Showdown: Todt, Ecclestone and Mosley vs Marchionne

by Mark Hughes on 7th December 2015

Last week the World Motor Sport Council issued an extraordinary change to F1’s governance procedure, empowering Jean Todt and Bernie Ecclestone to over-rule, if necessary, decisions reached by the existing governance. Essentially, they could ignore the earlier voting down by the F1 Commission of Ecclestone’s proposed cheaper independent ‘client’ engine, the instrument with which Ecclestone hopes to bust the hybrid engine manufacturers’ hold on F1.

This hold increased dramatically with the advent of the hybrid engine formula in 2014, the big increase in costs that followed and the competitive spread resulting in the factory Mercedes team’s domination.

The WMSC decision is the latest in a long-running power play and just the visible part of the iceberg. Many apparently unconnected events are only so on the surface and in reality are all part of the same game.

Ecclestone has finally – through the logic of his old cohort Max Mosley – convinced Todt of his vision to deprive the factory teams of political power, reasoning to Todt that it is damaging F1’s sustainability and that it’s therefore within the FIA’s remit to act.

Mosley, the long-deposed FIA President? He is the brains behind this strategy. That much was made very clear by the joint interview he and Ecclestone gave to a German TV channel on October 18, when every point of that strategy was clearly laid out in advance, ostensibly just by way of giving their opinions on the current state of F1.

“If Bernie and Jean Todt got together they could push that through.”- Max Mosley, ZDF TV, Oct 18

“Well Jean is a bit different from Max. He’s very worried about upsetting people. He wants everyone to be happy and you know that is impossible. When Max wanted to get something done, if one or two people were unhappy, that’s how it was.” – Bernie Ecclestone, ZDF TV, Oct 18

“It’s Max’s fault that we’ve got this engine,” – Bernie Ecclestone, ZDF TV, Oct 18

Max got Bernie into this mess, now Bernie needs Max’s help to get him out if it. Ecclestone has never been a strategist, just a brilliant improviser and negotiator. He needs a strategy to take on and defeat the manufacturers – and that’s where Max comes in. Not only can he advise Bernie strategically but is also close to Todt and Red Bull’s owner Dietrich Mateschitz, making each see the mutuality of their interests and how they can assist each other.

The apparent Red Bull engine supply crisis, together with the Ferrari veto over engine prices convinced Todt he had to act, made him align the FIA’s power with Bernie. It’s more than feasible that both those factors were manipulated into existence by a clever strategic brain with many years of experience of wielding political power, an Oxford graduate, former team owner and former FIA president.

With the benefit of hindsight, a cynic might suspect that Red Bull never did have an engine supply crisis, that it was all just a ruse orchestrated between Mosley, Ecclestone and Mateschitz, just one small but important part of a strategy to deprive the car manufacturers – Ferrari and Mercedes, principally – of control of the sport.

Then, what if we told you that on the other side of the fence was an animal the likes of which Ecclestone, Todt and Mosley may not ever have encountered in the shape of cardiganed assassin Sergio Marchionne, boss of Fiat and Ferrari? An aggressive, fiercely intelligent visionary, apparently incorruptible, and relishing a power struggle – we’ll come to him later.

The July meeting between (Ecclestone ally) Niki Lauda and (friend of Mosley and Ecclestone) Mateschitz, apparently about a Mercedes engine supply for Red Bull, was perhaps just for the sake of form, was never realistically going to result in that. That widely publicised meeting – ask yourself just why it was so widely publicised, why either side felt the need to have it out there that they’d met – was merely to provide the back story to the contrived Red Bull engine supply crisis.

With an apparent (but not real) Mercedes power unit supply in prospect Red Bull gave notice to Renault to annul its contract (which ran until the end of 2016) at the end of this year on the grounds of under-performance. Except, they didn’t ever go through with the annulment. Did it ever have any intention to? While all this apparent engine supply crisis was going on, incidentally, the staff at Red Bull Racing’s Milton Keynes factory had been told not to worry, that there was a plan and the future was secure.

Lauda officially left it that Mateschitz should put a formal proposal to Mercedes, but he never did. Funny that.

That gave Toto Wolff – the Mercedes team boss determined that the partnership should never happen – time to convince the main Mercedes automotive board (who inconveniently and bizarrely quite liked the idea) that it would be a bad idea, as Red Bull was going to become the factory Audi team somewhere down the line. That was enough to scare the board off.

