Ferrari will continue to receive a special prize money bonus not offered to other F1 teams under Liberty Media’s proposal for the sport.
The commercial rights holder presented its plan for how Formula One will be structured from 2021 to the teams today in Bahrain. It then issued a statement outlining its broad aims which avoided specific details about the proposal.
However RaceFans understands from a source who was party to the discussions that teams were shown a new model for prize money distribution post-2020 under which Ferrari will continue to receive preferential treatment.
The team is currently the only recipient of an annual ‘long standing team’ payment which last year was worth $68 million. Under the new prize money structure Ferrari will receive a reduced annual payment of around $40 million.
Ferrari president Sergio Marchionne warned Liberty Media last year he would pull the team out of F1 if he did not approve of its plans for the sport.
Under Liberty’s plans for 2021 all power unit manufacturers will also receive annual payments of $10 million per year. These currently include Ferrari, Mercedes, Renault and Honda.
Half of the remaining prize fund will then be divided between the top 10 teams in the championship. The highest-placed team will receive 14% of the fund.
Asked by RaceFans whether the extra money on offer to engine manufacturers could encourage McLaren to move into power unit development, the team’s group executive director Zak Brown said it was too early to judge.
“It’s very early days, hours into understanding which way the sport’s going to go with engines,” he said. “It’s something we discuss from time to time.”
“With all we have to accomplish right now, our head’s focussed a bit more on tomorrow and Sunday. As things become clear we’ll have that discussion.”
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61 comments on “Liberty will not abolish Ferrari’s F1 prize money bonus in 2021”
6th April 2018, 15:51
So, Marchionne prevails. Sort of.
6th April 2018, 16:46
@phylyp we have to quantify how much Ferrari weights in F1.
At this stage, Ferrari has no sense without F1. On the other side, can F1 live without Ferrari? If the answer is yes, how much would it cost the loss of Ferrari for F1? This means at least fewer paying TV subscribers and fewer people at GPs. This has relative meaning in places like UK or Benelux – I remember crowd strongly towards Hamilton and Verstappen last year, there – but what about every all the other places around the world, where is quite common to see a red prevalence on the standings?
I’m not in favor of a bonus like it is now, I think the formula has to change, but on the other hand given the position where Marchionne is, can you blame him?
6th April 2018, 17:00
@m-bagattini – very valid points, and I understand that the Ferrari name does benefit F1 in certain locales (a certain desert venue in November comes to mind :-) ). However, Liberty should make that payment out of their marketing budget (i.e. become a sponsor of Ferrari), and not out of the prize money.
6th April 2018, 17:30
This is the correct way to solve it. @phylyp
The money flows might be identical initially, but the purpose of each flow should be much clearer and fairer. Draw up a marketing contract with Ferrari and determine what they need to do (e.g. use the Ferrari name more explicitly to sell the product ‘F1’ globally), but give all the other teams a fair chance of fighting for their share of the prize money.
Mickey's Miniature Grandpa
7th April 2018, 6:13
The conflict of interest this would create is no better than the current situation.
Liberty Media has played a blinder here. Gradually phase out Ferrari’s bonus year on year while hopefully increasing revenues and bringing down costs so that the team feels no real loss. Best of both worlds.
Bridge Wilson (@gwbridge)
7th April 2018, 6:14
@phylyp @m-bagattini That extra ~$60 million ALREADY comes out of FOM’s share of the profits, not the teams’ portion of the profits. The team profit split goes to the payment for participating and the payment for performance (points).
6th April 2018, 18:29
Ferrari ( or better: Marchionne) already has a backup plan with Alfa Romeo. He can leave F1 with Ferrari and still build engines and keep the advantages f1 brings in the Fiat marketing dept.
6th April 2018, 20:01
It’s still a form of Blackmail. How is it possible for names like Mclaren,
Williams, Red Bull, and currently Mercedes, to be seen as of lesser quality
than Ferrari ? This is the strutting arrogance which has echoes of some
very unpleasant ( to put it mildly ! ) European individuals and attitudes.
