Formula one reeling as teams threaten break away series

• Ferrari and McLaren say they will not enter in 2010
• Mosley refusal to shift on budget cap provokes split

The Formula One Teams' Association, Fota, has sensationally confirmed it is to form a breakaway series, causing the greatest upheaval in the sport's 60-year history. Following a four-hour meeting last night of the eight teams that currently form Fota - Ferrari, McLaren, Renault, Toyota, BMW Sauber, Brawn GP, Red Bull Racing and Toro Rosso - they have all declined to enter formula one for 2010. Only Williams and Force India have done so.

Despite weeks of negotiations with the FIA president, Max Mosley, the two bodies have failed to find a compromise, leaving the sport's leading teams frustrated at Mosley's stance. Last night they decided they had no option but to break away and launch a rival series.

Outlining the major differences with the FIA, and confirming their intentions, they said in a statement: "Since the formation of Fota last September the teams have worked together and sought to engage the FIA and commercial rights holder [Bernie Ecclestone] to develop and improve the sport. Unprecedented worldwide financial turmoil has inevitably placed great challenges before the F1 community."

Amid the global economic downturn Fota said it has already embarked on substantial cost-cutting. "Fota is proud that it has achieved the most substantial measures to reduce costs in the history of our sport. In particular the manufacturer teams have provided assistance to the independent teams, a number of which would probably not be in the sport today without the Fota initiatives. The Fota teams have further agreed upon a substantial voluntary cost reduction that provides a sustainable model for the future.

"Following these efforts all the teams have confirmed to the FIA and the commercial rights holder that they are willing to commit until the end of 2012. The FIA and the commercial rights holder have campaigned to divide Fota.

"The wishes of the majority of the teams are ignored. Furthermore tens of millions of dollars have been withheld from many teams by the commercial rights holder, going back as far as 2006. Despite this, and the uncompromising environment, Fota has genuinely sought compromise. It has become clear, however, the teams cannot continue to compromise on the fundamental values of the sport and have declined to alter their original conditional entries to the 2010 world championship.

"These teams, therefore, have no alternative other than to commence the preparation for a new championship which reflects the values of its participants and partners. This series will have transparent governance, one set of regulations, encourage more entrants and listen to the wishes of the fans, including offering lower prices for spectators worldwide, partners and other stakeholders. The major drivers, stars, brands, sponsors, promoters and companies historically associated with the highest level of motorsport will all feature in this new series."

The FIA had issued a deadline of close of business today to enter next year's championship to McLaren, Toyota, Renault, BMW Sauber and Brawn GP in particular. As far as the FIA is concerned, Ferrari, Red Bull and Toro Rosso are contracted to enter, hence the reason they were given an automatic entry by world motor sport's governing body last Friday. Ferrari have stated that contract, signed in 2005, was invalidated by the FIA when it failed to recognise the Italian team's right of veto over the new regulations. Mosley unilaterally announced the introduction of a voluntary £40m budget cap at the end of April without consulting the teams, most notably Ferrari.

While Fota has now confirmed its intention to stage a breakaway series, the actual implementation is another matter.Significantly Ferrari face being embroiled in a legal wrangle that could last months, especially as Ecclestone has already stated his intention to sue for millions of pounds should they quit formula one. Any series without Ferrari will be hard to sell to television companies and race tracks around the world, the most renowned of which are signed up with Ecclestone.

Last night's announcement by Fota is sure to cast a pall over this weekend's British grand prix, which is set to take place at Silverstone for the last time before switching to Donington.

Andy Martin

The GuardianTramp

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