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F1 budget talks hit dead end

Another day, another statement. This one, from the FIA, again suggesting that the wheels are coming off the negotiating process between the FIA and the team’s body (FOTA) and that it is FOTA’s fault.

As I posted yesterday in the Ross Brawn story, the teams want to talk about ‘resource restriction’ which they control, rather than ‘budget caps’, which an outside agency controls on behalf of the FIA.

The teams feel that it is a fundamental right of a competitor to manage its own business autonomously. They are also concerned about how it would work if there was a disciplinary hearing, of the kind we have seen in recent years involving racing incidents, where a team was investigated for ‘financial irregularities’. A manufacturer could not afford the damage to its image that this might entail.

So FOTA put a plan to the FIA for a system of financial self-regulation, which it believes would achieve the same ends as a budget cap, but without the intrusion. That is what the two sides met yesterday to discuss and this is what the FIA has to say about it today,

“As agreed at the meeting of 11 June, FIA financial experts met yesterday with financial experts from FOTA.

“Unfortunately, the FOTA representatives announced that they had no mandate to discuss the FIA’s 2010 financial regulations. Indeed, they were not prepared to discuss regulation at all.

“As a result, the meeting could not achieve its purpose of comparing the FIA’s rules with the FOTA proposals with a view to finding a common position.

“In default of a proper dialogue, the FOTA financial proposals were discussed but it became clear that these would not be capable of limiting the expenditure of a team which had the resources to outspend its competitors. Another financial arms race would then be inevitable.

The FIA Financial Regulations therefore remain as published.”

In other words, the budget cap stays, take it or leave it.

The FOTA teams last week went over the head of the FIA president Max Mosley, questioning his style of governance and appealed to the FIA senate and FIA World Council to ‘facilitate solutions’ in this week’s meetings, which they described as a final opportunity to find a solution.

So far it doesn’t look like the appeal has had much of an effect.

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Before the Turkey weekend I flagged up that I was interested in Toyota’s performance after their alarming slump in Monaco and to some extent, Spain.

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Well Jarno Trulli had a great weekend, qualifying 5th and racing strongly against Nico Rosberg to finish fourth. Toyota are looking pretty good in third place in the championship, although you can see them possibly dropping one place to fourth when Ferrari get motoring in the second half of the season. What was hugely encouraging for Toyota in Istanbul, though, was that they kept the Ferraris behind them all weekend, despite the massive gains the Scuderia has made of late.

Here’s Trulli’s view, “We are back on track and it was good to be fighting at the front of the grid again. To return to the top five immediately after what happened in Monaco is great and it is a credit to the team, who have worked really hard to improve our performance. We were not far away from the fastest car; there is still a small gap which we will work to close but we are moving in the right direction.

“Basically it has been achieved through a lot of hard work after Monaco, by everyone in the team. Monaco is a one-off race and we felt sure our problems would not be repeated in Turkey but we didn’t leave this to chance. We had a few upgrades, with changes to the front and rear wings, which brought additional performance. Overall we improved in many areas, including the start which was fantastic for me on Sunday. Timo and I have worked together with the team to understand where we can improve and the result we had in Turkey was a nice reward for our effort. “

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I’ve been fascinated by the coverage of the FOTA teams’ entry for next year’s world championship in the last couple of days.

On Friday morning I was saying that something was going to come out of FOTA which was quite different from the convergence position with the FIA that was being widely reported. And so it proved. Then when the FOTA statement was made most commentators seemed to see it as Ferrari and the other eight teams signing up after all, which it was some way from being.

Ferrari obviously felt quite frustrated with this and so they issued one of those self-generated Q & A documents, with team principal Stefano Domenicali. The intention here was to SPELL IT OUT for those who hadn’t quite grasped the point of what FOTA is saying.

I won’t go over it again, because I’ve written enough about it already, but two things need to be taken away from Stefano’s comments.

