Ecclestone admits responsibility for F1’s costs crisis

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In the round-up: Bernie Ecclestone says the poor distribution of revenue in the sport which has driven two teams out is “probably my fault”.

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F1 finances ‘my fault’ – Ecclestone (BBC)

“There is too much money being distributed badly – probably my fault. Like lots of agreements people make, they seemed a good idea at the time. I know what’s wrong, but don’t know how to fix it.”

Bernie: Regulations have tied us up (BT Sport)

“I would say to people getting a chunk of money that I would like to take a percentage of their performance-related payment. I would put that money together to divide among the three or four we know are in trouble, and then I would put in the same amount of money.”

Ecclestone calls on big F1 teams to make sacrifices (Reuters)

“‘I’ve never felt helpless about anything. I’m not happy and we’ll have to do something about it,’ said the Briton, his usual energy sapped by a dose of flu.”

Ecclestone admits F1 in crisis as boycott looms (The Telegraph)

“We have to open the eyes of those people in a position to turn the lights on and off to what they need to do because I wouldn’t want to be in a position where I was too strong and Formula One disappears and someone says it is because of you it disappeared.”

McLaren’s Ron Dennis adds to F1 crisis by rejecting third-car option (The Independent)

“Dennis, who said his team is still seeking a $40m (£27.5m) title sponsor following the end of their agreement with Vodafone, privately poured cold water on the third-car idea when he revealed that running a third car would cost between $30m and $35m.”

Alonso: Common sense required (Sky)

“Also with the regulations, year after year, try to be on the cheapest side of the changes. Engine unfreeze… there are many things that we talk [about] and it goes the opposite to the direction of saving costs. So we need to put common sense in everything.”

Lotus owner denies F1 teams plan to boycott US Grand Prix (The Guardian)

Gerard Lopez: “What I can say is I’ve had a meeting with them [Force India’s co-owner Vijay Mallya and the Sauber team principal, Monisha Kaltenborn] about the cash distribution and so on, and that’s it. I’m not aware of this. I don’t even know where this comes from, and that’s the whole point.”

24 Hours Behind The Scenes: Preparing For A F1 Race Weekend (Red Bull via YouTube)

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Comment of the day

Roger believes the first person who should sacrifice income to sole the present crisis is Ecclestone himself:

Over the years, Bernie Ecclestone has done great job in helping develop F1 into a major commercial enterprise, however, it has become increasingly apparent in recent years that there is an imbalance in F1 finances. Ecclestone has become a billionaire and I do not begrudge him that, however, technological developments have now reached the stage where the ‘small’ teams are at a growing disadvantage, hence the loss of Marussia and Caterham.

I believe the time has come and is indeed right, for forcing change, most importantly getting the revenues from F1 from Ecclestone’s pocket and into the budgets of the teams. In fact, the best idea I have heard is the way NFL revenues are shared equally across all 32 teams. Now there is a novel idea!
Roger Gant (@Britwit)

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50 comments on “Ecclestone admits responsibility for F1’s costs crisis”

  1. “I know what’s wrong, but don’t know how to fix it.”

    Wow. Massive amounts of wow.

    1. I think he meant to say “I know what’s wrong, but don’t want to fix it.”

      1. Alex McFarlane
        2nd November 2014, 8:19

        Indeed, for a moment I thought I saw a pig flying.

        Who knows though, perhaps if the media keep up the pressure on the current state of affairs maybe something good can come from this. It’s a start, at the very least.

    2. There can be only one solution: He’s admitted incompetence, so he should resign and let somebody competent take the helm.

  2. He sure has multiple personalities or is trying hard to make heaven.

    1. He must have ate a Texas-style five pound steak and started to worry more about his health.

  3. Have to say, with Ecclestone responding it does seem that he does realise how much of a serious threat this is to his business if a boycott goes ahead, or more teams fold, so there could be a dot of light at the end of the tunnel. Whether it will be dark by the time we get there is unknown.

  4. I’m sure he owes a big apology to Caterham. He called them a beggar not long ago.

    1. Yes he is a real so and so for saying that and I hope that F1 gets rid of Ecclestone and restructures the FIA otherwise F1 as we know it won’t exist in a few years time or maybe a couple of years time. This new hybrid formula I think was the final straw for the struggling teams and its just not viable anymore to continue. Shame and there will be more teams pulling out and more sponsors pulling out also as long as Ecclestone is still there.

  5. That Alonso quote is funny in the way it goes completely against the way Ferrari thinks now.

    1. OmarR-Pepper (@)
      2nd November 2014, 0:55

      @hunocsi he doesnt need to care about Ferrari’s PR guide anymore.

      1. That’s the point, but right now he’s still part of the team.

        1. Ferrari didn’t want these engines so his quote could still be in line with their beliefs.

    2. @hunocsi I agree, although it’s not unlike Alonso to go against the Ferrari PR line when he disagrees with it – he did so at the beginning of the year when Montezemolo was claiming the new engines had made F1 boring.

    3. I think it means we can be certain he will not be in a Ferrari or Renault powered car next year (not that this would have been likely anyway).

  6. I like the angle he’s playing here. ‘It’s my fault for making bad agreements with the big teams’.

    So in other words everyone needs to take a financial hit to spread things out more rather than Bernie and co having to be the only ones to be stung.

    The problem is Bernie knows he’s already a billionaire. If F1 fails then he had a good run and did pretty well it off it. The teams need it more than he does.

    In his defence back when the TV rights were all agreed he offered the teams a share and they didn’t take it.

    1. Where do you get this story from ? @philipgb.

      1. Maybe if FOM sold their TV rights to FTA broadcasters instead of going to Pay TV which is a bad idea to start off with as it minimizes audiences. Then F1 wouldn’t be in this mess

        1. I think there is room for Pay TV in F1 – Pay TV will always have better coverage with less ads and it is revenue that could be split among the teams. However I think all Pay TV agreements should be alongside a FTA deal where all races are shown live on FTA TV, still leaving practice, qualifying, extended off-track coverage and races with less ads for the Pay TV companies to profit from but allowing anyone to watch the actual race itself.

          1. @vmaxmuffin

            I think that should be left for the broadcasters to decide. They’re the ones who pay for the rights and are entitled to the profits and if a third party comes and forces them to do something that’s not commercially viable, they’re just gonna abandon the F1 business altogether.

            If you have a reasonable quality broadcast for free, a very limited amount of people are gonna buy the pay-tv subscribtion as there’s simply no need. 90 % of the viewers are not interested in the practice sessions and other extra content.

    2. Although his comments are, of course, self serving, there is ultimately a certain truth to what he is saying, in as much as the way that the loyalty of the bigger teams has been bought is by offering them a progressively larger share, part of which has come from effectively squeezing down on the payments of the smaller teams.

      Even if all of the revenue generated by the sport was to be taken by the team, the larger outfits would still have to take a cut in their payments given that outfits like Ferrari or McLaren are given a disproportionately high share of the revenues. Ferrari won’t want to give away anything – why would they? – and other teams, such as McLaren, are likely to be similarly unyielding (it’s worth noting that, although it is nothing like in the same league, there are some indications that, like Ferrari, McLaren also get bonus payments in recognition of their historic value to the sport).

      Whilst it would make more sense for the larger teams to accept a smaller percentage of an overall larger cut of the revenues and allow more wealth to trickle back down the grid, I can’t see the larger teams being prepared to yield their current favourable position.
      Bernie’s payment structure sees them earning a healthy chunk of revenue and also helps maintain a favourable status quo by choking off smaller teams that could upset their position of influence and leverage. Yes, FOM is still taking a very sizeable chunk of the revenues, but Bernie will know that the larger teams probably hanker, to a certain extent, for the secure position that his payment structure provides and are therefore more likely to back him than the smaller teams.

  7. Adam Parr is right on the money, it’s more about the imbalance in the share between FOM and the teams than it is about the imbalance in the share between the teams. In the current 63-37% carve-up CVC would still end up with more of the profits than the combined amount returned to half of the competing teams if each team got an equal share of the profits. The situation Bernie is in is his own creation, made by him to protect the totally undeserved proportion of revenue flowing out of F1.

    1. ColdFly F1 (@)
      2nd November 2014, 1:45

      And spot on in his comment that Mr E. is now positioning the big teams against the small ones. Mr E. will once again get away with this, and achieve what he always wanted.

      1. Classic “Divide and conquer”, which of course he has done before to achieve the mess F1 is currently in.

    2. @hohum – That is the crux of the biscuit right there, Adam Parr has got it. Now Bernie says if others give up some their money first, he might do something. He is only responding at all because of some bad press over a situation that he has been trying to keep hidden under the rug while it festers and grows.

  8. First step is to admit you were wrong, Bernie. Then you toss it all away by saying you don’t know what to do, as if you never ever expected this, well trying to become the victim is always the next solution after admitting.

