Sauber and Force India have gone ahead with a complaint to the European Union Competition Directorate. This is not unexpected and has been in the pipeline for some time. The EU will now likely respond by asking the accused parties to answer questions and supply documents. The goal is to have a fairer distribution of revenues, while the EU will probably also address the question of the FIA taking a shareholding in the Formula One group and selling its right to regulate the sport, something that the federation undertook not to do the last time there was an EU investigation. The sport is obviously the big loser in all of this, but it could play into the hands of Bernie Ecclestone who may now be in a position to cancel deals he has with the bigger teams. The only fear is that the EU might issue fines to those involved. The only party that would struggle to pay fines is the federation…
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joeblogsf1 
Anything that is even an attempt at rectifying the list of issues this sport has is a step in the right direction. The only consistent with all of these issues are the beneficiaries.
An observation of the sport, yet a compliment to you – the highlight of my racing weekend is reading this blog.
Has Mr BE “encouraged” VM and Monisha to go and make his day – I am assuming Bernie may want to take control of F1 at a cheap price as a public listing is out of the question and CVC have already taken all the cash in the form of divis so any price Bernie pays for the rights is now probably a bonus.
It seems it may also be a clever way to trim the sails of Mr Todt. I wonder if this helps Red Bull to exit the sport without paying the “exit fee” as long as they return the heritage monies.
/Has Mr BE “encouraged” VM and Monisha to go/
Having read him today, I’d not be surprised at all.
Even if he claimed he had not discouraged nor encouraged that move.
BE in his statement to a news paper said the teams informed him before going to the EU so i’m guessing there’s more to this .
If Bernie is using the EU for a play, he is really playing with fire! The EU could easily find and demand he has nothing more to do with the administration of F1 as he and the FIA already agreed to be good before and could not do it. Jean Todt can say he did not sign the original agreement and his lawyers advised him he was OK etc, etc.
Making this play with the EU the week that most everyone assumes Bernie abused his power with TV coverage of Merc I doubt he would survive this investigation IF he lived long enough to see the results.
So lets see Ferrari looses its big payments and leaves for Endurance racing, RBR is on the way out the door and looses its big payments anyway so it is out the door regardless. McLaren and Honda has no real need to stay if Ferrari are gone to compete against and Merc will leave if the EU make the sport look dirty. I am not sure what part of this will work out as a good thing?
I would say it is a case of Chickens and Roosts and the EU transporting them by the truck load!
Ferrari cannot afford NOT to be in F1
Could this investigation have an affect on the Renault Lotus deal?
It was rumored that the Lotus Renault deal was depended on how much FOM was willing to pay Lotus Renault besides the normal competition payments and when you read the Force India statement it seems their complaint is especially focused on these kind of payments.
Would this mean cancelling/reducing CBB payments to the likes of Red Bull and Ferrari ?
We will see
I think the Glazer family would be ideal owners for F1 What about that Joe?
There’ll be no TV coverage for Sauber and Force India at the next race then…
Add to that Merc still getting the cold shoulder, Manor being ignored, Ferrari likely getting snubbed if they don’t give red bull an engine and both Red Bull teams probably getting shunned for quitting the sport, McLaren being so slow they aren’t worth covering, Pastor Maldonado likely crashing into Grosjean, we can expect to see a lot of Williams…
Don’t be silly Limelee, there are several days yet in which Williams could somehow offend those on high and also be spurned. Expect the next race coverage to consist of 90% shots of empty track and, er, the car park when that’s too difficult.
That’ll work out nicely – the next race is Sochi so there won’t be time to broadcast any shots of the cars in between the coverage of Mr Putin anyway.
The most distasteful thing about Sochi last year was BE and VP “holding hands”. It looked like teenage love. The funny bit was him uncomfortable JT looked because he needs Russian support for his road safety ambitions.
You’re certainly right hat the sport looses in the short term but I can’t help but think that in the long term this would be better for the fans and the sport
Can’t help but think/hope that any short term pain will be justified by a long term healthier F1
It needs to be done
If Bernie could Tap dance around the German court system then this should be a walk in the park. Your knowledge of the nuances of the situation and depth of understanding as to how Bernie can benefit by this and work it to his advantage are something the average punter (myself included) don’t see clearly.
