“There is something entirely wrong”: F1 teams clash over costs and revenue sharing

2014 United States Grand Prix

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In a tense press conference at the Circuit of Americas, team representatives clashed over how F1’s financial situation has led to the loss of two of their rivals.

Here are some of the key points made by both sides of the discussion.

Wolff: Marussia and Caterham overspent

Mercedes executive director Toto Wolff said Formula One should protect its nine remaining teams but that Marussia and Caterham ran into trouble because they were spending beyond their means.

I have an emotional and a pragmatic view. The emotional view is that there is personal drama behind it. There are families who need to pay mortgages, there are kids going to school and these people don’t have any jobs today anymore and that is a drama and it is painful and I am sorry for that. The rational side of things is that we have seen in the past that teams come and go. We have seen great teams who have folded, went into liquidation or administration. Great names: Brabham, Arrows, Ligier, Prost, Larousse, Leyton House… I mean there are 20 others. That was part of Formula One. Now, is that something that should happen? No, of course it shouldn’t. But when Formula One was opened up for new teams to join, you can’t compare the agenda of the teams. You know in our case we are representing a multi-national car company. This is a branding exercise, we are showcasing our technology. And on the other side if you look at Marussia and Caterham when they joined the sport it was an entrepreneur deciding to join Formula One and maybe underestimating what it meant joining that field. […]

If today you run a team, it’s like running a company. And this shouldn’t be sounding arrogant in any way – but you’re not obliged to spend more than you have. There are different agendas. If you run a company today and you own it, you should probably run it in a sensible way. And that means spending what you have. And if you decide to invest or to go into debt because you believe that there is a sound business case behind it, this is what you should do. Now, I find it disturbing as well that you need to spend one hundred million, or you want to spend one hundred million if your income is only 60 or 70 million. In my time back at Williams that was the philosophy. You spent what you have. And if you decide to follow a more aggressive strategy, you need to know what happens tomorrow. I have a lot of respect for everybody sitting on the stage, from an entrepreneurial view, but that is the economic reality and the economic reality is valid for any company out there and for any sports team.

Lopez: F1’s business model is killing teams

Lotus team principal Gerard Lopez said that expensive rules changes, supported by teams who receive far more generous remuneration from Formula One Management, are driving teams to destruction.

I take a GP2 team, or a GP2 car, and I make it race around this track. It’s not going to be ridiculous. It’s going to be down by a couple of seconds, four, five, six, maybe seven seconds. The whole GP2 team for the whole season is going to cost €4million. Are we really that much better? I mean are we really better to the point that a team needs to spend €300 million to be six seconds faster? We’re not. I wouldn’t accept that argument from anybody. We’re not €300 million better if you take the top teams compared to a GP2 team. So it’s a bit ridiculous to say that you need to spend that kind of money to have that kind of performance – because that makes us the worst managers in the world. If I took a financial view of this sport, comparing GP2 to F1, and the so-called Law of Diminishing Returns, we are most probably the worst managers there are. And we pride ourselves of not being. So, if we’re not, we really need to think about… and I’m not saying that suddenly Mercedes needs to cut down because I understand that for Mercedes it’s a small portion of their overall budget but a very important budget in terms of image. So, nobody’s saying Mercedes suddenly need to spend 20 per cent more than the cheapest team in F1, if I may say so, but what we’re saying is, where the money goes – which is essentially developing the cars and so on and so forth, if we need to spend €300 million more than a GP2 team to make the car go six or seven seconds faster, that’s not a very efficient use of capital – and so that’s where the issue is. So nobody – certainly I am not saying – that we should take the budgets down to a fixed amount. What I’m saying is we should take the budgets down to an amount where everybody can spend whatever they want on whatever they want – as long as the technological development, the development of the car is done within a framework that makes financial sense – and that can be measured. Because it doesn’t have to be measured in dollars, euros or pounds, but it can be measured in wind tunnel, number of packages, updates, so on and so forth. […]

I take the example of Marussia, of Caterham. I kinda guess what they must have paid for the engine this year and what they have paid for developing around that engine and I guarantee that in the budgets that they have, there was not a whole lot left – so it’s not like they had a choice. And the choice of the engine was not made by these guys – and this is one of the examples I gave before. It’s all good and fun and so on to say that you shouldn’t spend more than what you what you have or not. But at the end of the day, certain decisions on budget are forced up on you just by the fact that that’s what the market is giving you. […]

We’re in the lucky position, we took a Mercedes engine for next year. Seems to be the better engine – it clearly is – but the fact is we still have to pay. And I’m not finger-pointing because they’re the same price, all of them, but the fact is there’s a minimum budget that is required today to even exist in Formula One. And that minimum budget has actually killed two teams. […]

