Bernie Ecclestone, 2018

F1 teams were “bullied” and misled over unfair income deals – Mallya

2018 F1 season

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Bernie Ecclestone “bullied” Formula 1’s smaller teams into committing to the sport and disguised how much their rivals were earning, according to Vijay Mallya.

F1’s richest teams receive tens of millions of dollars more than their rivals in bonus payments under the prize money structure Ecclestone introduced.

Force India co-owner Mallya told RaceFans he would have reconsidered committing to F1 had he known at the time how much more the likes of Ferrari, Red Bull and Mercedes were earning.

“Bernie bullied us into signing with a paltry upfront carrot,” said Mallya. “Bernie did not reveal the overall picture and deals with other teams.

“Had I known how large the disparity was, I may not have signed up.”

Force India and midfield rivals Sauber complained to the EU Competition Commission about the deals and the preferential political status given to the top F1 teams. However they backed down after Liberty Media bought F1 from CVC Capital Partners, ending Ecclestone’s control over the sport.

“Sauber and Force India withdrew the EU complaint because we were assured by Liberty Media that our legitimate concerns would be addressed as they also recognised what we said,” explained Mallya.

As RaceFans revealed in April, Liberty Media is planning a drastic overhaul of F1’s prize money structure when the current commercial deals expire at the end of 2020. This will include abolishing most bonus payments to the larger teams, though Ferrari will continue to receive a separate, smaller one-off payment.

Read our full exclusive interview with Vijay Mallya later today on RaceFans

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59 comments on “F1 teams were “bullied” and misled over unfair income deals – Mallya”

  1. Gemma St. Ivans
    18th July 2018, 8:28

    Mallya is a criminal

    1. Nothing like one criminal being played by a con man. Got to hand it to Bernie.. he took the fraudster to school.

      1. Quite true, there’s always a bigger fish.

      2. Lol I was thinking the same thing!

    2. Bernie is a criminal

  2. :D That’s rich, considering the person quoted.

  3. That picture is scary as ______

    1. Oh, I don’t know, I sort of like him with this beard; without it he looks like he’s perpetually sneering.

    2. I think its some old tramp hanging about outside Mallya’s palace for a few crumbs…

    3. McLaren’s performance
      A back-marker for Vettel
      Not being blessed
      A kimoa hat
      Grosjean in a rear view mirror
      Grosjean in front of you
      An email from Ferrari in McLaren’s domain
      Pirelli tyres…in your road car
      A call from Briatore before a GP weekend
      Overtaking Verstappen

      1. A call from Briatore before a GP weekend

        LOL, to all in general, and this one in particular :-)

      2. petebaldwin (@)
        18th July 2018, 19:11

        I quickly scanned down the page and it took me a minute to realise your post was a response to someone. I initially thought you had written a poem about F1 and read it like that in my head. :D

        1. Now that you say it, it is a shame it doesn’t rhyme

          1. Makes for a neat free verse though :)

  4. I was under the impression the payout disparity across F1 teams was common knowledge. I don’t see how even a mediocre lawyer could miss this.

    1. It became common knowledge AFTER the deals were signed – all agreements were in bilateral form and had NDCs, so it was only after the teams requested a breakdown that the extent of the disparity first became known to them – which info I obtained and made public knowledge in April 2014, after the first round of payments.

      Think about it: seven teams were disadvantaged. Do you honestly believe all had sub-standard lawyers?

      1. @dieterrencken My thanks for telling me my comment was unjustified. I wasn’t aware the information was withheld from public scrutiny. My apologies to Force India and others for my comment.

        1. Not so much ‘unjustified’ as maybe a little uninformed and opened the debate to facts

      2. I think there’s an interesting takeaway there – while the NDCs prevented 7 parties on one side sharing information (which could lead to accusations of collusion), the other side had one party common to all transactions, one who was probably using information from each of the 10 contracts to structure all of the offers (which is collusion of a sort, even though its a single party).

        In that respect Liberty does appear to be holding more open conversations, to avoid exactly this sort of underhanded play.

      3. @dieterrencken Oh come on now. We have always known this.

        1. And ‘always’ means since when?

          1. It is not ‘always’ that two teams would take it as far as going to the EU Competition Commission. To me that is very telling in terms of how much BE had ramped up the power and money to the top teams in more recent years compared to what was ‘common knowledge’ from the past. BE moved the goal posts mid-game enough to cause two teams to start legal action.

