Both Force India and Sauber have confirmed that they have lodged an official complaint to the European Union competitions commission concerning F1’s governance and payment structure.
The official complaint follows threats by unnamed midfield teams earlier this year over the financial and competitive structure of the sport.
Labour MEP Anneliese Dodds pledged to support any complaints from teams and wrote to EU Comissioner Margethe Vestager earlier this year to outline her concerns that the sport could be in breach of EU law after Marussia and Caterham, both in her constituency, went into administration.
A statement from Force India today read: Sahara Force India is one of two teams to have registered a complaint with the European Union questioning the governance of Formula 1 and showing that the system of dividing revenues and determining how Formula 1 rules are set is both unfair and unlawful.
“Due to the ongoing legal discussions, it would be inappropriate to comment further at this time.”
Prize payment discrepancies
The primary complaint from Sauber and Force India concerns the manner in which F1’s revenues are distributed, with the five leading teams receiving $249 million collectively on top of the prize money that they receive from the Constructors’ Championship.
This stems from the Team Agreements contracts that every one of F1’s teams has signed up to, with the exception of Marussia. Each contract running from 2013 until 2020, with a wide range of benefits for each – Ferrari’s being the most lucrative and powerful.
In 2014, this resulted in Ferrari receiving a premium payment of $97 million – $30 million more than it received for finishing fourth in the Constructors’ Championship.
Under the agreement, the Italian manufacturer is granted a veto on any regulations changes – the only team to have such influence – as stipulated on page 179 of the Team Agreements document: “In respect of Ferrari only, Ferrari may terminate if the regulatory safeguards agreed between the FIA and Ferrari do now allow Ferrari to veto any change to the regulations already announced or introduced (subject to certain exceptions).”
Levelling the playing field
The complaint submitted by Force India and Sauber seeks to restore balance amongst the teams and do away with the financial benefits that have favoured the leading squads for so long, in effect creating a two-tier championship structure.
The documents handed to the EU in the complaint made by Force India and Sauber state: These unfair side payments put the independent teams at a perpetual sporting and economic disadvantage and directly harm the sport.
“By locking in a permanent advantage for a select few teams, the sport has been gravely undermined.
“The beneficiaries have vastly more to spend on technology, development, research and equipment, creating an ever-wider performance gap and, effectively, pre-determining the outcome of the world championships.
“These unlawful practices hurt the sport, its participants and the many thousands of people in and around Formula 1, and the many millions of European fans.”
Bernie Ecclestone went on record to state that he was unfazed by the threat of an EU investigation when it emerged in June, suggesting that Force India and Sauber should not have signed their own contracts if they were so concerned by the perceived imbalance.
Fairness and fans
It is clear that F1’s current pay structure is horribly imbalanced and highly unsustainable.
Formula One Management recently borrowed $1 billion to pay its shareholders at a time when Lotus is on the brink of financial collapse, two teams ceased operations in the last 12 months (albeit with Manor Marussia later being resurrected) and classic venues like Monza can ill afford escalating race fees.
The greed in F1 simply must stop or the sport will lose more teams and even more fans – 50 million people switches off from F1 in 2014 compared to the previous season.
At present the top 10 teams in the Constructors’ Championship are rewarded with funds to pay their travel expenses for the next season. Surely those with the greatest means and the biggest proportion of the prize money can already afford this, and offering financial assistance to the bottom 10 teams would be more beneficial? This approach would allow them to divert funds towards the development of their car and staff to improve the show for all.
What ever the future of the situation, it is clear that having two teams submit an official complaint will certainly have a very negative impact on the F1 brand, at a time when it can ill afford it. This further supports growing disquiet amongst fans that a chance in leadership and image is required if the sport is to continue to be heralded as the pinnacle of motorsport.
Are Force India and Sauber right to submit an official complaint? Make your voice heard in the comments below and on Twitter @ApexRacingPR