What Goes Around Comes Around...

It was nearly thirty years ago, when then Brabham owner Bernie Ecclestone, in his capacity as president of the Formula One Constructors Association (FOCA) went into battle with Jean-Marie Balestre’s FISA for the rights to run Formula 1. His right-hand man in that fight was an urbane barrister whose real ambitions lay in politics, but whose family history made such a career impossible. He chose instead, to go into the goldfish bowl world of motorsports administration. Step forward current FIA president Max Mosley. It was a tense, and bitterly fought affair which at times appeared to threaten to tear the sport apart. In the end, Ecclestone and Mosley emerged victorious, with FOCA, representing the teams, being granted control over the commercial aspects of the sport. Mosley, meanwhile, dethroned Balestre and became president of the organisation he had spent much of the last decade at war with – the FIA.

Fast forward to the present day, and the state of the sport that the two men have largely controlled for the past two decade. It has been a tumultuous few months for Formula One. At the time of writing, it remains unclear whether the men and women at the old Honda F1 factory team in Brackley will be looking for work, and whether Jenson Button and Rubens Barrichello, race-winners both, will have a ride this year. It is thought that Mexican billionaire and Grand-Am racing boss Carlos Slim has sniffed around. Rumour has it that both PSA (Peugeot-Citroen) and Hyundai took at least a cursory look purchasing the team but both have publicly ruled themselves out, and the clock is ticking if a deal is to be done in time to get the team onto the grid in Australia at the end of March. There are rumours that Prodrive supreme David Richards is still trying to put together a bid with Middle Eastern backers (although he now says he is not interested), but in the current economic climate, nothing can be taken for granted.

Fundamentally, the problem is that the team requires a vast amount to run. Honda, it is said, are happy to be rid of it for a nominal sum, but will want to be indemnified against future redundancy costs for the team’s current employees. Dieter Rencken, in his excellent Autosport column, The Weekly Grapevine (do subscribe, it’s fantastic value – and they don’t pay me to say so...) estimated the cost of providing such guarantees at around £75m. And on top of that sum, any prospective team owner would have to find the cash to run the team itself for the season – which would probably cost at least as much again, cost-cutting measures notwithstanding. The fundamental truth is that the cost of getting started as an F1 team is now so great as to be beyond all but the wealthiest corporations and individuals.

Teams have always come and gone, but in times past, there has always been a plentiful supply of aspirants in F2, or F3000, or sportscar racing prepared to take the leap of jumping up into Formula One. That is no longer the case. The blame must lie, in part, with Bernie Ecclestone, the FIA and FOM, with their insistence that any new team put up a bond of $30m and the ‘closed shop’ franchise system which has existed for the past ten years. That, though, is not the whole of the explanation. Such a system should actually have served to protect the existing weaker teams, but it was not enough to save Prost, Arrows or Minardi. As I have said on numerous occasions before, the cost of competing in F1 will always be a certain fraction of what the richest teams and prepared and able to spend. Over the past decade and a half, that sum has become so large, and so detached from the figures required to compete in other, lesser formulae, that the jump has become to great.

In years past, teams like ART, ISport, or Racing Engineering might have taken the leap into F1, but the start-up costs are simply so much greater than for GP2 as to make this completely unrealistic. Not since Forti Corse, Simtek and Pacific have there been completely new-start F1 teams which haven’t had the backing of either a major corporation with a product to sell (BAR and British American Tobacco) or a car manufacturer (Toyota). None of these, of course, were able to make much of a fist of it. The last completely new teams to come into the sport without the backing of a manufacturer or cigarette company and make a lasting impression were Jordan (in 1991) and Sauber (in 1993). What, you might say, of Super Aguri and Toro Rosso? Well, I can’t help but feel that, given they didn’t design their own cars, they don’t really count.

