F1 2021 article

F1 2021: Liberty’s masterplan for Formula One’s future uncovered


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On Friday in Bahrain Liberty Media laid out before the teams its plans to shake up F1 in 2021. No aspect of the competition will be left untouched by their wide-ranging plans to make F1 more popular and more lucrative.

RaceFans can now reveal what teams were told behind closed doors. @DieterRencken explains what’s on the table for 2021, how it will affect the teams and how they might react.

That Liberty Media, holder of Formula 1’s multi-billion dollar commercial rights, is under financial pressure is undisputed: Since acquiring the operating company Formula One Group fifteen months ago, payouts to teams have dropped by around 10 per cent, and the situation is likely to deteriorate before it improves.

The reasons are manifold – cancelled events, reductions in hosting fees, holding back on TV contract extensions pending the launch of its over-the-top service, etc… But the bottom line is that during the past three months the NASDAQ-listed FWONK share price has fallen from $33.31 to $29.41 – a drop of 12 per cent, and a massive 25 per cent since a peak of $40.73 was hit in early October last year.

Chase Carey, Bahrain International Circuit, 2018
Chase Carey presented Liberty Media’s vision to teams in Bahrain
As a public company (FWONK) Liberty needs to keep shareholders sweet, and therefore faces three choices: grow revenues markedly (complex, given the long-term nature of F1’s promoter/ broadcast contracts), reduce payments to teams (the largest drain, accounting for around 60 per cent of outgoings), or a combination of both. The last-named is the chosen (and logical) plan of action.

Thus keen anticipation awaited Liberty’s presentation to teams of its post-2020 vision which, in the words of its managing director of motorsport Ross Brawn, constitutes what “F1 should look like unless someone comes up with a better proposal”.

Liberty conducted the presentation in the Bahrain International Circuit’s Oasis conference centre on Friday morning, with Liberty CEO/Chairman Chase Carey and Brawn holding centre stage and presenting elements according to their remits, so Carey on commercial issues and Brawn on sporting matters. The FIA’s Secretary-General for Sport, Peter Bayer, contributed on regulatory issues.

According to sources, the following were present: Mercedes (Niki Lauda, Toto Wolff), Ferrari (Maurizio Arrivabene), Red Bull Racing (Christian Horner, Helmut Marko), Force India (Robert Fernley, Otmar Szafnauer), Williams (Claire Williams), Renault (Cyril Abiteboul), Toro Rosso (Franz Tost), Haas (Guenther Steiner), McLaren (Sheikh Mohammed bin Essa Al Khalifa, Zak Brown) and Sauber (Frédéric Vasseur).

During the meeting Liberty presented the five pillars it intends to address to ensure a healthy and sustainable Formula 1 once the current bilateral contracts between the commercial rights holder and individual teams – plus the over-arching Concorde Implementation Agreement between CRH and the FIA – expire at end-2020, namely:

  • Competition, action, unpredictability
  • Technological leadership
  • Healthy, sustainable business models – to create franchise values for teams
  • Simple rules and regulations – racing over penalties; drivers over technology
  • Simple, honest and transparent governance which provides equality

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In order to achieve these key objectives, five strategic initiatives were targeted in the presentation:

  • Power units – cheaper, louder, more power, less complex, allow 100% racing for 100% of race
  • Costs – defined by how well one spends, not how much, standardise elements which have limited fan value
  • Revenues – address inequity, more balanced distribution, reward success, return to meritocracy
  • Regulations – streamline, close performance gaps, reduce penalties, increase unpredictability
  • Governance – streamline structure, equal representation for teams, transparent process

Essentially, Liberty’s proposals take with one hand and give with the other. By reducing (and equalising) the costs of going racing, Liberty hopes to persuade the teams to accept a reduced take of F1’s annual $1.8bn (and hopefully growing) revenues, in turn benefitting the FWONK bottom line.

The 90-minute session was held, of course, behind closed doors, with all parties agreeing on a silence pact. However, as they exited the conference centre it was clear the proposals had not found universal favour, not least because a $150m (£110m) annual spend cap was a key ingredient. Although the cap excludes high-ticket items such as driver/executive salaries, engines and marketing, the overall implications are severe.

