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Volume 7 No. 80


Formula 1 introduced rules this year which aimed to "put the brakes on the dominance of a single outfit," according to Christian Sylt for the BBC. They came at a "hefty cost." Research revealed new regulations fueled a £167.6M increase in the F1 teams' costs in '16. They rose 14.5% to a combined £1.3B -- the "highest-ever total recorded in the sport." F1 cars are designed the year before they race so the "bulk of the investment in them is paid for then, too." It means that the cost of this year's campaign is reflected in the teams' '16 accounts. The costs of the teams' operating companies came to an average of £165.9M in '16, topped by Mercedes, which spent £274.9M, "excluding the investment in its engines." It is the highest total recorded on the accounts of a British F1 team and "even eclipses the turbocharged spending levels" before the '08 economic crash which "drove Toyota and Honda out of the sport." At the "other end of the spectrum is last year's new entrant," Haas F1, which spent "a third as much" as Mercedes. Haas "managed to keep its costs down by taking advantage of a new rule allowing teams to buy in more parts than before." Writing in the introduction to its accounts, Mercedes Motorsport Dir Toto Wolff noted that there has been "an increase of £27.9m in operating costs mainly due to the impact of technical regulation changes and movement in foreign exchange rates." The '16 accounts for Force India "give more insight into the effort required to meet the new rules." It said that combined with the change in tire sizes, "our traditional method of retaining 50% of the previous season's car and updating the remaining 50% is not possible for 2017." More than 90% of Force India's car this year is "completely new." The regulation changes "even dented the bottom line" of British manufacturer McLaren. It went from a net £3.4M profit in '15 to an after-tax loss of £3.2M the following year (BBC, 10/13).

Australian cricketers "have deeper pockets this week" after the payout of a A$58.5M ($45.9M) adjustment ledger from Cricket Australia that was a "major point of conflict during this year's bitter pay dispute with the governing body," according to Barrett & Lutton of the SYDNEY MORNING HERALD. Players who participated in int'l and domestic cricket between '12 and this year "received a share of the funds on a pro-rata basis" under the terms of the last memorandum of understanding between CA and the Australian Cricketers' Association. The adjustment ledger "is not a bonus." Players were entitled to it "as their percentage share of the game's revenue above forecast" over the previous five years. It became a "hugely contentious issue during the dispute with CA this year," however, when the governing body proposed to roll over half of the ledger -- about A$29M ($22.8M) -- to the next five-year period "rather than pay them out in full." While former players have reportedly received a "direct payment in the past week," players from '12-17 who are contracted to CA, the states and Big Bash League franchises had 70% of their slice "placed in a retirement fund," with the remaining 30% paid "straight into their bank accounts" (SMH, 10/16).

A law looking to introduce a 5% tax on transfers of "sporting professionals" has been proposed in France's National Assembly, according to L'ÉQUIPE. The law's goal is to fund the country's National Center for the Development of Sport (CNDS). The text stipulates that from August 1, 2018, transfers are subject to a 5% tax to be given to the CNDS "with the obligation of sharing it with amateur sports clubs." The tax would be due to come "from an amount defined by a decree” and would be applied equally to domestic transfers and to those between French and foreign clubs. The law's author, Deputy Michel Zumkeller, said he was not yielding to the "Neymar effect," adding that he proposed a similar law in '15. Zumkeller: "The idea is to tax the most important transfers, not the €2 to €3 million ($2.3M-$3.5M) ones. When a club buys a €100 million ($118M) player, it could give five more [million] for amateur sport" (L'ÉQUIPE, 10/16).

Scottish Premiership side Hamilton was "conned out" of almost £1M ($1.3M) by criminals "claiming to be from the anti-fraud department of the team’s own bank." The club "is believed to have been contacted by scammers who warned that their money was at risk" and advised them to move it to another account from where the cash was stolen. A source said, "There's sympathy for what's happened but there's a degree of surprise they've fallen for the scam" (LONDON TIMES, 10/16).

The duo who founded JD Sports "confirmed speculation" that they plan to float their latest retail business, Footasylum, in an IPO that could net them "tens of millions of pounds." John Wardle and David Makin announced an intention to float the fashion, footwear and clothing company that targets 16-to-24-year-olds on London’s junior AIM market next month. Footasylum operates nearly 60 stores across the U.K. and plans to "almost treble this" after an IPO by opening between eight and 10 stores every year. The retailer employs more than 2,000 staff and sells about 300 brands, including adidas, Nike and The North Face (LONDON TIMES, 10/16).