For a long time, the sport has been able to ignore this, as the existing manufacturer teams have appeared to be on a sound footing. Ford (as Jaguar) might have pulled out, but billionaire soft-drinks magnate Dietrich Mateschitz was able to step into the breach to keep that team going. Now though, with the world in the throes of what might be the most severe economic recession since the 1930s, it’s looking as if the grid for 2009 might well be down to 18 cars, and there are persistent rumours about Williams’ indebtedness, that Renault and Toyota are reconsidering their involvement in the sport, and that Vijay Mallya is becoming disillusioned with the lack of success from Force India. In short, F1 may be facing a crisis which threatens its very existence.

Those involved in the sport are not unaware of this, but they have massively divergent visions of how F1 might dig itself out of the hole it has found itself in. On the one hand, there is FOM’s vision, seemingly shared by FIA President Max Mosley. They look at the current situation and see 10 (perhaps now 9) teams spending astronomical sums on esoteric technology with little or no application in the world beyond, all in search of a few tenths of a second. Then they look at GP2 – the cars are not much slower, the racing is arguably better, and a team can be run for a tiny fraction of the cost of a Formula 1 team. Why? Because the cars are built to a standard design, and the teams are simply not allowed to spend millions

The teams, however, are all but united in opposition to this vision. They realise that, ultimately, it would render them much less powerful than they are at present. Once they are left running more or less standard chassis and engines, the teams would become like so many interchangeable light-bulbs. At present, the teams are real players in themselves. If they unite in opposition to the commercial rights holder or the FIA, then those bodies are forced to listen – the show cannot go on without them. If they were reduced to small engineering firms, doing nothing more than setting up a spec-formula chassis and providing mechanics, in essence, doing what GP2 teams do now, then the governing body would hold the whip hand. If the teams fell out with those running the sport, well, the governing body could go and find others to run the cars – there would be no need to compromise with them.

Being fair, I think the teams fundamentally see F1 as a competition between rival teams of engineers, as well as between rival drivers. They, quite correctly in my view, regard a spec formula as being contrary to the very spirit of the sport. Their preferred solution is a rule book which, while perhaps closing down development in certain areas, nonetheless leaves the door open for the teams to compete to build the most effective racing car. Arguably, at least, central to making this vision work is that the teams should get a larger share of the revenues generated by the sport’s owners from the selling of TV rights, track-side advertising and the rights to host races in the first place.

Inevitably, this sets the teams at loggerheads with the sport’s commercial rights holders. Bernie Ecclestone remains their fixer, though he has only a minority stake in FOM (and that through his estranged wife’s Bambino Trust), which is mostly owned by the hugely indebted private equity firm, CVC. The teams might reasonably ask what additional value the sport’s owners actually bring to the table. When CVC took over Moto GP, they took on a decidedly different proposition. MotoGP had great unrealised potential – the sport had a very low media profile, and yet there was no fundamental reason it could not be every bit as commercially successful as F1. Under CVC’s ownership, MotoGP largely fulfilled this potential. F1 is a different kettle of fish. Bernie Ecclestone et al had been doing a perfectly good job of promoting the sport for the past 30 years, and it has probably reached about as large a global market as it is ever going to. If CVC were to make more money, it would have to be from the sport’s existing base.

The teams' bones of contention with FOM are several. Firstly, the teams are competing with the rights holders for sponsorship money. Not a few teams will feel aggrieved at the fact that FOM have signed LG Electronics as ‘commercial partners’ - in the past, they might instead have sponsored a team. If further deals follow, expect the teams to feel still more frustrated. Secondly, FOM/CVC, in their quest to maximise their own revenues (and pay back the interest on the rather hefty loan CVC took out to purchase the rights from one Mr Ecclestone) are ever more inclined to have Grands Prix wherever there’s a backer (usually a Government) prepared to pay. Hence, Grands Prix next year in Abu Dhabi, Bahrain and China, but none in Canada, France or the USA and Britain and Germany under threat. Which is madness from the teams’ point of view, because they want the races in places which would interest potential sponsors, and Abu Dhabi is not such a place. It is, of course, also a travesty from the fan’s point of view. Finally, there's the profits themselves. The teams would argue that they shoulder most of the burden of investing in the sport and incur most of the costs - the commercial rights holder, which not being responsible for providing the cars or the circuits, essentially getting something for nothing, and yet they receive only half of the sport's revenues (with Bernie having stated he'd like to cut that figure back, rather tahn increase it). The thought must occur to them that, were they to go it alone and set up a break-away championship, they could keep all those revenues for themselves.