          2. @dieterrencken We knew there was some inequality since 2005 (that famous Ferrari extra payout) but until your brilliant research, all comments on the first post-Concorde deals were hearsay and rumours.

          3. @dieterrencken We knew well before that that Ferrari was receiving extra payments since 1997.

            Besides in which sport is this any different? Bigger teams, athletes get more money. That’s how it works. When you pull a bigger crowd you get paid better.

          4. Patrickl (@patrickl)

            @dieterrencken We knew well before that that Ferrari was receiving extra payments since 1997.

            Besides in which sport is this any different? Bigger teams, athletes get more money. That’s how it works. When you pull a bigger crowd you get paid better.

            @patrickl, I really have better things to do during GP weekend, but equally it would be remiss of me to allow our readers to be misled by some of your comments. The fact is that in F1 money equals performance, whereas it does not in most other sports. Incidentally – consider that Ferrari won its first world championship in almost 20 years within two years of first receiving a bonus.

            The $30m-odd paid to Ferrari in the during the 1998-2012 era was acceptable to the other teams on the basis of “name” and had not been hidden from them, whereas the 2013-20 bonuses paid to Ferrari amount to $102m annually, and were not openly divulged. Please get your facts straight.

  5. It stings when you’re on the receiving side, eh, Vijay?

    1. By playing the personal card we tend to camouflage that F1 as a whole suffered due to the disparity, including at least six other teams.

      Play the ball and not the person, please – this applies to all the comments above.

      1. Fair enough, Dieter, apologies.

  6. ColdFly (@)
    18th July 2018, 9:16

    Ferrari will continue to receive a separate, smaller one-off payment

    ‘annual’ rather than ‘one-off’.

    1. Nothing set in stone yet, but a one-off is planned, as it says.

  7. Why do Ferrari still get extra payments at all?
    That’s not exactly “fair” is it?

  8. Bernie looks a bit weird with that beard, LOL.

  9. Whilst I have no doubt that Bernie was a master negotiator and certainly a bully to those that disagreed with his point of view, I’m wondering who was bullying whom in some of these negotiation no.

    Bernie couldn’t really afford to lose the likes of Ferrari etc and one wonders just how much pressure was brought to bear on him by the negotiatin teams and lawyers from the top teams.

    I suspect there was a fair amount of bullying from both sides which left Bernie with a much smaller pie to share with the smaller teams like FI.

    Let’s hope that Liberty’s plan to better distribute funds actually materialises.

    1. I suspect there was a fair amount of bullying from both sides which left Bernie with a much smaller pie to share with the smaller teams like FI.

      @dbradock – while there would definitely have been pressure exerted on Bernie (e.g. Ferrari’s preferential payments), I’m sure that he clawed back as much as he gave.

      The different financial aspects we hear about Liberty having to deal with (team payout structure on the one hand, contract renegotiations on the other), all indicate that Bernie set up a structure aimed at generating profit for FOM in the nearer term, while not being satisfactory or sustainable in the longer term for the other parties involved.

      I’m sure Liberty’s due diligence would have uncovered all of this, and I must say that they are ambitious, confident and brave to take over the sport in such a state and put in the money & effort to make it work.

    2. @dbradock Ecclestone didn’t just want Ferrari in F1 he wanted them to win and be on his side. That 100million bonus was peanuts for that. Althoguh in those days it was a massive increase in budget.

      He also gave Red Bull an 80 million bonus to get them to stab FOTA in the back and got rid of a powerful block that he was having issues with.

      It all serves a purpose in the end.

  10. Yes there we go again with this nosnense. OMG some teams receive tenthjs of millions more than others.

    Stop pretending that this is actually an issue. Imagine taking 15 million away from each the top teams and giving it to the smaller teams. Would anything really change? No it does not.

    The budget gaps is 200 to 300million. You don’t plug that with a band aid.

    1. @patrickl Perhaps when you word it the way you have selectively chosen to word it, then sure little would change. However, your numbers are likely not accurate as I don’t think even Liberty knows yet where the cap will be managed, nor how the money will be distributed quite yet. On top of that much is being discussed at the same time about more standardized parts, less aero dependence etc etc…all things that can help the lesser budgeted teams along with a better money situation. It’s going to be a combination of several things at once that will improve the show and the outlook for lesser teams.

      1. @robbie I said gap not cap.

        It’s quite clear where the bonusses are and what the maximum shift of money will be.

