Formula One, formula lost

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: Rebel leagues and break-away factions are part and parcel of professional sports, but news of Formula One’s potential split is an unprecedented storyline in the history of sport, and certainly the biggest crisis that the league has had to face in the past sixty years. F-1 has grown into a multi-billion dollar industry, and even in India it is becoming popular. Besides the Force India (FI) team owned by the UB group, there are plans being made for hosting an F-1 race in India, and if the split does occur, it would be devastating for the future of the sport in general, and for India especially.

Ironically, Force India is one of the five teams to have unconditionally accepted the conditions that have become the bone of contention between F-1 and the association of teams, the FOTA. Unfortunately, three of the other five teams are new entrants, and both the present teams, Force India and Williams, don’t have enough brand-recognition to be considered revenue churners. The eight teams that constitute FOTA include Ferrari, McClaren, Red Bull and Renault, and the reason for the threatened split is simple: the imposition by the league of a “Budget Cap”, and the requirement of a new commercial agreement that essentially, as FOTA claims, leads to the withholding of tens of millions of dollars by the league. The budget cap is particularly interesting, because it isn’t the usual practice in professional leagues to impose a cap on the marketing and promotion of a team; instead, the more common practice to ensure parity among teams, is a salary cap, a practice that even the IPL has unofficially adopted. A salary cap restricts the ability of a team with deep pockets to dominate the talent pool market, and inhibits the ability of skewing the best players available, towards it. Promotions and marketing by individual teams are typically seen to be a positive, and encouraged, as a collateral benefit to the league. Perhaps the move was triggered by the lop-sided domination by teams like Ferrari and McClaren with respect to branding and publicity and hence the commercial gains that are synonymous with recognition. Additionally, there could be concerns within the league that the teams have become larger than life, and powerful enough to lobby and collude: something that is actually occurring at present.