A lot of people like to criticise [F1 owners] CVC for instance and unfortunately sometimes I have to take their side because in my real life that’s where I work, that’s the type of business I do, and the fact is that close after taking over the business, I think the sport was distributing about around $300m to the teams, something like that – three, three-forty. Today it’s almost $900m but it’s not distributed equally otherwise we would all be smiling here and saying there is no issue. So the amount might be an issue but certainly the distribution is a huge issue because – I’m not going to say it’s pareto rule, it’s not like 80% goes to 20% but close enough. A lot of the money goes to the top teams and it’s almost like – how can I say this? – it’s a self-fulfilling prophecy, essentially, that the ones that have more, get more and as a result want more and want to spend more and so on, and the ones that have less, get less. There is something entirely wrong with the distribution model right now. […]

I’ll be very frank, there wasn’t a whole lot of leverage to get a whole lot more [money]. At the end of the day, if I had gone to Bernie, for instance, and said you know what, I just don’t want to do this any more, he might have been sad – maybe – to see me go, but he might have thought OK, that’s the way it is. If somebody wearing red had done the same thing, that’s a whole different leverage effect.

Boullier: Not up to teams to fix F1’s problems

McLaren’s racing director Eric Boullier said the top teams would not sacrifice their competitive advantage to help other teams.

Each of us wants to beat everybody. We are competitors. If we compete with a bottle of water, if we compete with a Formula One team, we want to beat the others – and we will do it by any means. So, this is normal. Even, actually, as you say in the back row, they want to still compete and actually beat everybody. So, this is not… we can… I’m pretty sure we can sit down and agree drastic decisions altogether – but this has to be led by the governance body and by the people who are running the show. Not the competitors.

Mallya: Big spenders will walk out

Force India owner Vijay Mallya pointed out that if Formula One is increasingly populated by a smaller number of teams spending very large sums of money, it will become more vulnerable when those teams withdraw, as the likes of Toyota, Honda and BMW have done in the recent past.

We have to find some viable medium here – but what is actually compounding the problem is that the revenue-share model is skewed completely towards the teams who can afford to race at the pinnacle of sport at the direct expense of those who perhaps are marginal. And that’s why two of the smaller teams have disappeared. I would also like to take this opportunity of saying that sustainability in F1 is necessary for the sport but when large corporations like Toyota and Honda decide, for corporate reasons, that they want to walk out, they go. […]

I think what I’ve heard in the last few minutes is that if the smaller teams got more by way of income, that they would necessarily spend a lot more. I disagree with that completely because I think that the three of us sat here in the back row are smart enough to know how much to spend without going the Marussia and Caterham way. And as Toto said, if I can use his expressions as an indicator of how the big teams think, well if you can afford to be in Formula One, you’re welcome. If you can’t, get out. Fine. I think the FIA must decide this, not the participants because after all it is the FIA Formula One World Championship and if it is to be designed to be affordable to those big boys in the business, who of course benefit hugely in terms of their regular core businesses. That’s one way of looking at it and if it is meant to be racing in sportsmanlike terms, with big teams, small teams that compete with each other… Look at Williams: I’m sure Williams doesn’t spend a fraction of what the big teams are spending and look at their performance this year. Until the last race, Force India and McLaren were competing head-to-head. So money doesn’t necessarily buy performance. Equally, spending is discretionary and if the big teams want to spend $300m, it’s discretionary. That cannot be used against the smaller teams. The smaller teams must get a revenue share that makes it financially viable or sustainable. That’s the point.

Kaltenborn: Fewer competitors leaves F1 vulnerable

Sauber team principal Monisha Kaltenborn echoed Mallya’s view that F1 would be at greater risk if it had fewer competitors.

Entrepreneurs should also think a bit long term at least. If you do that, it would be interesting where that strategy leads to. We just go on the way we are and too bad for some teams that can’t make it because they’re not investing enough and it’s such a high motorsport level that you really have to have maybe three-digit million figures of budget that then in F1 are normal, for the outside world, not really. Let’s see where that will lead us to. Eventually you’ll have four – probably – participants with endless amount of cars. Let’s see where that show will gets you. How much of income you have there. And amongst the four participants, you probably all have big names, so you’ll have three losers every year. So, it’ll result into that. As a big name – and we’ve experienced that again – if you lose, you have to invest more. But a big corporation does that maybe for one year, for two years but the third year, it definitely gets too much for them. Because, surprisingly, those corporations do have budgets they control, they can control, and they have ways to measure what they are doing – and that system will just collapse at some point in time.

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Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

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43 comments on ““There is something entirely wrong”: F1 teams clash over costs and revenue sharing”

  1. this quote was the best of all. well said mr. lopez..

    I take a GP2 team, or a GP2 car, and I make it race around this track. It’s not going to be ridiculous. It’s going to be down by a couple of seconds, four, five, six, maybe seven seconds. The whole GP2 team for the whole season is going to cost €4million. Are we really that much better? I mean are we really better to the point that a team needs to spend €300 million to be six seconds faster? We’re not. I wouldn’t accept that argument from anybody. We’re not €300 million better if you take the top teams compared to a GP2 team. So it’s a bit ridiculous to say that you need to spend that kind of money to have that kind of performance – because that makes us the worst managers in the world. If I took a financial view of this sport, comparing GP2 to F1, and the so-called Law of Diminishing Returns, we are most probably the worst managers there are. And we pride ourselves of not being. So, if we’re not, we really need to think about… and I’m not saying that suddenly Mercedes needs to cut down because I understand that for Mercedes it’s a small portion of their overall budget but a very important budget in terms of image. So, nobody’s saying Mercedes suddenly need to spend 20 per cent more than the cheapest team in F1, if I may say so, but what we’re saying is, where the money goes – which is essentially developing the cars and so on and so forth, if we need to spend €300 million more than a GP2 team to make the car go six or seven seconds faster, that’s not a very efficient use of capital – and so that’s where the issue is.

    1. Actually most most of the F1 money is spend to go those 7 sec faster despite al the artificial limits that are there these days. Remove those limits like no engine development, the ban of exotic materials, artificial limits on tire performance etc etc etc you will see F1 would be heaps faster and probably cheaper as well.

      The drive to save money and reduced speeds for safety has had the opposite effect it has become more expensive.

    2. Gerard Lopez really nailed it on this one, hats off

  2. ColdFly F1 (@)
    1st November 2014, 12:46

    When Wolff says “And this shouldn’t be sounding arrogant in any way – but you’re not obliged to spend more than you have” he is blind to reality.
    Yes, F1 is like a business, and companies should not spend more than they earn. But he is doing exactly that; just lucky that he has this big shareholder behind him who is bankrolling his poor running of the ‘business’.
    F1 is like big ‘governments’ (Mercedes, Ferrari, Red Bull) spending money like there is no tomorrow. They are not running the companies like businesses, but more like inefficient governments, and they can only ‘win’ by outspending by multiples genuine businesses.
    Many of the small teams are much more prudent, efficient, and effective with the monies they spend. But like in real life it is almost impossible for a real business to compete with those ‘government’ companies. They can either spend what they earn, but fail to make it to market (miss the 107%). Or they can spend more and start competing with the hope that their efforts are noticed and somebody will pay them. Both ways they are doomed, unless their is a greater force stopping the unfair competition.

    1. @coldfly Wolff is a business man, I don’t think he’s an hypocrite. Mercedes is seen as a powerhouse but if it wasn’t for the key signing of Lewis Mercedes wouldn’t linger long enough to win and that’s up to the Brackley and Brixworth people not Mercedes, Mercedes-Benz is a brand name, so give credit to Brawn and Wolff for the business part.

      1. Not sure about that.
        Mercedes have travelled up the F1 rostrum fairly smoothly since joining. First podiums, then victories and now dominance. Hamilton is an excellent driver but Mercedes would be doing what there doing this year with almost any other driver.

  3. ” I find it disturbing as well that you need to spend one hundred million, or you want to spend one hundred million if your income is only 60 or 70 million”

    Well if you are fighting a team for 10th place in the constructors which will improve you’r income it doesn’t make sense to resign from the fight just so you can keep the bills balanced for a while, you will just be participating, nothing more than a highspeed billboard that will be empty because who would want to sponsor a team that finish last regularly? For a team to be in F1 for a great amount of time you need some success, you don’t need to be champion or fight for titles but you need to be at least regularly in the midfield and in the current state of F1 even the midfielders are in trouble.

  4. Johnnie Walker must be slipping Eric Boullier some good stuff, wasn’t he managing the team that won a race and still signed Maldonado just a year ago?

    1. Good point.

  5. F1 show vs F1 business , as new arrival you either put together a “redbull or mercedes team” and show a strong brand or simply make a clown of yourself and sponsors.

    Why would a new arrival “HRT team” be paid same than Ferrari after all the yrs Ferrari has invest in the sport, if that become the case anyone will buy a parasite ticket. Next thing will be drivers salary has to be split equal too. I think is fair you need to win to get the money prize.