        But sure, best case the smaller teams get 30 million extra. Are they suddenly competing with the teams spending 200 to 300 million more? Of course not.

    2. @patrickl It means the difference between having a “rainy day” fund and looking over one’s shoulder, and in less extreme cases can still be a deciding factor in midfield battles. Note that one of the teams ahead of Force India this year that wasn’t before gets masses of CCB bonus.

      1. @alianora-la-canta If anything it makes teams lazy. Communism has never worked anywhere.

        1. @patrickl It doesn’t make the Premier League teams lazy, to have an equitable funding scheme that guarantees survival of any sensibly-budgeted team and doesn’t give Manchester United a big bonus for being Manchester United. In fact, I’d argue the current system may have contributed to McLaren and Williams’ issues; having had their budgets unequally bulked for events that were not sufficiently recent, they were encouraged to take less action than was necessary to keep with the times. Both have suffered quite a lot for this.

          Remember I am not advocating for the removal of the performance escalator (which would be analogous to the communism-based economy you criticise), simply for conversion of the “historic” funds and instead using these to boost the 50% “entry reward” that already exists (as Column 1 payments). Since it would be the same for everyone, instead of being a reward for something that in many cases was done under a previous administration, significantly different staff and rather different method (and will only get worse the further removed from the fixed point at which it was awarded), it would increase rather than decrease competitiveness.

          1. @alianora-la-canta Well @dieterrencken does count all of the bonuses as unfair. Which is how he arrives at 300million. While about half of that is actually based on performance over the last 4 seasons.

            That’s why I give the example of Sauber getting 15 million extra instead of the 30 million Dieter Rencken pretends would be fair.

            Or otherwise if they divide the full 300million worth of bonuses, I would hope that at least half of that 300 million gets divided among the teams on a basis of actual performance.

            From the normal performance related payments, Mercedes gets 61 million for being the champions by a landslide. Williams gets 33 million for coming in a poor fifth and even Sauber gets 12 million for their performance of coming in dead last.

          2. @patrickl The $300 m is the CCB bonus payment, not including anything under Column 2 (the performance bit).

          3. Well @dieterrencken does count all of the bonuses as unfair. Which is how he arrives at 300million. While about half of that is actually based on performance over the last 4 seasons.

            @patrickl: Once again, please get your facts straight so as not to misled readers. For the record, the bonuses are known as LST (Long Standing Team) and CCB (Constructors Championship Bonus), and were paid from 2013 onwards on the basis of HISTORICAL performance and legacy – not based on the past fours seasons at all. Why do you think McLaren still qualifies for bonuses despite its poor performances since 2013? Equally, Red Bull has not won a championship since 2013, yet qualifies – and Ferrari’s last championship was scored in 2008!

            And, of course I count all bonuses that are paid to the major teams, because they are unfair. Simple.

  11. The big four shared bonuses amounting to almost US$300m last year, so how you get to 15m is absolutely beyond me.

    1. @dieterrencken Well I’ve argued 30 million before and I get bull for that too. That you think they will pay out the same amount in bonuses after they take away those bribes for Ferrari and Red Bull is beyond me. So I went with a more logical 15 million.

      Anyway, I have argued the same with 30 million too. This quick and easy fix delusion is simply that, a delusion. Perhaps it will help teams muddle along in non-competitiveness easier, but it is not going to make midfielders suddenly compete with the big teams.

      In fact I would argue it’s going to create more lazy teams which are just there as a job and not to actually further their own competitiveness. Teams that just hang at the back and get paid handsomely for it.

      1. @patrickl For even $30m (let alone $15m) to make sense as an average for the other three members of the Big Four, you would have to suggest that Ferrari gets $210 m as its bonus. That would be 15-20% of F1’s entire “disposable income” (after costs and compulsory cuts for entities like Liberty), and would be quite unlikely given that this is before considering the amount Ferrari would get from Columns 1 and 2 (the “starter fee” element and the performance-related element respectively).

        From what I see, both of us should be rejecting the notion of CCB payments continuing into 2021. The only difference is that I would want that money in Column 1 for reasons of equality and performance across the field, and your general argument pattern indicates you should argue for it to go to Column 2 for reasons of meritocracy and ntensifying competition in those areas of the grid where that might help.

        1. @alianora-la-canta How much would you think 300 million divided by 10 makes?

