Formula One and Beyond

by Max Mosley

  We followed our plan, turned out the red lights on schedule and the race started with only six cars. Fortunately, all finished. As happens in America, lawyers acting for spectators started a class action, suing us and everyone else, including Michelin and the teams. We won. They appealed. We won again. But Michelin, quite rightly, did later make a generous gesture to the spectators, refunding their tickets and giving them free ones for the next year’s race.

  We summoned the seven dissident teams to the World Council, where David Pannick QC defended them very ably. We found them guilty but later exonerated them when new evidence became available which meant that, technically, they had committed no offence under our rules despite their abortive rebellion.

  Paradoxically, the wider American public became aware of Formula One for the first time as a direct result of this incident, illustrating the old adage: there’s no such thing as bad publicity. Formula One had never previously made all the American news bulletins, even in the case of serious accidents, because, except for Mario Andretti, the drivers were never national figures there and, fortunately, Mario never had a big accident in Formula One. There were the usual silly comments from some of Formula One’s self-appointed experts. One particularly stupid pundit pronounced it the end of Formula One in the United States. Needless to say, we were back at Indianapolis the following year, but this time with the right tyres.

  A few weeks later, Édouard Michelin, great-grandson of the founder of the company, made a press statement in which he was very critical of the FIA over the Indianapolis incident. I had high regard for him because he was passionate about advanced automotive technology and had explained some fascinating ideas to me at a recent Geneva motor show. But his criticisms were annoying because what had happened at Indianapolis was entirely caused by his company bringing the wrong tyres. It was not our fault.

  Having made such a monumental mistake, Michelin had expected us to break our own rules and change the circuit to solve the problem they themselves had created. He also criticised the FIA’s move towards a single tyre supplier for Formula One, apparently not realising this was a teams’ initiative, not ours. I put out a rather aggressive press release saying he showed ‘an almost comical lack of knowledge of modern Formula One’, which apparently caused great offence. A few months later I came to regret my tone when he died in a boating accident in Brittany.

  Another difficulty came early in 2009, when I heard claims that Nelson Piquet Jr had been instructed to crash his car during the 2008 Singapore Grand Prix in order to bring out the safety car. It seemed an extraordinary stroke of luck that it had to come out just after Piquet’s team-mate, Fernando Alonso, had refuelled because it gave him a big advantage. It forced the field to bunch up, allowing Alonso to move up place after place as other cars had to refuel while he was able to keep running. It looked fishy straightaway and aroused immediate suspicion. Renault had refuelled Alonso’s car unusually early in the race and, apparently by luck, done so at the ideal moment, just before the safety car handily came out and gave him the edge to go on and win. But there was absolutely no concrete evidence of anything untoward.

  Now, suddenly, we had some sort of confirmation that all the suspicions might be well founded. But could it be proved? It was an extremely serious matter because, although unlikely, someone could have been killed: a track worker or the driver of another car or a spectator, even several spectators, if part of the car had gone into the crowd. If we held an inquiry, though, it was obvious that everyone in the team would simply deny it. Without real evidence, we would get nowhere. Very reluctantly, I decided we could do nothing for the moment. But we could wait and, sure enough, as we shall see, a few months later there was a breakthrough.

  The same year a major technical dispute erupted when Brawn, Toyota and Williams appeared with a radical new design for the rear underside of the car known as the diffuser. This is a device to create significant downforce from the airflow and exhaust gasses at the back of the car. They had read the new bodywork regulations as permitting them to create a second channel in the diffuser, thereby increasing the downforce it generated and improving the car’s performance.

  Ferrari were among the teams that had not spotted this possibility. They began an intensive campaign to have the so-called double diffuser banned. They started lobbying the FIA and ran a campaign in the media accusing the others of cheating. They ignored the fact that, as explained in chapter 24, any team was entitled to turn up with a new device at a race, whatever the FIA technical department’s opinion might be (though in this particular case our technical department thought the device legal). A team that disagreed could then protest to the stewards and invoke the normal procedures. It was nonsense to suggest that we could somehow ban it, as they must have known.

  At the first race of the season, the Australian Grand Prix in Melbourne, Ferrari lodged an official protest. Very conveniently, their usual English QC just happened to be on holiday in Melbourne at the time and was able to present their case. They lost in Melbourne, lost at the next event in Malaysia and then lost on appeal in Paris. Ferrari were furious and their fury was directed at me because they had expected me to intervene in some way. I had refused to do so and, anyway, I couldn’t even if I had wanted to. The rules didn’t allow it. Ironically, what Ferrari chairman Luca di Montezemolo wanted me to do then would not only have been illegitimate, but precisely the sort of dictatorial behaviour of which he was later to accuse me. The technical rules were published and it was for the stewards and the International Court of Appeal to interpret them. The FIA president was not and could not be involved.

  Instead of admitting that their designers had missed an opportunity, they had to find someone to blame, so they turned on the FIA and me. Needless to say, the (mainly British) fans who had always accused us of favouring Ferrari didn’t notice any of this. But it was undoubtedly a factor in Luca’s hostility towards me during the summer of 2009 – slightly disappointing, even small-minded perhaps, but no big deal to me.