Toto Wolff, Maurizio Arrivabene, Bahrain International Circuit, 2018
These two may not have liked what they heard
Mercedes and Ferrari would, for example, need to retrench around 400 heads each to meet the cap, with Red Bull Racing and McLaren in for 150 each and Renault 100 heads. That pans out at over 1000 highly qualified people – equalling around 4000 mouths – out of the sport, some after years of exemplary service. That said, it is utterly ridiculous that it should cost up to £350m annually to win the F1 world championship.

On the other hand one cannot help empathising with those employees who will be shown the door, for their lives have been aimed at working in the sport they love, only to be kicked in the teeth. However, the counter-point is that the best may find employment with independents teams, who will no doubt ramp up their manning levels given that a revamp of F1’s inequitable revenues structure is also on the cards.

True, in some instances Mercedes could transfer employees internally, or Ferrari’s excess be absorbed by Fiat. Ditto Red Bull Racing, which could transfer staff to sister team Toro Rosso. However, should Liberty not force through change, the independents would likely go out of business, for they are currently under enormous financial pressure in their unequal fights against teams spending up to 400% of their budgets.

As Brawn commented immediately after Sunday’s race, F1 needs to level the playing field somehow, with the big loser being F1 if Liberty does not achieve this ASAP. To illustrate the imbalances, the table below lists estimated team budgets (excluding engine costs) and headcounts in 2017 championship sequence, with non-performance bonuses paid to qualifying teams. A guideline headcount under $150m (£110m) cost cap is around 450 staff depending upon business model:

Team Budget (£) Bonus (£) Headcount
Mercedes 290m 57m 860
Ferrari 350m 80m 900
Red Bull Racing 220m 57m 740
Force India 100m 410
Williams 120m 8m 575
Renault 150m 620
Toro Rosso 110m 400
Haas 100m 250
McLaren 175m 25m 690
Sauber 105m 360

In summary: F1 teams currently directly employ around 5,800 heads, whereas under the proposals around 4,500 staff would be required across all teams.

Claire Williams, Maurizio Arrivabene
Revealed: The winners and losers under Liberty’s 2021 F1 prize money plan
As part of the revenue redistribution proposals Ferrari would lose its $100m annual “long-standing team” and constructors championship bonuses, but be paid a $40m annual heritage fee as a sweetener to remain in F1, while Mercedes and Red Bull each stand to lose out on around $70m in annual sweeteners. McLaren and Williams will also be hit to the tune of $30m and $10m respectively.

However, the upside is that the more equitable structure proposed by Liberty means that the only the Big Three are likely to lose out, with the rest breaking even or gaining. Engine suppliers will be paid a $10m annual subsidy each, which reduces Ferrari’s “loss” to $50m, and marginally compensates Mercedes, with Renault being the biggest winner of the proposed financial restructure.

Under the proposal Ferrari may not utilise it heritage bonus for performance purposes, and would need to write the $40m back to profits.

Save for the bonus and subsidies outlined above, under Liberty’s proposals F1’s prize money “pot” will (again) be divided into two equal “columns”, with all ten teams benefitting equally from Column One, and Column Two distributed according to performance on a scale decreasing 18% per cent to two per cent, resulting in the championship winner earning an effective 14 per cent of the “pot”, and the bottom team six per cent.

By way of comparison, last year Ferrari pocketed 18 per cent of the “pot” despite placing second in the classification, champions Mercedes 17 per cent, and Sauber (the lowest placed Col 1 and 2 team as newcomer Haas was ineligible for Col 1 monies), received 3.5 per cent. Spot the difference.

The overall winner will, though, be Liberty, which stands to score an estimated £100m per annum – even if it fails to grow F1, which is unlikely given its plans to introduce expand the calendar and introduce aits F1 TV Pro streaming service – effectively Netflix for F1 – which could net £100m per season in the short term, and up to £500m annually within five years. A portion of these proceeds will be distributed amongst the teams.

On the engine front, Liberty’s plan call for the existing 1,600cc V6 hybrid turbo architecture to be largely retained, but with the complex heat energy recovery units removed to reduce costs and increase noise, with the power loss compensated for by larger capacity kinetic energy systems and increased rev limits (by 3,000rpm).

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Again, the independents are delighted by the prospects of cheaper engines, but the motor manufacturers point to the increasing popularity of heat-based energy systems for road cars. Thus Liberty faces an acute balancing act: balance costs on one hand and technology on the other. Alienating the manufacturers could leave F1 without engine suppliers; equally, retaining the current complex engine may not attract incoming suppliers.