    The main difference are teams that want to be in F1 and teams that came to F1 to win.
    Teams should put together the budget to win and not simply enough to barely be there….

    1. Toyota must have been such parasites, then!

    2. Ferrari is a great team for sure. But if they disappear from F1, it wouldn’t mean more to me than if say Williams were to disappear.

  6. So, Marussia and Caterham spent beyond their means. And where did that get them? Nowhere. They were still back of the grid teams and the chances of them scoring points – Bianchi’s heroics at Monaco aside – were nil. That says an awful lot about how ridiculous things have become in F1, especially when you bear in mind what Lopez says about GP2 teams spending four million Euros and only being six seconds slower than F1 cars. You have reasonably well-run, competent teams like Williams and Force India, and they don’t look like getting on top of the podium either.

    Wolff is being disingenuous. HRT, Marussia and Caterham entered the sport on the basis that a cost cap was going to be introduced. It wasn’t.

    It’s simply not sustainable. Wolff may have Dr. Zetsche’s large wallet behind him at the moment, but will it still be there in ten years? They may be winning now, but they won’t win forever. Even Michael Schumacher’s winning era at Ferrari came to an end.

    What’s really disturbing is that F1 is going through a bit of a crisis and Jean Todt is nowhere to be seen. Max Mosley may have had his faults, but he would at least have tried something. Todt seems content to watch it all burn to the ground.

    1. ColdFly F1 (@)
      1st November 2014, 23:31

      @jules-winfield, good comment on Todt nowhere to be seen!

  7. I don’t believe that enforcing cost cutting on teams is a practical solution to the current crisis, the big four will always find ways of circumventing financial restrictions especially if they manufacture cars. For me there are some relatively simple ways to secure the future of F1.
    1) Better and higher distribution of basic funding to all teams, with smaller financial prizes for point scoring
    2) Reduce the reliance on aero with better mechanical grip. It is the perfection of aero that really costs, so make it less important. Yes the big teams will spend more to perfect it, but if it is less critical than the margin of dominance is less significant 0.4 seconds a lap instead of 2.0 as we have this year.
    3) Make it easier to watch racing, more viewers makes it more appealing for sponsors to fund teams

    Whilst I admire how Bernie transformed the sport, for the better, under his tenure I can’t help but feel that he is now so out of touch with the reality of the sport, blinded by greed and power that it is well past his time to retire. If only he could see past his own arrogance and start relinquishing his meddling control.

  8. I’d like to know the overheads that CVC incurs from F1, and the man-hours involved in its running. I know we’ll never be comparing apples with apples, but there seems so much more graft, for so much less money (though who can put a price on glory, and there was glory at Caterham and Marrusia) for the teams and circuit staff. Getting a reasonable image of who is putting what in, and taking how much out, to see who has the biggest responsibility to change. Until then, I think the teams should reduce any in-fighting to a minimum (traditionally their biggest weakness). Maybe we could do with Martin Whitmarsh at this point.

    1. @splittimes, I read in the last year or so that FOM had + – 150 staff for the entire bsns, TV production, freight, accomodation and catering.

  9. I simply don’t accept Fernandes’ argument regarding the teams’ fault in this situation. Yes, the well funded teams are essentially saying “this is terrible, let’s carry on regardless”, but why shouldn’t they? This is a sport of high achievers, where every designer, manager, mechanic, lawyer and of course driver is hardwired to compete, having done so to get where they are in F1, and that includes the former backmarkers too; they are psychologically compelled to maximize the potential they have available to them at all times. Collective action does not compute with these mentalities, and therefore a sovereign is required to eliminate the “Prisoner’s Dilemma” scenario and put the notion of “we” above that of “I”.

    Now that is all very well in political philosophy, but F1’s sovereign executive also has an agenda, and as with the teams, places financial gain over solidarity. It may stress the temple veins of some (perhaps the families of Caterham and Marussia employees cast into uncertainty?) to learn that Petra Ecclestone has put her LA mansion on the market with an asking price ($150 million) more than three times what Caterham and Marussia collectively received from FOM partnership last year ($48 million according to AUTOSPORT)! But whilst it is tempting to place the lion’s share of the blame at Bernie’s presumably elaborate door, it is the poor grasp of socialist redistribution beheld by the entirety of the FOM/CVC alliance that is to blame. Yes the redistributive argument is a somewhat conventional one, but it has been so repeated because it is so obvious that whilst there is such a skew towards the faster teams and whilst Bernie and his delightful daughters have such expensive tastes, F1 remains fundamentally unsustainable and fundamentally inaccessible for any venture without a global brand.