First that all nine teams are willing to sign up to race in F1 until the end of 2012 (if their conditions are met). The importance of this point is that the teams are saying that the sport need not fear that it will lose any existing teams, they are making it clear they aren’t going anywhere. The fear of losing teams was one of the main drivers for the budget cap idea.

Second, whereas before Monaco weekend, it was only Ferrari, Toyota, Red Bull and Renault saying that they would quit F1 if the 2010 rules were not changed, now all nine FOTA teams are saying that, which is a much stronger proposition, as Domenicali spells out below.

“It’s very simple. The nine teams – Williams membership having been suspended – that currently make up FOTA, have put in entries for the 2010 championship that will only be valid if the Concorde Agreement is signed and if the regulations will be those currently in use, but modified as per FOTA’s suggestions. The action taken yesterday is completely in keeping with Ferrari’s principles, as stated at the Main Board meeting on 12 May and with those of FOTA.

Q. What will happen if these conditions are not met?

SD: Once again, the answer is simple: the entries from the nine teams will be invalid.”

This has moved the story on quite a bit from the Monaco weekend and is completely against the grain of what was being reported in the days following Monaco.

The FIA believes that Ferrari has a contract to race in F1 and that this was proven in the Paris court case Ferrari brought, seeking an injunction, before Monaco. If the FIA decides to play hardball and reject FOTA’s conditions, it may be that Ferrari, Williams and the new teams are the only names on the entry list which will be published on June 12th.

Meanwhile I note that Alex Wurz has tabled an entry with his Austrian chums from Superfund. Without a sniff of a new team on the horizon for years we now have five putting in entries, which means paying a £2.5 million engine deposit. Some of them have been planning this moment for years, waiting for the right circumstances, others are seizing an opportunity.

Fascinating times..

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So are the nine teams in or out?

The nine remaining teams in the Formula One Teams Association submitted a conditional entry for the 2010 world championship before the deadline at midnight last night.

Along with that single entry for all nine of them, they have submitted a document with proposals for cost reduction to the FIA, which Toyota’s John Howett describes as ‘comprehensive’.

There has been a mixed reaction to this. Some media are saying that Ferrari and the other teams have signed up for 2010, others are highlighting the conditional nature of the entry and the two main conditions which they want to see fulfilled before their commitment will be confirmed.

One is the signature of the Concorde Agreement by June 12th. This would bind in all three parties, the FIA, FOM and the teams to an agreement which would run to the end of 2012. In the Concorde Agreement there are protocols for deciding the rules, involving things like the F1 commission made up of teams, sponsors, promoters and so on, which did not come into play in the framing of the 2010 rules thus far because there is no Concorde Agreement in place. Their idea is that the Concorde Agreement would then take care of the 2011 rules.

The teams want all parties to sign the agreement by June 12th. Bernie Ecclestone is believed to want the agreement to be for five years duration, rather than three, so that could be a sticking point. June 12th is also the date on which the FIA plans to announce which 13 teams have had their entries accepted. As far as I can tell there are 15 teams looking for 13 spaces. If all the existing teams stay, then there will be three slots available for the five other teams. So we may end up with two of them teaming up, which would be quite logical.

The other condition the teams have made is that the rules stay the same as this year, ie no two tier system with a £40 million budget cap. All the other teams who have signed up, including Williams and the new teams, Campos, USF1, Prodrive, Litespeed and Lola, have signed up to compete under the £40 million cap. All must have engine contracts in place before entering, by the way, so one must presume the majority are with Cosworth.

FOTA’s statement doesn’t say that all teams must operate under the same rules, only that all the FOTA teams must, which I suppose leaves open the possibility that the budget cap could apply to the other four teams (Williams plus three new ones) as these teams are not part of FOTA.

The teams are quite adamant behind the scenes that their statement is a rejection of the notion of the budget cap. Instead they intend to self police and self regulate. They will agree among themselves not to spend any more than a target amount in 2010 and 2011 and this amount will decline significantly over the two years. No-one would give me an accurate figure but I still think it’s going to be around £80 to £100 million in 2010 and £40 to £50 million from 2011 onwards.

