The boss of the largest shareholder in Formula One has revealed that the race series nearly collapsed following threats from its governing body, the FIA, in 2009.

The revelation came from Donald Mackenzie, the co-founder and co-chairman of CVC, a private equity firm which owns a 35.1-percent stake in F1. Giving evidence at a trial surrounding CVC’s 2005 takeover of F1, Mackenzie last week told a U.K. court that “the negotiations with [the FIA] turned out to be extremely difficult and very nearly led to the break-up of this company.”

The dispute surrounded F1’s regulations as the FIA wanted to enforce cost-cutting measures including a $60-million cap on team budgets. The teams threatened to leave F1 and were able to do this as the Concorde Agreement, the contract which commits them to race, had expired at the end of 2007. The threat was averted when the FIA signed the Concorde after it let the teams self-police the cost cuts. It is a mechanism known as the Resource Restriction Agreement -- and it has arguably not served its purpose as several teams are now understood to be in financial difficulty.

The teams dropped their threat to quit in 2009 after five days, and it was thought that they did not pose a real threat. However, Mackenzie said in court that “there’s no doubt in my mind they were prepared to wreck the current business and walk away from it, for emotional issues that were still being negotiated at the time.”

He said that when CVC bought F1 it “took it for granted” that the FIA would add its signature to the Concorde alongside its own and those of the teams. “We hadn’t fully understood then that the new Concorde Agreement not only required the teams to sign, but it also required the FIA to sign. And that turned out to be extremely difficult.”

Mackenzie added that even though CVC and F1’s boss Bernie Ecclestone had agreed to commercial terms with the teams, the FIA’s then-president, Max Mosley, “threatened” to go against this by withholding its signature from the Concorde. The contract requires the FIA’s signature; if it had not given it the teams could have walked away from F1 at any time.

Mosley admits that the FIA made this threat.

“In the summer of 2009, the FIA was indeed refusing to sign as it had been since before the previous Concorde expired,” he says. “An obvious reason for not signing in 2009 was we wanted a mechanism to keep costs under control enforced by the FIA, whereas the big teams wanted to control costs among themselves. We thought that would be no control at all.

“We were interested in costs because we thought excessive cost could kill Formula One but also for sporting reasons. If a team has much greater financial resources, it’s really no different to having a bigger engine. So we were indeed being difficult vis-a-vis CVC and refusing to sign because the teams would not agree to what we thought was necessary.”

Mosley added that “CVC were never in conflict with the FIA over this -- they agreed that costs needed to come down for a healthy championship … everyone agreed that costs needed to come down, though perhaps not as much as my opening bid. The disagreement was about how to do it. I said there had to be a rule enforced by the FIA. The teams said they could do it themselves without the FIA -- the so-called Resource Restriction Agreement. I thought this would never work. Some might say I have been proved right.”

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