Ecclestone Says F1 Governors Handed Power To Top Teams For $40 Million

Ecclestone says the FIA sold the farm for $40 million so the insane can run the asylum

Formula One's chief executive Bernie Ecclestone has revealed that auto racing's governing body accepted $40 million in return for setting up a new body which gives six leading teams a say in key decisions.

The revelation was made in a media briefing by Mr. Ecclestone to sports reporters at F1's headquarters in London on Thursday. Forbes was also in attendance and will present below the first part of the almost verbatim transcript from the meeting with the second section soon to follow.

Mr. Ecclestone's revelation concerns the Strategy Group, a controversial rule-making structure which first met in October last year. It comprises the F1 Group, which is run by Mr. Ecclestone, governing body the Federation Internationale de l'Automobile (FIA) and six leading teams. In 2014 they were Ferrari, McLaren, Mercedes, Red Bull Racing, Williams and Lotus. Giving the participants more say should be applauded but instead it has attracted criticism from the teams which are not members of the group.

Decisions are made by a majority and each of the three group members has six votes. They have used it as the Strategy Group has already vetoed significant proposals such as $200 million budget cap which was due to be introduced to F1 in 2015. It would have leveled the playing field which could have prevented the collapse of the Caterham and Marussia teams over the past two months. As Forbes revealed last month, Europe's anti-trust regulators are investigating claims that "the FIA accepted a dilution of its regulatory authority" as a result of the Strategy Group. Mr. Ecclestone says it was set up in return for money.

When asked why the FIA does not seem to be as influential as it once was Mr. Ecclestone says "they sold the rights. The Strategy Group that we have got. We made a contribution of $40 million a year." He stresses that the FIA did not sell the right to rule-making and instead "sold the rights to have this new group set up in the way we thought it should be set up." Responding to whether the F1 Group should have had to pay for this Mr. Ecclestone said "no. We were really helping out the FIA because it was in deficit and looking to get some money somehow." It reflects research by Britain's Daily Telegraph which revealed in February that the FIA made a $3.4 million net loss on revenue of $81.7 million in 2012.

In a bid to prevent more teams going to the wall Mr. Ecclestone says he is going to propose to the Strategy Group that F1's 1.6-liter V6 turbo engines are switched for the 2.4-liter V8s which were dropped at the end of last year. The V6 engines are more environmentally-friendly than their predecessors but are around twice the price at an estimated $30 million annually.

Mr. Ecclestone says he will make the proposal at the next Strategy Group meeting on 18 December and adds that it has a good chance of proceeding as four teams are in favor which would be enough to give a majority. He says that the old engines would be re-introduced in 2016 and would be formally branded hybrids to highlight their energy-saving capabilities. Time will tell whether the plan gets the green light. More at Forbes.com