Costs in F1 are largely dictated by the regulations, with grid penalties being the biggest deterrents. However, for obvious reasons these are unpopular. Here Liberty faces another tightrope act: relax the current system and costs career out of control; retain penalties, and fans turn off. A bigger issue is the performance gap between, say, Ferrari and engine customer Sauber: Both have the same power; yet one wins, the other places last.

The reason is simple: Under the current regulations, Ferrari spends what is required to win, and if in the process the team discards ten front wing designs at a cost of £100 000 each in pursuit of the perfect wing, so be it, whereas budget teams need to get it right first time. Under Liberty’s cost cap, the development potential of the Big Three, who spend upward of £100m on research and development, is reduced.

Red Bull exclusive
Red Bull exclusive: Horner tells Liberty to “decide what Formula 1 is”
The question is, though: Will Mercedes or Ferrari remain in F1 should the playing field be levelled? Already Ferrari has threatened to exit should the regulations be ‘dumbed down’, while Mercedes has every excuse to leave, having dominated both championships since 2014 – and forecast by some rivals to continue doing so until 2020 – should its premium brand come under threat from teams such as Force India.

The feeling amongst fans (and some in the sport) is ‘Let them’, but this overlooks two factors: They are likely to take their engines with them, thus reducing grids to eight teams, with insufficient time left to find two respectable newcomers. Their exits would also mortally wound Force India and Haas, who source complete powertrains plus electronics/hydraulics (and other components) from Mercedes and Ferrari respectively.

By the end of the Bahrain Grand Prix weekend the overall feeling was that Liberty’s post-2020 vision provides a good starting point for discussion, but that greater levels of detail is required before the full impact of the proposals can be ascertained. Crucially, though, there is little time: The regulations demand that major changes be tabled at least two years before change, and these have yet to be drafted, let alone agreed.

Significantly, apart from a bland three-page media release issued by Liberty after the meeting, none of the major players have commented significantly save that Mercedes boss Toto Wolff described the cost cap as “unrealistic”. Ferrari’s overall silence has been deafening, which does not bode well for the team’s continued participation. That Ferrari CEO Sergio Marchionne allegedly cancelled his trip to Bahrain at the last minute speaks volumes.

The balance of teams appear to have adopted a “wait and see” attitude, while Aston Martin’s Andy Palmer tweeted that the proposals were “a very positive step”, but he was not present, nor was he invited. Ominously the FIA has kept silent. True, the governing body could argue it was Liberty’s show, but regardless of the outcome, the series will continue to be known as the FIA Formula 1 World Championship.

Thus, if the overall lack of enthusiasm for Liberty’s proposals is any indicator, F1’s manager faces a massive battle – and has a little over two years in which to fight it, and, crucially, save F1 from itself by reversing the disastrous financial and regulatory structures imposed by previous commercial rights holder CVC Capital Partners in their pursuit of short-term profit via an (ultimately aborted) IPO.

Note: An exchange rate of $1 : £0,70 has been used.

Follow Dieter on Twitter: @RacingLines

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86 comments on “F1 2021: Liberty’s masterplan for Formula One’s future uncovered”

  1. I’m hoping some of the laid off stuff would have a chance with new teams. The barrier to entry of new teams needs to be reduced; the spending cap and the Haas approach will help but other start up costs could also be eliminated or reduced. New independent teams representing new markets would help meet several of Liberty’s goals, such as improved racing and broader market reach. Imagine an Asia-based team or two.

    1. @scalextric Sadly there’s not been any mention of expanding the existing 10 team prize structure to cater for a full 13 team grid, which would be essential to make one work in the long term. They talk a lot about attracting new engine suppliers but I get the impression they’re not as interested in attracting new teams

      1. @strontium surely the written ‘flat’ payment structure means it’s fairly easy to redo the payouts? No doubt Liberty will word it stating the Column 1 pay-outs will be divided equally and Column 2 adjusted based on the number of teams competing?