  9. Great qualifying today, this format surely works well. I really enjoyed listening to kravitz short interview with Bernie and Epstein, nothing wrong was said there. Honestly, imbalance or not the right business attitude is to push for the highest bidder, that’s how you grow your business because everything then follows, but Bernie has recognize that perhaps this strategy needs to be paused. Honda and other potential new entrepreneurs are still not yet matching the demand, so obviously you are getting a shrinking field, but that’s a completely temporary that’s a problem for 2015 and 2016 so I understand why you wouldn’t want to make definitive decisions. On a final note 3 team cars and costumer cars are the desire of RBR and Ferrari in particular but for 2015 and 16 it may work, also Dennis doesn’t like that because he knows that he can’t match that proposition for the next couple seasons.

    1. That post is almost completely incomprehensible. Does anyone care to translate?

  10. I don’t know how many homes Bernie owns, but obviously his preferred one is under a big rock and he’s just come out.

  11. Hrrrm, when my age you reach, be as shrewd you will not.

    1. Haha, well said

      yep, more afoot here than we think judging by bernie’s remarks. Shrewd guy

  12. Bernie is a multi-billionaire, thanks to F1 as a business enterprise. He has made many shrewd decisions as the “Ringmaster” over the decades but now a dose of the flu and his own mortality has himself questioning the legacy that will be left behind for the history books. That’s the only reason that I can see for his massive U-turn from “we don’t need the smaller teams” to admitting he is the reason that fans of the sport with realistic budgets can’t run a team in F1.

    There’s no denying Bernie is a remarkable man who has done so much as a fan and team owner in Formula 1, also raising the it’s profile to “The pinnacle of motorsport”.

    I say do your best to fix this Bernie, continue to pull the rug from underneath CVC and devalue F1 with your remarks and management style and then let the sport buy back it’s own commercial rights and govern it’s own revenues. Make your buck out of it but don’t strangle it.

    1. 20 years to late.

      1. @hohum if you are referring to Bernie’s legacy legacy I fear you may be right. Although, if any one man can make a difference at this point it is him. He has the political and financial position to put things right, it’s his call…

      2. Too right.

        CVC Capital partners have not the slightest
        interest in F1 except as a cash cow. If that
        massively profitable cow gets sick, as it is
        right now, then suddenly these unpleasant
        blood suckers will be forced to ditch BCE
        as their F1 ringmaster and reset the whole
        business plan. As Hohum says, 20 years too damn late.

  13. maarten.f1 (@)
    2nd November 2014, 6:21

    I love how I got a Mercedes Benz banner on that Red Bull video, perhaps YouTube knows something we don’t ;) (just kidding).

    As for Ecclestone’s comments, that’s quite surprising. Yesterday the man was quoted saying there’s no problem at all.

  14. Michael (@freelittlebirds)
    2nd November 2014, 6:51

    A change is in order – short term greed needs to be tempered by long term returns for everyone. They should be looking into ways to expand revenue, not divide the pie unevenly.

  15. Yesterday I was hacked off with Ecclestone’s callous disregard for the human cost of the loss of two teams. In the current economic climate, most people know someone who’s lost their job through no fault of their own. Ecclestone exists in a rarefied bubble of incredible financial privilege. His family will continue to commission their crystal encrusted bowling alleys and suchlike, while ex-Caterham and Marussia staff (the “begging bowl” teams) are now facing a lean Christmas. I never subscribed to the “glamour” aspect of F1 where we’re meant to be oh so amazed at all the celebs and moneyed elite hanging about at each race.

    And today we’re expected to swallow yet another complete volte face where he accepts the blame but can’t fix it, all the while setting the teams against each other.

    He must realise that his contradictory statements are completely transparent, surely? The alternative is that he thinks we are all fools. Yes, the racing has been good this year, but personally I am sick of being taken for a mug. I don’t want to do anything that puts money in his pockets. I can’t imagine ever going to a grand prix again.

    1. Well said @diregirl, I do think he might believe people with less money and influence are fools, and so far at least the teams have shown him to be right – divide and conquer always worked with them, and with the FIA, and even most of the media.

      1. @dirgegirl that is, stupid typo, thanks to weekend of halloween no doubt :)

  16. If the teams wanted to seize complete and utter control of the sport they could do it. They should have done it last time when the Concorde agreement was renewed. Let us face it they are generating all the revenue and are getting scraps from CVC (yes even Ferrari) and Bernie has the audacity to call smaller teams beggars. I cannot think business environment ass equally retarded at the moment. With breakaway series(formula ultra….or something) they could ditch FIA,CVC and Bernie. Then after few seasons trademark for for F1 would be buyable for 10euros and voila it is F1 again. All the revenues would be theirs and rules their to make.

    To bad there are several contractual issues now that keeps them from doing that.

    1. Teams have a backstabber in their ranks called Christian Horner. He will always break the alliance in the last minute and not only make everything fall to pieces, but also make everyone else lose even more by staying on the losing side to the bitter end. He always switches sides at the last minute, ruining it for all the other teams who kept standing together.
      I’ve been saying for years that Bernie needs strong Red Bull because they are his allies, and if they are not strong, they don’t have much influence.