As far as I understand things Bernie has been in bed with the CVC folks and orchestrated the existing Toxic arrangement not giving a Hoot how difficult it was for Teams to endure this environment. Although they have bled the business via Dividends I am sure they would not be happy with an asset that was ripe for further bleeding via a stock market floatation now being fire saled. Their ownership is worth Billions and they are going to want that Iceing on their cake, no?
Wow Joe, F1’s in a right mess now! Lotus financial, Red Bull/Torro Rosso engines and this! It is a water shed moment in the sports history which might not be a bad thing! I do think that there is so much to sort out but all at the same time, well why not. CVC must be cringing at the moment, their hopes of a far east flotation a distant dream! Is it being orchestrated by Bernie I wonder to clear the decks? If it is it’s a ballsy play!
My tears for CVC just won’t flow. I think they should be boiled alive (figuratively speaking)…
Are you sure you mean figuratively..?!
Er, CVC have always been who they are…no surprise there Joe, who sold the sports rights to them and who made the rights available in a package in the first place ? Save the boiling oil for them….figuratively.
Joe I have a new proposal for the future of F1 considering you rejected my hydrogen fuelled V10s . How about between 2025 and 2030 we have:
0.5 litre 3 cylinder turbos revving at between 9,500rpm and 10,000rpm and possibly equipped with a pre-2014 style KERS system should a team wish to use it . KERS usage however would not be mandatory.
Weight reduction for cars of least 50kg
Fuel flow limits removed
Wider tyres and narrower front wings
Re-introduction of ABS and Traction Control
Introduction of all weather tyre compounds
Make manual gearboxes an option
Ban on DRS
Create a smaller fuel tank made to hold up to a maximum of 60Kg of fuel
A maximum fuel weight of 60kg to be carried for the race and .
Refueling would still not be permitted during races.
I am assuming that we won’t see on screen any Force India or Sauber cars in Sochi or am I being too cynical
An interesting prediction.
Then again, if BE feels it will redound to his benefit, you may see little of cars that aren’t Force Indias or Saubers!
I agree with that, but also there will still be no Merc or Ferrari’s because they still wont supply Red Bull with engines, Bernie still doesn’t like Manor, the Renault cars will fail, as will the Hondas, Pastor will crash, we’ll only get TV coverage of handful of cars come half distance.
We’ll be left with Bottas and Massa on screen…
But only front views as the back of their cars are full of Merc engines …
Having now read Mr E’s comments, Sauber and Force India may well win at Sochi as an electricla link under the circuit mysteriously puts all other cars in Neutral.
Funny, it wasn’t the ‘White Knight in Full Armor’ E.U. that uncovered the VW scandal. Now torches are thrown on the F1 ship to take us all down in flames. Hope the fire fighting will be more effective than the rule making of recent years.
And already we hear the Bernie will somehow emerge from this with handfuls of benefits!!!!
Is Peter Sauber really 100% ok with this eu complaint?
For some reason with F1 these days all I see is Peter Ustinov acting as Nero with his Lyre singing about omnivorous power…. Boys gotta destroy to recreate. How we love F1… How indeed.
Fantastic Indycar season btw despite the obvious.
Hi Jo,
Is this not a massively risky strategy by Force India/Sauber. They are playing with a bees nest here?
Surely Mr E/the powers that be won’t forget this easily and are likely to chase some form of revenge?
You don’t piss off the decision makers with no repercussions!
Why would BE be pissed off if he is the one who gains most?
He controls a rgeat deal of the distribution (or uneven distribution) of cash in the sport. So I’d thought he’d be raging?
You are missing the point. If he is not allowed to pay the money to the elite teams – he has saved millions and put himself into a stronger position!
Yes but he has been party to breaking the rues laid down by the previous EU Commission on F1. He is at the centre of every financial deal. He is not supposed to be involved in rule making nor giving shares or dividends to the FIA. From that point of view he is an unsuitable person, he has traduced J Todt and by Todts own words, made him unable to govern F1.
I wonder how Ecclestone could gain from this fiasco. He is the one responsible for the mess.
Surely even a blind man can see Mr E….has got to go. And surely Todt has got to go as well. If you there was a man searching for a back bone….
Surely BE started the corrupt practice by paying (bribing) Ferrari to break FOTA. Blessed are the deal makers? Hell No!
I would not like FOM to come out smelling of roses by this news.
“You don’t piss off the decision makers with no repercussions!”
I think the point of this action is, if you participate in a well-governanced sport there’s no way this could even be a possibility.
This is the kind of situation – typically – that is either going to blow up or will be swept under the carpet quietly.
