lastturnclub.com

We've watched the historic conflict in Formula One over the past weeks. It's striking how much of the commentary of media and fans alike takes its context from a narrow view of a single series in a single sport and on only a few seasons of experience. It's as if everything that happened in the last century is well...the last century.

We were reminded of Dan Gurney's 1978 “White Paper,” a letter he wrote to his fellow team owners in USAC (United States Auto Club), then the governing body of North American open wheel racing. After pointing out the dire circumstances of teams in the USAC Championship, Gurney saw the F1 of the Seventies as a model of what might be done if teams took control of their destiny. He wrote:

“...the situation made them unite and form an organization called the Formula 1 Constructors Association. They appointed a...operations officer and negotiator and they made a solemn pledge to abide by his decisions 100%...transformed the Formula 1 Grand Prix racing scene from what was a weak and scattered group of teams without any bargaining or negotiating strength into a bona fide business. They did it by uniting and making that 'no turning back' commitment. They speak with one voice (that of the Chief negotiator) and that voice has gained authority by leaps and bounds.”

The teams of F1 had taken control of their own sport and appointed a "commissioner" to manage their interests equitably. Their “chief negotiator” (Bernie Ecclestone) was the “one voice” with which they spoke, and it transformed the sport. Gurney wanted the teams of the USAC championship to do the same.

Soon after, and as a direct result of Gurney's “White Paper,” Roger Penske and Pat Patrick led the formation of CART, ushering in two decades in which North American open wheel teams and fans were well served by good racing and financially successful teams.

Unfortunately, the seeds of F1 failure were there from the start – in Gurney's own words, “that voice has gained authority by leaps and bounds.” The interests of F1's teams were finally subordinated to the singular interests of their own “chief negotiator,” who leveraged his burgeoning power by forming an alliance with Max Mosely, the president of the FIA, racing's ultimate governing body. Likewise, CART moved beyond representing its members, developed into a separate and powerful entity in its own right, and began acting in its own corporate interest rather than in the interests of the teams that had created it.

Had the teams in these leagues paid attention, that "drift to tyranny" might not have occurred. But when revenue skyrockets, and there's seemingly enough for everyone, the growth of that “third party” profit center, whether it's called USAC, FOA, CART, NASCAR, or ALMS is easily ignored, or justified as a necessary “value-added” function. But is it? A motorsport veteran, whose career has spanned Can Am, IMSA, Le Mans and Formula 1, wrote, “all you need to race are racing teams and a track.” So how much value-added is there for business organizations outside of those that directly manage teams and tracks? When it's not “the best of times” is there room for a third profit center?

Consider the NFL. Its commissioners have been very powerful, in terms of protecting the game (and the teams from themselves), every bit as powerful as the F1 "supremo". But through it all the owners have acted in concert maintaining a veto where necessary, and preventing the league from emerging as a separate profit center that could compete with its own constituents. The PGA separated itself from the USGA when its interests were no longer congruent with those of the sanctioning body. CART might well have remained similarly successful had it maintained a properly constructed "team-centric” organization. It's not the principal that's in question, it's the execution.

Arguing that motor racing teams can't cooperatively manage their own sport because F1 drifted into the  control of the “supremo,” isn't much different than arguing that democratic institutions are doomed because the Roman Republic drifted into the hands of emperors. Gurney continued, in part:

"...we the car owners are the ones who have put forth by far the most effort, by far the most financial stake with little or no chance for return and...we have let the track owners or promoters and the sanctioning body lead us around by the nose while they reap the benefits. USAC for instance negotiates with TV as though it had the TV rights which in fact, if it came to a showdown, would turn out to be ours. (The car owners and teams)."

That seems as if it were written yesterday, doesn't it? One ALMS team manager said to me, “This is the only circus in which the clowns pay to perform.”

It's time to recognize, after a decade, that teams cannot thrive within the current business framework, a structure in which the sanctioning body's decisions are for its own well-being, and sometimes contrary to the interests of the teams.  Even in 2008, a “good year,” few teams were on firm ground financially. Thirty years before, Gurney wrote about the poor prize money at Indianapolis, then just equal to Long Beach with nearly nine times the attendance. The 500's 2009 purse is testament to the success of the changes wrought by the formation of CART more than anything else.

Was Gurney throwing USAC under the bus, declaring complete independence? He was not, recognizing that some administrative structure would always be necessary.

“...we have agreed that it is essential that we continue to support USAC as the sanctioning body for Championship racing. The only improvement will be that USAC will work for us and support our cause and our policies as well. It should be clearly understood that the purpose of this organization is to make racing better in an overall way. Not just for the car owners and drivers, but also for the track owners and promoters and the sanctioning body and the sponsors and supporters and last but certainly not least, the racing fans and paying spectators.”

We can't put it better today. As in most other sports, the administration, the sanction – the league, if  you will – must be a creature of, not a competitor with, the teams that deliver the show.

We're convinced that properly managed and distributed, the revenues of the sport are adequate to ensure successful teams and events, but a restructuring of the sport is needed for that to happen.

How can teams best ensure their own financial health? What does a sanctioning body, a series administration, need to do on behalf of its teams? What should that cost?

There are other models in which teams can thrive and control their own destiny. The detail of these models is of course different in different sports. Can sports car racing in North America find a structure that meets the needs of its teams, of tracks, of sponsors and of fans? We think it's past time for those discussions to start.