        1. @optimaximal I hope so, it would be very easy to recalculate. However in the initial outline that Brawn released it only mentioned distributing the prize money between the top 10 teams. I presume whatever they decide on this will also have to be written into the agreements they sign with the teams, it wouldn’t surprise me if the existing teams might make a fuss about having to share the prize money between more teams

      2. Strontium
        I would say both. Sadly. The way the money pot is shared right now, getting a team up and running means others having to take a cut of their payments, or the new teams taking the Hass approach. As for engine suppliers, a consortium approach, with both the FIA or liberty contributing significant funding seems to me the only way they will come in. After all, is there really that much money to be made supplying just 4 teams who could go out of business at any time owing you millions with little change of getting that back?

  2. On the engine front, Liberty’s plan call for the existing 1,600cc V6 hybrid turbo architecture to be largely retained

    Still 90 degree V6?

    1. Make it a straight 6. With pushrods.

      Might as well, if Liberty dumbs down the technology, it’ll become “F1-NASCAR Edition”.

  3. Liberty need to just push this through. New teams will come and recruit the staff that has to be laid off, if any (I doubt a cost cap could be enforced). And if Mercedes should quit, there is no way the team would just disappear, it would just be renamed once again.

    1. Krommenaas
      The economic of F1 right now guarantee failure, unless you are from the Hass mould and can justify the cost by promoting your business. Even then, if the aim is for more teams to compete, and have a good chance of winning, the numbers game still favours the big 3 teams. They have upwards of 500 + people to put 2 cars on track twice a month. The smaller teams have a max of 200 + people if that. Unless Liberty & FIA plan on making drastic changes, the winning is going to remain only for 6, and realistically 4 cars only.

  4. Bert. Ecclestone
    11th April 2018, 13:16

    Drivers penalised and put down the grid, drivers watching fuel / engines all not good for racing. Artificial over taking and dull tracks not good to watch.
    Engines blowing up with a lap to go and tyres disintegrating as the guy behind bare down on you. The sound of the 1000+hp NA engines screaming at 13000 rpm on minimal fuel this is good to watch.
    Too much interfering and not enough characters driving the cars.
    I’ve fixed F1 now wheres my cheque ?

    1. F1 can not be fixed as long as the words “road relevance” is used. The direction of technology is from road cars into f1 cars and as long as it stays like that it will be about fuel saving and engine saving with the “most exciting” part being the low fuel consumption. Not racing.

      1. Correct — “road relevance” is the most abused phrase to wrongly justify all the wrong thinking about F1. How many road cars produce 110dB? need a mechanic for the driver’s seat belt? have front wings? have no fans on the cooling system? Never has been, never should be, and will be the death of F1.

        _Spin-off_ from F1 to road cars is possible, but not too common except that (as the article says) thousands of young engineers are currently getting good training in F1. The idea of spin-off from road cars to F1 is hypocritical; how many of the four F1 engine manufacturers actually sell a road-legal 1.6 litre V6 capable of even 300 HP, let alone the 900 HP we see on the F1 track?

        1. @paul-a It’s less ‘road relevance’ and more technology transfer. More and more cars are being sold with turbo chargers these days (because it’s the only way for new petrol cars to meet emissions regulations) and if heat-recovery from said turbo can be made more reliable & compact, it will improve hybrids massively.

          Sport is second only to War for spurring technological innovation.

          1. @optimaximal, quite – it is a bit facetious to say that the engine must be exactly the same in order for technological transfer to occur, as if somehow there is some sort of magical divide between the worlds of motorsport and the wider world.

          2. I have the impression that you are confusing adiabatic engineering (a necessary and ineluctable component of progress) with the _politics_ of F1. Back in the 1970s, F1’s 1.5 litre turbocharged engines were producing about the same (maybe more) HP and torque than today. KERS in various formats, now MGU-K and MGU-H, batteries (and minimum weights), plus newer computer controls have *not* increased power, but have decreased fuel consumption.
            Consumption is _politics_ (green, global warming, end-of-oil) as shown by Formula-E; F1 is the top (“holy grail”) of motor racing — car, driver, lap time. The two should not be confused.

    2. Sitting in the NASCAR offices.

  5. It looks like a reasonable proposal though, I hope it goes through. There’s no details on an eventual engine freeze as proposed by Renault to avoid the current engine manufacturers to be at a disadvantage compared to new entrants in 2021.