It strikes me that the interests of the teams, and probably ultimately the sport itself, is diametrically opposed to that of the sport’s commercial rights holders, still operating through Mr Ecclestone, and the FIA, which, through Max Mosley, seems squarely lined up behind them. Through FOTA (are the echoes of the old FOCA in their name deliberate), the teams would appear to have put many of their differences aside to come together to make common cause. Will they succeed? Not many have gone up against Mr Ecclestone and won, but on the other hand, Bernie is only human, and he’s 78 now. Without any longer having a large personal financial stake in the sport, essentially the pawn of a group of investment bankers, will he really have the stomach for the fight, or might Mr Ecclestone and Mr Mosley’s long reign over the sport come to an end, just as Jean Marie Balestre’s did nearly two decades ago?

Wheels within wheels

A while back, I had it in my head to try to write a 'Dick Francis on wheels'-style thriller about organised crime and skulduggery, set in the F1 world. It never came to much, and, revolving as it did around a gang of criminals who took over a race team with the intention of using it as a cover for international drug smuggling (whilst furthering the racing career of the Crime Lord's promising son) , I've since discovered that reality beat me to it anyway. Recent events, though, have left me wondering if fundamentally, I suffered a failure of imagination and I should really have been thinking bigger.

When the Max Mosley 'sex scandal' broke a couple of months ago, I have to admit I couldn't summon up much interest in the matter. Under Max Mosley's leadership, the FIA had recently taken legal action against News Corporation over an article Martin Brundle had penned for the Sunday Times in which he had suggested that the FIA had been less than even-handed in its treatment of Mclaren and Ferrari during last year's spy-affair. My first reaction was to assume that, since the story broke in the Sunday Times more downmarket sister publication, the News of the World, this was just News Corporation's way of reminding the FIA Head of the dangers of messing with Rupert Murdoch. A fight between Mosley and Murdoch. Nothing to lose sleep over.

The question of whether Mosley should resign as a consequence of the revelations about his private life was, equally, not one I could bring myself to get worked up about. I have been of the opinion, for some time now, that Mosley has been at the helm of the FIA for too long, and that it is time for someone with fresh ideas to take over. Other, to my mind, far more damaging recent revelations about Mosley's time as FIA President constitute a far better argument for his resignation if they are true, not least because they relate directly to what he has done in that role. However, since stories about clandestine meetings with QCs and fuel filters don't sell newspapers, they have attracted far less publicity than salacious tittle-tattle about 'Nazi' orgies.

I can't really see why the fact that he has paid for sado-masochistic sexual services in a Chelsea flat is relevant, though. In the UK, neither the buying nor the selling of sexual services is, in itself, illegal at present and there is no suggestion that Mosley committed any crime. Comparisons have been made with disgraced former Governor of New York, Elliot Spitzer, who did resign following revelations of his involvement in a prostitution ring. With all due respect, however, there are significant differences between the two cases. For one thing, Spitzer was an elected politician, and as such, his views on, and involvement in prostitution could legitimately be said to be directly connected with his job. Furthermore, Spitzer had actively campaigned to increase criminal penalties in his home state of New York for men who buy sex. Max Mosley, by contrast, is not the head of one of the world's most important cities, but the head of a motoring organisation. One might, quite reasonably, view the buying of sex as immoral, but in Chelsea, it is not illegal and I'm not sure how paying for sex disqualifies a man from involvement in F1. All else aside, on the basis of conversations I had with an old schoolfriend who worked for a while as a journalist in F1, such a policy would considerably thin out the Grand Prix paddock.

