It is always a good feeling when one of the great and good says something that I pointed out some time ago. Not that it happens often - I am not claiming infallibility! So it was with some satisfaction that I read Luca di Montezemolo's latest utterance regarding the shift of power in F1 from the FIA to FOTA. Essentially, he is making similar points to those I made in my post, Has the Power Shifted?, back in October of this year.
Who pays the piper...
The recent agreement on regulations for 2009 and the future amounted to a significant change in the attitude of Max Mosley and the FIA. Previous suggestions from the teams have been contemptuously brushed aside by the FIA but this time virtually all of the agreed points came from proposals by FOTA. Whatever the reason for the FIA's sudden willingness to listen, the new atmosphere of collaboration rather than belligerence has given us all hope for the future. This is not about Mosley saving face, after all - it is about saving the sport of F1.
There is another battle still to take place, however: the struggle over the distribution of the income of the sport. With both teams and circuits finding it impossible to continue at the level of spending demanded by Bernie Ecclestone, FOTA is wanting to re-negotiate their share of the pickings. On the other side, Bernie is adamant that the teams already get as much as they are ever going to. It looks very much like the irresistible force meeting the immovable object.
Bernie's position is understandable; he has to ensure that his employer, CVC Holdings, receive enough income to service their debts and any reduction in their current 50% of income will make that impossible. But, if the cost of competing in and staging GPs is not cut quite drastically, F1 may find itself without circuits or teams to run on them. That would be an even more disastrous scenario for CVC and would ensure its bankruptcy.
The sport cares nothing for a group of investors who bought the commercial rights at a time when it looked as though F1 would remain a cow just asking to be milked. Any investment is a gamble and the current economic climate makes CVC's purchase seem a bit silly now. Essentially, the investment group made the same mistake as Prodrive - trusting that the powers that be in F1 were correct in their vision of the future. Max's promise that customer cars would be legalized proved empty in the event and Bernie's assurances of fat profits to be made looks equally ridiculous now.
There is a mystique about Bernie's financial acumen even so. Reading the comments on various blogs this morning, I detect a belief that Bernie will somehow finagle a way out of the mess he finds himself in. I beg to differ. It was fairly easy to arrange things comfortably when the FIA President was in his pocket and rights for a hundred years could be bought for a song; things have changed, however, and Max is no longer Bernie's compliant lapdog. Max has his reputation to rehabilitate, after all.
In fact, Mosley's need to side with the teams leaves Bernie in a very difficult position. Pressure for an adjustment to the profit sharing will continue and Bernie will have to talk eventually. If he is as clever as we have been led to believe, he must see that the only way to allow some compromise is to increase the number of races, thereby increasing the overall income by numbers rather than constant price hikes. I see little evidence of this in Bernie's statements, however, and he seems happy to let GPs disappear from the calendar while hoping for more circuits to appear in unlikely places in the world.
The coming battle over finance is going to be a struggle between titans, therefore, a fight none of the participants can afford to lose. And, just as the power has shifted in the balance between the FIA and FOTA, Bernie may well find that control of the sports's money is no longer entirely at his behest.