What I think will happen (or at least what FOTA's goals are): - get rid of Max - re-negotiate with Bernie about the revenues and maybe the track calendar, entry fees etc - form their own series with rules and ask FIA to run it (see the statement by Brawn elsewhere about this).
LOL ... cheers Dave ... Lets face it ..When Mosley took on the Vatican everyone else decided now is the time jump on board... Go FOTA..
Its time for an Fchat GO FOTA tshirt!! If I can get one made I will wear it in the paddock in 2 weeks at German GP I agree Steve - GO FOTA!
In my opinion any deal should be contingent on Max and Bernie stepping down from their respective positions but frankly there is so much fundamentally wrong with F1 that a clean slate may be a very good idea.
Yep, right there with ya Steve. I've said all along the main issue is getting rid of Max. Once that happens all other issues can then begin to work themselves out.
Thanks Clint, it's been along time in coming and well overdue, I hope I don't have to eat crow on here . I'll send FOTA some money if it helps...
The negotiation with Bernie may be the more difficult of the two, actually. FOM takes in about $1 billion a year. Of that, about $500mm is paid out to the teams, around $200-300mm in operating expenses, and roughly $200-300mm interest payment on CVC's loan. So as it stands now, CVC makes or loses a comparative little, depending on how the revenues looked for the year. FOTA isn't going to be looking for an extra $50mm a year. They are going to want their cut to go up to something like 75% - something substantive. And they really have Bernie over a barrel. If FOTA is successful with the removal of Mosley, then Bernie has lost most of his leverage. Knowing the fans are with FOTA by a gigantic majority, what can he do? He can't negotiate a good-faith agreement knowing it will bankrupt his company... and if the teams go, he's bankrupt anyway. In addition, if he charged lower fees for tracks and agreed to give up money-makers (for him) like the Asian races in favor of money losers like Indy and Montreal, then his revenues go down even more. Bernie may play hardball moreso than Max, because he has no other option. I can't imagine what Bernie could offer up as a resolution - can anyone? The only thing I can think of would be a very long extension of their commitment to F1, and use that to bolster the commercial viability of FOM to somehow obtain better financing deals... but he's not going to manage to cut the $200-300mm interest payments off completely, probably not even reduce it all that much. I can't see how Bernie isn't totally screwed.
The only this whole FOTA/FIA thing will works out is if: 1.) Max's head on a platter. 2.) Teams given far, far more say in the governance of the sport...because the man slated to replace Max is no better than Max. 3.) FOTA given lots more $ for participating. Again, impossible unless Bernie goes to CVC and performs some financial wizardry to greatly reduce FOM's debt load in order to convert interest payments to FOTA cash. Bernie's going to have to bend over backwards and CVC will too, but both of them know that refinancing their debt and forgiving some profit is better than looking at a billion dollar hole in their FOM bank account. Given the decades of behind the scenes machinations and chronic bullsquizzle, FOTA would be very wise to let FIA and FOM die.
Oh, and Max dropping legal threat is just a temporary action. You can betcha that the FIA and FOM/CVC will unleash the hell-hounds of unending litigation upon FOTA if FOTA do the right thing and form their own series.
I don't think there is any way they could refinance the debt to the extent necessary to please the teams. The teams get about 50% now. They don't want 52% or 56% - they will be wanting 80% or more. I'm sure Bernie will be able to haggle them down, but not as far as necessary... even if he kicked in an extra $200mm into the pot (70% vs 50%), that's $200mm more in costs for a business that is barely breaking even. The other side of what they want is more races in the USA - and Indy and Montreal aren't going to be running to pay higher fees, knowing they have Bernie over a barrel, and remembering what he did when they were over a barrel... and the teams want lower ticket prices, which can only come from lower track fees. So not only do the teams want more of Bernies cut, they want his total take to be lower. He just can't do it. It won't even be about "our way or BK", because either way would lead to the same result for Bernie. The only way he can accomodate them is if he can substantially increase revenues, which would be amazingly hard to do, considering how much he already charges the tracks. He could potentially haggle with the teams to increase the calendar to 20 races, and also maybe get commitments from the teams to stay in until 2015 or something... then with those contracts, he could extend the TV deals for more $$$ and take a loan against the future income from those. Then he'd have to hope like hell that inflation comes in a big way, and he can pay back those loans with depreciated money in the near future (near future meaning before his TV contracts run out). Bernie is really screwed.
And on this... they would, but they'd lose (FIA/FOM would lose, I mean). They're never going to be successful in compelling any of the FOTA teams to participate. In the meantime, all the FOTA teams have infinitely more resources than either FOM or the FIA. And it would be just as likely that FOTA teams would win such suits, and that would destroy the FIA or FOM if they ended up paying out many millions to Ferrari for breach. FIA is a non-profit, so what are their real monetary damages? No court is going to force FOTA teams to compete, and any damages to the FIA would probably be small. Also, no court is going to prevent FOTA from running their own series - courts, especially European courts, are loathe to restrict any sort of trade. Net-net, FIA and FOM are screwed if FOTA leaves, but FOM is much more screwed. The FIA would continue to exist, just without it's premiere series. FOM would be over and done with in short order.
They couldn't really buy out Bernie. He is just an employee of CVC ever since he sold his actual ownership. CVC owns the commercial rights to F1 and they would probably cost a lot more than the teams could shell out.