Incidentally there is nothing specific in the FOTA press release about technical help for the new teams. I’m told there are some thoughts in the technical document, but nothing concrete. Another important point to make is that the join entry includes Toyota so it looks, despite the spin, as though Toyota is at this stage planning to stay in F1. If the terms of the final offer do not suit them there is always the possibility that they will leave.

So yes, the teams, led by Ferrari, have signed up, but there still seem to me to be some fairly big blockages in the road to a settlement. I guess the next deadline in this process is June 12th, but before that the FIA is going to have to make some kind of acknowledgment of the entries and we will see how they take to the terms of what has been put forward.

Sources close to the FIA are still confident that a budget cap is on its way, even if the figure in 2010 is higher than originally planned.

For more on the FOTA position, take a look at the Q&A with Toyota’s John Howett on Autosport.com

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Counting down to midnight

After all the brinkmanship, the tough talking and the threats, the Formula 1 teams should today, barring any last minute upset, submit entries by midnight for the 2010 world championship. Ferrari will still be a Formula 1 team and life will carry on.

A statement is expected today from the Formula One Teams Association with their position ahead of the deadline, although team sources could not confirm at what time this might be published. Intriguingly, it has been suggested to me, however, that this statement will not be along the lines of what has been speculated in the media since Wednesday’s FOTA meeting in London.

The general gist of what has been written is that FOTA is proposing a phased reduction in costs with a limit somewhere below £100 million for next year dropping to the £40 million Max Mosley wants in 2011. The concession by FOTA is that the established teams will go out of their way to help the new teams Mosley is so keen to attract, by leasing them engines and gearboxes at below £5 million and giving them extensive chassis support. This will enable the new teams to compete at a sensible level – not be six seconds off the pace in other words – but will stop short of customer cars, which teams like Williams will not tolerate.

FOTA wants to exclude driver salaries, engine costs, dividends and marketing spend from the budget cap and there appears to also be some sort of exemption proposed for big salary outside subcontractors like Red Bull’s Adrian Newey. I look forward to hearing how that might work.

All eyes will be on Cologne this afternoon to see whether Toyota submits an entry. Rumours were rife in Monaco that the team would use this opportunity to make its exit from the sport. It’s not hard to see why they might do that, having failed to make much impression in the era of unlimited budgets, they are not likely to rise to the top when efficiency is the name of the game. But Toyota F1 boss John Howett said earlier this week that stories of Toyota pulling out were mere ‘spin’.

Meanwhile Williams CEO Adam Parr has spoken about the team’s decision to act independently of FOTA and submit an entry for next year. He denied that Williams’ move was to undermine FOTA’s unity. He said, “We are not trying to split the teams. We are not even trying to dissuade them.

“As a team we have a certain philosophy and this is an inevitable and necessary development. It may well be that other teams have a different view. I completely respect that.

“We feel there is a huge chance to resolve this and very much hope that all the existing teams, plus one or two new ones, will be on the grid with us next year.”

Of those possible new teams, US F1 and Campos have already entered, while Prodrive and Lola have made positive noises. My understanding is that you have to have an engine contract in place before you can submit an entry.

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There has been quite a bit of chatter in the last couple of days about Jenson Button’s future, in light of comments made by Brawn GP’s Nick Fry on the subject.
Buttn8

“Jenson’s been with us a long time, and we’ve had failures and we’ve had successes,” said Fry. “My objective, and our objective, is to have him for the rest of his career, and nothing’s changed on that front. It’s mutual that he would like to stay with the team, and after five race wins, we should be able to get something together.”

After five wins from six races and with a seemingly unassailable lead in the championship it is hard to imagine either side thinking about other options. Ross Brawn admitted last year that he was still assessing Button, after being quite impressed by him during the 2004 championship when he and Michael Schumacher raced against him in the BAR Honda. As this season goes on Brawn is increasingly impressed with Button’s ability to pull out a lap time in qualifying and to control races.

