FIA president Jean Todt says even F1’s wealthiest teams such as Ferrari should appreciate the need to bring costs down.
Todt told journalists including RaceFans yesterday that the majority of the grid is under severe financial pressure.
“At the moment there’s about six to seven teams struggling in Formula One,” said Todt. “It is not acceptable to have the pinnacle of motor sport where 60 to 70% of the grid are struggling to survive.”
Last year Ferrari responded to proposed F1 rules changes aimed at reducing costs by threatening to leave the championship. Asked how important F1’s longest-running team is to the sport, Todt said “we are very happy to have Ferrari as a strong, key player in motor racing.”
“But I do not think Ferrari would be what they are if they would not have also enjoyed the benefit of being involved in motor racing.”
“Each competitor is important to Formula One,” Todt added.
“But we know historically that it has been a big turnover amongst certain manufacturers and amongst the smallest teams. We’ve had from the beginning Ferrari, you have McLaren, you have Williams, you have in a way Sauber. These are the longest [running] in motor racing.
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“Clearly I’ve had some working relation with Ferrari. But before having that, for me, Ferrari was an iconic brand. When I was 10 years old, I was dreaming in front of a Ferrari. Then I got the position in Ferrari where I was still attracted but it’s a different position.
“I believe in tradition and I do realise the effect of Ferrari. All that Ferrari has got through amazing success in motor racing. Not only in Formula One, sportscars also.”
Todt believes Ferrari should also appreciate the business case for reducing costs.
“I definitely hope they will not leave,” he said. “But we have seen big competitors leaving [and] coming back.
“It is their choice but knowing those people who are smart business people, who are rational people. In a way now that’s why we want to reduce the costs because I feel that for a company like Ferrari racing should not be spending. [It] should be at least equal and even should be business revenue.
“That would be much more healthy than what it has been over the years where it is too much spending and it very often puts teams under difficulty.”
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FlatSix (@)
14th March 2018, 11:42
I’m spending $x, I’m happy spending $x, because doing so I’m practically guaranteeing my team wins races each season and I can hire the biggest stars in the sport. As a result I get media coverage and revenue.
So now tell me how Ferrari, Red Bull or Mercedes should ‘appreciate’ the call for a budget cap?
Just make it a two class (F1-Pro and F1-Am) championship already.
VR
14th March 2018, 11:55
So F1-Pro would be manufacturers, i.e. Ferrari, Mercedes, and Renault, and F1-Am eveyone else, including McLaren and Red Bull? Or would you separate by budget?
Robbie (@robbie)
14th March 2018, 12:28
Hmm, well, they’re not going to make it a two tier series, and even though it actually is, they need to head towards one fairer tier.
I note that Todt himself doesn’t use the word ‘appreciate’ in the above article wrt what Ferrari should do, or are thinking. But I’m sure Ferrari does appreciate the situation, it’s just that they’re acting, for now, like they don’t. They want everything they have and more and don’t want to have to give anything up, but I’m sure they know they will have to, ultimately. But as with any negotiation, you don’t just pull your pants down minute one. You start with trying for everything you want, with the understanding that you won’t likely get it all. And I really believe they’re not so far away that Ferrari is going to pick up their coat from the back of their chair and leave. They need F1 (and F1 them) and they also need 10 teams in F1, not 3 or 4.
Cooler heads will prevail, not that Ferrari’s heads are hot anyway. They’re just posturing to get the most they can, because that’s what they all do.
rob91
14th March 2018, 14:40
They should appreciate a budget cap of some sort because the amount that they are spending on F1 is A) completely unsustainable in the long run and B) making the championship wholly uncompetitive which is very bad for everyone involved including themselves.
F1 already is a two class championship effectively and it is really rubbish, the worst I have ever known F1 in the 15+ years of following it (and that includes the Schumacher/Ferrari dominance of the early 2000’s). I don’t understand why you want to see two classes in one race as a permanent feature because that will completely destroy F1, nobody wants to see it split into Pro and Am categories like the WEC.
FlatSix (@)
14th March 2018, 20:22
Unfortunately you have zero facts to support that the budget is indeed unsustainable. It is also not unfair, as every team has the same opportunity to find sponsors and attract money.