Joe: ‘I think they should be boiled alive (figuratively speaking)…’
They would probably try to sell the TV and sponsorship rights if this did happen.
Who wants to organise a whip-round?
I’ve been catching up with the races I missed while on me holibobs and doffed my CAT Diesel Power baseball cap (I went native) to Toto for his diplomatic reply when asked why M-B wouldn’t supply engines to Brown Cow i.e. he didn’t call them a bunch of petulant ingrates.
If this brings about a change in how F1 is run resulting in bigger grids with drivers there on merit rather than bank balance it can only be a good thing for the sport. I’m sure they’ll be much wailing and gnashing of teeth by some but in the end of the day the sport has gone away from being entertainment for the fans to lining the pockets of a few.
Are they this desperate or are they this dumb?
Surely this wont sit well with the bigger teams and/or Bernie E.
As mentioned above, likely no airtime in Russia?
FI/Sauber are are getting trampled by the big teams and BE anyway; so this is a desperate throw to try to get some muscle in the shape of the EU on their side before they go the way of Caterham, HRT, Lotus…
I’ve just had the biggest laugh of the week. Bernie saying the lack of coverage of Merc last weekend was a collective decision (meaning all the teams) to show more of the mid-field teams. It must be Alzheimer’s.
Ah, another opportunity to apply F1’s version of the Sherlock Holmes method: “When you have eliminated what Bernie has said, whatever remains, however improbable, must be the truth”.
IF anything happens, what time frame are we looking at , next year or 3 years & would any teams receive back pay or would there just be a fine ?
Can’t blame Force India or Sauber – they’ve stuck with the sport despite the unfairness because they are there to race. They are the real racers and the backbone of F1.
Having manufacturers is great for the sport, but having these teams, along with Williams and Manor is vital.
Joe, if there are any fines, it’s us fans who will pay.
With the complaint going to the EU, Bernie is a winner almost whatever happens.
Due to the uncertainty, CVC cannot sell; Bernie still in control: WIN for Bernie.
(Didi Mateschitz won’t buy anything under an EU threat either.)
EU judges “historic” payments to be unjust; a bunch of expensive contracts get undone, Bernie regains spending power at CVS: WIN for Bernie.
Sauber & Force India put out to dry, or Bernie pushes for ‘fairer’ pay-by-results, either way, Bernie in control of Sauber & FI’s fates: WIN for Bernie.
FIA judged to be failing; FIA power eroded further. WIN for Bernie.
Could Bernie be judged to be at fault? No, he’s always played the game “with CVC and FOM’s best interests at heart,” just like any good corporate suit will do. (his own benefit happens to have aligned with CVC & FOM’s best interests all along!)
See: the Bernard will have no problem with Sauber & FI having complained. In fact he probably encouraged them (quietly, behind the scenes), and thanked them with the ‘better coverage of the mid-field’ already.
Joe when I first started visiting your blog I was ware of your vast formula 1 experience but found it difficult to believe some of the things you’d report when no one else would. Time and time again though you proved you knew what you were talking about. I remember seeing Ted’s notebook (in Monaco I think?) when he talked to you and you mentioned the EU thing and he seemed doubtful. I’m not surprised to see you proven right again.
Painful period for the sport but sometimes the best medicine can be bitter.
Jack: this is why some of us have been reading Joe before anyone else for over 20 years now. Superb insights, beautifully written.:-)
Hallelujah!
Can I have an “Amen!”…
Ok then. ‘Amen’.
Though let’s see how this plays out before we become overly euphoric.
Oh, I completely agree that the consequences are uncertain… however, regardless of that I’m very glad that somebody is finally doing something… the resulting uncertainty is necessary…
Plus, I trust they did their homework before they pulled the pin… Mr Sauber doesn’t seem to be the reckless sort…
An alternative reality on the last 6-12months…
1 Red Bull come out strongly in favour of cost capping to help keep the sport affordable and allow the smaller teams to survive & compete.
2 Swell of goodwill from fans and most teams in the direction of Red Bull.
3 Teams and fans lobby in favour of RB getting their motor…making it a PR necessity for Ferrari or Merc.
4 RB get their engine…smaller teams feel they don’t need the EU.
PR success for all…F1 has healthy competitive teams resulting in increased excitement, interest and sponsor $$.