  10. I thought they had a lot of the answer between them, but they really demonstrated that teams are not the people to be running the sport. They’re great at making cars go round and round very fast. End of.

    Somebody else has to run the sport, but unfortunately that’s been someone who has the heart and soul of a thief.

  11. Werent Mercedes on brink of exiting F1 2 years back since they were not getting the desired result with the limited budget they had? And now since they got more backing and are on top of the sport currently, they are making such statements. I only see arrogance in Wolff’s statement.

    Mallya made correct point by stating that even if you have large budgets it wont guarantee in your presence in paddock if you dont get results. Bmw, Toyota, and for some years Honda left the sport. You need to have a sustainable environment otherwise everything will crumble down.

    CVC, Bernie and top teams are filled with so much of arrogance that they dont mind small teams leaving the sport. For once I want these small teams to back out of F1..let Mercedes, Ferrari, Rbr and Mclaren race each other in as many cars as they want to compete with, because at the end of the day if these teams (probably RBR & Mercedes) didnt get the desired result or fall at the back of the pack. .they will wind up everything they have and leave the sport. Probably then the F1 stakeholders will realise what stupid error they made by not having a sustainable environment and sharing the money in much better way.

    Although if my wish was granted, it would lead to many families without any financial support but it is truly sad that such a step would have to be taken against CVC & Bernie to make them realise there mistake.

    Btw, mind you Bernie people doesnt come to your grandstands just to watch a Ferrari or a RedBull or a Mercedes or a Mclaren, you will find many fans and supporters of all other small teams. Let these team exit the sport and watch less people coming to circuits to watch your sport. And if this thing happens, then dont blame anyone else except you for empty grandstands in the circuit.

  12. I’ll assume that the difference these days vs. the past is that the global recession continues to hamper teams from finding enough sponsorship to keep afloat. The well known trend of pay drivers is one indicator. Pay drivers is not a new thing in F1, but in more recent years has morphed into a necessity rather than a choice, for smaller teams.

    I’ll also assume that once desperate enough, F1 will fix this. It sounds like the money is there. But there is still a mix of opinions. BE seems to be leaning toward shrugging off a smaller grid as not being a problem and would rather let teams leave than just be going around with a ‘begging bucket’ as he termed it.

    I think F1 has to decide what it wants to be. On the one hand the big teams are admitting that they themselves cannot be trusted to have their costs capped and adhere to that without fudging the numbers in any number of ways to still spend hugely, because they can. The smaller teams want/need a bigger piece of the pie, but how full do you fill their pockets when they wanted to be in F1 and had to have proved they were viable in order to get into F1 to begin with.

    The same points/opinions keep getting hit on over and over again and so to me only F1 itself knows how serious thngs are and how seriously they want to take the current situation. Like any business entity, once their hand is forced, a direction will be taken. Is their hand forced yet? Hearing BE, it doesn’t seem so.

    F1 needs to decide if they still want small privateer type teams entering and having the potential to grow into something…or are those days gone. Can/should ‘college’ teams be expected to compete against the pros? If they are needed as ‘filler’ then I suppose their ‘begging bucket’ needs a bit more going into it. Or does F1 just accept that the big teams are not going to budge from spending big because they can and couldn’t care less about anyone who cannot survive on their own and with what they think should be a relatively small bucket.

    It seems like the big teams would rather see F1 end (or are comfortable that that won’t happen) than agree to any change that would alter the way they go about doing F1, yet of course they have agreed to many measures such as the reduced testing, reduced need for numbers of engines, gearboxes etc., while at the same time simply redirecting their funds to simulators for example if they can’t spend it at a test track.

    I think Horner has a good idea going back to some quotes from him earlier in the year. The lesser teams should be able to buy the bigger teams’ basic PU and chassis so they aren’t building everything from scratch. I just wouldn’t do it the BE way where the bigger teams also then get to dictate a sponsor and a driver for said purchased basic package…let the smaller teams at least sort everythg else out having saved millions in R&D and manufacturing. And give them a bit more for their bucket…but I’m certainly not for the continued bailout ad infinitum of teams for whom nobody forced to be there to begin with.

    1. “The lesser teams should be able to buy the bigger teams’ basic PU and chassis so they aren’t building everything from scratch.”

      The thing is @robbie, do we want ANY smaller teams to build their own chassis? Because if one needn’t bother then none of them will want to. It’s the same problem as with customer cars. One team buys a Red Bull chassis and a Merc engine, who will spend the money creating a Lotus? Then it ceases to be a constructors’ championship.