ECWDanSelby (@ecwdanselby)
15th March 2018, 15:53
Seems like a great time to bring up Max Mosley’s 2010 budget cap idea again… I loved the idea.
Joao (@johnmilk)
14th March 2018, 11:54
Instead of reducing costs why not look at ways of bringing the revenue of the smaller teams up? It won’t bother the big ones as much and it will be a better proposition for all.
We live in a capitalist society, like it or not, if a teams, individual or whatever can have a better chance at succeeding because it has more funds it will take, better try and make everyone rich baby
rob91
14th March 2018, 15:00
Why do people like you continuously miss the point? Increased revenue can only last so long before it inevitably drops so what that the big teams in particular are spending is not sustainable, their costs need to be reduced otherwise in a few years from now, when the small teams disappear and nobody replaces them because the costs will be too high, the whole world of motor racing will be in trouble because if F1 fails it will start a domino effect. It isn’t difficult to understand yet it is amazing how so many people fail to understand, especially those who really should know better.
Joao (@johnmilk)
14th March 2018, 15:26
calm down Rob
The budgets are so massively different from the big teams to the smaller ones, even if they agree to a cost cap it wouldn’t make much difference for the smaller ones, and if they mandate a cost cap that is good for the smaller ones the others will leave, it is a double edge sword. Teams like FI, Sauber and Williams need more revenue and costs have to come down naturally, either by consistent rules, or creating an environment where other manufacturers aren’t afraid to come in and provide other engines and parts.
Mercedes, Ferrari and Renault aren’t in it just for fun, it turns out some of things things they do are useful to their brand
Esploratore (@esploratore)
15th March 2018, 0:18
Indeed, remember indianapolis 2005 race? Just other teams and for other reasons, in a few years from now, mercedes, ferrari, red bull, 6 cars races for the whole championship, if the other teams can’t afford to continue!
bogaaaa (@nosehair)
14th March 2018, 12:00
F1 will soon be what it burns, Formula e will be the new pinnicle of motorsport, the car companies know it!
Stephen Crowsen (@drycrust)
14th March 2018, 14:46
F1 is the premier open wheel racing series. So regardless of what type of motive power is used, the premier open wheel racing series should always be F1. Currently there’s no competition between a Formula E car and a Formula 1 car, the Formula 1 car is faster and can travel further on the energy supply they carry. The energy content by volume of petrol is 13 times that of Lithium-ion batteries, so once battery technology or fuel cell technology gets close to that then teams will want to consider electric motors as the primary motive power used in F1 and a petrol engine (if fitted to a car) is used as the secondary motive power, just like petrol engines are the primary motive power and electric motors are the secondary motive power, in which case a simple rule change will allow teams to use one or the other.
anon
14th March 2018, 18:45
@nosehair, that is a rather bold assumption given that, right now, Formula E is still making substantial losses year on year. They lost nearly £50 million in their first season and £30 million in the next, and their last set of financial accounts (from 2017) indicated they’d already built up over £90 million in debts, and I believe that they were forecast to continue making a loss this year as well (in part because costs are still rising fairly sharply).
Equally, whilst they’ve been able to trade on their novelty for now to get access to some unusual venues, some of those high profile races have been a bit of a financial disaster, both for Formula E and for the promoters of those races.
The Canadian event is one example, with the promoter still owing $6 million to Formula E and the local authorities estimated to have lost $24 million as a result of the race. The race in Hong Kong has also been a loss making event – the local authorities lost around $6 million, and that included the holding company for Formula E paying the Hong Kong authorities $12 million to help cover their expenses.
Agag has mentioned that the series very nearly didn’t get off the ground due to a shortfall in funding – the series is surviving for now on loans from overseas investors, but that funding isn’t necessarily secure for the longer term. It’s not that long ago that people were predicting that the WEC was the future of motorsport, and yet that fell apart fairly quickly – such a scenario may well play out in Formula E soon enough.
Kringle
14th March 2018, 12:50
Give us a time Jean when there was less than 70% of teams with budgetary constraints.
Tifoso1989 (@tifoso1989)
14th March 2018, 13:37
It’s so funny that Jean Todt who is so obsessed about costs is wearing a £500,000 Richard Mille watch !