There were, of course, the suggestions that there was an explicitly 'Nazi' theme to what went on in the Chelsea flat. I'm not in a position to know one way or another - I'm afraid that there are some things I won't do in the name of research, and watching Max Mosley sex videos is one of them. Nonetheless, I can't help thinking that this owes more to journalistic hyperbole than anything else. Yes, there was undoubtedly a sado-masochistic element to whatever it was that Mosley was up to, but beyond the fact that the Nazis stole much of their 'aesthetic' from the sado-masochistic scene (yes, it really did happen that way round...) I'm not sure what the claims of a 'Nazi' theme are based on. Chances are, they were thrown into the mix because of Mosley's family history. Max's father was, of course, the odious former leader of the British Union of Fascists, Oswald Mosley. Nonetheless, it seems ironic that Mosley has ended up in trouble over this when former FIA President Jean-Marie Balestre's role as a Waffen SS officer during World War II went largely unremarked.

All this, though, is old news, because it now appears that something bigger is at stake. To be fair, while I was initially convinced this was all nothing more than a private feud between News Corporation and Mosley, others, most notably Mike Lawrence, were more astute. Truth be told, Mosley's legal action against the Sunday Times is no more than a minor irritant to the media behemoth, and it is unlikely that they would have felt the need to spend time and money investigating the private life of Mosley - a man whom, after all, your average News of the World reader probably really couldn't care less about one way or the other (let's face it, the only guy in F1 grid that the average UK tabloid reader is likely to have heard of is Lewis Hamilton.) All of which suggests that whoever was behind the operation to expose Mosley's private life, it probably wasn't the News of the World.

A couple of developments over the last week give hint as to what may lie behind it all. First, there was the news that one of the women paid by Mosley is married to a senior MI5 officer. Then came a letter from Mosley, addressed to the presidents of the national clubs, which appeared to suggest he was the victim of a conspiracy to wrest control of F1 from the FIA. All this suggests that someone with rather more directly at stake than News Corporation was behind the 'outing' of Mosley. The News of the World might have been more than happy to run the story, and in the beginning, when I had assumed the story had simply been sold by one of the women involved, perhaps because she was short of cash and had kids to feed and clothe , that seemed explanation enough. I doubt, however, that they hold sufficient grudge against the FIA president to pay for an expensive and complicated spying operation against the man.

Whatever Joe Saward's alter ego, the Mole, might have you believe, I rather doubt that MI5 are much interested in who runs the FIA. In fact, though it wasn't something which the Intelligence Service were keen to admit to publicly, one rather suspects that it was not so much the fact that their agent's wife was involved in prostitution but the possibility that the agent himself might have been doing some private surveillance work on the side which led to his dismissal. After all, the prostitutes' spy cameras does look like the work of people with espionage experience. It is clearly someone went to considerable lengths to dig the dirt on Mosley, and Mosley himself believes their ultimate objective was to undermine the FIA itself.

So who might? Some initially suggested that someone at Mclaren might be behind it all, but in all honesty that seems unlikely. One doubts that a change of leadership at the FIA would result in the rescinding of their $100m fine and such a conspiracy simply seems to dangerous a thing for Mclaren or Mercedes to become involved in. What would the FIA's attitude towards the Woking squad be if that were to come to light? (That said, it should be noted that Peter White has written some interesting pieces suggesting that Mclaren really might be behind it all).


No. I'm inclined to think that whoever was behind the exposure of Mosley had rather more at stake. I'm reminded of an article which the ever-readable Mark Hughes wrote for Autosport a few months back about a dystopian vision of the future of F1, in which the sport had moved away from its European heartland to showpiece tracks built by third-world dictators, been abandoned by the major manufacturers, and the teams were no more than subsidiaries of the sporting rights holder. The racing itself might have been close, but, in Hughes' nightmarish imagined future, it was fixed in advance by the organisers and drivers who stepped out of line quickly found themselves out of work. It was, in short, a horrible cross between NASCAR and television wrestling.

At the end of the article, Hughes suggested that this scenario had come to pass because the sporting rights holders had, faced with vast unpayable debts to the banks who had lent them the money to buy the series in the first place, made all their decisions with the aim of maximising short-term profits at the expense of the long-term health of the sport. So if various Middle Eastern countries would pay more for a race than classic venues like Monza or Spa, that is where they went. If more money could be made out of the sport if so much wasn't being (in the eyes of the sport's rights holders) 'wasted' on car development, then chase out the manufacturer teams and bring in spec-cars. If the best drivers kept winning regardless, then make quite clear to them that it might be disadvantageous to their career if they were to win too often.

The relevance of Hughes little story to the current furore over Max Mosley is, of course, that the sport really is owned by a large private equity firm, CVC Capital Partners, which has borrowed vast sums in order to purchase the rights to F1 (from Bernie Ecclestone...) and now has to find a way of paying back those debts. F1 undoubtedly generates a lot of money, and a lot of that money is retained by the commercial rights holder of the sport. It was this which led to plans for a breakaway 'manufacturer backed' F1 series a few years back. This in turn led to a deal with the major teams which saw them take a larger share of the sport's revenues, though Formula One Management (and hence parent company CVC) still keep around half of all the income.

Doubtless, FOM would really rather keep still more of the money, but so long as F1 remains an expensive development race between the teams, any move to cut the share of the sport's revenues which goes to the teams would be fiercely resisted and might lead to renewed threats of a breakaway series. Of course, one way round this would be top amend the rules so as to reduce costs for the teams - and hence to some extent at least - their clamour for a greater share of the sport's revenues.

The problem for the rights holder, though, is that they don't have control over the rulebook. Since the end of the FISA/FOCA war of the early 1980s, the sport has been governed by the FIA, while the commercial rights have passed from the old Formula One Constructors Association, through Bernie Ecclestone's Formula One Management, and are now in the hands of private equity firm CVC. In short, the rights holders have, at least in theory, no room to change the rules of the sport so as to increase their return on investment. Something which, all else aside, doubtless makes the sport much harder to sell as a going concern.

Into this, then, are three or four very powerful vested interests who doubtless have a vested interest in the future of the FIA. Firstly, there are the teams themselves. If they feel that Max Mosley wants to take the sport in a different direction from where they themselves want to go, might it suit them (either individually or collectively) to have rid of him? Then there are the sport's commercial rights holders. As I've outlined above, there are plenty of hypothetical reasons why they would wish to exert control over those who write the F1 rulebook. Finally, there is Max's old ally in the FISA/FOCA wars, Bernie Ecclestone himself. Technically, these days, he's an employee of FOM, but there can be little doubt that he remains a powerful figure within F1 in his own right. It is probably a mistake to see him solely as the agent of the sport's owners. What, after all, if he felt like buying back the rights to F1 from them, and perhaps at a rather lesser sum than he sold them for? What would be better than a scandal around the sport's governing body to destabilise the sport and hence, quite possibly, persuade CVC that they would really be better cutting their losses now and concentrating on other ventures?

All of the above is no more than speculation. I don't pretend to know what has ultimately motivated those behind the exposing of Max Mosley's private life. I don't know what their agenda is. I don't know whether the sport's best interests would be served by siding with Mosley, or with those who would have him brought down. What I do know is that it is vital that those charged with deciding on next week's vote of confidence on Mosley, and with any decision on his likely successor, should be privy to all the facts before casting their votes. For anyone who really cares about the sport, it is clear that much more is at stake than one's moral position on Max Mosley's private activities.