2010 F1 rules (if there is a 2010 F1 series that is!)

 

As close as I can get to a definitive timeline of the F1 dispute

8/1/09 – FOTA unanimously agree to (http://www.teamsassociation.org/press-release/2009-01-08/fota-press-release) :

• cost reducing initiatives
• sign a comprehensive Aerodynamic Test Restrictions Agreement (effective 2009)
• develop and freeze low cost transmissions for 2010-12 seasons
• reaffirm their commitment to £5m engine supply from 2010 for independent teams

5/3/09 – FOTA Roadmap for the Future of Formula one (http://www.teamsassociation.org/press-release/2009-03-05/fota-press-release). FOTA publishes its proposals for the sport:

• 8 Engines per driver per season (at cost of £8m dropping to £5m per team by 2010)
• Standardised KERS
• 50% reduction in aerodynamics spend, with restriction on development changes through a season
• Standardised telemetry and radio systems
• 50% testing reduction
• New points system (12-9-7-5-4-3-2-1) to differentiate GP winners
• Radical new points scoring opportunities (1 championship point for fastest pit-stop)
• Enhanced engagement with public and TV coverage, including Starting fuel loads, tyre specs and refuelling data made public
• Findings of Global Audience Survey released
• History of FOTA attached

20/3/09 – FOTA Press Release (http://www.teamsassociation.org/press-release/2009-03-20/fota-statement) objecting to the World Motor Sport Council decision to change the way the Driver’s championship is awarded.

26/3/09 – FOTA Press Release (http://www.teamsassociation.org/press-release/2009-03-26/press-release) claiming that CVC (the Commercial rights holders for F1) owe agreed sums of money to the teams for 2006-08 championships

 

The following letters were all published on the FIA site and can be downloaded at: http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fia_fota.aspx (bottom of the page, headings 1-4)

28/4/09 – Letter from Luca di Montezemolo (Ferrari / FOTA chair to Max Mosley) agrees in principle to process of cost-cutting started by FIA, but criticises its communication and implementation. In particular:

• Objected to submission of new 2010 regulations (including the cost cap and difficulties in implementation both technically and for individual teams)
• Rejected proposals for a two-tier championship
• Reasserts Ferrari’s rights under the Concorde Agreement

 29/04/09 – Letter from Max Mosley (FIA) in response to Luca

• Expresses fears that another team will drop out and absence of any legal agreement from any other team to continue. The cost-capped team is therefore ‘an insurance policy to maintain a full field’
• Wish that any cost-cutting restrictions come in the form of financial measures, rather than the technological restrictions (proposed by FOTA).

 

Interestingly, the FIA approach seems to echo Ross Brawn’s who is quoted by Reuters as stating: “One of the difficulties of Formula One is that we are turning into Swiss watchmakers. We are just refining everything to the nth degree instead of being able to make conceptual or innovative changes because the rules are becoming more and more constrictive. To try and contain the costs, we are just closing everything down so much, and I’m not sure that’s what Formula One should be. We can save costs by saying ‘That’s all you are allowed to spend, and have more freedom’. For me, that’s a more exciting Formula One for us and the public and we’ve always supported that concept.” (http://uk.reuters.com/article/motorSportsNews/idUKL815353020090508?feedType=RSS&feedName=motorSportsNews&sp=true)

 

30/4/09 – F1 Cost Cap Q&A and Discussions, Released by FIA (http://www.fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/f1_cost_cap.aspx)

• Confirmation of FIA position of cost-cutting through financial spending and leaving technological improvements comparatively unfettered
• £40m cost cap
• Establishment of Costs Commission to monitor compliance and enforce the costs cap

6/5/09 – FOTA meeting in Heathrow to examine FIA regulations (http://www.teamsassociation.org/press-release/2009-05-06/press-release). Constructive meeting, but seeks urgent consultations with FIA

At this point, while both the FIA & FOTA are agreed that cost cutting is necessary, the first sticking point seems to be in agreeing the extent. While the headline figure is £40m, there are a number of important exclusions in relation to driver salaries, fines / penalties, engines and corporate hospitality / marketing which actually makes the figure much closer to the team’s position. This is because driver salaries alone in some teams would have swallowed up much of this figure (Raikkonen and Hamilton are paid at least £10-20m) and while Mosley argued substantial salaries could still be paid, but in the form of dividends rather than wages, this was rejected by the teams.