Then there’s the apparent Ferrari deal that never was. Red Bull publically placed Ferrari in a position where it was aggressively asked for an impossible deal: the very same power units as in the Scuderia’s own cars, with no compromise. Before any meaningful discussion between the two parties had even taken place Mateschitz was making this demand.

For one thing it was unreasonable, verging on rudely disrespectful; for another, once it was made, in Red Bull’s own publication, how could Ferrari be seen to be being dictated to by a rival and a customer and meekly agreeing? What loss of face would that have been, let alone the possible embarrassment of a Red Bull-Ferrari repeatedly beating the Ferrari? That deal was never going to happen – nor probably was it intended to.

It now looks like Ferrari, just like Mercedes, had been played – walk-on extras in a play-acted drama they knew nothing about. Finally, a bit of noise about a possible Honda deal, made in the knowledge that Ron Dennis had veto rights over that – and no way would Ron be repeating what he sees as the mistake of Martin Whitmarsh in agreeing to supply a rival (Brawn) to help them out, only for that rival to then out-perform McLaren and run off with its engine partner. Again, surely a deal that Red Bull knew was never going to happen, something put out just to shore up the subterfuge.

In between the Ferrari and Honda speculation came the engine manufacturers’ meeting where they were set to vote among themselves on the FOM’s (Bernie’s) request that they halve the price of their engines. That was a hugely provocative request, calculated to trigger Ferrari (Marchionne) into using its veto to nix the idea. This played perfectly into Bernie’s hands, for it finally brought Todt and the power of the FIA onside with his aims. Which was probably what it had been designed (by Max) to do in the first place.

“You have to have an independent engine supplier who can supply on a commercial basis. And the great strength of F1 from the late ‘60s until quite recently was that we had Cosworth, Mechachrome, other people making engines, so you weren’t in the hands of the manufacturers. The moment you have one, two or even three manufacturers and they are involved at board level so that Mr Zetsche can talk to Mr Marchionne and Mr Ghosn – then they control F1. You don’t control F1. And at that point the need for an independent engine supplier becomes acute.” Max Mosley, ZDF TV, Oct 18

“Jean is finally beginning to get it,” said Bernie in an unguarded moment in Mexico. He was referring to how Todt had come around to Bernie’s way of thinking about the need for an independent engine supply. A few moments later Todt was explaining how he had reached the conclusion that really for the sake of F1’s sustainability, unless the manufacturers would agree to drastically reduce the price of the hybrid power units, then he would support the proposal of an alternative independent ‘client’ engine that would be simpler, vastly cheaper and made competitive through a balance of power equivalency formula. The independent teams were endangered by the prices and so even though the FIA can have nothing to do with commercial matters, he felt justified in acting in that the FIA was responsible for the sustainability of the championship.

“Also, it's very annoying that some teams are struggling to get an engine for next year. That should not happen.” (Except – probably unknown to Jean at the time - they probably weren’t and probably never had been). Furthermore, said Todt, if the existing governance procedure voted the idea down, then he was prepared to change the governance procedure (that sounds so like Max, doesn’t it?).

The F1 Commission (the teams plus others) did indeed vote the idea down. Within just over a week, the governance procedure had been changed. The World Motor Sport Council “approved, by a near-unanimous number (just one vote against) a mandate for Jean Todt and Bernie Ecclestone to make recommendations and decisions regarding pressing issues in F1.”

And, once Todt was onside, guess what happened? It became clear that Red Bull never had gone through with that Renault annulment it had leaked and that it had an engine supply contract through to the end of 2016 all along… Well, you could have knocked us down with a feather.

But after that Renault contract expires at the end of ‘16? Red Bull needs not to be at the mercy of a major engine manufacturer. It cannot control its own destiny this way. What about a cheap and powerful ‘client’ engine that’s been regulated to be very competitive? Sounds ideal. Mutual interests, see...

In the meantime the FIA received expressions of interest from four specialist engine companies in supplying the alternative client engine, based around a bigger, simpler twin-turbo V6. The formal tendering process has yet to begin, but the engine specialists agreed it was feasible to supply at between €6-8 million per team, per season (the hybrid supply retails at between €18-24 million) for 1000bhp (more power than the best of the hybrids).

As things stand, the manufacturers have until January 15 to present to the FIA a proposal that will drastically reduce the price of the hybrids, address the (lack of) noise issue and simplify the technology. The World Motor Sport Council statement that announced the change to the governance system also noted that: “Mr Todt and Mr Ecclestone expressed their intention to establish conclusions on these matters by January 31.”

