compete for the championship, or the prospect of thirteen teams providing fans with much closer and more unpredictable racing? And still by no means funded on anything remotely like a shoe string, still with plenty of scope for technical innovation, but not decided by wheel nuts costing thousands.

At present their is huge competition between teams but most of that competition goes on behind closed doors and is never visible to the public. Really, what is the point of that? The details of the technical developments might well be fascinating in themselves but they never will be available to the fans anyway, for obvious reasons.

What we have at the moment is no more than a battle of the budgets, a test of whch boardroom is prepared to throw the greatest number of hundreds of millions of pounds (literally) at the championships. A battle in which two or three hundred million pounds extra a year has to be spent to gain a measly few tenths of a second, at no benefit to the spectacle, in fact quite the opposite. Surely F1 should primarily be a test of the skills of the man behind the wheel rather than those of the backroom boys we never see, or of the nerve of the suits in boardrooms? F1 has not been such a test for many a year, and the last time that it was was back in the mists of time, in the era of the dinosaurs, or at least, of the Cosworth DFV.

Which set of regulations makes the most sense when manufacturers are closing factories and laying off workers by the thousand all over the world? Closely fought racing between twenty-six cars or predictable processions largely decided by grid position between the monied few, themselves teetering on the edge financially?


I have wanted a budget cap for years rather than tighter regulations like the 2009 areo spec or engine freezes. I would however quibble with your description of a capped F1 as 17 races in *key markets* How about a race in the United States, or anywhere in North America?

The thing that worries me is that this is Max’s initiative. For better or worse I do not trust his judgement. He has a track record of making decisions that, perhaps suit his short term objectives but the soundness of which is not born out in the long term. For example, the ‘narrow track’ era which lead to aero-dominated cars that couldn’t overtake; refuelling, which was intended to mix things up but instead discouraged on-track racing; single-race tyres which we forgotten about after one year. His decisions are often spectacular u-turns on previous ones which really makes me question the wisdom of the original decisions made to the contrary.

I believe also, that he is too close to the sport’s commercial rights holder, which often clouds his judgement on key sporting issues. A prime example being whether or not to exclude the drivers of a team that has been excluded from the world championship as in 2007. Few can complain that the McLaren drivers were allowed to race for the championship but from a purely sporting point of view should that have been allowed to happen?

I feel that he too often allows his personal opinions to get the better of him and affect the conduct of the organisation he represents. Take the relentless pursuit of McLaren and Ron Dennis over recent years. McLaren have often been in the wrong on numerous occasions, but does Max really have the right to dictate who runs the team and in which fashion? Anther classic example is his public response the the joint Mercedes and BMW statement following the sex scandal last year, as well as his outbursts towards F1 figures such as Brundle or Stewart. Whilst each was highly amusing, is this really the behaviour one would expect of an FIA president?

Despite all this, I do respect Max is a far more politically astute man than I and because he does tend to get what he wants most of the time. It does make me feel sometimes as if Max picks a fight for the pleasure of the fight rather than the greater cause at stake and that his decisions rarely seem to be made purely for the benefit of Motorsport.

It is for these reasons that I am uneasy about the coming era. Although as a humble, lifelong F1 fan I am not naive enough to think that my opinions count for anything.

Great blog James. I never miss a chance to enjoy your writing.


Its the 15th anniversary of Ayrton Senna’s death and I hope that everyone remembers Roland Ratzenberger too, we may of lost one of the best drivers ever in f1 but please don’t forget Roland Ratzenberger as alot of people and the media seem to as Senna wasn’t the only driver lost that day.

I know this post doesn’t relate to the article above, I hope James and the mods echo my thoughts that we don’t also don’t forget Roland Ratzenberger.

John of Woking

To begin with I was dubious about budget caps, but I’m starting to come around to the idea though. There is one thing that concerns me though…. for any business large investment is needed for long term success. We will no longer see teams spending a lot of money on large assets such as factories. Everyone can see the short term plus points to this but what about the negative longer term consequences. What do you think James?


I dunno people…. putting a cap on F1 spending… what other sport in the world would accept a cap on spending.. can you imagine a spending cap in football???? Eh no I thought not!

