Accusations over the allegedly elastic limits of the self-imposed
Resource Restriction Agreement have put the Formula One Teams Association at
risk of a meltdown - but what's the problem, what can be done and why is it so
important they stick together?
Ferrari boss Stefano Domenicali spoke this week of "suspicions
and polemics" at play within the Formula One Teams Association (FOTA)
ranks over the approach of different teams to the Resource Restriction
Agreement (RRA) and suggested the next few weeks are vital to come up with
answers to those concerns.
Following a recent independent analysis of the mechanisms
of the RRA, Red Bull and latterly Mercedes have been put under the spotlight
for taking a 'more aggressive' approach to the agreement, but both have
strongly denied breaking any rules or coming close to exceeding the applied
The teams' FOTA representatives met during the Korean
Grand Prix to discuss the situation and have lined up a critical meeting for
the Abu Dhabi Grand Prix, which could decide whether they stick together or
disband the group.
WHAT IS THE RRA?
FOTA was set up to protect the commercial interests of
every outfit on the grid, to give them a united voice and try to reduce costs
across the board. It currently covers all but one of the teams, with HRT having
quit at the start of this year claiming the collective was biased in favour of
the bigger teams.
As part of the process of cutting costs, FOTA introduced
the RRA - a self-imposed version of the budget cap that FIA president Max
Moseley tried to bring in - and although shrouded in secrecy it is known to
cover a variety of operational elements including staff levels, in-house aero
time, CFD time and spend on sub-contractors.
WHY IS IT NEEDED?
Formula One teams have always been run on a knife edge,
often driven by passion first and business sense second - and as such it was
recently noted by McLaren boss and FOTA chairman Martin Whitmarsh that over the
course of his team's 700 races some 107 teams have bitten the dust.
The big spending culture of the motor manufacturers in
recent years has instilled itself in some of the bigger teams and at least four
front-running outfits - Red Bull, McLaren, Ferrari and Mercedes - have the
resources and desire to spend highly to win.
The RRA was put in place to kerb their spending, ensure
they did not get too far away from the rest of the field and prevent the
creation of a two-division sport simply won by the team with most resources.
Williams claimed in their 2010 annual results that the
RRA had helped them "substantially" reduce costs - yet ask others and
they will say that the smaller teams still do not come anywhere near the
restrictions imposed by the agreement.
WHERE IS IT GOING WRONG?
As such, the focus of the RRA is not at the back, and
saving the smaller teams costs, but at the front, and limiting the overspend to
Red Bull were questioned by media (and absolved) last
year over their use of resources, resulting in a re-working of the RRA in
Singapore, but the fact that this has come up again suggests the systems in
place are still not right.
The highly competitive nature of F1 racing (and F1
business) means that teams do not want to reveal their detailed finances, yet
in truth that is the only way an RRA could work.
Currently, only the methodology of the teams' finances,
not the numbers, are given benchmark targets and the only checks done are to
ensure all teams are interpreting the regulations in the same way.
With no auditing of the numbers, it is hard to police
and, some say, easy to find loopholes which may not break the rules but do
break the spirit of them - such as maximising wind tunnel use then farming out
further work to other tunnels under the sub-contractor budget (something
Ferrari admitted to doing with Toyota's Cologne facility).
As Ross Brawn said recently, the RRA is now "starting
to bite" the teams who have the resources available to need them
restrained, adding that the agreement is "not structured well enough yet
to have the controls, checks and reassurances in place to give everybody
The result is some teams enjoy a competitive advantage by
simply spending more money and, much as with the work on the engineering side,
those who don't push the boundaries and explore the loopholes are a step
WHY IS IT SO IMPORTANT TO KEEP?
The RRA is just a small, if important, part of the bigger
picture. It has been one of the biggest tests of trust set up by FOTA, and
right now FOTA needs that trust to be solid and unbreakable.
Sure, if it does fall apart the floodgates will open for
the front-running teams and a spending war will ignite, especially with the new
regulations coming in for 2014 in both car and engine departments.
But as with all budgets, balance is achieved through
income and spend, and while cutting spending is important so too is the
strength of FOTA in preparation for what is likely to be a complex and highly
political battle for F1's commercial rights, with a new Concorde Agreement that
determines some of the teams' commercial income due for 2013.
McLaren's MD Jonathan Neale appeared to hint at the
business approach of rights holder Bernie Ecclestone when he recently said: "There
will inevitably be pressures. There are those who would seek to divide the
teams as we get ourselves ready for the next round of commercial negotiations..."
British lawyer Oliver Weingarten, former in-house counsel
at the English Premier League, has recently arrived to steer FOTA through the
next delicate phase of negotiations over the new Concorde Agreement, working
alongside Whitmarsh and vice chairman Eric Boullier, but they will need a
united front to make a strong case.
When I spoke to Martin Whitmarsh about FOTA last year, he
reminded me of why FOTA came together in the first place.
"There had been clear policy to divide and conquer
the teams and the teams had allowed it to happen," he recalled, speaking
of the FIA's attempts to push through a budget cap when the teams were last
negotiating the commercial rights.
"FOTA was an opportunity to come together and try to
put together a cohesive team position. For the good of F1 we need to form a
consensus and previously there was no forum in which that consensus could be
developed and acted upon."
He denied FOTA was constructed to fight with the FIA or
Ecclestone, and instead focused on its united front, signing off with the
promise: "Certainly, while I am chairman of FOTA, I will try as best I am
able to get the teams to work together in a sensible and rational manner and to
work with the governing body and commercial rights holder to develop the sport.
But we'll see how that goes..."
The danger is, if the RRA issues cannot be resolved by
both those who are igniting distrust and those who are disbelieving, FOTA will
feel it cannot trust its own and Whitmarsh will have his work cut out keeping
it together. And if that happens, Formula One as a whole could lose out...