The second sticking point is the team’s unwillingness to disclose their accounts to the governing body. Although the FIA agreed with Deloitte Accountants that the “vast majority of payments are traceable” and that any benefits in kind “can be valued”, the original plan would be that every team is audited by an FIA Costs Commission. This is quite firmly rejected by the teams.

 

At this point the lawyers really start to get involved and the letters become a lot more formal……..

12/5/09 – Letter from Peter (Ferrari Lawyers) to FIA

• Asserts that Ferrari will be exercising their right of veto in respect of the introduction of any new Technical or Sporting Regulations (apparently given to them by the FIA in a letter, Jan 17^th 2005) (it is perhaps just worth pausing for a moment while the implications of this actually sink in – what other sports teams, in any sport, have any special secret veto powers over what rules they do or do not like? There’s  favouritism and poor governance, and then there’s this!)

13/5/09 – Letter from Mosley to Peter in response

• Suggests that as the teams have failed to deliver sufficient cost cuts and given the fact that Ferrari cannot stop itself from overspending(!), FIA has no choice but to act to protect the Championship [1]
• Rejects any suggestion that the cost cap was improperly introduced [2]
• Confirms existence of the 2005 agreement between FIA and Ferrari, and that it also included FOM. States that loyalty was an essential part of the contractual consideration and by Ferrari leading FOTA to seize control of significant aspects of the regulatory and financial functioning of Championship, and threatening to leave the Championship, it was not complying with these terms [7]
• Rejects that any Ferrari exists, but if it did do so, the FIA suggest that these would only apply to any Sporting or Technical Regs that require Ferrari to alter its car (which does not apply here), and that this veto should have been applied before any regulations were adopted [10].

Ironically though, Reuters reports that Ferrari was the most cost-efficient Formula One team last season! Although F1 teams increased their overall budgets by an average of about 10%, the report estimates that Ferrari invested 328.2 million euros to win eight races and gain 172 points last season, while Japan’s Toyota and former Honda teams sit at the bottom of the list in terms of cost efficiency. (http://uk.reuters.com/article/motorSportsNews/idUKLO58544420090324?feedType=RSS&feedName=motorSportsNews) The report says nothing about absolute spending however.

 

15/5/09 – Letter from Peter to FIA

• Doesn’t accept the description of the 2005 agreement and any conditions and suggests the only qualification to the agreement is on safety grounds (inapplicable here) [2]
• Rejects FIA suggestion that the new regulations do not affect Ferrari [4]

 

20/5/09 – Ferrari v FIA in Tribunal de Grande Instance in Paris (no access to the official resource). From Press releases and news reports, seems that the court refused to strike out the 2010 regs, but suggested that Ferrari did have a potential veto.

23/5/09 – Another Letter from Peter to FIA

• Rejects any suggestion that the 2005 Agreement with FIA means that Ferrari have a binding contractual obligation to compete in 2010 [1]
• Confirms that under another 2005 Agreement with FOM that Ferrari extends their participation until 2012, subject to a condition precedent that a new Concorde Agreement is signed by FIA, FOM and Ferrari (this hasn’t happened yet) [2]

26/5/09 – Letter from FIA to Peter

• Unsurprisingly, the FIA rejects all the claims and demands made in the previous Ferrari letters
• Suggests that internal inconsistency between arguments in letter (that Ferrari did not have any contractual obligation to compete) and argument before French Courts / World Council (that Ferrari received 2005 consideration in return for agreement to compete)
• By entering into the 2005 agreement, FIA argues that Ferrari accepts the obligation under the Concorde Agreement to participate in the Championship, in addition to any rights it feels it might have (veto)
• Suggests that Ferrari’s opportunity to object to any regulations or use its veto had passed and no longer existed in relation to the 2010 regs
• Seeks clarification regarding the status of the 1998 Concorde Agreement
• Reasserts that Ferrari is contractually bound to enter the F1 Championship up to 2012