      1. @lockup Yeah, a valid point. My short answer is that entities “will spend the money creating a Lotus” if that’s the level they want to play at, and be known for, based on the marketing advantage they are looking at for being in F1. Do they want to be a ‘Mercedes’, a ‘Williams’, or a ‘Marussia’? If an entity wants to be in F1 but is fine not being known for building everything from the ground up (PU generally being the exception) then so be it. There is still a Constructors Championship. Smaller teams have always needed to buy others’ engines…but now it’s a power unit and that power unit’s marriage to chassis is more crucial, more expensive, and more complicated and technical than ever. A lesser team is likely to never beat a works team to the trophies, but that doesn’t mean they can’t be viable entities on the track and in terms of a marketable brand globally, providing return for sponsors’ marketing dollars. Eg. Williams hasn’t won a WDC nor WCC for what will soon be 20 years…since JV in 97…yet look where they are this year…still not going to win, but certainly providing impact for the brands that work with them. Haas surely isn’t expecting to win in his first handful of years in F1, at a minimum, but expand his global contracts for his CNC machinery? Absolutely.

        Perhaps if money starts getting distributed by F1 differently it could be broken down as such…are you are works team, a strong privateer team ala Williams, or an entry level team not building your own chassis? Base the size of the ‘begging bucket’ on that.

    2. @robbie – You raise some interesting points. I think the key issue here is that of Ayrton Senna. In the 1980s a team could arrive at the track with a “glorified F3 car”, to quote Gary Anderson’s description of the first Jordan car, but now F1 is a different animal. The globally acclaimed drama of Prost vs Senna took F1 onto a new commercial arena, and after Senna’s death standards of chassis construction were revolutionized. This was promptly followed by a revolutionized understanding of aerodynamics. Put simply, by 2005 F1 had become outrageously expensive.

      But was the end to the relentless and annual failure of poorly conceived teams that punctuated the 80s and 90s a bad thing? Was the “professionalization” of F1 a bad thing? I think F1 knows what it wants to be, it is a celebration of technology, not just a one-dimensional spectacle, and I can only commend F1 for that; the new formula is a triumph of sporting spectacle and fuel-efficient technology.

      My argument is the formula is fine, the formula excellent, and F1 is a professional, technological marvel as billed, but in order to create that professional, technological marvel it must be facilitated. Q.E.D. if F1 is made more expensive, it must be assumed that the teams deemed financially sound enough to enter F1 weren’t stashing cash for a rainy day in the cheaper days of 2010, and they must be given a larger slice of the pie. Now in that F1 is a sport of competitive high-achievers it would be illogical for them to consider the fortunes of their rivals, and unreasonable to expect them to do so. Enter our dictatorial sovereign who will surely see the simple solution to this crisis (and I don’t use the word softly in that F1 appears now to be viable only for globally-scaled brands) and grasp the immediate need to redistribute funds. But no, I think Tamara is getting bored of her £45 million Kensington apartment…

  13. Monisha perspective on F1 as sustainable business model was spot on.

    1. +1
      She really appears as a smart person and has great understanding of the issue. But who is going present a solution and maybe more importantly – who is going to implement it. This need a strong person with character (Brawn) and appropriate organization and mandate (until now FIA has been to weak) .

    2. Mallya’s one aswell, specially about the big teams. No one knows for sure how long Mercedes is going to stay in F1. What if Red Bull decides to leave because it’s not interesting anymore from their point of view?

      Those high-spenders take the life out of the smaller teams and can come and go at will, with no damage: all that damage goes to F1.

      They push development forward, they raise the costs by being more and more competitive, and then BANG! they leave because they decided to. Leaving behind them all the consecuences of their actions. And Bernie, or FIA, has no power to stop Honda, or Toyota, or Mercedes to leave. They are a big company full of reasons to believe F1 isn’t interesting enough.

      But if a small team HAS to leave, because they can pay bills anymore, F1, Bernie or whatever, can do their bit to keep them alive.

  14. Smaller budgets and better revenue sharing are definatly the way to go.
    But besides that, some interesting ideas are floating around.
    Ideas that allow teams to spend more than the agreed budget, but is they do, they have to put the equal amount of money to the other teams.
    Or what about killing all electronics in the cars. That would also save a lot of money and make drivers drive again (instead of being a systemsmanager like they do now). Who wouldn’t love to see drivers with one hand on the wheel and the other on the gear stick going through the swimmingpoolchicane on Monaco.
    And don’t forget the amount of money that flows out of F1. How can it be that when Spa is sold out, the circuit still looses money? Bernie needs to go. He’s doing more damage to the sport than anyone realises.
    These were just some brainfarts I needed to vent. There are more, but I’m getting all emotional about it.

