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Kate Walker: The trouble with consensus

In her latest exclusive column for Crash.net, Kate Walker looks at how F1 has shot itself in the foot again by failing to impose some form of cost controls...
While FIA president Jean Todt's desire to achieve rule by consensus is admirable, it is not necessarily the best way to get things done in Formula One.

It is undeniable that F1 needs to impose some form of cost controls if it is to safeguard its long-term future. At the moment, thanks to a series of sweeping technological changes, we have seen some of the smaller-budgeted teams performing well, with Force India currently second in the constructors' standings and Williams with six times the points from the first three races of 2014 than they managed in all of last year.

But it is unlikely that those with smaller budgets will continue to perform as well as the season progresses – while the likes of Red Bull and Ferrari are currently struggling, both teams have the sort of development budgets the usual mid-fielders can hardly dream of. While the current advantage of the Mercedes power unit will continue to aid both Williams and Force India, once Renault and Ferrari get on top of their power units we will see a typical developmental arms race, with the big spenders outstripping the less well off.

It has long been thus in F1, and without cost controls it will ever be the case. But the predictability of an arms race is not the issue – it is the sport's long-term future that is at stake. As the cost of competing escalates sponsorship is becoming harder to come by, thanks to a drop in viewing figures caused mainly by changes to TV networks – often to subscription-only channels – in a number of key markets.

For existing teams, it becomes ever more difficult to compete. Some teams are well-known to be in the red, while others have recently struggled to pay staff and drivers. But the lack of cost controls also makes F1 unappealing to potential investors, as the current business model leaves little opportunity for profit.

Payments from the commercial rights holder are weighted in favour of a number of legacy teams, who are richly rewarded. It makes little sense for a potential investor to start a new team or buy up a midfielder without those financial advantages, as they start life with a significant disadvantage.

Unfortunately, the same teams who receive bonus payments from the CRH are those same teams who sit on the F1 Strategy Group, and who decided to oppose the cost controls that the FIA had wanted to implement for 2015. Because the F1 Strategy Group has already rejected cost controls, and because any new regulations implemented after 30 June must have unanimous approval, the much-needed financial intervention is now on the backburner for at least another year.

The FIA cannot intervene while following the procedures they themselves set. Whatever the Federation's desires for cost controls – and however necessary they might be – the sport has once again shot itself in the foot by refusing to consider the long-term implications of their decisions.


Kate Walker

Kate Walker is a senior F1 writer for Crash.net. A member of the F1 travelling circus since 2010, she keeps an eye on the behind the scenes wheeling and dealing that makes Formula One a political melodrama.




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27.07.2013-  Bernie Ecclestone (GBR), President and CEO of Formula One Management, Jean Todt (FRA) Fia President and Matteo Bonciani (ITA), F1 Head of Communications
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nealio

April 11, 2014 9:41 PM

If this rumored Ecclestone led consortium of wealthy teams buy into ownership of F1 it could mean an even more tilted playing field for the smaller teams. I can't fathom why any new team would want a part in this F1 environment. Unless they are so wealthy they need the tax write-off!



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