Formula 1 - F1 giants 'could kill smaller teams' - Mercedes-Benz Forum

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post #1 of 2 (permalink) Old 10-22-2013, 11:47 AM Thread Starter
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Formula 1 - F1 giants 'could kill smaller teams'

Formula 1 - F1 giants 'could kill smaller teams' - Yahoo Eurosport UK

Fears that Formula 1's major players are secretly pushing to drive small teams out of business to bring in customer cars have emerged as the new Strategy Group meets.

Representatives of the FIA, Formula One Management and six teams - Red Bull, Ferrari, McLaren, Mercedes, Lotus and Williams – are meeting later on Monday to discuss future rule changes.
The agenda includes future tyre supply, tyre testing, cost restrictions and other minor sporting and technical rules tweaks.
Dieter Rencken analyses the Strategy Group agenda
There will also be discussion of the Listed Parts area of the rules, which ultimately defines the future of customer cars.
At the moment teams are strictly limited on what parts they can share with other squads, but a push to open up this area could allow whole cars to be sold in the future.
This could change the face of F1, and lead to a scenario where there are only a handful of big teams left supplying the whole grid.
Force India deputy team principal Bob Fernley, whose is frustrated that his squad does not sit on the Strategy Group, believes that the return of customer cars is only possible if some of F1's smaller teams are driven out of business.
"One would have to say – what is the agenda?" Fernley told AUTOSPORT. "On one hand, you have got four teams that are totally protected against all the rising costs because of the extra money that they have got.
"And the teams that have been disenfranchised are totally burdened with all the costs. So, the question is why is that happening? One would assume because it is to influence a different route for F1 in the future."
When asked if he felt there was a genuine desire among the top teams and sport's chiefs for customer cars, Fernley said: "You cannot bring customer cars in unless you force teams out of business... and we are going in the right direction to do that.
"Am I saying that is right or wrong? That I am not sure about. But what I am sure about is that there is obviously clear evidence of a move, not only to disenfranchise teams, but to burden them with costs on a continual basis.
"I would assume the reason for that is to [make them] fail, which would allow the customer cars to come in."
The majority of the increased revenue heading to teams as part of the imminent new Concorde Agreement is going to the larger outfits, while extra burden has been placed on everyone through extra outlay for entry fees, testing and new rules.
This hits smaller teams very hard, according to Fernley.
"There isn't a single initiative over the last 18 months that has not significantly increased the costs," he said.
"All teams are looking next year at a £20 million plus increase in costs. Four teams not only have that covered, but they also have reserves left over as well."
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post #2 of 2 (permalink) Old 10-22-2013, 12:28 PM Thread Starter
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The Strategy Group and the F1 business model

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The Strategy Group and the F1 business model
October 21, 2013 by Joe Saward
The F1 Strategy Group is meeting for the first time today and it will be interesting to see what results from the meeting. The new body consists of the FIA (which has six votes), the commercial rights holder (six votes) and the teams (six votes). The method of choosing the teams that sit by right is ill-defined at best because Ferrari, McLaren, Red Racing, Mercedes and Williams are not the five most successful teams still in operation.

If one uses the Constructors’ titles as the yardstick (as is normal) and company numbers as opposed to names one can say that Ferrari (16), Williams (9), McLaren (8), Lotus (3) and Red Bull Racing (3) should sit by right. Teams with the Lotus name have won seven Constructors’ Championships, but the current firm is unrelated to the original. However, the company that is now called Lotus won three titles as Benetton/Renault. Mercedes uses the company number that once belonged to Tyrrell, but that means it can claim only two Constructors’ titles, one as Tyrrell and one as Brawn, which put the team sixth on the list.

In any case, the reality is that Lotus gets the sixth seat this year because it is the most successful team without a seat by right. This means that the small teams have no say at all on this body. They do have seats on the F1 Commission, but this is now just a rubber-stamping body. Force India’s Bob Fernley says that there could be competition questions about the Strategy Group, as it could be deemed to be abuse of a dominant position. All of this is typical of the current dysfunctional state of the sport at the moment.

It remains to be seen whether even this body can be successful. Each of the teams (apart from Marussia) has a bilateral financial deal with the Formula One group. None of them have any agreements about governance (except perhaps Ferrari, which negotiated a veto). So they really need to sign governance deals before starting to take votes on the new rules, lest they get themselves into a position that means involvement in the strategy group is a de facto acceptance of the structure of governance that the Formula One group wants.

The financial realities do not change. The big teams remain unwilling to accept budget caps, the small teams struggle, and the fans keep asking: “are all the teams going to survive?”

Given the size of their budgets the 11 existing teams should all make it, but those running them know that there is little that can done beyond surviving until either the big teams relent and accept a budget cap; or the FIA forces it on them; and/or the sport undergoes a revolution which ends the current structure in which half of the money generated by the sport goes to financiers who put nothing into the sport and are simply milking it until someone stops them.

Given these circumstances, what is the likely pattern of development ahead? The smaller teams can survive if they all have the same kind of budgets, so they are getting together and trying to do something along these lines. However, ultimately, this will increase the gap between the rich and the poor and make it harder for a team to bridge that gap. If one looks at the way things have developed in NASCAR in recent years, the likely development in F1 will be not teams going out of business as HRT did, but rather the wheeler-dealers looking for ways to protect the investments made by merging with one another, in the hope that they will create a stronger force, capable of taking on the big guys. In the NASCAR world there was a sudden spate of such mergers when the global recession began to bite. It started with the Ginn Racing merging into Dale Earnhardt Inc (DEI) and then a year later DEI merging with Chip Ganassi Racing to create Earnhardt Ganassi Racing. It was a similar story with Petty Enterprises which merged with Gillett Evernham Motorsports and then a few months later swallowed up Yates Racing and being renamed Richard Petty Motorsports. While Penske Racing also beefed itself up by gobbling up Bill Davis Racing. The result was a reduction in the number of cars overall but the big names remained.

The big question is whether this will be the way things happen in F1. Last winter in F1 there were prolonged talks between Caterham and Marussia in an effort to merge their operations, although the talks ultimately failed, and the two teams went back to building up their operations.

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