In order to bring down costs, F1 should start by finding a way to drop the extra complex hybrid engine formula because PU’s are the most expensive part of an F1 car since his stupid idea of forcing the top teams to sell PU’s at a lower price to customer teams was vetoed by Ferrari and I understand his frustration btw since this was the second slap in the face he got from Marchionne (the first one was when he got sacked from Ferrari)
A good idea would be to allow small teams to have extra testing sessions since they cannot afford to have the same facilities as the top teams (simulators,Wind tunnels,software,engineers….)
harold wilson (@bonbonjai)
14th March 2018, 15:07
Tifoso1989
Money, is the elephant in the room. It is not the only one, I grant you, but it is the main one. Dropping the Hybrid system
which Ferrari, Mercedes, and most of all Renault wanted. Renault made it clear they would leave the sport when this formula was negotiated if the hybrid element was not there. Simplifying the Hybrid system would help (removing the MGU-H) the most expensive part, (but also the part that interests Mercedes and one in which its advange is clear).
anon
14th March 2018, 19:10
@tifoso1989, firstly, the engines are actually being sold at a discounted price to teams – Ferrari did object to the original proposal, but there is a suggestion that the other engine manufacturers also objected and might have actually encouraged Ferrari to use the veto to force the FIA to renegotiate their position. That lead to a second round of negotiations that meant they cut the price of the engine supply deals.
Secondly, for the obsession with the engines, the cost of the engines is fairly trivial compared to that of aerodynamic development, which swallows up a far larger chunk of the overall budgets of the teams – Sauber indicated that between 50-60% of the budget of a midfield team was going on aerodynamic development, whilst for a team like Red Bull I imagine that aerodynamic R&D costs are likely to be higher.
As for extra testing sessions for the smaller teams, those smaller teams were the ones who wanted the current restrictions in part because they couldn’t afford to test as much as the larger teams in the first place. The cost of renting the circuit for a multi-day test alone would run into millions; meanwhile, I recall that Pay Symonds have an interview whilst working for Marussia about the cost of competing in F1 where he mentioned that, when you take into account logistics, labour costs and so on, just getting the car to the circuit and ready for a race weekend cost €2 million by itself (that doesn’t include the cost of running the car once you get there). Even if you accept that the costs of a test are likely to be lower than a race weekend, you’re still likely taking about a single multi-day test costing a team several million to run – so even if you offered that to smaller teams, the costs of running a test means that most of them probably wouldn’t take up the offer because of the associated costs.
Jimmi Cynic (@jimmi-cynic)
14th March 2018, 22:14
@anon: Exactly.
In the grand circuit of F1 politics the issue under discussion is rarely the issue. Thanks to the Bernie model, the teams are fighting over half the pie. Thanks to the Bernie PayWall model, the teams can’t attract enough good paying sponsors.
The loss of the cancer-promoting smoking companies hurt the ‘garagista’ teams the hardest. Ferrari managed to workaround the tobacco marketing ban and kept their Phillip Morris money pouring in by the hundreds of millions.
Liberty is stuck with Bernie’s $8 billion liability – they must service that debt load. While trying to pretend that their 50% share is somehow a good value for the teams.
The F1 economic model is not sustainable. Period. That’s why Bernie/CVC sold out.
Good luck to Liberty – holding back the budgets of the big teams that they obviously feel is money well-spent while keeping the small teams happy with a little bigger piece of the already smaller piece of the pie.
Diego (@ironcito)
14th March 2018, 13:54
They’ve been talking about reducing costs since I can remember. They always say that it’s urgent, that the situation is critical and that something has to be done soon. Meanwhile, they’ve gone from simple, cheap V8s to exceedingly complicated and very expensive V6 hybrids, and they’ve changed the regulations substantially every couple of years, thereby forcing the teams to redesign everything, making the gap between teams larger. Now they’re planning a new PU change for 2021.
Teams with more money will always do better, and a budget cap is impossible to enforce. But at least leave the regulations unchanged and costs will come down, designs will converge, the top teams will have diminishing returns, and there will be more parity.
Dewald Nel (@ho3n3r)
14th March 2018, 14:59
I would like to see a cost breakdown of V8 vs. V6 costs over a season – keeping in mind they only use 3 engines over a season now.
