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GP Week : Issue 216
as all F1 needs to do is demonstrate that it attempted to procure 16 cars, and used its reasonable endeavours to do so. It would then not be in breach, even if there are less than 16 cars on the grid. Nevertheless, that doesn’t mean the contracts are immune to legal action. Far from it in fact. Braithwaite says that in order to determine whether F1 did indeed “attempt to procure” at last 16 cars “it is highly likely a court would look to the facts of the contract and situation - much as it would in determining the meaning of ‘reasonable endeavours’.” Lux adds that “what constitutes an ‘attempt to procure’ or ‘reasonable endeavours’ is a very fertile source for legal argument and therefore protracted disputes. “In my humble submission rather than deal with such disputes in court or arbitration proceedings it would be far more productive to refer such disputes to mediation – where not only the rights but also the underlying interests of the parties can be fully taken into account. “Mediation is successful in about 90% of cases – the end result is a settlement agreement which is not restricted to the claims and counter-claims initially presented by the parties but may include, for example, agreement on future business between the parties, thereby enhancing rather than undermining their business relationship.” F1 has a trick under its hood to prevent it from even getting close to 16 cars. As Mercedes motorsport boss Toto Wolff said last year, “there’s a regulation which says if the grid drops below 20 cars, so 19 cars, then there is a certain mechanism which would trigger certain teams to fill in.” It is the so-called third car clause which requires each team to provide a third car if the grid falls below 20. So why didn’t this come into effect last year when the collapse of Marussia and Caterham left 18 cars on the grid? The reason for this is also found in the flotation prospectus. It reveals that the teams’ contracts to race in F1 say that their rights, such as their entitlement to prize money, expire if they miss more than three Grands Prix or cease to be a constructor which involves designing and manufacturing key parts of their cars themselves. In short, the contracts allow teams to miss up to three races before the third car clause needs to be invoked. However, if so many teams are missing at any race that it reduces the grid to below 16 cars then F1 will need to demonstrate that it attempted to procure at least that number and used reasonable endeavours to do so. “It is unlikely that F1 would want to risk a potential claim by having less than 16 cars,” says Braithwaite. “It has contracts in place that could enable it to ask certain teams to field a third car if the grid drops to below 20 cars and it would likely try to exercise that right if it appeared likely that less than 16 cars would participate - at least until a new solution was agreed and updated rules and contracts drawn up.” However, in practice, the shorter the notice, the harder it could be for any of the teams to supply a third vehicle. Until recently, it would have been almost unthinkable that F1 could lose so many teams in such a short period of time that it could push the grid below 16 cars. However, within the space of several weeks both Caterham and Marussia collapsed which alone led to F1 falling from 22 to 18 cars. Losing two more teams would have pushed F1 below 16 cars and if it were to happen at the start of a series of long-haul races the remaining teams may not have enough time to freight a third car from their factories which tend to be in the UK. F1’s contracts take this into account too. The third car clause was written into F1’s contracts in an era when the teams brought spare cars to races along with cars used specifically for qualifying. At that time if a team needed to run a third carallitneededtodowasflyinoneofits reserve drivers and give them the spare. Nowadays, teams only take two cars to each race and carefully control usage of F1’s expensive engines. It explains why McLaren’s racing director Eric Boullier said in September that “the driver is the easiest to get on board, you know. The chassis and the logistics of the third car, the people around it, we would need about six months’ notice.” The Concorde Agreement, the contract which preceded the teams’ current F1 agreements, stated that teams would be given “sufficient advance notice (not less than 60 days)” to run a third car and added that “no team which enters an additional car shall be entitled to any points...arising out of the additional car’s performance.” This would prevent a team from gaining a direct advantage from running a third car though it could still be used tactically to spoil a rival’s race strategies. The cost of running a third vehicle is around $45m annually so only the frontrunners could really afford it and this would cause their rivals particular grief as it would put another of their top-performing cars on the grid. Last year Ecclestone told Britain’s Daily Mail newspaper that to avoid accusations of bias, if third cars are needed, they would not be run by the teams that provide them. Instead, they would be supplied to backmarkers which have gone bust or are at most risk of going bust. “They would supply a third car to someone else,” said Ecclestone. “If maybe Sauber disappeared a team could do a deal with Sauber. Ferrari for example could say, ‘we will give you a car, all that goes with it, and we want you to put this sponsor on it. You have your own sponsors but we want you to include this one as well and we want you to take this driver’. The team wouldn’t have to go under then would they?” The crew would be supplied by the team which received the car and it could be modified in its factory. If Caterham had been a beneficiary of a car from one of the frontrunners it is much more likely that it would have scored points when it returned for the season-ender in Abu Dhabi flush with £2.4m of crowd-funding cash. This is the very reason why some teams are opposed to third cars being handed to rivals even though they have all signed contracts committing to them. The use of cars supplied by rivals seems incredibly close to the concept of customer cars which is barred in F1 as each team is required to be a constructor rather than being given their vehicle from a third party. It means that the rights of the team receiving a third car would cease so it could not be guaranteed income from prize money, only sponsorship. However, its costs would be dramatically reduced as it would not need to spend on research and development which is one of the biggest single expenses for an F1 team. The upshot is that the team could make a profit which may make up for a lack of prize money. F1’s sporting regulations would also need to be changed as they currently state that “no competitor shall be entitled to share any information...not limited to the supply of or access to drawings designated by such competitor with another competitor.” However, it is not uncommon for the sporting regulations to change so this isn’t a significant hurdle. Teams which aren’t owned by multinational corporations tend to be most strongly opposed to customer cars. The most vocal is British outfit Williams and rightly so. Williams is controlled by its co-founder Sir Frank Williams and it is the second most successful team in F1. It prides itself on having achieved success through building up its talent internally which runs counter to the principle of allowing teams to buy in expertise from their rivals. This applies just as much to third cars as it does to customer cars. “We have always made our position clear on customer cars and three car teams,” says Williams’ deputy team principal Claire Williams. “Frank has always been really clear on this that we don’t believe it to be in the DNA of our sport. I think a more important question is why are we having those conversations? It’s because there is talk that teams are in financial difficulty at the moment. I think we need to be addressing the cost issues that we have in Formula One in order to support the teams that we currently have. So therefore I believe those conversations show that we are not doing what we need to be doing from a cost control perspective.” A $200 million budget cap was due to be introduced in 2015 but was rejected last year by the Strategy Group, a body comprising Ecclestone, the FIA and six leading teams. The ones which are excluded from it are currently pushing for a greater say. It remains to be seen if they will be successful but had they been given a greater say before now they may well have been able to swerve around their current predicament. F1 >>> BUsinEss “It is unlikely that F1 would want to risk a potential claim by having less than 16 cars ..." 36 GPWEEK.com // 36 GPWEEK.com // PARTNERS: