Ecclestone, the concord and break away plans

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WhiteBlue
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Re: Ecclestone plans new championship without FIA

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the equal distribution of price money in F1 can easily argued. the revenues for the big teams are just augmented by the price money. they do not need 20-30 millions more having budgets in excess of 400 millions and exceeding 1000 team members. they can attract sponsors and many of them get hundreds of millions from the parent corporations. small teams rely on price money much more almost as the big teams did 25 years ago.

promotion relegation would work if some of the CRH extra cash was invested in that series and helping the promoted teams with initially making the big jump.
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WhiteBlue
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Re: Ecclestone, the concord and break away plans

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Time for some more documentation.

One should not forget that Williams, Ferrari, Red Bull and Force India (then Midland) signed a 2008-2012 Concord agreement with the FIA and FOM.

For those who remember the unexpected change of mind in the customer car issue there should be little doubt that those four teams have a legal claim against the FIA to receive protection of the constructor status and certain revenues from FOM. Unfortunately the clauses of the 2008-2012 CA are unknown. It is fair to assume that some of the clauses must be simillar to the 1998-2007 CA. I believe that the leverage of the 6 party concord agreement lead to the compromise to accept customer cars until the 2009 season and require constructor status again from the 2010 season.

It is logical to assume that the FIA will not extend the conditions of the six party concord agreement to the other 6 teams, or we would not be in the situation we are facing now. It is also clear that FOM and the four teams cannot break away without being subject to legal claims and damages.


Bernie has given an interview to the BBC
F1 boss 'could not endorse' split
By Andrew Benson

Ecclestone and Mosley disagree over the future of F1
Formula One boss Bernie Ecclestone says he could not be part of any move by the teams to form a breakaway championship.

The teams are unhappy about the refusal of Max Mosley, president of governing body the FIA, to sign a new Concorde Agreement, which governs F1.

But Ecclestone told BBC Sport his Formula One Management company was contractually tied to the FIA.

"I told the teams, if they wish to break away, then do it, but we couldn't be part of it," Ecclestone said.

"What this has come down to is, if we don't get a Concorde Agreement, what is going to happen?" he added.

"[For the teams], it was simply, 'we don't have any links with the FIA, and if we want to do our own thing, we can always do our own thing'.

"But we couldn't [endorse that] even if we wanted to."

Ecclestone said it was imperative for the sport to secure a new Concorde Agreement "for stability".

"I believe the teams should write the regulations with input from the FIA."

The dispute threatening to split F1 centres on a disagreement about how the rules are made, he said.

The old Concorde Agreement, which was in force from 1981 until 2007, gave the teams a central role in the rule-making process through an organisation called the F1 Commission, on which Ecclestone and Mosley both sat, along with representatives of the teams, promoters and sponsors.

It effectively wrote the rules, which were then rubber-stamped by the FIA World Council.

But the teams and Mosley have been unable to agree a new Concorde Agreement, which has left the FIA with absolute power over the rules.

"Early on, one of the things we agreed was that it would be in its previous form," Ecclestone said.

"With the F1 Commission as it was, no individual party had control.

"(Mosley) has proposed something completely different, which the teams wouldn't accept. I don't see any need for compromise. They're just bad solutions. We want to continue with the Concorde Agreement as it was in the past."

Ecclestone said Mosley did not want to sign a new contract "because he wants to do what he's done this year - say these are the regulations you race under if you want to race in the FIA world championship".


Could the teams split from the FIA to set up a rival championship?
But the teams are still arguing over the exact nature of next year's rules, and Ecclestone said there was a risk some could quit the sport if Mosley tried to unilaterally impose rules they were not happy with.

"My argument has always been, if you let the teams sort things out between them, the big manufacturers aren't going to screw over the small teams," Ecclestone said.

"If it's in their hands to help them, they'll help them. They want them all to stay in business.

"But if the FIA puts a rule out that suits the four big teams, the other teams might go, and if it suits the lower-grade teams because it's cheaper, the big teams might go because they could say we don't want to be part of that, it's like GP2.

"I believe the teams should write the regulations with input from the FIA - providing they [the rules] conform to safety, and providing they [the teams] have been around for a long time and intend to stay a long time, and confirm they will, and confirm they will support the non-manufacturer teams."

He admitted there was a fundamental philosophical difference between himself and Mosley on this issue.

"We don't think [the FIA has the right to make the rules]," Ecclestone said.

"The police are like regulators, but they don't write the rules. They say, you did 40mph, it's a 30mph limit, you're nicked.

"I think the people who spend the money and participate are the people who should have much more input into making the regulations, and the FIA should control those things."

The FIA insists that it is consulting the teams on the regulations.

However, the sex scandal which has enveloped Mosley is making the situation more difficult.

Mosley has been under pressure since March, when the News of the World accused him of taking part in a "Nazi-style orgy" with prostitutes.

Mosley, the son of former British fascist leader Sir Oswald Mosley, accepts he visited the prostitutes but denies there were Nazi overtones.

The 68-year-old has launched a legal action against the newspaper alleging defamation and invasion of privacy, with the case due to start on 7 July.

Mosley won a vote of confidence of the FIA members on 3 June, but it is known that senior executives in some of the big companies involved in F1 are uncomfortable with Mosley staying on in a situation in which they themselves would have been forced to resign.


Ecclestone and Mosley appear to be at loggerheads over F1
Ecclestone said the issue could raise particular problems for companies that had Jewish executives.

"A lot of companies have Jewish people on their boards," said Ecclestone, who this website incorrectly described as Jewish on Monday.

"And as the Jewish community in the first place said Max shouldn't be there, I sincerely hope this would not affect their participation in F1, whether now or in the future."

He said the dispute over F1 would not have come out into the open had it not been for the Mosley scandal.

"The problem is, Max has opened the door with what's happened to allow them to say these things," he said.

"Before the vote, people were protecting their position as they did not know what the result of the vote would be.

"Had he not received a vote for him to stay, no-one knew who was going to be the president, what they would have needed to do."

The FIA was unavailable for comment, but Mosley wrote a letter to the FIA member clubs last month setting out his position on the Concorde negotiations.

He said that the FIA had two main concerns - to ensure a fair financial package for the teams and the championship, and to guarantee the independence of the FIA as a regulatory body.

He wrote: "A new Concorde Agreement would give the F1 teams a greater say in the rule-making process, including various rights of veto.

"Because of its influence over the teams (which comes mainly from its ability to offer favours in and around the paddock), [Ecclestone] sees a Concorde Agreement as another way to exercise control over the sport.

"I do not believe we should concede. The sport and the commercial interests should be kept separate. The teams and the CRH [commercial rights holder, which is Ecclestone and the venture capital company CVC] should be consulted and listened to at all stages, but it must be the FIA, not the CRH or the teams, which decides the regulations.

"My refusal to concede on this has led to a difficult situation."
This interview is pretty revealing. It shows that the current fight between Max and Bernie is primarily about the new rule making mechanism as introduced in 2006 with the appendix 5 of the sporting rules for this year. The Mosley sex scandal, the Nazi fabrication and the rubbish about Jewish investors is just a thinly veiled attempt to divert attention from the real issue.
Mike Lawrence wrote:If those self-same Jewish investors in F1 can put up with the growing Arab influence on the sport, it can certainly handle Max Mosley ratting about in a west London knocking shop with a Welter of Whippers.
It is obvious that Bernie cannot drive the break away himself. Compare the above link on the 6 party CA. The contractual situation with the FIA and the bond holding banks prevents him from doing this. So he is stirring up team resistence and hopes they will do the break away or use the break away threat to pressure the FIA and Mosley into concessions.

I believe that more and more people and sports media will understand the true nature of the conflict.

The sale of the commercial rights and the separation of commerce and rules justifies and requires a new way of rule making compared to 1981.

Obviously this new mechanism could not be introduced before the old concord agreement expirered. so the consultations about it started in 2005. in 2006 the teams all signed up to the new constitution by comitting to the 2008 championship based on the sporting rules including the appendix 5. they are legally bound to it as much as FOM is bound to marketing "The FIA Formula 1 world championship".

Any break away option they have is perhaps in 2009 and later. I do not think that they had to apply to successive championships past 2008.

Bernie says the FIA is making all the rules and under the old concord the teams were making the rules. LOL!!! Another red herring.

Under the old concord Bernie had voting rights in the F1 comission as had some promotors and teams. The promoters were completely dependand of him and he has always told them how to vote. The small teams have also been quite often in commercial and financial difficulties and he was the only one who could help them because he and the big teams had grabbed all the money. So he often was in a position to make them vote for him.

Under appendix 5 all the decisions are made by the team majorities. all other decision bodies are rubber stamping only. so effectively if 6 teams agree things will always go ahead. this means that some balance is needed for the small teams as there are 6 well financed big teams. it is obviously now an objective of the FIA to increase the number of the small teams to strengthen their voting power. their future share of price money is likely to come from FOM. by restricting the budgets of the bigger teams they will be able to play a bigger role in the rules process.

Bernie's strategy obviously is to conserve the old structures where an F1 comission was blocked most of the times to make any decisions by extremely high voting hurdles and veto clauses and he could influence votes indirectly. he is getting more and more desperate with this issue as he is running out of cards to play.

The sex scandal card did not work. The Nazi defamation did not work. The "We only want to keep what we had" card did not work. and the old break away scare is not going to impress much longer. I do not see his "FIA dictatorship" card working either. the teams have worked out the overtaking issues in a constructive way and this is proof that the rules can be developed effectively and cooperatively by appendix 5 modus.

So what is the next thing we are going to see from him? Perhaps he will eventually accept that the next commercial agreement will be based on the appendix 5 rules? In my view the FIA will be mad to sign off anything else. But will Bernie? I will not hold my breath.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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WhiteBlue
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Re: Ecclestone, the concord and break away plans

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more info about the negotiations from Autosport
FIA to demand more revenue for teams

By Simon Strang Sunday, June 22nd 2008, 11:48 GMT


The FIA will tell Bernie Ecclestone this week that he must give teams a larger share of Formula One's revenue if the governing body is to sign a new Concorde Agreement.

In the latest development in ongoing negotiations to set out a new financial framework for the sport, the FIA is now believed to be ready to agree an accord, but only on the condition that a larger percentage of F1's total earnings are re-distributed to the teams.

The governing body is expected to use next Wednesday's FIA World Council meeting in Paris, as an opportunity to take forward proposals outlined by Max Mosley in a letter to all the FIA Presidents on May 16th.

Sources in the Magny-Cours Paddock suggest that the FIA may call for the teams to receive 92% of all promotional revenue, and 67 percent of all television revenue from each event with Ecclestone, the sport's commercial rights holder.

The teams currently receive 75 percent of the promotional revenue, and 50 percent of TV earnings. They each receive a different take of this, based on success and historical escalators, though Ferrari have a separate agreement.

A spokesman for the FIA made it clear that the governing body is seeking an "equitable distribution of revenues" and to ensure that any agreement "maintains the FIA's independent authority" to regulate F1. It is understood that the FIA sent Ecclestone their proposal for a Concorde Agreement in May 2007 but have received nothing back since.

Apart from reducing the revenue received by F1's commercial partners, the move could be seen as a political play to win over team support for Mosley.

But some team principals have privately suggested that the negotiations over a new Concorde Agreement will not be lead by money alone.

BMW team principal Mario Theissen told autosport.com: "First time I've heard about this. But we wouldn't reject the money.

"If you look at the agreement, you have to look at all the points," he added. "Not just at the money. To us it is important to have a good, strong basis for, let's say, the next ten years. In all respects. Money is part of it.

Asked if future regulations were a key factor he replied: "Sure. And not just the regulations themselves but also the procedure for how to develop the regulations.

"The basis split of responsibilities into the commercial side and the regulatory side, in my view, is not bad. I think we have seen too often in the past 10 years that the regulations were changed in a way that the teams could hardly cope with.

"And sometimes the changes were not well thought through either, and had to be reverted back. So this is something that we would like to be involved in a better way in the future; not just to be heard but also to really be in a position to influence what comes because we have to cope with it, we have to spend the money for it and we need to have the time to do it.

"All this has not always been respected. But basically, the split is OK for me."
more information from Joe Saward
JUNE 22, 2008
A few more days of calm
The FIA World Motor Sport Council will meet in Paris on Wednseday and we anticipate that there will be discussions over a proposal that will, if agreed, spark a major fight for the control of Formula 1. At Magny-Cours the F1 world has been very quiet, although everyone is very aware that this is the calm before the storm, and that the conflict between Max Mosley and Bernie Ecclestone is heading towards an explosion.

