FOTA wants more money for F1 teams – it should get some for circuits too

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North America has been priced off the F1 calendar
North America has been priced off the F1 calendar

Having taken on Max Mosley over F1 cost cutting – and come out with some positive changes for the sport – the Formula One Teams’ Association is now aiming to get a bigger share of F1’s revenue. FOTA president Luca di Montezemolo told Gazzetta dello Sport:

I’ve known Ecclestone since 1973, and I think he’s done a great job. But a few years ago we argued: I called him greedy because of the revenues which were distributed 70 percent for him and 30 percent for all the teams. Now we are 50-50. We’ll have to do something more, we’ll see.

Can Montezemolo squeeze more money out of Bernie Ecclestone? If so, they need to make sure it is spent on more than just themselves.

FOTA’s successes

The cost-cutting deal rubber-stamped by the FIA last week featured some key victories for the F1 teams’ agenda over Max Mosley’s. Mosley’s standard engine proposal is out, the standard KERS system he opposed remains on the table, and the refuelling ban he didn’t want is set for 2010.

Montezemolo attributed FOTA’s success to the face the remained united:

What’s certain is that the time to divide and conquer to rule in F1 is over.

Having had some success in making Mosley accept their policies, FOTA is now trying to achieve the one thing in F1 that’s even more difficult: getting money out of Bernie Ecclestone.

The revenue debate

Earlier this month Mosley offered the teams his backing in this cause. In a letter to the teams he wrote:

The FIA would join with FOTA in seeking to persuade Formula One Management to divide the prize money so that up to 12 teams are guaranteed at least $50m (??40m or ??33m) each. This would ensure a full grid with a strong possibility that new teams will enter the championship, filling the two vacant slots as well as any additional vacancies.

Ecclestone didn’t accrue a personal wealth of ??2.4bn (divorce notwithstanding) by saying “yes” when people ask him for money. He is already under pressure to maximise F1’s earning to pay the debts accrued by owners CVC. Giving more money to the teams will only make it harder.

Instead of just asking for more cash for themselves, FOTA may enjoy more success by encouraging Ecclestone towards making price concessions that will benefit him in the long run.

A win-win scenario

One example is race hosting fees. Ecclestone continues to force prices up by as much as 10% per year. Now the majority of the races on the calendar receive some form of local or national government support. That may work in Abu Dhabi and Bahrain, but traditional F1 venues like the United States and Canada have been forced off the calendar because they cannot afford these prices.

The manufacturer-backed teams need these races back on the calendar because – even with the contraction happening at the moment – they are huge and important markets for car sales.

It would be do the manufacturers and the sport a lot of good if the teams cut back their own demands for more cash in exchange for concessions from Ecclestone that he will offer cheaper deals to strategically important F1 races: especially the northern American rounds.

I’m not saying the teams don’t deserve a greater share of F1’s earnings. But I do feel that if they can get him to agree to take less money out of the sport, some of that should be spent on keeping traditional venues in important markets.

It would be an investment in the future of the sport that would reverse the damage being done to its credibility as a global racing brand. In the long term, it would pay off for all parties.

Read more: Are FOTA a force for good in Formula 1?

Author information

Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

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21 comments on “FOTA wants more money for F1 teams – it should get some for circuits too”

  1. Good thought Keith! Finally FOTA has done something more than what was expected out of it. Job well done till now, keeping the tyre warmer ban for 2010 aside.

    Do you share these posts with FOTA? I mean, by any chance do you make sure that the thoughts we share here through the posts and comments reach the right/concerned people?

  2. I would prefer to see some encouragement from Bernie to get new teams into the sport – maybe a reduction in the entry fee for the first year, and help with the travel costs.
    Also, if he was savvy, he would do a deal with a sponsor (or a friendly millionare) to run a Rookie Championship, with the prize being the payment of all or part of the next years Superlicence fee. This would make younger drivers more interested in joining, and the teams more interested in promoting newer drivers and helping them to win races.

  3. As Bernie has stated there will be no price concessions on race fees, as long as there are more locations looking to hold races than available dates on the calendar. Supply and demand.

    As the economy sinks and countries like Germany cancel their subsidies, then and only then will the sanctioning fees also reduce. I’ve read that Abu Dahbi is financially tanking, and how much longer will Oz subsidize their race?

    FOTA will only help themselves as opposed to revenue sharing with venues. And who would decide which circuits get reduced fees? The howls of outrage from the remaining unsubsidized venues would be deafening.

  4. @ George

    FOTA will only help themselves, but part of that self-interest is preserving the brand and prestige of F1, and part of that is ensuring there is at least one race in North America – that’s a huge potential market.

    Another (though less important) part is to be seen to be preserving the prestige and history of F1 – it would be nothing if all the races were on anonymous Tilkedromes. It needs races like a French or British GP to maintain the quality of the series.

  5. @ El Gordo.

    I totally agree on the importance of the historical venues, especially locations like Silverstone, Monza, Spa, etc. As to the prestige of the F1 brand Bernie and Spanky are really taking care of that legacy eh? Having your industry run by a greedy whore and regulated by a patron of whores does wonders for the brand.

    With Bernie struggling to raise money to pay CVC’s debt there just isn’t enough cash to go around. Sanctioning fees won’t reduce until CVC’s debts can be restructured. And in this economy it might be possible.

  6. FOTA are just after there own profits and not the good of the sport!! There has talk about different point schemes that are just bad ideas!!

    Get it simple and the crowdds will love it!!

  7. As I said in a post on an earlier article the finances for the circuits are completely wrong.

    It should be that while ticket prices are set at a fair price for the fans, a circuit should be able to sell 80% to 90% of the tickets over the weekend to break even or make a small profit.

    Circuits should be chosen on quality of F1 races the track produces, historical significance, how many Grand Prixs are in the surrounding countries, and quality of the facilities at the circuit. Also the calender as a whole should have different types of tracks eg street circuit, high speed etc, so it doesn’t get filled with just one type of track.

    1. “Circuits should be chosen on quality of F1 races the track produces, historical significance, how many Grand Prixs are in the surrounding countries, and quality of the facilities at the circuit. Also the calender as a whole should have different types of tracks eg street circuit, high speed etc, so it doesn’t get filled with just one type of track.”

      Yes, absolutely ….. tracks have to be chosen, by people with good judgement, on the basis of factors other than just money : history, variety of speeds, emotion that the visual experience provides, etc

      Dull tracks, in the short run, might put money into CVC´s pocket, but ultimately hurt the interests of F1
      by diminishing the class and excitement of the show

  8. I’m convinced Luca and the FOTA have the good of the sport uppermost in mind. It would be a good PR move for them to demand reduced sanctioning fees and get North American races back on the schedule. The same for the classic Europeon venues. Yes, the teams want a bigger share of the pie…and probably deserve it. After all, they are the sport. But by working to lower ticket prices and sanctioning fees, FOTA could polish teir image, generate a postive perception as the defenders of the sport and help rebuild its reputation that B. Ecclestone and Mad Max have so ruthlessly tarnished.

  9. I am all for profit sharing with the race venues, Its wierd business model, that F1 circus goes to a venue charges them for hosting them, decides the ticket prices, get monies from track side advertisement, and leaves place asssuring the host that Host has got lot of intangibles in form of tourist visiting them for the event and Prestige they have got holding a world class event. This is nothing but hogwash.

    And there can be no double standards for so called Traditional European venues and not traditional venues in emerging market. Profits and losses should be shared as one team.

    Other alternative is for Bernie to find Private players who have disposable income , or want to launder their dirty monies to host Bernie and the Circus.

  10. Considering the amount of money generated by the sport it is simply immoral that circuits have to make a loss or get state assistance to be able to host a race.

    At the very least they should break even but the only decent situation would be them making at least 10% profit on the event in order to maintain & upgrade the track & facilities & where appropriate increase the capacity so more people can attend future races.

    PJA has it right about track selection, I’d happily have a core set of races that are always on the calender with a rotation system for the others.