I’m old-fashioned enough to look anyone straight in the eye and tell
the world that my sport in conducted on a perfectly level playing field
where every team is as honourable and worthy as all the other teams.
But F1 still has to shake off images of personalities and conduct entirely
unworthy of a truly reputable sport.
I am perfectly aware of the fact that the roots of this thorny and odorous
issue were sown an awfully long time ago by people who would probably
be arrested on sight if they showed their faces anywhere near F1 today,
but the smell is still there and it’s getting worse.
7th April 2018, 1:30
Surely you must be joking. McLaren, Williams and Red Bull have zero brand value compared to Ferrari. I would imagine Liberty has data to show that. The $50 million payment is a bargain to ensure Ferrari’s continued participation.
7th April 2018, 12:59
From your remarks you clearly miss the point of my
argument. For me, and very many like me, the commercial
‘brand value’ which Ferrari certainly carries, is, quite frankly,
of very limited value. Being a brilliant F1 team, to people like
me at any rate, carries a quality value of it’s own in terms
of racing prowess, engineering brilliance, and driver quality.
The massive commercial clout that Ferrari uses to intimidate
and impress leaves people like me utterly cold.
As far as I am concerned Ferrari is a piece of theatre
desperately trying to kid us all that it is innately superior when
in reality it is, like all the rest. quite good in parts.
12th April 2018, 9:45
@loen you can think whatever you want, but everyone involved knows that the value of F1 would decrease dramatically without Ferrari. I’m not saying it would be better or worse, just the amount of money circulating would be far less. That’s why there’s a bonus for them, that’s why in a way or another Liberty will keep on paying it. F1 and Ferrari are a symbiosis.
You can dislike it and from a certain point of view I too dislike it (this is preventing Ferrari from approaching Formula E for example).
The fact is that there are millions of people outside UK and Italy and EU interested in F1, paying for tickets and subscriptions. Who do you think they follow, Red Bull?
NS Biker (@rekibsn)
6th April 2018, 19:30
Giving $40 M to Ferrari or any other LST, is really taking the same amount from the lowest placed teams.
Ask if the racing is likely to be better if Ferrari gets the $40 M or if it were spread out to the 4 or 5 bottom ranked teams.?
What one can hope is that the current issue of the bottom 2 teams always being on the verge of folding, can get fixed. The worry shouldn’t be how much the winners get (yes, it is important), but what do the last placed teams get.
6th April 2018, 15:53
Hardly a massive reduction…that amount is still something like 40% of Force India’s total budget. I expected FOM to be bolder in this regard.
6th April 2018, 16:32
Plus another 10m for being an engine manufacturer
6th April 2018, 15:54
I can’t see them making a full 13 team grid last if they don’t divide the prize money between the top 13 teams. That said, I don’t know if they are bothered about seeing a 13 team grid or not
6th April 2018, 16:12
I guess it might depend on whether the ‘rest’ ist enough to winter a year, and on whether there will be enough mobility in the grid order to make it so every year teams have a good chance of being in the top ten @strontium, but yeah, that will remain an issue.
6th April 2018, 16:29
1st place = 14% of prize fund
2nd = 12%
3rd = 11%
4th = 10.5%
5th = 10%
6th = 9.5%
7th = 9%
8th = 8.5%
9th = 8%
10th = 7.5%
Bottom team shouldn’t get any less than half of what the top team receives.
6th April 2018, 17:21
So does this mean if there is total prize fund of $1,000M (a bit more than the previous years), then based on recent competitors and results:
a) Ferrari: $40M;
b) PU manufacturers: 3*$10M
c) ‘50% of remainder’: 1st (14%) $65M; 2nd $56M; 3rd $46M; and $2-3M less for each thereafter (10th $35M)
d) rest (also 50% of remainder): equal per team? $46M
Thus Ferrari, even when they come last, will get more than the WCC winner?