  6. I like the concept except one thing: Cost cap.

    I know this won’t be popular opinion but enforcing cost cap is a wrong move. Everyone should be free to value what something worth to them and F1 value to big corporation like Mercedes or Ferrari is obviously more than its value to Williams or Sauber for instance, because the former can trickle the benefit to their other business compared to the latter who most people only know them in F1. Also while spending amount is somewhat correlated to performance, it’s not causation. Mercedes and Red Bull dominating the last decade even when Ferrari spending more. Also look at ToyotaF1, BAR, and Brawn GP stories. The proposed adjusted prize money is enough for me.

    1. For engine, just a thought, but I’d like to have F1 engines that not limited by type (V6 turbo), but limited by goals instead, for example: max peak power 900bhp from ICE, 4 unit per season, 100kg fuel limit, one type of additional auxiliary power to supplant ICE (MGU). The peak power restriction is to leveling the field for the first time and can be increased each year to allow for progression.

      Additionally, each engine manufacturer must give FOM a supply slot at a determined price range that can be re-sold or auctioned to other teams. For example, currently Mercedes (along with Ferrari, Renault, and Honda) must agree to give a supply to FOM that other team like Red Bull can buy it from. In case of multiple interested parties, let’s say McLaren also interested, the FOM can auctioned it. The manufacturer must supply that team, no questions asked give fair treatment as they would to other team who buy it directly from them.

      1. @sonicslv But how would an auction be even remotely fair – how could Williams or Force India afford to bid against McLaren or Red Bull?

        Or are you suggesting that every engine manufacturer supply a ‘joker’ engine that’s available to everyone along with existing factory and contracted customer supplies?

        1. Or are you suggesting that every engine manufacturer supply a ‘joker’ engine that’s available to everyone along with existing factory and contracted customer supplies?

          @optimaximal That’s the idea. The teams can still make a deal themselves, the FIA only act as failsafe. In worst case, let’s say Williams competing with McLaren for the FOM Mercedes engine, Williams could still pick Ferrari engine after they lost the auction. Of course provided no other team calling dibs on the Ferrari engine first.

          1. @optimaximal Also to clarify the example: that provided Williams cancel their existing deal Mercedes. If they have their own deal with Mercedes, they don’t even need to care about FOM supplied engine.

    2. I agree. Also, people seem to forget where those large budgets came from…years of success in F1. If a team can get a sponsor to give them $300 million to go racing, then they should be allowed to take the money and put it toward their racing program. Success on the track translates to more sponsors and more money for the team to go racing. It’s like this from karting to F1 and I don’t believe it should be changed.

      1. The problem is that sponsors are less and less interested in spending big money in F1 because they don’t get the exposure like they used to.

        Moving from free-to-air tv to pay-per-view and streaming services will result in less people watching F1 and thus less sponsors interested.

        And some willing to spend big money in F1 are not allowed because of law.

        So I think a budget cap is appropriate to level the playing field (and keep the small teams), although $150 million is probably on the low side. I would prefer something more like 200 or 250 million.
        And I will think that will ultimately be the compromise.

        1. As I said in my response to Mr. Collantine below, the loss of cigarette money was the turning point in F1. Cigarettes and F1 were almost made for each other as it was pretty much the only place the cigarette companies could advertise, and there was plenty of money to go around. But once the cigarette money was lost, the pool of sponsors who saw a large financial commitment to advertising via F1 shrunk. The big teams picked off those still willing to advertise via F1 and the small teams were left to fight for the scraps.
          It might even be in Liberty’s best interest to fight the ban on cigarette advertising by arguing it hasn’t done what it was supposed to. And no I don’t know if it has or hasn’t but it might be worth a try.

          1. @velocityboy This something I thinking recently too. Tobacco sponsorship ban is doing more harm than good. If they pour obscene amount of money like they used to in F1, that money at least going to used for R&D, advancement for humankind so to speak. Instead, that millions now wasted on giant billboards, decorating their shelves in store, hiring salesgirls on street, and making events/festivals that ironically directly aimed for teenagers. TBH, I never bought the argument sponsoring sports team made people want to smoke. I think it just affect what brand the one who already want to smoke to buy, the non smokers still won’t smoke because their favorite F1 team sponsored by a tobacco company.

      2. @velocityboy

        people seem to forget where those large budgets came from…years of success in F1

        That’s not entirely true though, is it? If it were surely Williams would get a bigger bonus than Red Bull, as they’ve been around longer and won more titles. The real reason Red Bull get more money is because they broke ranks with FOTA to sign with Ecclestone.

