European Commission probe looms for F1

Reports are circulating that F1 may be subject to an official complaint to the European Commission about the way the sport is operating, namely that its commercial and governance structures are designed to be anti-competitive.

The prospect of a probe comes at a critical time for F1, with the highest levels of fan unrest coming amidst reported record revenues.

Growing scrutiny

The investigation of self-governing bodies is a high on both the media and political agendas at present, particularly following the raft of revelations and allegations made against FIFA in recent weeks.

The link between football and F1’s governing bodies is transparency. With any business, being open and honest about your activities is the only course of action for success, but neither organisation could claim to have any real degree of transparency.

Money is key to the potential investigation from the European Commission – as it was with FIFA. Many of F1’s teams are struggling to afford their place on the grid, with three teams having gone bankrupt in recent year (albeit with Manor Marussia recovering to return in 2015), and many grand prix circuits themselves have reported that they can no longer afford the cost of hosting a race due to Formula One Holdings’ price hikes.

As prolific motorsports journalist (and the reporter who broke this story) Joe Saward, highlights: “How can a sport that generates £1.8bn a year in revenues be incapable of supporting 12 two-car teams which race one another on only 20 occasions each year? The only possible answer to this is that the business model is not a very good one for all concerned.”

With the discussion over customer cars presenting opportunities for rich teams to become richer, those in the mid-pack or lower are highly concerned that the sport is fast becoming an bias and unaffordable playing field.

F1’s legal commitment

Formula One Group is not the only organisation that would become embroiled in any European Commission investigation. Such a probe would greatly damage the reputation of the sport and all connected at a time they could ill afford it.

Furthermore, the FIA would be particularly exposed as a previous European Union investigation, which concluded over a decade ago, led to them agreeing to act as the only sports regulator for F1 and not to get involved in commercial matters. As part of the agreement, Formula One Group similarly agreed to deal only with commercial matters and not be involved with governance.

One could argue that double points, proposals to spice up racing and, perhaps most crucially, the creation of the F1 Strategy Group could all be deemed to contravene this ruling. Some are speculating that this could be the driving force behind Bernie Ecclestone’s recent call to disband the Strategy Group.

Don’t forget the fans

Regular readers will know that I have been actively campaigning for F1 to promote greater interaction with its fans, as current approaches are driving fans away and are clearly not sustainable.

Any investigation would only have a negative impact on F1’s reputation and would likely divert a great deal of attention away from recent initiatives to promote greater fan inclusion in the sport, such as the GPDA’s global fan survey.

Manor Marussia Team Principal, Graeme Lowdon, perfectly encapsulates this: “The biggest asset Formula 1 has is its fan base. It’s global and it’s massive. There are millions and millions of fans and it’s the root of this ensure sport. Everything channels from that, so it’s very, very important what fans want, not just now but in the future, and how they would like to integrate and engage with the sport.”

As fans trickle away from F1 other racing categories have flourished. WEC, Formula E and BTCC are driving considerable fan engagement and should be praised for this. But F1 is still the pinnacle of motorsport – and its reputation, and fan engagement should reflect that.

I’ll bring you more on this story as it develops.

In the meantime, I would encourage you to read more of Joe Saward’s views on the subject on his excellent blog.

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