          1. @patrickl Five of the ten teams do not get a CCB payment, and Williams gets a fixed $10 m “historic payment” (that Dieter did not include in his $300 m figure). Dieter said “the Big Four”, which by no possible counting measure could make 10 teams.

          2. @alianora-la-canta Geez man, how hard can this be. When you think I wrote something illogical, you simply need to read and try to comprehend again until you finally actually understand.

            So lets try again. When you have “almost $300 million” in bonuses available and instead of dividing this over 4 (or 5) teams you divide this over all the teams (which to be utterly clear about the math here, is 10 teams). Then what do you get?

          3. @patrickl Now that you have provided context for your answer, instead of simply saying “$30 m” and “$15 m” – that made it look as if you were claiming a $30 m bonus per CCB team (or, even less sensibly, $15 m), and that you therefore needed to be corrected on a fairly basic fact – it is possible to have a conversation about this. Please note for the future, that in order for someone to read a complete statement, it needs to be completely written first (unless one is very careful regarding implications and connotations, which is particularly difficult to do on the internet).

            $30 m per team, assuming it is shared via the Column 1 method that I would advocate (per-team amount gets more complicated if using the Column 2 method, which is what I suspect you would prefer, though the average would be the same). $30 m is over 10% of the budget for some of the smaller teams. 10% budget increase in any context is substantial, and there is every reason to believe it would also be of substantial help in the smaller teams’ efforts to try to catch the larger teams (since a fixed-dollar amount is more useful at the cheaper level of research smaller teams can currently access than the more expensive, more refined level the larger teams can currently access).

            Hopefully you now understand what I have been trying to tell you all along.

          4. (Correction: because Dieter doesn’t include Williams’ $10 m (it may not be a Big Four team, but it’s still a historical payment not based on current performance nor equitable entry) in the “Big Four” total (for the obvious reason that Williams isn’t in the Big Four this decade), the total is actually just below $310 m, which would mean about $31 m average for each team. The other comments still apply.

          5. Well blame the supposed lack of context on Dieter since he apparently doesn’t know how to use the reply button.

            Still, my advice stands. Try to understand something before you start shouting that people are crazy. The $300 million Dieter is talking about is quite clear in his post and the $15 million too if you just read.

  12. I am thinking that if Ferrari get a last one off payment, they just might start threatening to leave again.
    No loss….

  13. Sergey Martyn
    18th July 2018, 20:47

    Wow, is this an official poster to ‘The Night of The Living Bernie”?
    Hope you didn’t forget to buy Zombie Apocalypse flamethrower…

  14. There’s plenty of time before the end of 2020 for 6,8 or 9 teams, plus invited others, to organise their own series. Sure it won’t be F1 but it could be called something else to indicate that it was the pinacle of motor racing.

    1. I think I’ll give Liberty their fair time in the sun to shine. They’ve barely begun putting their plans in motion, and have spent the money, so deserve to see things through for many years to come. I have no doubt they’ll quite improve on things as we wean off the BE era.

  15. @alianora-la-canta

    We knew there was some inequality since 2005 (that famous Ferrari extra payout) but until your brilliant research, all comments on the first post-Concorde deals were hearsay and rumours.

    That “extra Ferrari payout” amounted to 5% total, split 2,5% each commercial rights holder and the teams collectively. That was worth, at worst, $30m and expired at end-2009, and renewed until end-2012 under the terms of the 2010-12 Concorde. This became public knowledge in 24/01/2005.

    The “Big 4” inequitable payments as mentioned by Mallya (above) and originally made public by myself in 2014 – fact, whether @patrickl accepts that or not – are paid under the 2013-2020 bilaterals and amount to around $300m per annum split across Ferrari, Mercedes, Red Bull and McLaren, with Williams receiving $10m annually.

    Let us not confuse the two – not only do the amounts differ greatly (by 1000%), but all teams knew about the 5% payment; not so the 2013-2020 bonuses.

    1. @dieterrencken We knew that Ferrari was getting $100 million extra since the FIArari era. It’s a bit reduced yes, but still.

      Still you have to be utterly naive to assume that there was so much secrecy about how much each team was getting if they were all getting the same amount.

      And yes I also don’t think Liberty will keep handing out the full bonus amount and divide that same amount equally over all teams.

      Yet I have also argued on the basis of even the most extreme that the small teams indeed would receive the “full” 30 million extra since my argument then still stands. This round of communism will solve literally nothing, other than to keep the small teams (with no ambition whatsoever) “alive”.

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