 

Then we get the following concessions from the FIA:

 

26/5/09 – Letter from Max to Luca

• Proposes a cap for 2010, which could be as high as €100m (£86m) [1]
• Proposes a Cap for 2011 at £40m [2]
• Scraps proposal of separate rules for cost-capped teams [3]
• Facilitate know-how transfer between new and old teams [4]
• One employee per team (eg Chief Designer) in addition to drivers can be outside cap for 2011 [5]
• Draft of proposed Concorde Agreement sent by the teams is broadly acceptable [6]
• Cost cap can be renamed as “financial regulation” or any other term [7]

 

Before going back to all the lawyer’s letters……

26/5/09 – Letter from Peter in response to Max’s Letter

• Ferrari accuses FIA of breach of contract in relation to the adoption of the 2010 F1 Regs in contravention of the 1998 Concorde Agreement
• Confirms that the French Courts (20/5/09) recognise Ferrari’s veto right
• Suggests that FIA refusal to recognise this right of veto over the 2010 regs is also a breach of contract
• Suggest that as the FIA breach of contracts have created significant damages for Ferrari, the only sensible way for Ferrari to mitigate their damages is to immediately withdraw its proposed amendments to the existing F1 regulations, and that should the FIA continue to ‘refuse to honour its contractual obligations, Ferrari will be forced to consider its options, including holding the FIA liable for the losses sustained as a result of the various breaches by the FIA of its contractual obligations.’
• Ferrari enters a conditional entry to the 2010 Championship

29/5/09 – FOTA Press Release (http://www.teamsassociation.org/press-release/2009-05-29/press-release) confirming that all FOTA teams have entered for 2010 season on basis of:

• FOTA revision to 2010 regulations apply
• New Concorde Agreement is signed by all parties before 12^th June 2009

8/6/09 – Letter from FIA to Peter

• Disagrees (again unsurprisingly) with all previous Ferrari points
• Confirms that the French Court decision ruled that any veto that Ferrari had over 2010 regulations should have been used before this date
• Rejects any suggestion that the FIA should have used the Concorde Agreement to make rule modifications
• Rejects any claim that the FIA has breached any contract
• Reiterates claims that Ferrari has breached agreement with FIA by threatening to withdraw from the Championship (suggests that the instability caused by this gives rise to damage, but that FIA has not decided what action to take although this is under active consideration)

9/6/09 – Letter from Peter to FIA

• Rejects any contention that Ferrari has lost any rights under the 2005 Agreement
• Suggests that Ferrari voted against the proposed changes at World Motor Sport Council (April 29, 2009), therefore FIA is still in breach of its contractual undertakings
• States that as the French courts would not decide the issue, it thus remains fully open on the merits

Not written down by either side, but picked up by the Times F1 Blog (http://timesonline.typepad.com/formula_one/2009/06/the-big-bad-wolf.html) is the suggestion that following a meeting of the teams in Monaco, there is an agreement between the five manufacturers to pay each other £50 million each in compensation if they decide to leave FOTA and join the FIA. (The Times also uses the analogy here of a group of fish bolting themselves together to stop a circling shark ravaging them)

 

10/6/09 – Letter from FIA to Peter

• Suggested that as Ferrari participated in 15 rule changes after the Concorde Agreement lapsed, any use of the Concorde Agreement is irrelevant (although the last paragraph in particular in phrased in somewhat indelicate language and almost guarantees a response back!!!)

11/6/09 – Letter from Peter to FIA

• Suggests that FIA was misleading the public by suggesting that the Ferrari entry was unconditional and they therefore reserve their rights for the damages caused by this misleading statement. They also threaten to issue their own Press release.