6th April 2018, 23:07
i believe always was the case, and the years when ferrari was the champion the difference was bigger still
6th April 2018, 16:02
Been saying this for a while. Liberty is just chicken out. And worse, they afraid to even to mention it on their official ‘Broad Aim’.
6th April 2018, 16:04
And with that, I have lost all respect for Liberty Media and its 3 amigos.
6th April 2018, 17:21
“Meet the new boss…Same as the old Boss”
Rui Trindade (@trindade)
6th April 2018, 16:09
Common sense prevailed
Nick Wyatt (@nickwyatt)
6th April 2018, 16:15
I think that’s very disappointing.
When I read the ‘strategic initiatives’ this morning it was difficult to disagree with any of their aims and I wondered how much compromising there would be down the road. But I didn’t think there would this much capitulation this soon. With this wimpish attitude in continuing unequal payments, I expect Ferrari to retain their veto as well.
I really do understand Liberty’s position; they could have played hard ball and lost key players in the sport, but this just looks weak.
Andrea Ferrero (@telegrafista)
6th April 2018, 16:26
The wording of the title is a bit tendentious. “Liberty will reduce Ferrari’s F1 prize money bonus in 2021” would have been more neutral.
6th April 2018, 16:59
“would have been more neutral”
It’s all about the click baits. F1fanatic.co.uk is now positioned as an international all-sports mega site remember.
6th April 2018, 17:02
Well, Liberty abolishing the bonus would have also been neutral/fair, wouldn’t it? :-)
David Not Coulthard (@davidnotcoulthard)
7th April 2018, 3:04
@telegrafista I think a lot of readers here do want to see it gone though which would mean it’s more relevant to say whether it is.
6th April 2018, 16:38
I think the idea of a bonus for historical F1 teams is overall good. Maybe they need to adjust it, instead of removing it completely.
As far as I know, “long-standing team” LST bonus is given only to the oldest F1 team. I think that this should be broadened to more than one team, since – to name a few – also Williams and McLaren are historical F1 teams. I mean, Sauber is in F1 since 93, 25 years, this could be rewarded. This would also encourage, if possible, the return of other historical names. I know there’s some sort of “heritage” payment but can’t find more info about that (only Williams got it?). This two payments should ideally become one.
The amount of money should be reduced: at this stage, Ferrari can keep their cars in the garage for the whole season and still gain more than half of the teams. Simply put, it’s unfair.
6th April 2018, 21:50
@m-bagattini, sorry, but the site keeps messing up the posting system for some reason.
Basically, since you ask, several of the teams you list do already receive “heritage bonuses” – Williams reportedly receive a $10 million bonus “heritage payment”, whilst McLaren reportedly receive a “Constructors Champions Bonus” that is worth $30 million to them.
6th April 2018, 16:45
I think the key problem is not that ferrari or mercedes might leave if these rules go through. The issue is that there are no new engine manufacturers or teams who could jump in. In other words the engine rules are a dangerous compromise. If you please ferrari and mercedes too much and keep a lot of the things about the engines we already have then you end up with this same engine situation where it is nonsensical for any new engine manufacturer to try to enter. Too expensive and too complex. Honda’s situation is grave warning for anybody thinking about joining. And honda is a huge corporation with deep pockets. If they can’t do it then what chance does aston martin, mclaren or someone else have? So it is given you won’t have any new engine manufacturers coming in in this scenario. But you’d keep ferrari. Merc might leave regardless.
Other option is to be bold with the engines and ferrari and merc leave which means you have just 8 teams left. This very bold because you are assuming renault stays. So to go that way you’d need to be absolutely sure you get new engine manufacturers joining f1 because otherwise you only have honda and renault. And nobody wants hondas. And renault does not have capacity to take 6 or 7 teams if honda takes 1 or 2.
And while a rule change period like this is a good moment for a new f1 team to enter they won’t be exactly replacing merc and ferrari on the sharp end of the grid. In worst case you end up in situation where you have renault dominating while honda and some other new engine manufacturer are building portable smoke generators and the new teams are the same pedigree as the hrts, marussias and caterhams. Hopeless lack of pace and money. And even if you create engine rules that allow good hard racing you still only have 8 teams.