F1 is the pinnacle of motor sport – surely it’s survival of the fittest – meaning the fastest car wins. If you win you get more money – if you lose you get less. – as simple as that. What is the point in racing if you don’t rewarded for it.

Max & Bernie have capped the time teams can spend on R&D & testing time, the engine size… now its capping spending… will it ever end?

Where is the motivation for the top teams to bother with F1 if they are bound and gagged with so many rules and caps on everything.

I’ve been a F1 fan for 20 years… and it’s been spoiled by Bernie – all he’s interested in his precious TV rights and his bottom line!

I say the top teams should leave F1 and set up a new driving championship in 2010.


Not only do they feel they have ‘right and the law’ on their side… but they’ve also invested huge sums over many years to establish a long-term position at the top of the pile – this is going to write-off that entire spend… with which they could have developed several new road cars and currently not be so exposed to the economic downturn…

They have every right to question this call… and be severely miffed. Trouble is I don’t see an alternative solution to a budget cap – unless the cap itself is set per team in line with relative investment over the past 3-5 years? up to a maximum of £60mio – giving ferrari, Toyota, McLaren etc close to 50% advantage over the new starter teams?

Having said that, Ferrari’s original investment was always a self-regulated and calculated risk – so you could just say tough s…


Changing some basic rules and expanding grey areas almost every day is salvation for F1. It should be applied to other sport disciplines.


Max is right that the cleverest teams will win, but will it be the engineers or the accountants who need to be clever?


I’m afraid I disagree!

Formula One has always existed to be at the forefront of technology. That is why the manufacturers get involved; it is a showcase of their products not only being tested to the extreme, but, they hope, winning.

If the budget cap is £40 million, then, by the time you have made the chassis, engines etc, there won’t be much money left to innovate anything.

I see the need to cut costs in the short term to keep the manufacturers involved, as FOTA has suggested. But if the aim of a budget-capped F1 series is to produce the best spectacle, then, in the long-term, the manufacturers will wonder what the point is, especially if they are getting trounced by the independents. They will leave, and thus one day, when the economy recovers, a new form of manufacturer-based elite motor racing will emerge as car companies once again compete for sales.

If we are to have a series that simply produces the best racing, well then let’s all switch to the BTCC. I fear Max is right when he says that in a cost-capped championship “the cleverest team will win”. But shouldn’t that be “the best team”, or even “the fastest”?


Two thoughts spring to mind about the budget cap.

If you have a £40M cap and a team brings in an amount of sponsorship, they can only spend a certain amount of TV money. So all the more for FOM and the FIA.
If the cap was £100M the teams would want more of the TV pot, which unlike football is not controlled by an organization formed of all the teams.

There’s plenty of money being spent on F1, look what Abu Dhabi has spent on a circuit the hotel there.

Personally I think the best F1 car ever build was the Williams FW14, and it was built with fewer people and less money than even a force India today. And the team went testing when they felt like it, took a “T” car to races, used an engine and gearbox per car per session etc.

So where is all the money going ?

Of course Max worries about the manufacturers pulling out and talks as if there is some latter day Colin Chapman or Ken Tyrell ready to enter the sport if they can only make the business plan fit. (Step forward R. Brawn). Of course that was an era when almost everyone got their engines from Cosworth and we didn’t have Ford (Jaguar), Toyota, BMW and Honda putting hundreds of millions each into the sport for 1 win between the lot of them. It was too much for Ford, then Honda, would the sport be truly the worse if Toyota, Renault and BMW only supplied engines ?

Peter Freeman

James you mention ‘Christmas’ coming for the independent teams with the introduction of budget caps… surely a MUCH bigger ‘Christmas’ would be an independent series and a real share in the TV revenue for ALL the teams?

I do not understand why a new series is not FOTA’s main focus right now. Owning the series is clearly the way to go. The teams ARE the show, what on God’s green earth does FOTA need either the FIA or FOM for?

All the FIA and the FOM are to FOTA is less money and a constant hassle over management. What is the attraction for staying with them?

I just don’t get it!

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