New teams on collision course with FOTA?

We are in for a fascinating weekend in Germany as we look to see whether Red Bull has its nose in front on all circuits now or whether Silverstone flattered their car.

But behind the scenes in Germany will be very interesting as well as the latest developments in the ongoing row over next year’s rules come into play.

Today’s development is a series of letters from FIA president Max Mosley to the Formula One Teams Association, to the non-FOTA teams; Williams and Force India and to the three new teams; USF1, Manor and Campos.

To the non-FOTA teams Mosley emphasises that they are part of the decision making process because,

“No change can be made to the published regulations without the agreement of all confirmed entrants. As a result, changes to the 2010 regulations require your agreement and consent.”

This gives this long running saga a new twist. in June Mosley was all for the FOTA teams signing up for 2010 and then changing the rules from within. Instead FOTA announced a breakaway series and forced Mosley and Bernie Ecclestone around the table to agree a peace deal. As far as FOTA were concerned the deal agreed in Paris was for them to go away and sort out the rules for 2010 among themselves, which would then be ratified by the FIA. This meant the death knell of the budget cap, the very reason why the new teams signed up.

But now they find that it will not be as simple as that. So at the meeting in Germany this weekend we will have three new teams plus two existing ones who signed up for a £40 million budget cap, asking the FOTA teams exactly how much they propose to slash budgets by and how they propose to police cost control.

What will enrage the FOTA teams is that potentially you could have the three new teams, who have never turned a wheel in F1 and who’s ability to stand the heat in this particular kitchen is yet to be proven, able to veto rules which FOTA has devoted thousands of hours developing.

My sense during Silverstone weekend was that the new teams didn’t want a fight with FOTA and just wanted to get on with it.

Here they are being set on a potential collision course because if the costs are significantly higher than £40 million with no real prospect of them being able to survive and prosper then they will find it hard to agree.

Read Full Post »

How the three new F1 teams were chosen

“With the financial reforms to lower the barrier to entry to realistic levels it is good to see such a strong market for new teams, ” said the FIA this afternoon in a second official statement, following on from the announcement that F1 will have three new teams on the grid next season.

“This exercise has demonstrated that the only reason there have been vacancies on the F1 grid for many years was the excessive cost of participation. ”

This is what the FIA has maintained all along was it’s main motivation for introducing dramatic cost reductions and even the budget cap. Judging from the extensive comments on this site over recent weeks, it seems that a lot of people welcome the idea of fresh blood in F1, provided it is stable and has a strong chance of surviving more than a few months in the bear-pit of F1.

The FIA revealed that there were 15 applications for the championship from new teams, some of them were chancers, others deadly serious. From the chatter I’ve heard in racing circles, they have picked ones who have got their ducks in a line, namely Campos and USF1, the only slight surprises for me are the absence of Prodrive and the inclusion of Manor Motorsport, who will operate in partnership with Nick Wirth, formerly with Simtek and Benetton.

FIA consultant Tony Purnell

Each team went through a due diligence process overseen by the FIA’s Tony Purnell, the ex Jaguar F1 boss who has been advising Max Mosley on the technical side.

The primary concern was to ensure that adequate funding was in place. USF1 has raised around $60 million of start up capital from US investors in Silicon Valley. There are rumours that one of the founders of You Tube has put money in.

Adrian Campos has always been very good at raising money in his GP2 ventures and he has run a successful team. The team, now called Barwa, is leading the GP2 championship at the moment with Romain Grosjean at the wheel. Campos is also the man who discovered Fernando Alonso, so his credentials are pretty respectable.

So how did the due diligence process work? “We have requested documentary evidence to support all the new teams’ assertions, in particular with regards to funding,” says the FIA statement. “Thus we have been provided with accounts, contracts, multi-year business plans and other supporting material. On the technical side we have asked for a thorough description of their capability, key staff, project plans, capital assets (present and planned for), organisational charts, and so on.

“We have asked to see contracts and letters of intent. This extends to the sponsorship side, where plans and any descriptions of existing relationships are required. In all these aspects we have requested evidence that substantiates any claim in the teams’ plans.

In the background to these evaluations, where key individuals were identified on the funding side, our forensic accountancy advisors have run reputational checks, alongside the checking of factual data supplied.

“Once we had formed an opinion of the serious contenders we asked them to come to London to be questioned face to face by the due diligence team. Then a short summary report on the top five was sent to the FIA President.

The process was conducted with the professional assistance of Deloitte.

Prodrive boss David Richards was surprised and probably rather embarrassed not to have had his entry accepted. Of all the proposed entrants he is the one with the most senior F1 experience and his Prodrive company has succeeded at the highest levels of motorsport in sports cars and rallying. He also has wealthy backers from the Middle East.

But DR has not given up yet. As long as the FOTA teams’ entry remains provisional and a chance remains that one of the teams will not enter, there is a chance that the FIA will go down the reserve list to fill the grid.

“We are naturally disappointed by the FIA’s decision not to include Prodrive in the preliminary entry list for 2010, ” said Richards. “As we believe we have the resources and set-up to be competitive in Formula One and would make a positive contribution to the sport.

“We will wait to see how things develop in the next week, up to the 19th June deadline set by the FIA and we remain prepared and ready to implement our plans should the circumstances allow. As we have seen before, there are quite often many twists and turns in Formula One.”

Read Full Post »