  15. Lopez, Kaltenborn and Mallya brought up some very significant points. Money does not equal performance at all and that there has to be some sort of fair way to allow teams to at least survive in Formula One. I was especially impressed with Lopez, he really did his homework. It might not necessarily be easy to be on terms with Mercedes whilst spending less than a third of their budget, but it does not mean that it is completely impossible. When you have certain teams being paid an extortionate amount beyond the budget of any of the smaller teams simply for turning up and one team being paid absolutely nothing for coming last, then something is seriously wrong.

    I watched the press conference and I felt that it was Wolff and Boullier who were the ones who seemed under pressure there, often diverting away from questions that were asked to them. Is it really worth spending an extra £20m just for that extra tenth of a second? When the financial prize is there at the end of the year, then yes, I certainly understand that, but it is also possible to find performance whilst on a smaller budget – Just take Force India and Williams as examples. The difference between say Mercedes and McLaren this year is that one has spent an incredible amount of money and has delivered the goods, whilst the other simply has not. This was also the case back in the 2000s. Ferrari and Toyota had very similar budgets. Toyota was in F1 between 2002 and 2009, and look at the statistics for those years:
    Ferrari wins: 66.
    Toyota wins: 0.
    Ferrari championships: 9.
    Toyota championships: 0.

    These teams are not forced to pay hundreds of millions of pounds to try to be competitive, they choose to. Teams are forced to pay an amount simply to survive, and that amount is considerably higher than the reward for receiving the Wooden Spoon. It is very easy for Wolff to claim that these teams have overspent but when they are overpaying simply to survive, then something is wrong. My idea of surviving is turning up to each event and being within the 107% rule on a regular basis.

    The claims that teams should not be the ones to find the solution is not quite right in my view. Whenever anything regarding money seems to be proposed these days, at least one of the big teams waves their arms about threatening to leave or they threaten to form a breakaway series. Well if they can’t sort it out, why can’t the teams at least provide some sort of assistance? I understand that there will be a big teams vs small teams situation but somebody needs to get absolutely everybody involved into a room, bash some heads together and sort this whole farce out.

    Unless serious action is taken by the commercial rights holder and the FIA and with assistance from the teams, Formula One will collapse in on itself. It’s as simple as that.

  16. Well, I see it in this way: F1 for manufacturers is only a platform to promote their product (except, maybe, Ferrari and McLaren). So, they do not care at all about the F1. They can quit just because they want.
    Small teams, like Sauber, are there because they want to race. Surely, they want to earn as much money as possible. But they race because of racing.
    There must be something done. Perhaps, we should forget about levelling up the field with the cost cap as it is nearly impossible. But money must be distributed more fairly.

  17. “And this shouldn’t be sounding arrogant in any way – but you’re not obliged to spend more than you have.”

    That’s a naive thing to say. The competition moves forwards and the only way to survive, is to actually be sucessful. Besides, there’s a limit imposed by the rules: the 107% rule. Not fulfilling it, means missing the start of the GP, your sponsors won’t be happy, they’ll leave and you have less money to spent on the car. One day you’ll run out of money and that’s it.

    You need to improve. And, as in everything in this world, the way to improve is to have the money for research and development. They overspent because the other teams, by raising the bar, virtually obliged them to.

  18. well..it`s a cruel world…nobody has said that Formula 1 is a socialistic sport or something like that
    for ages top teams have spent billions of dollars and back-markers have failed, so why bother now? because someone can`t keep the pace? why Caterham problems should worry Ferrari or Mercedes? It was clear from day one, that HRT, Caterham and Marussia teams were mismanaged in a bad way, and I do not think that getting additional few mills from FIA would change situation.

    Marussia was introduced as promotional vehicle for Russian sports car makers, but when the project folded (mostly of mismanagement and poor economic situation), folding of F1`s project was just a question of time.
    HRT was an ambitious project of country backed team, but it has also failed, firstly because of strange management (designers weren`t using wind tunnel…) and secondly because of failure of Spanish economics.
    and as for Caterham, the team was a mess… overspending, without clear goal or progress…
    So why top teams should worry and pay for that?

    1. Because they need someone to beat and the current arrangement is killing their competitors, and in turn killing the sport.

      And I say that as someone who does not blame the top teams for the current problem. As Boullier rightly says, it’s not their responsibility to fix it. But that doesn’t mean they shouldn’t be concerned about where things are heading.