As it is…lengthy wild goose (or Bernie?) chase with the EU & Red Bull left asking ‘why does nobody like us?’ whilst bolting in the motor from a Prius…
I’m not sure anything will change for the teams. Surely it can easily be argued a team like Ferrari ought to get a bigger share of the income. Nothing to do with ‘fairness’ but just simple commercial business and within the right of a commercial holder. This type of ‘unfair’ payment happens in Football and I have not seen the Premier League dragged in front of the EU Commission. It seems to me Force India and Sauber are making a bet that this will create such an amount of pressure on the commercial rights holder that it will allow them to re-negotiate their current deal or a future deal. As for the FIA and them selling the rights in the first place, this is a weird situation but I would not be surprised if the outcome of it all this is that the teams sell their rights through the FIA in future, much as the premier football teams do through the FA. So the big winner could be the FIA. Whatever happens an interesting few months ahead for F1, I can even see Red Bull being the catalyst for a break away alternative with the help from Bernie and a few others, a nice phoenix construction perhaps where Bernie gets paid (and gets rid of pesky CVC) and Dieter runs the ‘new’ show which would make a lot of advertisers interested as he is a master when it comes to branding and advertising.
Absolute tosh Jeroen.
Ferrari don’t deserve anything just for being there and the premier league isn’t similar at all. They split 50% of the revenue evenly between all the teams just for being there, then the rest is divided into prize money for where you finish at the end of the season and a further amount based on how many times a team is shown on TV during that season with all teams guaranteed a certain minimum number of matches, so Man U (read Ferrari) will get more then say Bournemouth (read manor) as they are very likely to finish above them and have a much larger fanbase so are shown more often on TV. This is logical and fair. Man U don’t get £100m just for agreeing to play in the premier league in the first place ontop of whatever other prize money they can win.
Joe, I do understand that you can see Bernie profiting from this.
Given that:
* Bernie won’t change his stripes;
* CVC (won’t/can’t) give him the boot;
* Todt is a severe disappointment;
* the teams are knuckleheads who permit themselves to be divided-and-conquered…
Can see you see any event preferable to this, short of Bernie kicking the bucket?
I assume it is the EU’s business as the governing body is in the EU?
Sauber of course are not.
Well moves are afoot to move the FIA to Geneva.
It will be interesting how they solve the back tax rebate from La Republique Francais.
They have two federations at the moment: one governed by French law, one by European law. But it is not really a question of where it is headquarters. Where it takes place is mor important. Thus any race in Europe is subject to European legislation
European law = EU law. Switzerland does not fall under EU Law.
Yes but all the teams bar Sauber and Haas do and the Europeam races do.
Just curious: if Haas operates a branch office in the UK, does that bind him to EU law?
Probably.
CVC have greatly reduced their shareholding over the last couple of years. I read of the likely quiet disposal of the remainder some time ago. However as we know nothing is simple when Bernie is involved, all shares are not equal, and some carry conditions restricting their sale to certain parties only, whether the EU can declare these unfair or illegal conditions I do not know.
One thing is certain, that in every part of F1 where dubious or unbalanced agreements exist, the common denominator is Bernie. (Is HMRC still investigating Bernie?)
The possibility of a float is now almost non-existent, the bank who gave all those loans to be dished straight out as dividends must be getting nervous as things could change substantially. (Could we end up with a bank owning a chunk of F1 again?)
The EU commission requesting and obtaining documents is going to be a very long arduous exercise, as most are considered secret. However some may be leaked as tactical ploys by those with knives to grind, or hoping to improve their financial position, which must be pretty much everyone except Ferrari.
Option 5 bucket,
Box, Box, Box!
I wouldn’t be surprised if in fact Bernie and CVC were quietly supporting Sauber and Force India on this. Maybe a one-time under the table payment for the two teams to stick their necks out. If the EU comes down on the special payments, then less money for the top five, and ultimately that money will stay with CVC and Bernie. A win for them and more profits.
Joe, you have commented many times about the lack of transparency in the agreements governing F1. Would this investigation bring more of the contents of those agreements to light, you think?
Well the trigger has finally been pulled; now let’s get on with the documentations, which shouldn’t take too long to sort out. Some people will be a little amazed, but the EU has been quietly working in the background gathering data on sports sponsorship and how it is generally paid out. The firm I work for has been interviewed a number of times by the EU regarding this matter. Also the TV rights for the Football seasons have been re-done in a number of countries, and I think the way those sums are paid out, would be the best guide to look at.