Although F1 is a cynical business, it matters all round that Button stayed with the team through the winter even when it meant he was potentially risking his career. The team have rewarded that loyalty with a race winning car and no driver can ask more than that.

But F1 is also a fickle business and a driver who was considered to have ‘flatlined’ in his career is now flavour of the month again and in demand from other teams. Jenson was considered to have plateaued by Ron Dennis and was described as a concrete post by Renault boss Flavio Briatore earlier in the year. He responded by revealing that Flavio had tried to hire him over the winter.

This will have been the period when Flavio was unsure whether Fernando Alonso was going to stay with the team. Alonso had been in quite serious discussions with Honda among others, but decided to stay put in the end.

Jenson signed a new contract with Honda just before the Japanese Grand Prix last year, having been made to sweat on it by the Japanese manufacturer. After the pull out he took a pay cut this year to stay with Brawn and is believed to have signed only a one year deal, but he will have had a pay off from Honda for the unfulfilled contract and will have benefitted from bonuses from the success he’s enjoyed this season.

It is clear that some of the established top teams have been making enquiries about getting him for next year. Button will reflect that at 29 and likely to become world champion this year, it could be the time to maximise his earning potential. Also it will be difficult for Brawn to maintain is pre-eminent position in F1 next year, despite Ross Brawn’s acknowledged brilliance at planning and resource management

There is no need to hurry into a decision, especially with the sport in such a volatile state over the rules for next year but it makes little sense for him to think of moving on to another team. Funding remains an issue for Brawn. They stand to win around $70 million for winning the championship, but they have yet to put any more sponsors on the car apart from the relatively low fee paid by Virgin. He will want some assurances that Brawn is going to pull in the sponsor investment for the medium to long term.

Fry made another interesting comment when he said “I’m sure he (Button) and his manager are sitting there thinking his price is going up the whole time. But maybe the sponsorship for the team is going up too, so maybe we can afford it.”

This seems slightly odd because it is acknowledging that they are going to have to pay him a lot more money because of the results. But you could not have a more graphic illustration of the fact that an F1 driver is only as good as his car than Jenson Button’s last two seasons.

Button staying at Brawn is considered more or less a given in the F1 paddock, but there was some discussion as to who his team mate might be next year. Rubens Barrichello has done well this year at getting the car set up and backing Button up by scoring lots of points. The balance seems pretty good between them but Rubens cannot go on for ever.

There are not too many obvious alternatives, although someone like Timo Glock might fit the bill quite well. However he is known to be on Mercedes hit list for the McLaren team as a possible replacement for Kovalainen.

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I posted here on Sunday morning that I had heard Williams were going to break ranks with the other Formula 1 teams and put in an entry for the 2010 season this week and they have done that.

I’ve been thinking about this, about why they have done it, what it will do to FOTA unity and where it leaves the other teams.

Williams have become the team closest to the FIA in recent times. In part this is down to a personal relationship between Williams CEO Adam Parr and Max Mosley. Both trained as barristers and I think they understand each other as a result. I also think Adam knows how to read Max pretty well. On a more basic level Williams need to stay close to the FIA because all they do is race F1 cars, they don’t sell energy drinks or road cars. So if they didn’t put an entry in for 2010 what would they do with themselves and their 500+ employees? They also stand to benefit from budgets coming down to £40 million. At that level they will not only be able to survive but to make a profit. And the technical department reckons that with many teams scaling down, they will do the best job on that level of money.

Williams signed a contract back in 2005, shortly after Ferrari, to stay with the FIA and with FOM, rather than join the manufacturers’ breakaway series being proposed at the time. The contract they signed then obliges them to race in F1 until the end of 2010. I don’t know what time frame is in the agreement Ferrari signed at the time, but Bernie Ecclestone referred to it the other day when he implied that he would sue them if they didn’t enter next year.