  So much for my determination to stay out of Formula One back in 1991, but all the trouble was part of the job. If you take it on you have to accept the consequences. Like racing back in the 1960s, I didn’t have to do it. Only this time it was my wife, Jean, who was pointing out that it was all entirely voluntary. I did not really need reminding that if had stuck to my decision to retire in 2005, I could have avoided a whole range of problems that made my last mandate so troublesome.

  28

  MONEY AND THE FORMULA ONE TEAMS

  In January 2008, I invited the teams to Paris and pointed out that with six major car companies still involved (Ford had already pulled out) Formula One was particularly vulnerable to any change in their fortunes. This was at a time when the industry was riding high off the back of record sales and profits in 2007. The collapse of Lehman Brothers and the world financial crisis lay in the future. But I pointed out that the level of costs was unsustainable even for those companies and that with other pressures, such as new EU emissions limits, their resources would be pulled away from Formula One. I added that a third factor was the increasing likelihood of a worldwide recession that was probably coming and would have an effect on the motor industry. If we didn’t reduce costs, we risked losing teams, particularly the car manufacturers’.

  The teams were all there, even Bernie came, and, for once, no one disagreed. I explained that the experience of the previous five years had shown conclusively that it was impossible to control costs by technical regulation alone. Again, no one disagreed. I added that, having repeatedly tried and failed to reduce spending by technical regulation, we had to stop making the same mistake over and over again. A radical solution was required to bring costs properly under control.

  I suggested that the only fair and effective way was to impose a cost cap – to limit the amount each team could spend. Apart from the obvious money-saving benefit, it would spur greater sporting fairness because a team spending more than its rivals had an unsporting advantage
. It was no different to being allowed to run with a bigger engine. With a cost cap, the rich teams would no longer be able to spend more on R&D and exotic materials than the smaller teams, with all the competitive advantages this was according them. The top teams would still attract massive sponsorship, but most of this would now be profit for their shareholders.

  Another major benefit of a cost cap would be that the cleverest engineers would have a chance of winning, not just the best-funded ones. I always bore in mind Keith Duckworth’s dictum that an engineer was someone who could do for a pound what any idiot could do for £100. Moreover, the big car companies would never let their engineers design a new road car without a budget. In the real world, everything has to be done to a price and still be competitive. After some discussion, everyone except Ferrari’s Jean Todt seemed to like the idea.

  The first obvious issue we faced was whether we would be able to enforce a spending cap if one were agreed. I said we certainly would because, for a tiny fraction of the money that was currently being wasted, we could hire two former tax inspectors for each team to do nothing but watch every move they made. It shouldn’t be too difficult to come up with a more sophisticated monitoring system than that. We agreed to set up a working group of the teams’ financial officers under Tony Purnell. Tony had all the relevant expertise, having built up and sold a very successful electronics business and then run a Formula One team, Jaguar. At his suggestion, two partners from Deloitte, Patrick Maher (Forensic and Dispute Services) and David Noon (Internal Audit and Risk Management) joined the teams’ representatives. After several meetings, the group produced a complete and robust scheme in May 2008 and the independent expert accountants from Deloitte confirmed it would work. Still Ferrari dissented, but they were in a minority of one and I was confident they would not be able to stop the plan.

  While this was going on, I had a meeting with ACEA (the European Automobile Manufacturers’ Association) at the Geneva motor show and explained the cap to them. It’s one of the few occasions when you can find all the CEOs of the major car companies together in one room, and those with no involvement in Formula One listened patiently. Someone immediately said enforcement would be impossible because R&D expenditure would be so easy to conceal. I replied this was a question for experts, for forensic accountants. They would decide whether we could enforce a cost-cap rule. It was futile to discuss that in this meeting. We needed to address the principle not the particular: if it could be done, should we do it?

  Carlos Ghosn, the CEO of Renault and Nissan, immediately saw the point and agreed. Interestingly, he also sided with me at a lunch some time later, arranged by Bernie and Flavio, where they had hoped he would tell me my cost-cutting plans were misconceived. They were surprised to discover he opposed their objections and supported us. He is one of those rare people who get straight to the central point, to the things that matter, without wasting time on irrelevancies. No wonder he has been so successful.

  I also quietly had my sights on what I saw as a fundamental unfairness in the finances of Formula One. Bernie had a long-established technique for dealing with the teams. First he would sign up Ferrari by giving them the most money; then he’d sign one or two of the top teams; then divide what was left among the remainder. The rich got richer, and thus more competitive (unless very badly run), while the poor faded. He believed (rightly as it has turned out, at least until 2014) there would always be another billionaire if one of the poorer teams disappeared. I thought that, although the most sponsorship would naturally go to the most successful team, the money Bernie controlled should be divided equally. Bernie did not agree – he derided this idea as ‘communism’.