  11. I would be all for a return of F1 to america and the retention of the older(better) circuits – the fans know them and if ticket prices were lowered then things should balance out – but fota in general are making some good suggestions – if Montezemolo is as hard a dealer (remember he kicked his tv in) – then he should be able to handle the little big man and as for the whippersnapper – well more power to Monte’s hand there. F1 for years has neede to get things on a fairer level with the teams having a larger say in their future policy and regulation – as for kers – dump it now – energy saving in motor racing – is the biggest contradiction you could get.

  12. A little ironic then that it should be Monte calling for unity amongst the teams & trying to get power back into their hands.

    Had he & Ferrari not collaborated so much with the FIA in the past in order to gain or keep an advantage then maybe the teams wouldn’t be having these battles with Spanky now.

    As for the American GP; It’s not a World Championship without the U.S.A. GP, get it back as soon as possible !

  13. IMO all it has to do is cut hosting fee’s!

  14. If the teams do get more money – and
    I’m not holding my breath – one of the minor conditions of this should be all the teams open up their websites to be free of subscriptions fees.

  15. How mauch can Bernie take with him to the grave? For once, just do what is good for the sport and stop killing it with money. Everybody from the fans to the teams are bending backwards for Bernie. The way I see it, the only problem here is Bernie. just get rid of him and everybody can agree on continuing the sport for everybody’s benefit, not just Bernie’s.

  16. It’s not Bernie, it’s the mountain of debt CVC took on when Bernie sold the rights. Bernie CAUSED the problem, and now he has to keep squeezing money wherever he can to sustain the debt burden and make money for the new owners.

    Don’t get me wrong, I’m no fan of Bernie, we would all have been better off had he sold out 5-6 years ago at a more “reasonable” price and allowed the venues to profit from the sport, as well as the teams and sport ownership.

  17. FOTA have really noone to blame but themselves.

    They set up the prior organisation – the GPMA – and threatened to go run their own series. And with the leverage they had all they did or all they wanted was a bigger slice of the pie. If they have issues with Bernie and/or the running of the sport they had the opportunity to use that same leverage to effect change there too but in the end money was the real motivator.

    They then committed, or agreed to intend to commit, or wherever we are at this stage of the (complicated) game, knowing that they were signing up to and in essence endorsing the Bernie Ecclestone model and his decisions.

    To come out now and disagree with what Bernie is doing now just seems a bit hypocritical. If they don’t like it they should go off and run their own series the way they want to run it and not continually niggle and moan about how things are. After all they are now united and the time to “divide and conquer” is apparently over.

  18. “After all they are now united and the time to “divide and conquer” is apparently over.”

    I wonder about that Robert. What happens when Bernie approaches Luca and dangles another $125 million in his face to resign with the series, much as how Bernie killed off the GPMA?

    I still don’t trust Luca, but the current financial scenario is so different from anything in the past that I will give Luca the benefit of the doubt…..until he stabs the other teams in their collective backs.

    Bernie paid off Ferrari earlier to get Ferrari to commit to the series in order to sell the rights to CVC and break up the GPMA. Luca now threatens come 2012, when the current agreement expires, the teams may toddle off and form their own series. Reads like deja vous all over again!

  19. “I’m not saying the teams don’t deserve a greater share of F1’s earnings. But I do feel that if they can get him to agree to take less money out of the sport, some of that should be spent on keeping traditional venues in important markets.”

    Yes Keith well said. It is crucial that we have great, visually exciting historical tracks.

    More money for the teams and for the tracks, less for CVC. It is in no one´s interest for the teams to split into two series – this would be disastrous, but if ALL the teams ( including Ferrari ) stick together, they might be able to get more money from Bernie. The present arrangement is very unfair for teams AND tracks like you have well pointed out.

  20. “Luca di Montezemolo, Chairman of FOTA, said: “This is an unprecedented moment in Formula One history. Above all else, for the first time the teams are unified and steadfast – with a clear, collective vision. Thanks to this unity, all the teams ……”

    The first thing that Monty needs to explain is why he gets more money than the other teams. As long as historic teams like Wiliams are struggling he has no right to get more money than the rest

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