  19. The BTCC is a good example of the way F1 could go.

    Back in the 90’s there were many manufacturers teams, but I guess it was relatively expensive and only one got to win each year. One by one they dropped out, leaving only Vauxhall to mop up all the prizes, but where’s the kudos in that? Everybody knew it was a one horse race and eventually Vauxhall went too.

    Mercedes and the other big teams need to remember that before they dismiss the demise of the smaller teams as Darwinian.

  20. I think the entire issue has been caused because F1 has been turned into a business. F1 is not a business. It is a sport. There are business aspects to F1, but in the end, it remains a sporting event.
    But CVC’s puppet, Bernie has reduced it to a cutthroat financial only model which may be suited to an autocratic business, but not viable for a sporting event.
    In addition, it should not be up to the top teams to decide what happens in F1. They will always and only stick to a path which suits their agenda. Instead, it should be upto what the fans want. The FIA is the voice of the fans and the FIA should make these decisions based on what the people who pay for their salaries wants.

  21. I’m on the side of those, claiming F1 is too expensive.

    FIA made quite strict rules, where advantage can be gained by developing a very small amount of areas, mainly aerodynamics. Teams spend millions just to gain a couple of tenths. If you spend less, you will get less, so money receives paramount importance.

    In my opinion, making rules less strict would be the best decision for everyone. Big teams can still spend huge amounts of money to gain those couple of tenths from aerodynamics, but a smaller team could compete with them if it came with a brilliant idea on the car – a silver bullet, which would give it quite big performance gain (some smart suspension coils or smth like that). That was the case in older times. I don’t know the details, but in late 1990s, when I started to watch F1, I saw Jordan win the race, and it was one of the smaller teams. We don’t see it nowadays, do we? When was the last time such thing happened? In 2009 when Fisichella claimed 2nd place for Force India. Haven’t seen anything similar since then. Many say, that money does not ensure success, but it does make you a team, competing in the top 5, doesn’t it?

    I suggest to limit the amount of time, spent developing the car and give more leeway to the teams. And I’m not talking about the engines. There are plenty of areas in an F1 car, which can net you big gains, if you let them being developed. This would be more interesting to the fans, because developments would be more visible to the fans, teams could spend less money but having young and smart engineers at the beginning of their careers outsmarting big teams and competing with them. That would be the real DNA of F1, as team bosses like to say these days and much healthier to the sport.

  22. What utterly sickens me about this situation is that people have only started to talk about this financial crisis only now- because they were given the opportunity to. These 2 teams dropping out and the financial problems of many teams that had already arisen was something that was forseen by a lot of people many months ago. Why didn’t we start talking about it then, then maybe action would been taken, and potentially saved Caterham and Marussia from not participating in this upcoming GP and maybe others as well? Toto Wolff’s comments are completely irrelevant and politically favoring the current business model, which is appallingly cynical in the way it is set up- favoring only the big teams- who can do without at least 35% of the revenue they are given from this unequal business model. I use strong words here to really, really get my point across- because F1, quite simply, can not continue like this and is unsustainable in the long run. 12-14 cars on the grid for a GP is going to be deterimental for F1’s already dubiously self-inflicted image. What is also cynical about Wolff’s comments is that none of the teams he described- Brabham, Leyton House, Arrows, Prost- had to compete with such a difficult financial distribution package- and all the current teams that are struggling- all of whom have been competing since at least 2012 have. The current business model is not only unfair, but most importantly- it drives away potential investors and participants who may potentially set up a racing team that will become successful in the long run. That is how much damage CVC and the big teams have done to F1. You never know- if the current business model was not so favorable to one side, then maybe that may happen.

  23. Every team on the grid is spending more than they have. They hope to make up the shortfall at the end of the year. I believe there is a simple fix, get rid of Ferrari, who take the lions share of the money, and there would be plenty for 12-14 sustainable teams. Ferrari are the problem, I don’t believe they are more important than the good of the sport, they do.

  24. Bernie go home, You and your partners are killing Forula 1.

  25. Enjoy modern F1… Borring cars with booring sound, wich brings less sponsors and less money. Then car that are too complex, with two propusion systems that not only cost a lot more to build, but need more poeople to work on it.

    Makes cars simpler, make cars exciting again, that would be cheaper, more exciting, and would bring a lot more sponsors.

    If you don’t like anything i just said, then you only have 1 solution, bring back cigarette brands.

    1. 1995 must be more fun than I remember it being.

  26. It’s funny to see how 3-car-teams is seen as a solution.

    6 teams with 3 cars is still only 18 cars …

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