As I mentioned the other day, the small teams in Formula 1 are becoming rather more active as they struggle to survive without a cost cap. The four – Caterham, Force India, Marussia and Sauber – wrote to the FIA last week saying that they want to have a voice in decision-making and hinting that the F1 Strategy Group, which features only the six biggest teams, is almost certainly anti-competitive under European law. The process, they argue, is neither democratic nor transparent and should not have been agreed to by the federation, which was keen at the time to complete its financial dealings with the Formula One group (before the FIA election) and so agreed to what the Commercial Rights Holder wanted. The letter was clearly what caused the World Motor Sport Council to call all the teams together on May 1 for a meeting about costs. Bizarrely, at least two of the “big teams” have significant financial problems as well and would welcome some form of cost control, but clearly did not want to be out of step with the others on the F1 Strategy Group.
The best way to get the big teams to agree to a cost cap is for the smaller operations to come out and announce that they have agreed a limit (the number being something akin to the biggest budget they have between them). If this is given sufficient publicity and one of them is still beating the big teams – Force India being the obvious candidate this year – then it is inevitable that eventually someone on the boards of the big teams will start to ask questions about why they are investing so much in the sport and being beaten by teams spending a fraction of that money. That will create pressure from above for the big teams to reduce their costs and with a few more recruits the small teams and the FIA could write some form of control into the rules. Once this was done the big corporations would not dare to spend more than the limit as the risk of being found to have cheated (and even the accusation) would be sufficient deterrent. It would also be a good opportunity to showcase efficiency for all concerned and thus make F1 more attractive to others who are scared away by the lack of financial limitations. The current situation is being maintained by the teams that are running at the front for purely selfish reasons and none of them really care what happens to the sport in the longer term as they all have other core businesses and will depart if they do not like the rules and regulations. If Formula 1 has to lose a few of these selfish big players then so be it, but all of them are in F1 because it offers them significant gains and so, in the longer term, it is logical for all of them to agree to a cost-cap and to stick to it.
Once there is a sensible cost cap in place and there is an FIA-administered policing system, the teams will start to produce profits. Once that begins to happen each of the entities will suddenly acquire considerably more value than is currently the case, which means that there will be a new generation of team owners who like the limelight but do not want to have to pay for it. This would also help the sport grow in the United States where there are a large number of sports billionaires who would jump at the chance of such global opportunity.
All things considered, there is no sensible argument against a cost cap, unless you have a vested interest in keeping the current status quo and winning by out-spending the opposition. Just as the technical rules have moved towards efficiency, so the commercial side of the sport should head in that direction in order to create a better future for the sport. It will not be an easy route to take, but the current path is not a good one. We have already seen (in the 1930s) what happens when one or two teams can outspend everyone else and it does not bode well if nothing is done.