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FIA to sue teams over planned series
Source: Agencies/Shanghai Daily |
June 20, 2009, Saturday
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FORMULA One's governing body says it will sue the Formula One Teams Association after the group that is made up of Ferrari and seven other teams announced plans to start a rival series.
Ferrari, McLaren and six other teams announced plans yesterday for a breakaway competition following the collapse of heated negotiations with the FIA over the introduction of a voluntary budget cap for next season.
Ferrari has participated since the inaugural series, but is now set to break away along with current championship leader Brawn GP, McLaren, Renault, Toyota, BMW Sauber, Red Bull Racing and Toro Rosso.
The FIA said: "The actions of FOTA as a whole, and Ferrari in particular, amount to serious violations of law including willful interference with contractual relations, direct breaches of Ferrari's legal obligations and a grave violation of competition law."
FIA says it will be "issuing legal proceedings without delay."
The teams will be taking more than US$2 billion of annual investment with them if they leave the championship, according to industry monitor Formula Money.
Formula Money calculated that the eight teams accounted for 47 percent of Formula One's total revenue generation in 2008 through sponsorship, supplier deals and team owner contributions. Of the total US$2.2 billion, US$667 million was in the form of sponsorship revenues.
The report said Formula One could expect the crisis to have an immediate effect with fans less likely to book advance tickets for next year.
"This could make it more difficult for race promoters to pay F1's hosting fees which average US$23.7 million per race," it added.
Television stations are also likely to want to renegotiate their contracts, or could even terminate them, if the likes of Ferrari are no longer competing in the officially-sanctioned championship.
"These teams also spend huge amounts on F1's corporate hospitality and on trackside advertising so their departure will further impact F1's revenue stream," said Formula Money, which said the sport needed around US$550 million in annual revenues to meet its costs and liabilities.
Late compromise
The organizers of the Chinese Grand Prix in Shanghai were hoping for a late compromise when reached by Shanghai Daily, but did not rule out hosting both the series.
"We are open to all top-class motor racing events here," said Yang Yibin, the marketing director of Juss Event, the organizing company of Chinese GP. "Our aim has always been to introduce high level motor sports events in Shanghai.
"Personally though, I'm hoping they would reach some sort of compromise before the (Friday night) deadline. However, if they do go their separate ways in 2010, Shanghai International Circuit has no reason to say no to either of them."
Shanghai first staged the Formula One GP in 2004, with the 7-year contract due to expire next year.
The deal has not been extended yet though F1 supremo Bernie Ecclestone said during the 2009 China GP in April that they were keen to extend it.
"FIA would be too busy now to sit down with us and talk," said Yang. "The Shanghai government has also set up a panel to study the impact F1 has had on the city. We will get a clearer picture early next year."
Ferrari, McLaren and six other teams announced plans yesterday for a breakaway competition following the collapse of heated negotiations with the FIA over the introduction of a voluntary budget cap for next season.
Ferrari has participated since the inaugural series, but is now set to break away along with current championship leader Brawn GP, McLaren, Renault, Toyota, BMW Sauber, Red Bull Racing and Toro Rosso.
The FIA said: "The actions of FOTA as a whole, and Ferrari in particular, amount to serious violations of law including willful interference with contractual relations, direct breaches of Ferrari's legal obligations and a grave violation of competition law."
FIA says it will be "issuing legal proceedings without delay."
The teams will be taking more than US$2 billion of annual investment with them if they leave the championship, according to industry monitor Formula Money.
Formula Money calculated that the eight teams accounted for 47 percent of Formula One's total revenue generation in 2008 through sponsorship, supplier deals and team owner contributions. Of the total US$2.2 billion, US$667 million was in the form of sponsorship revenues.
The report said Formula One could expect the crisis to have an immediate effect with fans less likely to book advance tickets for next year.
"This could make it more difficult for race promoters to pay F1's hosting fees which average US$23.7 million per race," it added.
Television stations are also likely to want to renegotiate their contracts, or could even terminate them, if the likes of Ferrari are no longer competing in the officially-sanctioned championship.
"These teams also spend huge amounts on F1's corporate hospitality and on trackside advertising so their departure will further impact F1's revenue stream," said Formula Money, which said the sport needed around US$550 million in annual revenues to meet its costs and liabilities.
Late compromise
The organizers of the Chinese Grand Prix in Shanghai were hoping for a late compromise when reached by Shanghai Daily, but did not rule out hosting both the series.
"We are open to all top-class motor racing events here," said Yang Yibin, the marketing director of Juss Event, the organizing company of Chinese GP. "Our aim has always been to introduce high level motor sports events in Shanghai.
"Personally though, I'm hoping they would reach some sort of compromise before the (Friday night) deadline. However, if they do go their separate ways in 2010, Shanghai International Circuit has no reason to say no to either of them."
Shanghai first staged the Formula One GP in 2004, with the 7-year contract due to expire next year.
The deal has not been extended yet though F1 supremo Bernie Ecclestone said during the 2009 China GP in April that they were keen to extend it.
"FIA would be too busy now to sit down with us and talk," said Yang. "The Shanghai government has also set up a panel to study the impact F1 has had on the city. We will get a clearer picture early next year."
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