12/6/09 – Two sentence response from FIA to Peter

• In a nutshell, Ferrari has obligations under Concorde Agreement 98 to participate until 2012, therefore its not misleading or causes loss to announce this.

12/6/09 – Unsurprising Press Release issued by FOTA In response (http://www.teamsassociation.org/press-release/2009-06-12/press-release ) stating that their 2010 entries are conditional.

15/6/09 – FIA Press Release (http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fota_1.aspx) stating that the FIA and FOTA very close to agreement over technical regs and costs and that there was an element in FOTA who were determined to prevent any agreement being reached.

15/06/09 – FIA Press Release in Response to ACEA Statement (http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/acea_1.aspx)  

16/06/09 – FIA Press Release (http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fota_meeting.aspx), detailing meeting of financial experts from FIA & FOTA and suggesting an inevitable financial arms race was inevitable if FOTA proposals were agreed.

16/6/09 – Interesting FIA Press Release on what they feel the main ‘philosophical’ issues are: http://www.fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fia_fota.aspx

17/6/09 – FIA Letter  to teams (the original teams letter hasn’t been published):

• Governance – all parties should agree to 1998 Concorde Agreement and then negotiate new 2009 Agreement [1]
• Finance – Suggested that reputable auditor backed up by signature of main company board member is sufficient, and that any suspected investigation over breach would be carried out by a mutually agreed auditor. Any breach would be subject to an agreed financial penalty (to be agreed) [2]
• Confirmation that two tier regulations will be scrapped, however the letter also states that: “the Cosworth has to be allowed to run without limitation in 2010 (ie the 2008 duty cycle for a 2006 engine), because Cosworth have neither the time nor the resources to retune for 2010. Any engineer will confirm that this will not give the relevant teams any competitive advantage whatsoever” [3]

The response from FOTA was to issue this Press Release 18/6/09 (http://www.teamsassociation.org/press-release/2009-06-18/press-release) stating an intention to commence preparation for a new championship that:

• Will have transparent governance
• One set of regulations
• Encourage more entrants
• Listen to the wishes of fans (including offering lower prices for spectators worldwide)

19/6/09 – FIA Press Release in Response to FOTA announcement (http://www.fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fota_and_fia.aspx):

• States that it is not surprised but ‘the actions of FOTA as a whole, and Ferrari in particular, amount to serious violations of law including wilful interference with contractual relations, direct breaches of Ferrari’s legal obligations and a grave violation of competition law. The FIA will be issuing legal proceedings without delay.’

24/6/09 – ‘Peace in our Time?’ Press Releases from World Motor Sport Council (http://www.fia.com/en-GB/mediacentre/pressreleases/wmsc/2009/Pages/wmsc_240609.aspx) and FOTA (http://www.teamsassociation.org/press-release/2009-06-25/fota-press-conference-transcript)

• All teams have committed to the 2010 World championship using 2009 Technical Rules
• Teams will, within two years, reduce the costs of competing to the level of the early 1990s
• Teams agree to FIA as the sports governing body and FOM as the commercial rights holder
• Teams will adhere to an upgraded version of the governance provisions of the 1998 Concorde Agreement
• Max Mosley will not stand for re-election in October 2009

 

So the upshot is F1 continues as this year, and Max Mosley will not govern the FIA from October. Phew…….

The 2010 Regs: http://argent.fia.com/web/fia-public.nsf/755774E21C7A8B1DC12575B000326F7C/$FILE/1-2010%20F1%20SPORTING%20REGULATIONS%2006-05-2009.pdf

(for an interesting criticism of the current governance (or not) of the sport see also: http://www.telegraph.co.uk/sport/motorsport/formulaone/ferrari/5320514/Formula-Ones-warring-factions-are-making-the-sport-a-laughing-stock.html)

Conflict of interest allegation against Chief F1 Steward

Source: http://uk.reuters.com/article/motorSportsNews/idUKLG55252820090616?feedType=RSS&feedName=motorSportsNews

On a similar governance note, it was reported that the eight members (BMW Sauber, Brawn GP, McLaren, Red Bull Racing, Renault F1, Scuderia Ferrari, Toyota Motorsport, Force India F1 – now suspended, Williams F1 – now suspended) of the Formula One Teams Association (FOTA), wrote to the FIA on the 13^th June complaining of a conflict of interest affecting the sport’s permanent chairman of the stewards (Alan Donnelly) and seeking a separation of his roles.