  17. I’ve got a horrible feeling there’s going to be a some kind of pile-up in turn one tonight that takes out five or so cars just to pour salt on the wounds. It’s the kind of sick irony that happens in Formula 1 when there’s a crisis.

    Remember Indianapolis 2006? Back in America with a 22-car grid after the six car fiasco the year before and seven drivers don’t even complete one lap, with another three dropping out before lap 10.

    Or Singapore 2009? Amidst the fall out from the Crashgate scandal, Grosjean’s Renault spinning at ‘Piquet corner’ during Practice in an almost exact replica of the crash the year before.

    I hope it doesn’t happen and I hope F1 can put on a great show for US, but I won’t be at all surprised if they do manage to kick themselves whilst they’re down.

  18. You should take a look at Bernie’s biography. He’s been taking money out of the sport for the last 30+ years and getting away with it with the help of Max when he was at the FIA. His family trusts will alway control the income no matter what games he plays now, and it is a game of poker to him!

    1. Michael (@freelittlebirds)
      2nd November 2014, 13:38

      It sounds like he no longer needs to take that much money out of it any longer. When you have a few billion, you make more by doing nothing and simply investing your money. He can also find new sources of wealth such as making F1 go public or find alternate sources of revenue. I don’t believe that they have milked F1 the way they should have. The F1 video game needs to be up there with FIFA.

      What’s ridiculous is that Marussia makes 14 million in 2013 when they actually weren’t last with a team that has been in F1 for 4 years counting Virgin’s time. The midifield season costs are estimated at $120 million. Let’s say that Marussia was efficient and it cost them $90 million. That’s a $76 million loss that they need to cover. It is beyond absurd.

  19. Michael (@freelittlebirds)
    2nd November 2014, 14:10

    I haven’t heard anyone offer a way to fix this. I’ll offer some ideas:

    – I think Formula 1 should take an approach where they aim for at least 2/3s of the midfield returning a healthy profit and 2/3s of the backmarkers staying within a reasonable pre-defined loss per season. This will automatically determine the amounts they need to boost for the midfield and backmarkers and the top teams and Bernie can decide how they take the cuts. It will also help them understand what amount they want to limit costs by.
    – They should pay a premium to teams based on previous experience not just Ferrari but only if the team is not doing well. If you are in P3 you receive the standard P3 income – no extra income. If you fall in P10 like Lotus, you get a slight boost to prevent you from falling into the red and having to switch to pay drivers. No one wants Williams to flounder in the back for 10 years and certainly no one wants them to ever leave Formula 1. That would be a disaster.
    – They should definitely give teams that are dedicated to F1 and have no other cross-promotional benefit or are major car manufacturers a boost. Mercedes probably gains more than they receive from F1 simply from competing in F1. Teams like McLaren, Force India, Williams, Sauber are strictly F1 teams and have nothing else to gain from competing in F1. If they lose 70 million in one season, they can’t offset it and they may flounder. You can easily redistribute 20% of the winnings of other teams like Ferrari, Red Bull and Mercedes and they wouldn’t care.
    – F1’s finances need to be more transparent in this age at least internally within the sport. All teams should know all the revenue that is received and how it’s distributed. An independent comptroller or CFO office needs to be created to oversee F1 revenue. CVC’s and Bernie’s cut need to be dependent on the success of the sport for the teams to align their goals. So if no teams make any money during 1 horrible year, well CVC and Bernie shouldn’t either.
    – All teams eventually need to have a say in the finances of the sport and the votes can be weighted to ensure that new or smaller teams can’t outvote old or larger teams.
    – Major regulation changes need to be better thought out to assist backmarkers perhaps even with an infusion of extra cash ($5-10 million) during the 1st year. It’s no coincidence that 2 backmarker teams are 3 midfield teams are in trouble during the 1st year of regulation changes. A well-planned infusion fund for 2014 could have helped with that.
    – Create a team to increase F1 revenue and the value of the sport which will keep everyone happy in the long run. F1 should be making a sizable portion of its income from other sources like video games, toys, clothing, collectibles etc.

  20. Now he’s saying to forget about third cars because nobody can afford them. I’ve never seen a pensioner back-pedalling so hard.

  21. Ecclestone and his partners are killing sport, are kiling Formula 1. He is the “godfather” of a real “mafia”.

  22. If anyone thinks things can’t get much worse with the new rules, wait ’till the final race, when Hamilton could lose a huge points lead to Rosberg due to that stupid double-points rule.

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