Why F1’s funny money is no joke
“Formula 1 has always been a battle – not only to win, but also to survive,”
Cost control, budget capping, resource restriction. Call it what you will, it’s F1’s recurring topic and a highly emotive one. On one hand the main teams, existing primarily to drive commercial messages for their owners, will spend their ways to multiple titles; on the other, the independents struggle to stay in business.
Formula 1 has always been a battle – not only to win, but also to survive, as proven by the fact that over the sport’s 64-year life around 120 entrants (ie an average of two per season) have disappeared. Its survival-of-the-ttest credo has ensured that only the best fought another day.
It’s sobering to realise that a single team (Ferrari) survives from that maiden season, with McLaren and Williams the only survivors from the 1960s and 1970s, respectively. True, there’s room to quibble; Mercedes were active in the 1950s, but the present team is rooted in Tyrrell, who arrived in the 1960s but have passed through several owners before Stuttgart bought in to recreate the magic of the ‘Silver Arrows’.
As for the rest: Lotus hark back to the 1980s as Toleman via interludes as Benetton and Renault, sharing no DNA with the original outt carrying that name; Toro Rosso (Minardi), too, date from the era of bubble perms and shoulder pads; Force India (formerly Jordan, Midland, then Spyker) and Sauber arrived in the 1990s; and Red Bull began as Stewart GP in 1997. Marussia and Caterham are F1’s millennial kids.
Tellingly, since Eddie Jordan and thenMinardi boss Paul Stoddard rst agitated over costs in the early 2000s, only two teams – Arrows and HRT – have folded, while Toyota, Honda and BMW made strategic withdrawals for other reasons. Compare this to the 1990s, when no fewer than nine teams simply ran out of money and closed their doors. That said, F1 tsar Bernie Ecclestone recently indicated that two current teams could go under – hence the FIA’s decision to allocate a 2015 grid slot to NASCAR team owner Gene Haas and to re-examine an application lodged by serial team boss Colin Kolles. This suggests that F1’s lifesupport system is dysfunctional, hence the FIA’s stated determination to regulate costs.
Purists decry such initiatives, believing that (in the words of one team boss) “you eat what you kill”, but surely such sentiments should reign only where sporting, commercial and regulatory factors are equal. This is not so right now. A privileged few sit on the Strategy Group while receiving premium slices of the sport’s revenues; the rest are disenfranchised and take home lower rewards for the same results.
In the past, only Ferrari enjoyed a regulatory veto and a premium revenue slice on account of their historic role, while the others shared a payment structure: whether McLaren or Minardi, the payout for any result was identical. But now, the big four – Red Bull, Ferrari, Mercedes, McLaren – skim the cream while the rest starve.
Indeed, so large is the earnings gap between those teams and, say, Force India, that this year each will each bank an estimated £66m (or 150 per cent) more – even though Force India are (at the time of writing) ahead of Ferrari in the constructors’ championship and not far off Red Bull. Put differently, Force India would need to acquire one of the largest sponsors in F1 history simply to ght Ferrari on equal terms – and still wouldn’t enjoy primary input into the regulatory process as part of the Strategy Group.
So it’s no wonder Force India (plus Sauber, Marussia and Caterham) are pushing for larger slices of F1’s pie while urging the FIA to regulate spending. But the big teams are pushing back; the heads of Ferrari and McLaren have both spoken out against the very principle of cost restrictions. In last month’s F1 Racing Ron Dennis said, “If you can’t afford to race in F1, there are plenty of other categories you can race in.”
Thus the FIA called a team meeting to coincide with the most recent sitting of the Strategy Group on 1 May. On the agenda were cost-cap proposals versus the alternatives proposed by the Strategy Group – ‘cost restriction’ items that range from increased manpower curfews and tyre-warmer bans to standardised parts such as steering racks and crash structures.
An interesting divide is developing. The Strategy Group consists of six teams – the aforementioned four, plus Williams (on heritage grounds) and Lotus (as highest-placed other team), although these last two are junior members of the Group, and receive either a much reduced premium (Williams) or nil (Lotus). Cost capping is clearly crucial to their survival – just as it is for the teams outside the Strategy Group.
So Williams and Lotus face a major quandary. Do they follow the status quo and continue to enjoy (limited) regulatory input into the Strategy Group, or do they break away and join the push for increased revenues and budgetary controls? It’s status versus survival…
Ferrari will bank an estimated £66m more than Force India this year, despite being behind them in the constructors’ standings