Donnelly currently oversees the race stewards (who enforce the FIA rules: for example in relation to the Diffuser controversies, or on track incidents). Apparently, it is alleged in the letter that the teams have suggested that Donnelly is also undertaking a political role for the FIA by going around from team to team telling them to abandon the FOTA stance and sign up for 2010.

The FOTA letter suggested that: “This situation raises serious doubts on the autonomy of the judicial functions from the executive functions of the FIA, that need to be separated for a proper governance of the federation. In the FIA’s role as regulator it is imperative that the chairman of the stewards remains totally impartial and we therefore respectfully request that these roles are separated.”

Reuters also reported that Donnelly was not immediately available to comment but an FIA spokesman said the governing body “utterly rejects the suggestion made by FOTA in their recent correspondence”.

If this was true though, it would represent governance issues. Indeed as we saw from the recent political scandal engulfing the UK parliamentary system, it is not just enough to be within the letter of the rules, rather officials should be seen to be beyond reproach. For much the same reasons, this was why UK Sport devolved its doping functions to a new independent organisation.

K.E.R.S.

Source: http://uk.reuters.com/article/motorSportsNews/idUKSYD49346020090327?feedType=RSS&feedName=motorSportsNews&sp=true; http://www.crash.net/f1/news/148788/1/bmw_drops_kers_as_domenicali_brands_it_an_expensive_mistake.html

Kinetic Energy Recovery Systems (KERS) was a new innovation this season in Formula One and were heralded as a way of making cars more environmentally friendly (by recycling energy normally lost under braking into kinetic energy) and also providing additional opportunities for overtaking (KERS gives a potential power boost of 6.7s per lap).

Teams were given the opportunity of storing this energy through Flywheel technology, batteries, supercapacitors, or hydraulic based systems (see a good description and pictures of each system here: http://max-rpm.blogspot.com/2009/04/kers-in-f1-basically-explained.html ) KERS has a number of significant problems though. The first is that its weight is at least 35kg (thereby penalising heavier / taller drivers) and the position where that weight is sited on the car (higher on the rear, thereby raising the centre of gravity) can have an effect on the balance of the car. As such a number of teams, like BMW, have confirmed that they have now dropped KERS and will concentrate on improving the aerodynamics of their car instead, viewing the two technologies as mutually exclusive. Indeed, BMW Motorsport Director Dr Mario Theissen has suggested that if KERS isn’t made mandatory next season, then it will disappear from F1. The Formula One Teams Association (FOTA) has also confirmed that they are pressing the FIA to drop the technology for the 2010 season. Given this, it therefore seems crazy to focus on cost-reduction strategies and budget restrictions, while at the same time asking teams to spend a considerable amount of money, research and development on trying to make KERS technology, safe reliable and effective.

In particular, concerns were also raised at the start of the season by drivers as to a possible safety risk caused by the potential for electric shocks from the high-voltage system. This is because the circuit used in the battery systems remains live for around a second after the car has stopped. Reuters reports that the matter came to light when a BMW mechanic suffered an electric shock when he touched a car during testing last year. Marshals and medical teams at the Australian Grand Prix were therefore advised to wear special gloves to protect against the risk of any electric shock. The disadvantage of this precaution though, is that in the event that emergency treatment was necessary, there is a fear that these thicker gloves may prevent trackside medical staff from carrying out life-saving procedures.

Although Mark Webber said the matter had already been discussed by the Grand Prix Drivers Association but there was still some level of uncertainty about how it would work in a real-life crisis: “As usual you do gain knowledge and experience on the front line so we’ll see how it goes”