So, Mr Marchionne and how he plays this – for it is he who is the pivot upon which the outcome of this all balances: those in the various F1 meetings confirm he is stridently, aggressively protective of Ferrari’s interests. Since his arrival, notes one long-serving team principal, the Ferrari veto has been mentioned more times than in the previous 20 years combined. It’s always just been an implicit threat, but now it comes up as a routine flag of Ferrari objection – and its use in the engine manufacturers meeting is believed to have been the first time it has ever actually been invoked.

It is Marchionne who has been the least unbending on the engine price subject, the one fiercely adamant that no outside power can dictate what are Ferrari’s own private business decisions. Mercedes stands officially in support of Ferrari’s position, but behind the scenes is much more open to the idea of compromise.

Todt – a man very aware of the power of that veto from the time he was Ferrari’s boss – sounds prepared for a Ferrari fight. “Power is very interesting,” he notes. “[With the veto] we are talking about sporting power, but you have people with power at a higher level… the veto is like having a gun in your pocket. You need to be very careful how you use it.”

Perhaps Marchionne’s use of the veto at that engine meeting in Geneva will be seen in hindsight to have been a crucial tactical mistake. It was the invocation of that veto that triggered Todt into aligning the FIA’s power with Ecclestone. In aggressively responding in unyielding fashion to what Todt saw as a reasonable request for the sake of the championship, Marchionne’s position angered the normally conciliatory Todt and put him in a position where he was forced to choose sides.

Now, if the engine manufacturers – with Ferrari’s agreement – cannot come up with a ‘cheap’ hybrid engine supply proposal by January 15, (ie. the very thing Ferrari vetoed against), Todt can feel justified in believing the FIA is empowered to impose change by means of the client engine. All it takes is for one team to use this engine (probably from 2018, but possibly ‘17) and it can be regulated to be as competitive as is necessary and the political power of the manufacturers is broken. The mechanism is then there to make low-budget independent teams as competitive as is deemed necessary for the sustainability of the championship.

But if the manufacturers do come up with a cheap hybrid proposal, thereby averting the client engine alternative? Then Marchionne will be seen to have backed down. Todt will have got what he wanted – cheaper hybrids. But Ecclestone won’t have got what he seeks – neutralising the engine manufacturers’ power. Can Bernie, with Max’s guidance, then convince Jean that this runs deeper than just cheaper engines, that the engines were just a manifestation of an underlying problem – that of the participants calling the shots – one that will continue to thwart their efforts unless they remain united? In which case the alternative engine might just go ahead anyway.

Would that violate Ferrari’s right of veto? Well, there are a couple of issues there. One is the re-wording of that veto that Todt insisted on when the contract with the FIA was renewed shortly after he took over as president. Previously it was unconditional, but it now specifies that it can be invoked only if something is against Ferrari’s specific interests. “If they are trying to suggest that one engine for independent teams is against their interests… I’m happy to debate that,” says Todt. The second point is that a participant having a veto over the rules by which all the other participants must abide might be deemed illegal under EU law, a subject with which Mosley is intimately familiar.

“I would say it’s impossible. Unless there’s a rule somewhere that says it’s anti-competitive. I understand some of the teams are complaining to the European Commission and saying what I’ve just said – that it’s anti-competitive.” Bernie Ecclestone, ZDF TV, Oct 18

Which is where that Sauber/Force India EU complaint could be crucial – for although their issue is with distribution of revenue and the make-up of the strategy group, the EU can take that investigation in any direction it wishes (or is encouraged to). That’s what Todt means when he says Ferrari should be very careful about how it uses its veto; it could backfire on them.

Does that sound like Marchionne could be cornered? What sort of animal does he become in such a situation? How does he react?

“You always get big companies like Ferrari saying ‘if you do that we’ll quit F1.’ And you have to be prepared to call their bluff. You have to be prepared to say if you want to go, do. Don’t slam the door behind you. And you know that they’ll still be there next season. But it does mean a period of disagreeable relations.” Max Mosley, ZDF TV, Oct 18

Marchionne has stunned the auto industry with his revival first of Fiat and latterly Chrysler. Utterly unconventional and a left-field thinker, he’s in charge of F1’s most powerful brand. It’s difficult to see him simply caving. Let’s see what happens on January 15 – and the 31.

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