rich The teams had a strong incentive to see that the RRA failed
First a bit of history: by 2002, excessive cost was a real threat to Formula 1 but the teams could not agree on how to reduce it. Starting in 2003, the FIA took the initiative and controversially abolished qualifying cars, restricted engine development and prevented excessive engine changes, plus other measures. But by 2008 we realised we could not control costs by regulation alone. With a nancial crisis driving the big car companies out of Formula 1 and rising costs making things very difcult for the smaller teams, a radical new rule was needed. It was time to limit what a team was allowed to spend.
If pitched at the right level, a cost cap would make all teams nancially viable and the well-sponsored ones very protable. It would also level the playing eld; a team with three times more money might as well have a bigger engine. Most of us would like to see what the engineering talent in the smaller teams could achieve if all teams spent the same.
The immediate objection was that you couldn’t enforce a cost cap. But between January 2008 (when we proposed it) and the following May, the nance directors from the teams, two specialist partners from Deloitte and a former F1 nance director got to work under the chairmanship of former Jaguar Racing team principal Tony Purnell. They produced a foolproof scheme for scrutinising each team’s nancial activity and accounts.
There was absolutely no doubt it could be enforced, but over the winter of 2008/9 the teams decided they did not want an FIA-regulated cost cap. They told us they would make a ‘Resource Restriction Agreement’ (RRA) among themselves. I was surprised that the smaller teams went along with this. It seemed obvious that without independent enforcement, the RRA would fail. It was also obvious that the biggest teams did not genuinely want to restrict spending because they would lose their advantage: easier for them to compete with two or three other rich teams and have the rest handicapped by a lack of money than to face ten teams with equal nance. The rich teams had a strong incentive to see that the RRA failed.
So why did the smaller teams agree to the RRA rather than back FIA regulation? I think they were probably swept along in the campaign for more money from Formula 1’s owners, CVC. Ferrari’s then president Luca Di Montezemolo and others were complaining that Bernie and CVC were taking too big a proportion of the receipts. That was certainly arguable, but was, for the time being, a side issue. The urgent need was to restrict spending and divide the CVC money (such as it was) fairly. But like a conjuror distracting his audience, Luca focused the smaller teams on the amount CVC were paying rather than the immediate problem.
Back in 2008, if the smaller teams had asked, the FIA could have pressed for a fair distribution of the CVC money. The 1998 Concorde Agreement had expired on 31 December 2007. Bernie and CVC wanted it renewed. The nancial arrangements for the teams were part of Concorde. It needed the FIA’s signature, so we were in a strong negotiating position. We might not have achieved equality but we could have got a much fairer division.
Bernie understood this. He would not send us the nancial schedule he had already agreed with the teams, saying it was none of the FIA’s business; it was between him and the teams. We replied that we would not sign a new Concorde without seeing and approving all of it, including the payments to the teams. Bernie and I had a rare public disagreement about this at the June 2008 World Motor Sport Council. Another 12 months followed with no movement, so no Concorde Agreement.
Bernie claimed the money was not our concern because we had agreed with the European Commission that we would have no commercial interest in any FIA championship. But in return for ofcial recognition as the sole body governing international motorsport, we had agreed to ensure fairness and safety. This meant the commercial arrangements had to be fair – a separate matter from the FIA participating nancially in F1. For example, we would have had to intervene had CVC given all the money to just one team. The problem was that the smaller teams were not complaining. I was being labelled a dictator because of the cost-cutting and we could not force through fairer payments without the support of the smaller teams.
We nevertheless tried to introduce a cost cap in 2009 by offering greater technical freedom (for example, movable aero) to any team prepared to operate on a greatly restricted and rigorously checked budget. The idea was to make up the grid with cars that would be up to F1 performance levels rather than admit GP2 or allow third cars. It would also have shown that from the grandstands and on television, a £40million team was indistinguishable from a £200million team. The big teams were strongly opposed saying it would lead to ‘two-tier racing’. It seemed they hadn’t noticed we already had that. By 2009, CVC’s need for a new Concorde Agreement had become urgent. If the smaller teams had backed the FIA we could have insisted on a cost cap and fair distribution of the money in return for signing. The rich teams might have tried a breakaway (as they repeatedly threatened) but it would have collapsed by early 2010 once they realised our deal with the European Commission meant their series would have to run under the FIA and, worse, that their bargaining position with race organisers and TV companies was hopeless. But the smaller teams had chosen to back FOTA against the FIA. We decided to leave them to it.
So where are we today, ve years on? The problems are pressing, but I think a properly enforced cost cap combined with a fair division of the