The FIA has put its own future at risk
“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 ofce 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 ofce, 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 ratication 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