Our spies tell is that the proposal being put forward is that the FIA will only agree to a new Concorde Agreement if everyone else involved agrees to a substantial redistribution of Formula 1 wealth. The FIA is expected to argue that too much money is leaving the sport and wants a new agreement in which the teams share the majority of the race fees and two-thirds of the TV revenues. At the moment the current deal is that the teams get 50% of all revenues generated by the Formula One group of companies. Such a suggestion would push that figure up to around 75%. This would probably make it impossible for CVC Capital Partners, which controls the Formula One group, to make the debt payments necessary on the loan it took, which was secured on the future profits of the F1 world.

This move is likely to get Mosley the support of most of the teams, even if they are not keen to be associated with the FIA president as a result of his recent sex scandal. It is not just a question of money, however, as there are questions of governance that many of the teams want answered as well. No-one we have spoken to has shown any great enthusiasm for the idea of Mosley being replaced by ex-Ferrari boss Jean Todt, which appears to be Mosley's plan at the moment.

However, money is money and teams that worry about it such things are likely to be keen on the idea. Others may simply stand back and watch the fight in the hope that it may end with a completely new structure and perhaps completely new management on both sides.

The FIA is at an advantage as the official status of the World Championship and the difficulty in starting a rival series means that most of the teams will stay with the federation, even if they are not keen on Mosley. And if more money is on offer then the logic is stronger still. The rumoured proposal means that CVC cannot match the offer because it must pay the banks more than it will have available, unless Ecclestone and his partners are willing to put money back into the business, which is not thought to be very likely.

The big question is whether or not the two sides are actually looking for a compromise, as would normally be the case, or whether this time the fight is a mortal combat over control of the sport.

The signs are that it is the latter.
This is unlimited warfare between Max and Bernie. I must say I really love this last move by Max. Bernie has done so many exploiting deals with Max's support that he probably forgot that things can go the other way round. It has a kind of ying yang justice to it. Actually the money distribution now proposed is exactly the original 1981 scheme. =D> =D> =D> So if Bernie wants to keep the Concord as of old he should agree to this. :wink:

Bernie's big archilles heal is money. He is running a company that is brutally leveraged. Cash flow is so tight that it cannot afford to loose this kind of cash without a complete refinance. Bernie has been under pressure before by CVC. Now with this problem published he really gets a kick in the nuts.

once the WMSC backs the new money distribution officially the FIA is bound to that strategy. CVC will not really want to do this. So they will open a back channel to Mosley and make inqueries what it will take to get a better deal. I can lively imagine how Max tells them. "Lets remove Bernie and forget Newscorp as a buyer and we will talk about it.". :lol: :lol: :lol:

The AMS report Max strikes backthat kicked off the other reports. German only.

Ecclestone denies that he had anything to do with setting up the Mosley scandal.

A new twist is the threat to have the EU check into this to prevent the mixing of the FIA in commercial affairs. A strange change of tack. Wasn't it Ecclestone who wanted the mixture of commerce and regulation that is the Concord agreement to continue?

A new plan for shifting the cost of technical services from the FIA to the teams was rumored today. This will be petty cash compared to the money the FIA intends to get the teams from FOM. It seems to be connected to the driver license price hike. It looks like the FIA is making an attempt to recover some cost it has from the licensees. If the money dispute with FOM goes wrong this could become an issue.

An agenda of tomorrows WMSC meeting was available to autosport.com.
The FIA is also to consider opening the period of entries for next year's world championship from July 1 to July 31 - meaning any new outfit will have just one month to put together their plans.
this is going to seal the break away issue. It is thought that Ferrari, Williams, Red Bull and Force India have a concord agreement til 2012 which will see them racing with the FIA. the other teams need to make a decision til 31st July. It will be interesting to see if appendix 5 of the 2008 sporting regs will be repeated in the 2009 rules.
grandprix.com wrote:JUNE 24, 2008
Bernie denies
Bernie Ecclestone has told The Times that he had nothing to do with the revelations about FIA President Max Mosley's sex life, as revealed in March by the News of the World.

"It’s nothing to do with me at all," Ecclestone said. "You must be joking. Secondly, this sort of thing is not my style - not the sort of way I would operate. Thirdly, there is no way in the world that I would want to destroy Max."

