The FIA has put its own fu­ture at risk

F1 Racing - - POWER PLAY - DI­ETER RENCKEN

“The FIA stared ruin in the face, forc­ing Todt to turn to FOM for mod­est com­pen­sa­tion”

Re­mem­ber the in­fa­mous ‘Bernie Bung’? Not the Mu­nich Mil­lions, but the one paid by Bernie Ec­cle­stone to Tony Blair back in 1997? Prior to that year’s gen­eral elec­tion, the F1 tsar do­nated £1m to the then-op­po­si­tion leader, os­ten­si­bly in support of Blair’s prom­ise to peg tax for the su­per-wealthy.

Shortly after Labour came into power, a meet­ing was called at 10 Down­ing Street. It was at­tended by Blair, Ec­cle­stone, then-FIA Pres­i­dent Max Mosley – un­der whose watch F1’s 113-year rights were sold to his friend of 30 years for an es­ti­mated three per cent of their in­trin­sic value – and strate­gist David Ward, FIA lob­by­ist and later (un­suc­cess­ful) 2013 FIA pres­i­den­tial op­po­nent to Jean Todt.

The agenda for that 16 Oc­to­ber 1997 meet­ing was rudi­men­tary: ex­emp­tion from to­bacco re­stric­tions for For­mula 1 on the ba­sis that th­ese could crip­ple Bri­tain’s F1 in­dus­try. Two weeks later, re­prieve was granted.

When news of the do­na­tion hit Fleet Street the na­tional press shifted into over­drive – col­lo­qui­ally a mil­lion quid is now known as a ‘Bernie’. The “pretty straight kind of guy”, as Blair then styled him­self, bum­bled about un­til, even­tu­ally, the party re­turned the do­na­tion in full; the ex­emp­tion, though, stayed in force to 2005, when EU-wide leg­is­la­tion banned to­bacco liv­ery in all mem­ber states.

How­ever, the 113-year deal left the FIA se­ri­ously cash-strapped after the gov­ern­ing body vested the one-off pro­ceeds (£250m-odd) in the ring-fenced FIA Foun­da­tion, a char­ity of its own mak­ing, which Ward headed un­til pres­i­den­tial as­pi­ra­tions in­ter­vened.

With the FIA obliged to ad­min­is­ter what is, after all, its own cham­pi­onship, but with no means of com­bat­ting ever-ris­ing costs, by the time Mosley left ofce in 2009 gal­lons of red ink were wash­ing about 8 place de la Con­corde, Paris. Worse, when ap­prov­ing the sale, the EU had de­manded a sep­a­ra­tion of ad­min­is­tra­tive/com­mer­cial pow­ers, leav­ing the FIA un­able to plug the hole.

Thus, as Todt headed to­wards his sec­ond term in ofce, the FIA stared even­tual ruin in the face, forc­ing the French­man to turn to For­mula One Man­age­ment for mod­est com­pen­sa­tion, which the bil­lion-dol­lar company – now owned by in­vest­ment fund CVC Cap­i­tal Part­ners after a se­ries of con­vo­luted deals – could eas­ily af­ford.

An an­nual fee, thought to be in the re­gion of $40mil­lion, was agreed through to 2020, with the caveat that the FIA ac­cept a re­vised gov­er­nance pro­ce­dure split­ting ul­ti­mate power three ways in an 18-vote cab­i­net – the gov­ern­ing body and FOM with six votes each, and six teams with a voice each – charged with for­mu­lat­ing the fu­ture di­rec­tion of the sport. De­ci­sions taken are by sim­ple majority.

In terms of EU re­quire­ments, the body, known as the Strat­egy Group, would (al­legedly) have no ex­ec­u­tive pow­ers, be­ing deemed a fo­rum to de­vise reg­u­la­tions for con­sid­er­a­tion by the F1 Com­mis­sion (on which all teams are rep­re­sented) prior to ratication by the FIA’s World Mo­tor Sport Coun­cil.

On that ba­sis, Todt and his se­nate in Au­gust 2013 signed up to what is known as the Con­corde Im­ple­men­ta­tion Agree­ment – a sort of heads of agree­ment in the ab­sence of a con­tin­u­a­tion of the his­toric pact that de­ter­mined F1’s sport­ing, com­mer­cial and reg­u­la­tory frame­work – in turn en­abling the for­mer Fer­rari team boss and cham­pi­onship­win­ning ral­ly­ist to ‘save’ the FIA.

Ac­cord­ing to sources, the Strat­egy Group op­er­ates in con­tra­ven­tion of orig­i­nal EU di­rec­tives, which call for all teams to have an equal say in gov­er­nance. This is not the case, as ev­i­denced by the cost-con­trol de­ba­cle: in Jan­uary 2014 Todt pushed for reg­u­la­tory cost con­trol, but was over­ruled in March by the Ec­cle­stone/team fac­tion – thus such is­sues fail to make F1 Com­mis­sion agen­das.

Equally, there are claims that the FIA’s an­nual pay­ments are a breach as th­ese im­ply the FIA re­lin­quished its reg­u­la­tory pow­ers in re­turn for nan­cial gain, with Ec­cle­stone re­ported as say­ing: “We made a con­tri­bu­tion of $40 mil­lion a year to buy that [power.]”

The EU is said to be in­ves­ti­gat­ing F1’s var­i­ous covenants, in which case the FIA may have to re­turn any monies paid and forego fu­ture rev­enues: jeop­ar­dis­ing its own fu­ture and global pro­grammes, as an in­di­rect re­sult of a trans­ac­tion sealed be­fore Todt’s pres­i­dency.

Iron­i­cally, Mosley has been men­tioned as pos­si­ble me­di­a­tor. How­ever, the burn­ing ques­tion is whether the Strat­egy Group will simultaneously be dis­man­tled. If not, it would be 1997 re­vis­ited, with mil­lions re­turned to Ec­cle­stone while pol­icy re­mains un­al­tered.

Caught be­tween Bernie and the EU, FIA pres­i­dent Jean Todt is caught in a cri­sis not of his own mak­ing

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