In other words mercedes and ferrari hold all the cards. They have created these engine regulations that guarantee nobody will enter and replace them. If you change the engine rules and those two leave you need to be totally and completely certain new teams and engine manufacturers join.
6th April 2018, 23:39
I highly doubt Ferrari and Mercedes nor anyone else are going anywhere, so for me what you are saying is moot.
6th April 2018, 17:51
I am initially disappointed that Liberty haven’t abolished Ferrari’s historical payment because as it stands it gives them an unfair financial and sporting advantage.
However should Liberty implement an effective, watertight and well regulated cost cap along with their proposal for fair distribution of the money pot then I wont have an issue with it given it should in theory make no difference from a sporting standpoint.
Stephen Crowsen (@drycrust)
7th April 2018, 7:53
This is a very good point.
My major reservation is ALL teams that compete in a season should be paid. This isn’t some amateur league, F1 is expensive and teams that compete deserve to be compensated.
6th April 2018, 18:45
Over the long term, I think the Ferrari brand would be devalued without being involved in F1.
Vettel fan 17 (@)
6th April 2018, 18:49
Given all the talk Liberty Media were doing before, this is quite disappointing. 40 million is a lot, they still probably make the most money.
6th April 2018, 19:04
What an absolute shame… let’s be honest and stop calling this a sport. Everone knows F1 is a lot about money invested, so when you start giving specific team(s) extra money this is to help them win… pathetic!
Mickey's Miniature Grandpa
7th April 2018, 6:32
Guess we’ll have to stop calling every other sport a sport too then.
6th April 2018, 19:21
So Every team or a car manufacturer gives up 4million of prize money (Wich goes to Ferrari) in exchange of bragging about Beating or competing against Ferrari. It’s actually not that bad considering the power of the Ferrari brand.
6th April 2018, 23:37
I doubt you can look at it as others giving up money. Others also get an agreed upon amount so, it’s not like they would automatically have gotten 4 mill more each, like they’re paying to play with Ferrari, although I do agree they and F1 benefit from their presence.
Christopher Bowers (@darkstar)
6th April 2018, 19:47
I have logged in just to do this: 🙄
6th April 2018, 20:25
That’s a real shame. I thought Liberty had balls. They certainly talked a good game…
6th April 2018, 23:29
Are you suggesting they said they were going to pull this bonus away from Ferrari and have gone back on that?
6th April 2018, 20:34
I hope this is the first in a gradual reduction of Ferrari’s payments. If not, most disappointing.
6th April 2018, 21:48
The whingers still win. What a farce.
6th April 2018, 21:55
Ferrari have been extremely professional in making their brand what it is today. Both trough F1 and their comercial cars.
I believe they are valuble for the sport, but all teams are valuble in some degree.
I can understand their desire to be treated as something special in F1.
But who on earth think they are risking their whole reputation by withdraw from this sport…..? What will be the simple reason on people’s lips?
It will be that Frrrari withdrew from the top step of motor racing because they had to compete on the same level as everybody else…..
It’s nonsense to believe that they are risking this scenario…
Mickey's Miniature Grandpa
7th April 2018, 6:41
The bottom line for Ferrari is simple.
“How many cars does being in F1 sell?”
“How much does it cost?”
“Could we sell more cars spending that money in different ways?”
As soon as they believe the answer to the third question is yes, Ferrari will quit F1. As will Mercedes, Honda and Renault, just like every other car manufacturer who’s ever been involved.
Jorge Lardone (@jorge-lardone)
6th April 2018, 22:12
Formula 1 without Ferrari does not exist. It would be one more category among many in the world. A reality difficult to accept by fans of other teams and english journalists.
6th April 2018, 22:34
Maby….But for Ferrari to compete, only in other series than the fastest and most technological advanced of theese series, is also very unlikely….
