Formula 1 is receiving limelight that it probably isn’t used to.
Members of the European Parliament have given their blessing to the European Commission to undertake an inquiry on Formula 1’s suspected “anti-competitive practices”.
Many spectators are unaware of the happenings ‘behind the scenes’ of the sport; however the investigation launched by the European Commission may shed some light in alleged ‘underground-esque dealings’.
Governance structure of F1
South East Labour MEP, Anneliese Dodds, believes that smaller teams are “unfairly punished” because of the structure of Formula 1.
The argument that Ms Dodds proposes is that:
“…smaller teams are unfairly punished by an uncompetitive allocation of prize money that will always give the biggest teams more money, even if they finish last in every race.”
This commercial agreement, involving teams such as Mercedes-AMG Petronas, Red Bull Racing, and Scuderia Ferari, is in place until 2020.
Much of Ms Dodds concerns surrounds the governance structure of Formula 1, which gives the 6 top teams a say in rule-making.
Ferrari’s bonuses
Suspected anti-competitive practices involve Ferrari’s additional “historical bonus” just for competing in the competition. The astounding bonus of $56.1 (£44.6) million has been in place since series one, back in 1950. It’s reported that this bonus equated to more than Manor F1’s earnings in an entire season. I’m guessing you can see the alleged hierarchical unfairness in the current system by now. Why do all the top dogs receive more, due to their size?
Just for background knowledge, Formula 1 generates £1.1 billion of income of which 63 per cent of that goes to the teams. If larger teams are getting a majority of the income, where does that leave the smaller teams?
Reoccurring problem: 2015 investigation
This isn’t the first time Formula 1 has come under scrutiny. Ms Dodds previously said that she had “real concerns” about the smaller teams in the sport in 2015. Ms Dodds didn’t have any power to do anything as the Competition Commission would only investigate after the teams submit a formal complaint.
Back in 2015, two smaller teams, Force India and Sauber, asked the EU’s Competition Commission to formally investigate the motor racing sport due to the perceived unfairness over how revenues were split and rules decided.
Force India released a statement saying:
“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’s rules are set is both unfair and unlawful.”
Bernie Ecclestone’s suspicious exit
Former Formula 1 CEO, Bernie Ecclestone, welcomed the 2015 investigation as he believed that the sport had nothing to hide.
Is it suspicious that two years on from that, Mr Ecclestone has been removed from his position following a takeover from U.S. giant, Liberty Media?
Maybe the $8 (£6.4) billion takeover has something to do with the alleged “anti-competitive practices”. This could well be a reason for why Mr Ecclestone was allegedly “forced out” from his position, as there could’ve been a dispute regarding the alleged anti-competitive practice.
Potential fines
Many are glad that the European Parliament has decided to investigate the potentially mysterious world of motor-racing. If Formula 1 is guilty of being anti-competitive, they could be fined up to 10 per cent of its global annual turnover, which roughly equates to $1.68 (£1.33) billion.
Sources:
http://www.bbc.co.uk/sport/formula1/38971214
http://www.bbc.co.uk/sport/formula1/38723001
http://www.bbc.co.uk/sport/formula1/34388544
http://nesn.com/2017/02/eu-parliament-supports-anti-competition-investigation-into-formula-1/