The question now is, will the other teams who signed up in 2005 also now be obliged to put an entry in for 2010? These teams are Red Bull, Toro Rosso and Force India (was Midland at the time). It is unlikely that their deals are all the same as Williams, because Ecclestone tends to like doing different deals with everyone.

For example, Frank Williams said on Friday that he knew Ferrari’s deal paid them more money than Williams but he did not know that they had a right of veto over the rules.

It has been reported in the last couple of days that the other teams within FOTA are angry with Williams because they signed a collective letter saying that they would not enter the championship. This isn’t quite true. They refused to sign that letter, but they did sign a second, modified letter, which did not commit them to that collective action.

Williams have painful memories of a time when they didn’t put in an entry; in 1993 they missed the deadline for entering the championship – a championship incidentally they went on to win with Alain Prost – and there was some pain to be taken over that.

Judging from the noises coming out of Toyota at the moment, governance and transparency are their big bugbears, more than budget caps. Toyota and Ferrari have been working closely together at all levels and if Toyota are to leave the sport, I’m sure that they will say that it is because of the governance.

There is another meeting of FOTA this week, so the story will move on quite a bit before the deadline for entry on Friday.

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This morning in Monaco there was plenty of activity around the ongoing discussions about the 2010 F1 rules and plenty of chat about what was going to happen next.

It seems to be becoming widely believed that Toyota will use this situation to make its exit from Formula 1. They were thinking about it towards the end of 2008, but there seems to be general belief among the other teams that they will go at the end of this year. BMW, which is having its worst season by far in F1, is also said to be reviewing it’s participation.

FIA president Max Mosley was making himself very available to the media and his message was that Ferrari will be staying in F1 “100% sure.” But the sport needs to fill the empty grid slots and that is the area a lot of work is going into.

It was being said that the teams and the FIA had kissed and made up and that it was all going to be sorted out by the May 29th deadline for entries, but team bosses I spoke to on the grid in Monaco sounded a not of caution. “Are you all loved up again?” I asked one, and he replied, “No, but we’re falling in love again.”

The teams say that they would like to start from the point of maintaining the 2009 regulations and go from there in terms of finding a communal way of regulating the costs down to a level around the £40 million Max Mosley wants the budget cap set at, perhaps by 2011. But by then the world will be out of recession, in all probability, and new opportunities will be out there to generate income for the teams.

Mosley, who is still determined to maintain the idea of a budget cap, said, “I can imagine we can take it through one year if possible [with the] higher figure and then go to the full cap in 2011, but that’s something under discussion. This is a possibility.”

“Ultimately, it’s going to have to be that sort of region,” he said. “Just imagine in today’s world, you go out to get sponsorship and you are just an ordinary team, so to raise 45 million Euros is a massive undertaking.

“Everybody can talk figures, well it ought to be this figure or that figure, but if a team cannot raise the money, then there is nothing they can do.”

Money is hard enough to find for the existing teams, look at the amount of sponsorship on the Brawn and they have won five races!!

It seems very hard to imagine new teams being able to raise the kind of money necessary to get into F1. But Mosley insists on new teams coming in, so discussions are centring around ways of helping new teams, with cheap engine and gearbox deals and a possible chassis lease package to allow them to run competitively at low cost to start with. It seems that the existing teams are saying that they would require the new teams to run rookie drivers on that basis.

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This is going to be a big day. The F1 team owners meet this morning to discuss their next move in the escalating row over the 2010 budget cap rules.

By the end of today, the teams will really have to make their minds up whether they are going to put an entry in before the deadline of May 29th.

At the moment, there is every indication that Ferrari are determined to stick to their guns and if nothing changes they will not put an entry in for 2010. They are backed up by other manufacturers including Renault and Toyota. I sense that BMW are sitting on the fence a little bit, having given indications that they would put their own statement out along the lines of Ferrari and Renault last week, but the statement never came and you keep hearing that the view of the race team management on this issue is different from what the board of the car company thinks.

The FIA is sticking to its guns too, determined to drive through the budget cap, but possibly able to make some concessions around what is included and what is not.

One point I heard last night from Mark Webber, which hasn’t been said much before is that Ferrari is important to F1 for all the other teams because racing against them adds prestige to their own team. Without Ferrari, in other words, F1 would be struggling for a reference point. From the way McLaren and Mercedes are behaving at the moment, they may be well placed to benefit from a manufacturer withdrawal from F1 and so would become one of the few reference points for the teams who would continue, along with Williams. But it is too soon for Brawn, for example, to be seen as the reference point for F1, despite their strong form this season.

As for the new teams coming in, I Sport’s Paul Jackson has given an interview to Autosport website where he talks very confidently about coming into F1 with his team, which has been very successful in GP2. His is precisely the kind of team which used to make the step up, as Jordan did and Sauber in the past. He contends that F1 is for teams like his and that the manufacturers’ place is as an engine supplier, as it was largely until the late 1990s.
“F1 always was small teams. If they named GP2 Formula 1 and put it on the TV, how many people would know? Only the real hardcore enthusiasts,” I’m not sure I agree fully with this, as you cannot unknow what you know, but he makes a good point.

All eyes on Flavio Briatore’s boat for the first of the day’s meetings.

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I caught up with Fernando Alonso this afternoon at his press briefing in the Renault motorhome. He’s one of the few drivers to do this session on the first day of practice.

I was interested to hear how good it felt to be back on the streets here, brushing the barriers, feeling that unique adrenalin rush of Monaco. His answer surprised me a little,

“Not feeling good because being close to the barriers is not something you enjoy too much it’s a bit stressful. It’s always nice to be at Monaco and you get a different feeling, but it’s very demanding in terms of concentration in terms of how precise you are with your lines etc, because a little mistake and you finish your session. On Thursday you need to do as many laps as possible, so from a driving point of view you need to start risking, improve some racing lines, but you need to allow some margin because you want to do as many laps as possible.”

Today went pretty well for the team. Alonso wound up 11th, but he set his fastest time on the eighth lap of a 12 lap run on used soft tyres, so his time is not particularly representative of his outright pace. He thinks that with a bit of luck, a clear track and a bold lap he might squeeze into a slot on the front three rows of the grid.

“Top five, top six will be the absolute maximum. Maybe a more normal result will be fighting for the last couple of points. It’s a good opportunity for us to fight against teams we cannot fight on normal circuits. We know that when we get to Turkey we will be between position eight and position ten, more or less. So here is a bit different. Maybe here the position changes, if you have a good lap in qualifying, if you are close to the barriers, everything goes perfectly on your lap then maybe you start fourth in the race and you can keep that position.”

Today was more about the drivers getting comfortable with the car and the track than anything else, doing as many laps as possible to get into the groove. The circuit changes a lot here over a weekend as the rubber goes down. But already we saw how fast these cars are with the slick tyres and improved mechanical grip compared with last season. the fastest time today was a 1m15.243, which is only a tenth slower than the fastest low fuel time in qualifying from last year. So I reckon we will see some very fast times on Saturday.

“The set up was good more or less straight away,” says Alonso. “We tried not to change too many things on the car because the circuit keeps changing on every run, improving and improving when you put some rubber down. It’s quite clear for everyone that supersoft tyre will be better for qualifying for the one lap performance and the soft tyre will be better for the race with better consistency.”

Alonso got the maximum out of the car in Spain, finishing fifth behind the Brawns and the Red Bulls. He’s punching well above the car’s weight this season, so keep an eye out for him on Saturday.

He finished by reiterating his comments from yesterday about not wanting to drive in F1 if the manufacturers pull out at the end of this season,
“If all the manufacturers retire from F1, it’s not any more F1. It’s not about technology, it’s not about improvement it’s not about the maximum category in motorsport. I won’t consider driving in a category that is not the maximum of technology.”

The teams meet tomorrow morning to discuss the situation with the budget cap and then they meet again at 4pm with Max Mosley. With a week until entries open for the 2010 championship it will be a time for cutting to the chase.

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