The CCB Fund or Heritage Fund, or whatever you may want to call it, is just a simple way for the long standing teams to turn up at an event. In other sports its called appearance money, which is generally paid across to the person, which as here it is paid to a team. Sure Ferrari gets £100M, but that is only £5M per race.
The prize fund, which the teams get an the end of the season, but Bernie pays it out over a sliding 2 year period is wrong, and that needs to be stopped. The same with the CCB / Appearance money.
What Bernie has done is build up the “Show” and the TV rights have generated a lot of money, but in the same time he has screwed the local promoter and taken all track side advertisement monies for FOM. He should have left the track side to the local’s and reduced the entry fee he charges them – race owners to a realistic amount. The TV rights money is good enough for the teams, but then CVC has taken a ton and more of it. That should never have happen, but it did.
Given the amount of money that the TV rights generate, then he can easily set up a fund, that pays out to the winning constructor, the winning engine manufacture, and the winning tyre company (here we need a min of 3 companies – tyre war to start)
So would Mercedes or Ferrari lose out? No as they sell engines to other teams, and if there engines win, then they get some funds from this new prize fund to offset their costs, same with the tyre companies.
A flip side to think about, Red Bull don’t get the engines they want and leave. Fine no real problem here. Renault if they’re smart then acquire the Red Bull team, a much better deal than Enstone, the junior team takes Ferrari engines. (Gerhard Berger and his Billionaire mates take out the junior team ownership)
Mean while Dietrich realises that the FOM value has dropped and does a deal to buy out CVC, now he owns the F1 rights, which is what he wants, without the team ownership hassle. Bernie and he get along, and Horner, is ideally placed, like him or not to be Bernie’s understudy, given his age ect…. Maybe that why Bernie is happy???? Spring in his little leg’s
I don’t buy this idea that Mr E is going to come out of all this smelling of roses. I think we are seeing the end game of Mr E’s reign. If you think objectivly, if Mr E was on top of his game, he wouldn’t of let RB box themselves into a corner on the engine front and got them an A grade spec engine for both teams, nor would he of let Ron come within an ace of watching the sponsors favourite, Jenson Button leave the grid or have Lotus in and out of court and get with a couple of days of going out of business. It does seem to me that for Sauber and FI this is the last throw of the dice for them as they don’t have the money to continue as they are. I’ve no doubt that F1 will come out of this stronger but it will only do so if Mr E is out of the picture and the fans and sponsors can be enticed back where there is a lot more transparency in how the sport is run.
Any chance the EU will enforce the mandatory retirement age upon the CEO?
Redbull however excellent the team may be, is the main reason we have this potential EU investigation. They pulled out of FOTA to sign a lucrative deal with Bernie thus forcing the break up of that association which wanted an improved TV revenue sharing.
Redbull’s if at all should be investigated for their role if they colluded with FOM. They are not babies who need hand holding. They should sort out their own mess they created for themselves. They once had the Ferrari engines but dropped it in favour of Renault. You can’t do that and later expect privileged status.
Mercedes that has a richer history in F1 gets even less money than Redbull. Why should they give them engines. Mercedes have every reason to feel Redbull have an unfair advantage, why should they make that advantage even more for the foul mouthed ones.
I suspect that the ‘Law of Unintended Consequences’ is about to bite a surprising number of people on the ass.
Let us hope so! That is if the EU do actually investigate F1. In JA’s blog he says it is 70-30 against, so it may not happen, though it very clearly needs to.
I doubt the complaint would have been launched if it was not certain it would be investigated.
If Mateschitz loses interest in F1 because Red Bull is not winning, I don’t see why an F1 with him owning the rights, would not be unfairly weighted and regulated to have Red Bull winning all the time.
Because if he owned F1, he wouldn’t need a racing team… the whole shebang and everything peripheral to it would have Red Bull plastered all over it…
Joe, can you shed any light on how this may or may not affect the Ferrari Sauber relationship. Those teams have ties and I think it’s interesting to see Sauber in this if Ferrari would be disapproving. Am I off base here, or is this simply much more meaningful to Sauber that any negatives relating to Ferrari just don’t matter. I guess the same could be said for Force India and Mercedes and McLaren relationship?
My guess is that Ferrari needs the cash from the Sauber engine deal more than they dislike the EU complaint. They are trying to float Ferrari in the short term, and the more revenues are coming into the company, the higher the share price will rise.