FOTA Drops the Gauntlet

Geneva, June 13, 2009: In the wake of continuing political wrangling between F1 engine manufacturers, existing "works" teams, and FIA's Max Mosley over who will control the business future of F1, FOTA has now decided that killing the "golden goose" is preferable to continuing to work under "Czar Max the First" and his continually meddlesome autocracy. As a result of FIA's recent entry list associated with the 2010 F1 season, Max's straw finally broke FOTA's back, as the following letter from FOTA attests:

"Dear Sirs,

During the current discussions between the FIA and FOTA it has become evident that FOTA has been ineffective in communicating directly and openly with the membership of the Federation and that this may have led (to) a widespread misunderstanding of its intentions and objectives. For this we apologize and the purpose of this letter is to clearly set out the objectives of FOTA and our concerns about the present situation and in particular in relation to the entries that its members have submitted for the 2010 championship.

Firstly it is important to state clearly that FOTA wishes to work in a positive and constructive manner with the Federation and to emphasize this we attach a copy of the objectives contained in our

Articles of Association.

These may be summarized as an intention and commitment to work constructively with all of Formula One’s stakeholders, in particular the Federation, the Commercial Rights Holder and the Grand Prix organizers, to build a sustainable future and to improve the worldwide reputation and appeal of the sport.

Our fundamental wish is to work within a framework of cooperation and dialogue with the Federation to improve Formula One and to stop the confrontational and negative approach that has dominated the sport in recent years. This approach compounded with constant announcements of regulatory changes, resulting from the unstable governance process that exists, has unfortunately created a situation of confusion and uncertainty among the public and sponsors. This situation is adversely affecting the business of both the teams and the organizers.

We would also like to draw your attention to the changes that have already been implemented at the initiative and support of the FOTA teams (summary enclosed).

FOTA teams have the following main areas of concern:

Grand Prix Organizers (Promoters)

We are becoming increasingly aware that the event organizers are facing many difficulties and we wish to work with the promoters and organizers to increase the appeal of the sport to new fans, a situation that will benefit all stakeholders.

Governance

Clearly the situation we are facing today has resulted from a breakdown in communications and cooperation between the FIA and the teams. We do not believe that it is constructive to attribute blame; we must seek solutions.

It is our view that by introducing the balanced and transparent basis of Governance which is defined in the 2009 Concorde Agreement (governance extract enclosed) we can restore a situation where the teams work in harmony with the Federation, a situation which can only be beneficial to all stakeholders. Accordingly, we have requested that the FIA join with FOM and the teams to sign a binding agreement that will bring stability at the very earliest opportunity, or alternatively, enter into a separate bi-lateral governance agreement between the teams and the FIA.

2010 Regulations

In the aftermath of Honda’s withdrawal from the sport and the growing economic crisis, the FIA unilaterally introduced a dramatic change to the Formula One Regulations (summary enclosed). These proposals included the option of a budget cap with major technical advantages for teams following this route, making it impossible for non-budget capped teams to compete.

We accept that we are in the midst of a serious economic crisis, but we believe this process did not follow the FIA’s own statutes and principles and was too radical, even for the circumstances we face. We run a high risk of alienating and losing a number of Formula One Teams who have been committed to Formula One for many years, both privateers and manufacturers. The prospect of losing eight well established and funded teams with provenance and history such as Ferrari and McLaren, and replacing them with the current unconditional entrants would be deeply disappointing to the teams and we believe to the detriment of Formula One as a whole.

FOTA believes that it is the fundamental right of a competitor to manage and administer its business autonomously. This is a basic principle which must be retained. In addition, the publication and public discussion of absolute team budget figures risks inflicting serious damage to the value of existing teams and has significantly reduced the fees which can be charged to sponsors which have traditionally been based on media value rather than team running costs. There is also concern that to combine sporting issues with budget or financial issues, risks to create a paradoxical situation whereby a championship could not be decided or could be rescinded on the basis of a detailed forensic financial point which could take months to resolve.

We seek support for a methodology of resource management which respects the principles and avoids the issues mentioned above. We have submitted an alternative proposal to the FIA president that we believe achieves the same objectives, but achieves these objectives in a confidential manner. It is unacceptable to consider the possibility that a large manufacturer or any team could be investigated for ‘financial irregularities’ to establish compliance or to fend off accusations relating to a ‘budget cap.’ It would cause irreparable and irreversible damage to the team or manufacturer.

As mentioned above, the proposed regulations for 2010 operate on a ‘two tier’ basis. There are two different sets of regulations for competitors dependent upon their choice of financial controls. We believe this is a highly undesirable situation and one that risks causing confusion and alienation of spectators, fans and the viewing public.

Finally, the teams are concerned that the basic principles and detailed procedures of governance have been removed from the 2010 Sporting and Technical regulations.

Stability

We wish to confirm that the teams are prepared to enter into binding commitment to enter in the championship until the end of 2012. This eliminates the misconception that certain teams are going to leave the sport and in doing this Formula One will establish a solid and stable platform for the future. All of the present competing teams in Formula One have significant investments in staff, factories and facilities. We request our level of commitment is respected and that we are allowed to address the changes needed due to the present economic climate in the most effective and efficient way for the participants with the correct governance from the regulatory body, the FIA.

The existing FOTA teams understand the need to encourage and assist new entrants to the sport and we agree to undertake in good faith any reasonable measures that will help new teams establish their position in Formula One.

Recommendations

We respectfully seek the intervention of the World Council to facilitate solutions to the present situation. We have attended numerous meetings with the FIA’s representatives and have been unable to make any substantive progress.

The entry list has been published with five established teams listed as conditional entries. On this same list, Ferrari, Red Bull and Toro Rosso have been classified as unconditional entries, although they also had filed conditional entries.

All of these teams are united in their concerns about the present situation and are deeply worried about the crisis that Formula One now faces, a crisis that appears to be self generated. The teams wish to find a swift solution to the situation.

In a final attempt to resolve this crisis, further meetings are scheduled for the next seven days. We would urge your support to ensure the outcome of these meetings achieves a solution that allows long established competitors to continue in their sport within a framework of sound governance and stability that will ensure the future and sustainability of Formula One.

Yours sincerely

(Signed by representative of the BMW Sauber, Brawn, Ferrari, McLaren-Mercedes, Red Bull, Renault, Toro Rosso and Toyota teams.)"