        1. @keithcollantine Williams are almost a special case. When they had the FW18 & 19 they were considered by many to be a big well funded team team. Then they lost/left Renault and they lost Rothmans when cigarette money was removed from the sport (when things started to go wrong for a lot of teams in my opinion) and their results declined. One can’t say their decline in finances was solely down to on track results but it probably was a significant part of it.

    3. “I like the concept except one thing: Cost cap.”

  7. Seems lime they are banking on new entrants. Talkers and doers. Big teams in now are putting their money in its very dangerous to bet against them in the hope others MAY come in. These current engines went through a drawn out process due to VW teasing an entry, getting IL4 engines put through then pulling out. Better to concentrate on appeasing the big teams that matter, they will have satellite teams for new drivers and thats how this will end.

  8. Where will Ferrari go? A brand like Ferrari lives on of course the quality of their road cars but also on name and racing pedigree. If they leave the championship because the scales are not tipping (as massively as before) in their favour, they are chickening out from competition. And that’s hardly a good image for a brand created on racing.

    1. @eljueta This is a good question. A1GP has “powered by Ferrari” because it does used Ferrari engines, but does it gives the same commercial benefit as Scuderia Ferrari racing in F1? Seeing WEC, Ferrari cars also kinda lacking. Audi R8 and Mercedes AMG definitely looks more popular than Ferrari 488.

      1. My point being, I don’t think Ferrari is going anywhere. They of course have to threaten it, not to lose the sweet deal they had until now. But I don’t see an alternative for them that wouldn’t cost them either a lot of money or have enough visibility. I for one couldn’t care less, as long as we still have 20 cars, I don’t care who makes them, if the drivers and racing are good.

      2. Audi and Merc are not in WEC? Ferrari do quite well in WEC GTE PRO, they are the current champions.

        1. Sorry, you’re right. I meant the Blancpain endurance series (from FIA GT series), which different from FIA WEC.

    2. Ferrari can leave by running under the Fiat brand.

  9. Under the proposal Ferrari may not utilise it heritage bonus for performance purposes, and would need to write the $40m back to profits

    How easy would it be for Ferrari to take $40 million less profit from elsewhere in the company?

    1. A great article by the way, really nicely written and enjoyable to read. Thank you :)

  10. It bugs me that they want louder engines. F1 cars have never been designed to look or sound in a particular way, the technology of the time just dictates how the car looks and sounds.

    1. F1 cars have never been designed to look or sound in a particular way

      I wish that was the case but things like the V-shaped front wings introduced last year and the sloped rear wing endplates were done for aesthetic reasons. Then you’ve got things like the (original) removal of ‘shark fins’ which first happened quite a few years ago.

      But I agree, I’m not interested in making the cars look or sound a certain way, it should be a matter of form following function.

      1. I wasn’t aware of the change to the the wings I’ll have look at that. I firmly believe in, form follows function, not the other way round.

      2. @keithcollantine
        ”the sloped rear wing endplates were done for aesthetic reasons.”
        – Is that really the case with the current 2017-present rear wing model? Since the start of the last season, I have occasionally wondered why the rear wing endplate features the weird-ish curve that the similarly wide pre-2009 rear wing model didn’t.

        1. That curve is because the top of the wings is wider than the bottom, that still has the same width as before 2017, but now with wider wheels next to it @jerejj

        2. @jerejj It’s not the curve that you can see from front, if I interpret what you mean correctly. The aesthetic changes is making the endplate look slanted if you look at the car from the side. The front wing V shape is of course noticeable when you look at the car from top.

      3. @keithcollantine

        it should be a matter of form following function.

        On the one hand I’d like to completely agree, on the other hand I dread having noses as phallic as 2014.

    2. +100000000000000000000000000

      I can’t stand the whining about sound any more

      1. just wait until the new regs come in, the cars are louder, and everybody start to wear ear-plugs, oh the irony

  11. Paul (@frankjaeger)
    11th April 2018, 14:04

    The proposals seem quite agreeable although I think Liberty need to go ahead with some changes for the sake of keeping the sport afloat and the suppress fan’s discontent , e.g. excessive engine replacement penalties, a move towards ground-effect aero

  12. ”Power units – cheaper, louder, more power, less complex, allow 100% racing for 100% of race”
    – I can agree with the PUs needing to be cheaper and less complex, but not with them needing to be louder and have more power. The sound isn’t the most relevant thing in Motorsport, and the PUs as of now produce a great amount of BHP already, so no absolute need to increase that number. Furthermore, F1 has never really been about racing flat-out 100% of the time.

