FIA missing the point…again

The FIA, according the the Financial Times, is preparing to position a White Paper before FOTA regarding more radical cost-cutting measures for 2010. In this White Paper it is believed that the FIA is asking for more than previously agreed upon by the FIA and FOTA in prior negotiations. The FIA’s paper classifies defined areas of “technical competition” between teams, with other areas to be described as “non-compete”. Engines are to be in the “non-compete” category and while FOTA agreed to a non-compete classification of their engines until 2012, this may be stepping over the line as far as some team principles are concerned.

Ron Dennis, McLaren CEO, said, “F1 should not be a prescriptive formula where engines and a large group of components should be standard. That places total emphasis on the driver, and if you went down that route the drivers would be the [important] ingredient and that is where the money would be spent.”

Ron has been very visible and vocal regarding FOTA and it’s position even though Ferrari’s Luca Di Monetzemolo is the current standing President of the organization. Recently announcing his stepping aside for Martin Whitmarsh to take the helm of the F1 team, one wonders if Mr. Dennis is not positioning himself for the role of President of FOTA when Di Montezemolo’s reign ends.

Realistically there are opportunities to cut costs in F1 and not lose the DNA of the sport or the fan base that fuels its existence. Oddly the FIA have seemed to miss this crucial point as they suggest that F1 exists to spurn technology for the FIA’s championed road car initiatives and social conscience.

The FIA’s President Max Mosley has made “green” initiatives, like KERS, his modern Waterloo. Unlike Wellington, Mr. Mosley appears to have lost site of the battle for claiming victory over the war. Mosley has not only claimed F1’s future endeavors should sate the social conscience of a world enchanted with Al Gore’s deconstructing world theory of melting ice cap panic but it should also provide competitive advances/advantage at a reduced price for other teams to adopt without the gray matter or resources needed for R&D. FOTA have agreed to some extent to provide these technologies to smaller teams but should the FIA demand standard chassis parts, common non-compete engines and technologies to be freely offered for a price most economical; why fine McLaren $100 million dollars for possessing a Ferrari technical manual? You’re forcing teams to give most of their technology to a common market and standardizing all the rest.

The FIA is assuming that a quick announcement of drastic cost-cutting measures for 2010 will prompt the sale of the Brackley-based F1 team and entice other teams to join the series if they know the outlay of cash will be limited and the access to competitive cars will be affordable and on par with the top teams. Never mind the reason for Ferrari, McLaren, BMW or Renault designing a car that is the fastest on the grid.

The FIA figures their cost-cutting measures will reduce the cost for manufacturer’s in the sport to €100 million and the cost for independent teams to €50 million. It also assumes that through standardized car parts and the fact that if a manufacturer team were to decide to compete in an area of technology, it must be prepared to supply at a capped price the technology it develops to the teams who choose not to compete, in much the same way FOTA-agreed engines will be made available to independents at only €5m a season.

FIA technical consultant Tony Purnell said the new rule package offers the FIA flexibility within the world economic situation.

“When we see that things are picking up and there is more money in multinationals for discretionary spend, then we can start reintroducing a wider technical competition,” he told the FT. “But we’ll keep to a central philosophy that engineers work on things that are relevant to society, like fuel economy and efficiency.”

The last time I checked the central philosophy of Formula 1 was racing, winning and selling. Perpetuating the aggregate demand. Maybe I missed something along the way. When did the FIA start believing that they too could prod car manufacturers to a more socially conscience and eco-friendly agenda? Does the FIA have a command of the car making business? When the FIA makes its first production road car, I’ll start listening. That goes for the American and British governments too.

If all of this does not lead the reader to a head-scratching moment then I would argue you are a fan of pragmatic thinking in its most egregious form. While you may be delighted with quick, continuous and ambiguous regulation changes for immediate problems presented to F1 I would argue that after 50 years F1 has taken it’s biggest climb, and perhaps fall, in the last 20 years due to the current leadership of the sport. The FIA has swayed with public perception, social conscience and regulation changes that would leave one believing its only goal is self preservation. The pragmatic logic used in several of Mr. Mosley’s actions drip with irony, failure and receding returns for F1.

This does not leave FOM off the hook for its jockeying for more commercial gain than restraint of a regulatory body who has operated, usually in lock-step, with FOM’s desires according to the financial gain of any given year or contract. The recent sale of FOM’s commercial rights to CVC has added an extra weight to its need for maximizing financial return on investment as leveraged banks and individuals press for loan payments and maximum gross profit dollars. FOM has maintained a familial position to the teams and the FIA in keeping both camps on their back foot during negotiations and initiatives like an odd, eccentric uncle at Holiday dinner.

In the end game, FOTA may be gearing up for a position of power brokering and negotiating prowess never before seen in F1. A group of teams, big and small, banded together to represent their self interest and the interest in the fans and customers that drive the sport. None of the FIA’s White Paper initiatives leave me confident in solving F1’s current financial crisis. If you remove resources or revenue from systems or participants and spend it bleakly on a regulatory process without any re-investment in the sport or teams you pilfer; the sport will collapse. Keynesian it may be but aggregate Demand will tear the FIA model apart. Central financial planning in F1 runs the risk of leading towards non-competitive, spec-series collectivism, because the FIA would have to be endowed with powers that would have an impact on technical, regulatory, competitive, sponsorships and social aspects as well (limiting teams work week/hours over summer break for example). The FIA has claimed a lateral relationship between two powerful players in FOM and the teams but in short order the FIA has attempted to guide F1 through a series of consolidation-of-power moves while claiming some semblance of decentralization. In many opinions, the FIA has been the velvet glove surrounding the iron fist of the FOM. FOTA may be the only organization capable of breaking this cycle. Understandably, processes in F1 that take more time will not be adopted unless the return on their time investment is bigger than the processes that take less time. Let this be a reminder to the FIA when proffering White Papers and Orwellian regulations that champion things like “non-compete” classifications, spec-parts and mandated technology share that eliminates a teams competitive nature and reduces their desire to spend more time on R&D for that bigger return.

But what do i know? I’m just a fan.

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