John H (@john-h)
7th April 2018, 1:20
True, but why don’t they want to win honourably on a level playing field? Not particularly sporting is it.
6th April 2018, 22:42
Fully deserved, if someone was a member from the start they would be annoyed by new custimers getting the same as the. Longest standing team, biggest single entity in F1, most famous, most supported and so they should be paid extra. However Liberty pay it Ferrari deserve it, better to lose a few teams to keep Ferrari.
7th April 2018, 3:24
So you mean Mercedes or McLaren ie. also should recieve some money? Maby they should pay all teams but the most recent F1 team?
I bet HAAS would agree on that one…
Wake up man…..
It surely would be a loss to loose Ferrari, but F1 i certainly nothing with Ferrari as the only competitor…
7th April 2018, 12:36
Merc have not been long in F1 as a constructor. Ferrari, McLaren, Williams etc do deserve more, Merc do for being an engine supplier for so many Consecutive years. Red Bull wouldnt get much as they are only 13 years old, Williams should get more than them. As long as the main teams are happy the little ones do not matter, Haas would not need a loyalty bonus for now as they have a great model to go racing in a cost effective manner.
6th April 2018, 22:47
As long as this continues every Ferrari result should have an asterisk for “Unsporting Advantage”.
6th April 2018, 23:32
That wont happen. Ferrari are the greatest and outlived many Brit teams that tried to take over F1 with bought in engines as they could noy build theur own. Ferrari are the biggest and best and have had to endure the Brit teams.
juan fanger (@juan-fanger)
6th April 2018, 23:20
So do TAG-Heuer get $10M?
Stephen Crowsen (@drycrust)
7th April 2018, 8:21
I would have to say “Yes”, and somewhere in the fine print of Tag Heuer’s contract will be a clause that passes “prize money” to Renault, and somewhere in the TV payout contracts will be a clause that means Renault can’t get more than the $10M without the approval of some jealous person.
6th April 2018, 23:27
I have no problem with this, and in fact had pretty much predicted they would still get this money, but reduced from currently.
Perhaps I would think differently if this money they’ve been getting was some sort of guarantee of success, but it has not proven to be the case. Money has never been an obstacle for Ferrari so this money is nice for them but yet…Mercedes dominates.
7th April 2018, 3:51
They’re evil, awful.
Bridge Wilson (@gwbridge)
7th April 2018, 6:09
F1’s profits are divided up according to percentages specified in the Concorde Agreement. The Ferrari bonus does not currently come out of the portion of the lump that belongs to the teams. It comes out of the Formula One Group’s profits. So:
1. Currently, if the Ferrari bonus was rescinded, it would go to F1, not the teams.
2. Currently, awarding Ferrari this bonus money does not take money away from the other teams.
3. However, it DOES give Ferrari a competitive advantage over the other teams since Ferrari’s expenses are subsidized by F1.
4 Other teams get bonuses, as well, but they are given for different reason. Teams that have won championships get a bonus. Merc gets a bonus because it won several championships since this Concorde Agreement was signed; it was a sort of side deal they were promised.
Ferrari gets the past champion bonus AS WELL AS the “long standing team” bonus, and they have in the past totaled almost $100 million, but that number has fallen with revenues.
In my opinion, if teams want to race they should all be treated the same and none should be subsidized in any way beyond the existing sharing arrangement. That is, each team gets a percentage of the profits as a basic split for participating and thereby making F1’s profits possible PLUS prize money based upon performance (points). NO BONUSES BEYOND THAT OF ANY KIND.
Anything else is anticompetitive and unsporting. If a team (whether it be Ferrari or anyone else) refuses to compete without a special subsidy, they can just not race. No team gets financial assistance that the other teams don’t get.
As a practical matter, F1 may give Ferrari their bonus to keep them in the sport, but it would be unsporting, and it sets a very bad precedent for the future (as it has been the past number of years).
Stephen Crowsen (@drycrust)
7th April 2018, 8:33
The big looser from this is F1 and most of its fans.
Comments are closed.