@keithcollantine do you know whether such data exists?
anon
14th March 2018, 19:47
OK, the site seems to have failed to post my original comments, so he goes again:
@ho3n3r, in 2015, Toto Wolff has stated that the cost of an annual supply of V8 engines was between €10 million and €14 million, whilst the cost of the V6 hybrid engines was €15 million to €17 million. In the case of Mercedes, he stated that they charged €14 million for their V8 engine and €16.5 million for their V6 engine. http://www.formula1blog.com/f1-news/haas-f1-could-have-big-advantage-in-2016/
Some journalists have claimed a higher figure of €20 million a year for the V6 engines, although that higher price tag is a bit misleading as it appears to include the cost of purchasing a supply of fuel from the suppler as well. It is worth noting that the price tag of €10-14 million for the V8 engines excluded the cost of fuel, and the price tag for a supply of fuel in that era seems to have been fairly similar – so that suggests that a V8 engine and fuel supply would cost you around €13-17 million per annum, as opposed to €17-20 million for the V6 engine.
For all the talk about “simple and cheap” V8 engines versus “exceedingly expensive” V6 engines, in reality the cost difference isn’t as big as is made out – less than 20% in the case of the Mercedes customer teams. It also highlights that those V8 engines weren’t exactly cheap to begin with, even with the FIA forcing the engine manufacturers to sell the V8 engines below cost (Renault have stated in the past that they made a €60 million loss on the sales of their V8 engines in 2013 because they had to sell them below cost).
Now, in 2016 it seems that the FIA and the engine manufacturers came to an agreement to reduce the cost of an annual supply of engines down to around €12 million in 2018. It seems that the proposal was to reduce costs by €1 million in 2017 and a further €3 million for 2018. https://www.grandprix247.com/2016/04/29/formula-1-agrees-cheaper-power-units-from-2017/
If those figures are correct then, working with the figures from 2015, that indicates that an engine and fuel supply deal in 2017 should have cost around €16-19 million, and this year it should cost around €13-16 million.
Jimmi Cynic (@jimmi-cynic)
14th March 2018, 22:26
Exactly.
The engine cost between the V8/V12 versus the V6 Hybrid isn’t the real issue. It’s the political issue du jour. It’s a power move to keep pressure on the auto manufacturer teams.
With the vast amount of money in the sport, the driving power behind F1 is the political power of the powers-that-be tussling to wield over each other.
Contrary to Horner’s views, the constant power struggle off track is the real entertainment value of F1. Many fans sometimes get distracted by the racing, however. ;-)
harold wilson (@bonbonjai)
14th March 2018, 15:10
Dewald Nel
We know the v8’s were cheap to build and run. We know all this. The problem is that V8 V10 or V12 even are and were a dead end. The manufacturers now in F1 wanted the next leap in engine tech and this is what we have.
LDG (@ldg95)
14th March 2018, 19:03
Mercedes, Ferrari, Red Bull, Mclaren, Renualt, Toro Roso are not struggling to survive. Sauber are now under Alfa Romeo and are the Ferrari B team, so i assume they’ll be alright, so thats 70%, Haas seem ok (for now), so thats 80%.
Which leaves Williams and Force India as the only 2 teams struggling. I assume these 2 teams are in favor the most for cost reduction. So thats 20 to 40% of teams struggling to survive depending on if you include Sauber/Alfa and Hass.
By no means am i suggesting that F1 is in a Ok place BTW
FlatSix (@)
14th March 2018, 20:25
Why not make all technology open source after the season ends? Give everyone a look into the others ones books. The rich teams can build their dream car on the budget, and the less fortunate can perfect their existing cars.
Mark (@inkpen99)
15th March 2018, 7:25
One of the largest followings of F1 used to be in the UK with TV audiences of 10 million+, back in the day. Paywalls have cut UK TV audiences down to 500,000, sometimes less. Is it surprising that advertisers have left in droves and many teams find it difficult to get a headline sponsor? Even the small teams used to be able to find big name sponsors. They need to work on free to view TV & audience figures or it will be game over soon. Trying to fund F1 from a diminishing pay-TV audience is a losing formula, especially for the smaller teams.