  13. Another excellent article (again, marred slightly by too many typos).

    Somebody posted a fantastic comment in another RaceFans article recently: If Ferrari decided to break away and form their own championship, who on earth would want to join them knowing the scales would always be tipped in Ferrari’s favour?

    Of course, Ferrari could just leave F1. Not form a breakaway series.

    1. Primarily, create a news series would require a big investment without any guarantee of success, and Marchionne is famously very cautious in investments. I agree they could simply leave F1, or maybe join WEC.

      1. It would take a whole lot of years to have the same exposure as F1, if it ever will. And both series will hurt from a breakaway. Just like it did in IndyCar. And even 10 years after the merger it is nowhere near what it once was.

        WEC never had and never will have the same exposure as F1 to the general public. If only that the races are too long for non motosport enthousiasts to follow.

  14. Allow customer car teams supplied by those better funded teams who are prepared to go that route.

    This was the form in the early days of F1. It would be cheaper than the current garagista approach of designing and building your car for an engine from one of the four engine suppliers, which would still be an option to the likes of Mclaren for example, who have a road car brand to publicise. Haas are halfway there (some might suggest more than half), have the smallest team on the grid and are now punching above their weight.

    Redesigning the engines is expensive and inappropriate for manufacturers who need to justify F1 investment by feeding back into road car technology. I too am sick of the wingeing about the noise they make. If you force manufacturers out of ICE racing, you’ll end up with their emphasis going to formula E, and they really do make a depressing sound.

    Remove majority of aero possibilities via regulation to decrease the downforce and hence problem of not being able to follow another car closely

    1. @frasier ”Remove majority of aero possibilities via regulation to decrease the downforce and hence problem of not being able to follow another car closely”
      – The amount of downforce isn’t the problem, but how it’s generated. All that really needs to be done to make following another car closely easier is to shift from a predominantly wing-dominant downforce (and or simplify the wings) to a less clean air-dependent method of producing the DF.

      1. @jerejj It sounds like we’re actually agreeing, but a couple of extra points..

        I’ve heard it said that underbody aero won’t suffer the same problems in dirty air, I don’t buy that argument. All aerodynamic downforce is basically centred around the Bernoulli principle. Whether it is underbody venturi, compound wings, double diffusers or any of the other little winglets, they all require clean air. Disturbed air provokes premature stalling of the flow across aero surfaces and loss of downforce.

        I’ve been watching F1 since before Chapman first put a wing on the Lotus 49, drivers have always complained about the difficulty of following another car.

        Actually Formula E cars are a clue, to eke every last bit of speed they run minimal downforce with tiny wings and flat undertrays. The racing is close, perhaps one lesson F1 could learn from them.

        1. The racing is close in Formula E, in part because it is almost a “spec” racing series.

  15. ‘Power units – cheaper, louder, more power, less complex’

    Louder will be achieved by going back to 29% efficiency, this will also achieve the ‘less complex’ bit.
    More power by inefficient engines means increasing cylinder capacity. Cheaper could mean using an existing popular V8 block.
    So I’m thinking super charged 5-6 litre V8 similar to monster trucks?
    Time to hand over road relevance to Formula E

    1. But FE is electric and that’s not the future. Electric cars are a business nightmare, TESLA went full in and are on the verge of bankruptcy, plus now Bahrain has found an oil field with 83 billion barrels of oil there’s plenty of petrol to go round, that’s petrol the superior method of moving a car which beat electricity over 100 years ago as the preferred choice.

      1. Unfortunately dude, electric cars are the future. Burning fossil fuels has to stop not just because it’s a limited resource but it’s bad for the environment too. And if you’re thinking why not just use hydrogen: you have to think about where that hydrogen comes from. Making pure hydrogen is expensive in terms of energy used and it’s not environmentally friendly either. You might just think that we could get it from water, but water is hydrogen that’s already been burned, you have to put much more energy in than you get out.

