http://autoweek.com/article/formula-one/third-cars-f1-not-required-lawyers-say
F1 grid could shrink to below 16 cars without contractual repercussions, contrary to speculation
The number of cars racing in
Formula One could shrink to less than 16 -- without the sport breaching its contracts, according to leading auto racing lawyers. The revelation comes on the heels of recent collapses by the Marussia and Caterham teams. Several other teams are also thought to be at risk, notably Sauber, Force India and Lotus. Indeed F1’s grid size may be on track to shrink if a minimum number of cars don’t have to race.
If Marussia and Caterham fail to make it to the start of next season, there would be 18 cars on the grid, as there were at this season’s penultimate race in Brazil and the one before it at Circuit of the Americas near Austin, Texas. Persistent talk during the past couple of months said that if more teams go under, the remaining ones would have to field a third car. The belief was that remaining teams would have to field those third cars to prevent F1 from breaching contracts with race organizers and its governing body, the Fédération Internationale de l’Automobile (FIA), which ultimately owns the sport’s commercial rights. However, this now appears not to be the case.
The minimum number of cars required has long been a subject of great speculation, with some suggesting there is no minimum number, while others say it is somewhere between 14 and 20. However, Autoweek has learned that while the sport’s contracts with race organizers and the FIA do refer to a minimum of 16 cars, this is not an “absolute obligation” according to leading attorneys.
The race promotion contract for the European Grand Prix in Valencia, Spain, recently came into the public domain after the venue held its final race in 2012. It states that F1 “shall use its reasonable endeavors” to ensure at least 16 cars race. This reflects the details of F1’s contract with the FIA, which are disclosed in the prospectus for the stalled stock-market flotation of the sport. The key part states that F1 “must attempt to procure that at least 16 cars participate in the world championship.”
Jonathan Lux, a lawyer at London’s Stone Chambers who works in the motorsports business, says that “neither contract imposes an absolute obligation on F1 to ensure a threshold of 16 cars.
“The Rights contract simply refers to an ‘attempt to procure’ -- not even requiring that there be a ‘reasonable’ attempt. [So] at least arguably, an attempt falling short of a reasonable attempt would suffice.”
Charles Braithwaite, media and sports partner at British law firm Collyer Bristow, adds that the requirement in the race contract for F1 to use reasonable endeavors “is not hard and fast.”
He says, “The onus is less than an obligation to use ‘all reasonable endeavors’ or ‘best endeavors’, two other frequently used terms. None provide an absolute obligation.”
The gist: F1 boss Bernie Ecclestone needs only to show he attempted to procure 16 cars, and used his reasonable endeavors to do so, and if he does that, the sport will not be in breach of contract even if there are less than 16 cars on the grid. This isn’t an unthinkable scenario as Ecclestone told British broadcaster Sky Sports at the Brazilian Grand Prix, “It could go down to 14. If we lose another two teams that is what will happen.” This is where the controversial third car clause comes in.
F1’s contracts with the teams state they may have to run a third car if the grid drops below 20. It didn’t come into effect in Austin or Brazil because the contracts also say teams are allowed to miss up to three races.
However, the discussion about running third cars raged throughout both race weekends, with F1’s smallest teams claiming they had seen an e-mail outlining a plan to have Red Bull and Ferrari supply a third car next season.
Whether this actually happens now looks far less important. Instead, the fact that a discussion took place about it may prove to be significant as it could show that Ecclestone attempted to procure 16 cars and used his reasonable endeavors to do so. If less than 16 cars race next year, then it is this fact which could keep F1 under his control: Should he breach his contract with the FIA, the governing body could use it as justification for reclaiming the commercial rights. Ecclestone paid the FIA $313.6m for a 100-year license to those rights beginning in 2011, which means the governing body will have to wait a long time to reclaim them unless Ecclestone’s F1 Group breaches its contract.
By Christian Sylt