Tomorrow's meeting of the FIA World Motor Sport Council is expected to see Mosley move against Ecclestone, with the proposal of a major rethink of F1 finance. Ecclestone says that the FIA cannot do such things because of existing contracts.

In the next week the first of Mosley's legal actions will come to court in the UK and it will be interesting to see how the story develops.

One thing that is certainis that the next few days will be anything but dull.
I agree with that last sentence. Bernie has got himself into a very dangerous position. He was very valuable to CVC as long as he could run the business like he always did. The way things go he is quickly becoming a liability. CVC is not likely to let someone stand in the way of a solution that will let them stop the losses. the way things are going the odds are stacking up very fast against Bernie. CVC can loose a lot of money if they stick to him. I'm not sure they will want to ride this out. I would not be surprised to see Bernie gone from F1 before Max hangs up his whip next year. :wink:
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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WhiteBlue
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Re: Ecclestone, the concord and break away plans

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A new entry in the break away saga:

GP.com comment regarding break away situation after the WMSC meeting
The FIA said that it will discuss plans for better efficiency with the F1 teams, including new technical regulations and a review of the way F1 is governed. The Formula One group has, apparently, agreed to provide its response to a number of proposals made by the FIA last year.

It is worthing noting that in order to head off any possibility of a Formula 1 breakaway series - unlikely though that may be, the F1 teams must enter the championship before July 1 and July 31. In effect this means that teams have no choice but to sign up as there is no chance at all of anyone organising a rival series in 2009. The FIA says that the entry fee will remain much the same as in 2008 but is going to discuss further fees with the teams. These are designed to take organisational elements in F1 away from the Formula One group.

All things considered, the decisions suggest that the FIA is taking protective measures against the possibility of a split, while at the same time, going on the attack with the Formula 2 idea.
I assume the break away momentum is coming from FOM, McLaren and Honda. Ferrari, Williams, Red Bull and Force India are locked in the FIA series until 2012 by contract. I can only conclude that this strategy is going to deal the break away idea a deadly blow.

Potential pirates are much worse off than the supposed GPDA rebells were in 2005:
  • There is a solid core of F1 teams committed to the FIA F1 championship.
  • The FIA is committed to get the teams more money (up to 125 million $).
  • The teams will be able to influence the rule making
  • consultations will follow a compact agenda with a very robust time frame (special WMSC meeting for rubber stamping in September 2008)
  • FOM will not be participating in the rule making talks
I can see the FIA meetings being followed and preceded by hectic motor home talks with Bernie at race weekends. The F1 team principals will have a hard time.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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WhiteBlue
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Re: Ecclestone, the concord and break away plans

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Peace is breaking out according to The Times

It is difficult to assess what has really happened but it would appear that CVC has made a move to accomodate some of Mosley's whishes prior to the high court procedure next week. Mosley has left himself many open doors by not being specific about who trapped him.

AMS thinks that Donald McKenzie of CVC, Mosley and Ecclestone met and agreed terms. It is also interesting that Ferrari is apparently party to a deal as the peace talks come in the wake of an Ecclestone/Montezemolo talk.

This could mean that CVC has accepted the FIA rule control and change of control clause. Any controversial exit strategy is probably terminated. Due to the involvement of Montezemolo who is the first and most influential signatory to the trunc concord agreement signed in 2005 and running to 2012 one can assume that the negotiations for a full concord involving the other teams are now on their way.

It is also interesting that Patrick Head has once again made his objections to Jean Todt as a potential successor to Mosley public. One should not forget that Williams is also party of the existing trunc concord, so they must know what is happening. It is probable that the settlement will include Mosley's succession which would ensure that Ferrari is satisfied. If that means Todt is now internally confirmed as part of the deal rests to be seen.

Ecclestone to Reuters
...We will get the Concorde Agreement signed, which we have been cracking away on for a long time. I don't need it, but the teams need it, so we will get that done. It's all in place. I've been battling with him (Mosley) now for a few years. Let the teams write the technical regulations. They know what they can afford to spend and what they want and don't want and what they think is good. They know what's good for the sport because they are part of it, they are spending the money, so they should write the regulations. We want the costs reduced in order that we can have other teams come in, so they've an opportunity to do it, and if they don't do it then the FIA will handle the regulations. From my point of view, it's good.
edit 24 July:

Industry observers say: F1 enemies set up Mosley sting
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)