If one has a pet journalist who does whatever is suggested to him/her/it without any question, one is actually creating a problem. The journalist has zero credibility, of course, but in consequence the puppet-master has little credibility either – because the need to manipulate the news highlights what you are up to, or the problems that worry you. Thus when a pet scribbler reports that the European Commission has brushed off the suggestion that there will be an investigation into anti-competitive activities involving the FIA, the Formula One group and some of the F1 teams, everyone assumes that the word to do that came from the puppeteer, which means that this is something that worries the string-puller.
The good news in this case is that the once-credible magazine that ran this tosh is not overly-extending its fact-checkers – because there are no facts involved.
In the writer’s opinion (worthless or otherwise) a letter sent by the European Commission was a brush-off. Apparently, this passes for journalism these days.
What the letter shows is carefully worded bureaucratic language which says “we are investigating”. Bureaucrats are always careful with words, lest they get bitten by them later. And the last thing they want to be seen as is gung-ho, as an enthusiasm to investigate can be portrayed as bias at a later point.
Anyway, what we have here is a worthless opinion which has been picked up by the usual bottom-feeders and the impression is created that the Commission is not interested in F1.
It’s far wiser to read real journalism in The Times, which reports that there are fears that an Competition Directorate investigation of F1 could do the sport serious damage, quoting Max Mosley, the former FIA President, who has already warned that the Competition Directorate could rip up all the F1 financial agreements because of the way the money is shared out and the sport is governed. Mosley has some experience with the FIA, the EU and Formula 1, and while there may be some agenda behind what he says, the fears are real.
I think it is important to remember one or two important facts from back in the mists of time. In the 1990s there were some complaints against the FIA and the Formula One group (and related parties) over the handling of various commercial rights. This came from a number of different parties, who got together (secretly) and agreed to try to get things stopped. They knew that they had a strong case and the worst case scenario was a pay-off from the commercial rights holder to make the problems go away. A settlement duly came and the conspirators received what the FIA later called “a very substantial payment” from the commercial rights holder. As a result of this they withdrew their complaints.
However, the European Commission did not stop there. It plodded on through its due processes, unrelated to the previous complaints, and ended up forcing change. The Competition Commissioner at the time of the settlement, Mario Monti (later Prime Minister of Italy), agreed to a settlement on the basis that “the parties agreed to make changes which limit the FIA to a regulatory role, so as to prevent any conflict of interests and to remove certain commercial restrictions put on circuit owners and TV broadcasters”. The Commission said that “the sector will be kept under scrutiny to ensure that changes work in practice”.
My sources tell me that the F1 teams have already met with the European Commission and discussions have taken place, but there is really no need for an official complaint, unless the teams are aiming for an a la mode pay-off from the Formula One group. I wouldn’t be surprised if every chancer with half a complaint did not jump on the band wagon to try to suck some cash out of the rich.
But will that stop the Commission if it chooses to revisit Grand Prix racing? No. The problem is that another investigation could, as Mosley says, do considerable damage to all concerned, but at the same time it might also be a good idea for everyone, if it creates a better structure for the future.
In general terms the Commission does not want to get involved in sport and prefers to leave the sporting federations to run their own operations. However, if those operations are deemed to be unfair then the Commission will step in, as was proved 15 years ago. Deals can be made and there is a very neat system whereby the first whistleblower in a cartel arrangement gets immunity if its shops the others involved? One can see Bernie Ecclestone scurrying after that if there are signs that the EU thinks a cartel is being operated. One cannot imagine that the FIA would be able to move fast enough…
In any case, none of this helps anybody involved. The Formula One group is owned by a bunch of private equity investors. They want to make money and sell the sport to the highest bidder. The problem is that no-one will buy if the sport is up to its neck in legal waffle and investigations. Thus they are stuck. Trying to float the business will not work because potential investors won’t want to know if there are risks of the whole thing being unravelled. One might argue that the Formula One group could go down this path in order to damage the FIA and ultimately go off on its own, regulating itself, but that will not happen. Why? Because the value of the FIA as a regulator and safety monitor is actually quite important to the Formula One group because it is the FIA that has to deal with all the boring stuff, like liability issues, rather than those tasks and risks having to be taken by the Formula One group itself. Claims brought against the federation in the case of serious accidents (such as a Le Mans-style disaster) could prove destructive. One can insure oneself against liability issues but the premiums are high, particularly if the insurers agree to pay negligence claims. Bernie and his backers don’t want to run those kind of risks, nor pay those kinds of premiums. The FIA has to. It is their responsibility. The federation insists that all competitors are themselves insured, but that does not preclude negligence claims.
These are matters that are understood by the automobile clubs, a lot of which earn huge sums from insurance. What they want for their core businesses is for the federation to be seen as being clean, transparent and effective. That creates confidence.
Oddly, when you take a step back, both the FIA and FOM want the same things, it is just that their executives have created structures that have attracted the attention of the Commission.