  A financial memorandum of understanding signed by Bernie and the teams in 2006 formed part of a new draft Concorde Agreement prepared by Bernie’s lawyers. It was a schedule of great complexity and about 20 times as long as the equivalent in the previous (1998) agreement. Bernie wouldn’t give the FIA a copy, saying it was none of our business – we should just sign it without seeing it. But I couldn’t possibly sign the agreement without seeing the financial schedule officially and getting the OK from our lawyers. I was also planning to try to secure a more equitable distribution of money, which led to the biggest row Bernie and I ever had in the World Council.

  The extract below from the minutes of the meeting of 25 June 2008 cannot convey Bernie’s anger. During the exchanges, he more than once folded his papers and made to leave but each time thought better of it, all this in front of the entire World Council, the commission presidents and FIA staff – upwards of 50 people all told. We usually avoided public disagreement by discussing things beforehand, and almost always one of us would see the other’s point. Sometimes it was me, sometimes it was Bernie, who is usually rational contrary to the impression he sometimes gives. I try to be, too.

  But in this instance I had broken off contact after he sided with those who were trying to get rid of me following the News of the World story. I wouldn’t take his phone calls and there was no discussion before the meeting. I think Bernie genuinely believed that his arrangements with the teams were none of the FIA’s business, no matter what their impact on the fairness of the sport might be. He thought that the deal with the European Commission meant we should leave commercial matters entirely to him, whereas I was quite clear that, although we must not participate commercially, we still had to make sure all the arrangements, including the money, were fair.

  Above all, he did not seem to want to understand that if we were to sign an agreement, it was essential that we should see and agree with all of it. The question of whether or not we could interfere with his arrangements with the teams (which, of course, were part of the agreement) was an entirely separate point.

  This is an extract from the World Motor Sport Council minutes of 25 June 2008:

  Concorde Agreement

  The President said that, despite the comments in the press, the facts were as follows: in February 2007, Formula One Management [FOM] had sent a proposal to the FIA for part of the Concorde Agreement, namely the section that dealt with regulations and how these were agreed. In May 2007, the FIA had, after discussions with its lawyers, sent a counter proposal to FOM. Since then there had been no progress until a few weeks ago, when Mr Ecclestone had proposed to sign a red line version [a draft showing all the proposed amendments in red] of the 1998 Concorde Agreement.

  The President had agreed and asked Mr Ecclestone to send a red line version. He had not done so yet.

  The President said that the red line version should include Schedule 10 which covered the financial arrangements and which had always been part of the Concorde Agreement and therefore had to be agreed by the FIA if it was to sign the Concorde Agreement. He understood that there had been lengthy negotiations between FOM and the teams about the content of Schedule 10 and although he had had sight of a proposed Schedule 10, he had not been sent it officially for the FIA’s approval. He added that if a new Concorde Agreement could not be achieved, the FIA’s current commercial agreement with FOM would simply continue. He concluded that this was not a criticism of FOM in any way but the delay was not due to the FIA. He undertook to look at the red line agreement including all the Schedules as soon as the FIA received it in order to progress matters.

  Mr Ecclestone said that the President had stated that he would not sign a new Concorde Agreement and that he simply wanted the current commercial agreement to continue. All the current competitors had signed the new proposed Schedule 10. He felt that the current Concorde Agreement met all of the FIA’s objectives as well as those of all the teams.

  The President said that it was inaccurate to say that he had stated that he would not sign a new Concorde Agreement, as it was not his decision but that of the FIA as a whole. He had set out his position in a letter of 16 May to all the FIA clubs in which he had stated that the FIA would only sign the Concorde Agreement if it was in the interests of the FIA. This had always been his position and until he had seen the whole o
f the proposed revised Concorde Agreement, including the commercial arrangements in Schedule 10, he could not make a proposal. He said that there would probably be no difficulty in obtaining the FIA’s agreement to the new Schedule 10 but he had noted some radical changes between the document he had seen unofficially and the Schedule 10 that was agreed in 1998. For that reason the FIA needed to be sent this document officially so that it could give its opinion. It also needed to be sure that it was fulfilling its commitments to the European Commission.

  Mr Ecclestone said that all the signatories to the new Schedule 10 were happy with it and that the FIA did not have a say in the commercial arrangements.

  The President said that Mr Ecclestone was wrong to say that the FIA had no say in the commercial arrangements. The FIA’s arrangement with the European Commission was clear: the FIA was, as the regulatory authority, not allowed to play an active role in commercial matters. It was, however, allowed to ensure the financial arrangements between FOM and the teams were fair or practical or otherwise if these arrangements were to be incorporated in an agreement to which the FIA was a party.

  Mr Ecclestone said that if all the signatories were happy, there was no reason for the FIA to be concerned.

  The President said that his information was that not all of the signatories were indeed happy with the agreement.

  Mr Ecclestone said that they had all signed the agreement.

  The President said that the FIA had been given different information. The FIA needed to have sight of the final document signed by all the teams; it was not enough just to be told that it had been signed.

  After some discussion, Mr Ecclestone undertook to send the FIA the red line version including the signed Schedule 10.