Why F1’s funny money is no joke

“For­mula 1 has al­ways been a bat­tle – not only to win, but also to sur­vive,”

F1 Racing - - INSIDER - DI­ETER RENCKEN

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 outt 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

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