        1. Didn’t Max Mosley once argue that one trans atlantic flight uses more fuel than an entire F1 season? Why dont they get the airlines to worry about cutting emissions, F1 should stay petrol.
          Or F1 should run nuclear powered engines, that would be sweet lol

      2. Tesla are on the verge of bankruptcy because, after a decade developing electric car technology, the huge manufacturers have come in and achieved as much in just a couple of years. Tesla’s problems are entirely due to electric cars being the future

        1. Tesls are the biggest selling electric car? The total amount sold has stalled, in some markets they stopped selling when government subsidies were pulled. One day they maybe something worthwhile but over 100 years away. BS politics mrans there is a little surge in electric cars but early takers (the cream of the market) will soon have taken up the cars and most people would not touch electric cars with a barge pole. I am very happy for the electric car market to fail and not get going for around 100 years.

          1. https://insideevs.com/global-plug-in-car-sales-is-booming-market-expanded-by-75-in-may/

            Electric car sales are rising rapidly. Some countries have even passed laws of phasing out petrol cars by a certain year.

            It’s only a matter of time before petrol cars die – good riddance.

  16. Gavin Campbell
    11th April 2018, 15:15

    If they can create a model that brings in Aston Martin and others (or co-branding so Sauber-Alfa or Renault powered team with Nissan branding) it softens the blow of getting beaten by a garagista. Cheaper engines would allow so much more promotional running (imagine something daft like a Rookie Race every year!).

    I feel the big elephant in the room is still Aero – I think you should massivly relax the restrictions but set a max downforce limit (Now purists – lets be honest the point of the rules over the last 30 years has always been to limit the amount of downforce so its a call a spade a spade rule). Teams then need to create slippy cars or cars that follow other cars well – a move to bottom rather than complicated top side aero would be the result more than likely.

    The issue with all the rule changes has been that the F1 aerodynamisits are clever people and as this articile proves heavy in number. Thus they always find clever if delicate ways to circumvent the rules – this way you make them solve their own problem. Also you wouldn’t have to change rules for saftey reasons (as much) as you could restrict corner performance to keep circuits on the calendar – do you want to go 0.5s faster a lap if means no Monaco/Canada etc. Historically the longer you leave the rules alone the closer the entire field gets, this allows you to leave the rules the same or similar because you wont end up with teams creating cars that take the majority of corners flat or needing runway lengths of runoff to contain the crashes.

    An effect of this rule would be in theory that the teams would be much closer in performance and it would allow for smaller teams especially during qualifying to post good results from good drivers. It protects the larger teams as they would still likely produce the best results and increase the raceability of the cars as a side effect. In F1 the goal of the game is to produce the most downforce via aero, this simply changes the game to produce the best racing car.

    Final benefit would be that you would be less likely to end up with strange coat hangers/monkey seats/thumb tipped noses/step noses etc. as the teams search for ways around the rules for a few points of extra downforce.

    1. Agree on the aero aspect and wanted to see more in that regard from any proposals. Seems there is much relief to be gained there in terms of budget and race competitiveness, yet little if any mention in the reports about the proposal.

  17. great article @DieterRencken.
    The decisions are largely correct commercially, and there is enough change left and wiggle room to land this successfully for the sport overall.
    If Ferrari and Mercedes stay doesn’t depend so much on these plans: Mercedes would probably leave soonish anyway; who wants to be the next McLaren. And Ferrari needs to learn that it cannot always have it their way.

    The key to a successful F1 in the long run are the strategic points listed here, and especially ‘create franchise values for teams’. This is the only way to keep the teams long term (even if they might change ownership). Instead of being afraid to lose Ferrari, just think back to the illustrious constructor names we lost over the years. That needs to stop to make F1 ‘future proof’.
    And as much as I want the number of teams to go back to 13, this will probably come a bit later when proven that F1 is ‘future proof’ and building ‘franchise value’.

  18. I wonder what this has done to the morale of those people (and families) that currently work in F1.

    Hopefully some discussion and leeway will be worked on to avoid the sort of potential mass layoffs that have been predicted.

    Interesting times ahead for a significant number of people.

  19. machinesteve
    11th April 2018, 16:11

    If they want to recapture the excitement of the 70s and 80s then the answer is simple.

    (1) Slash costs get more startup teams in let Ferrari go if they want to…Hesketh I seem to remember had a team of about 15 people!
    (2) Get rid of tarmac run-off areas they ruin the spectacle.
    (3) Massive limits on aero and get back to chassis racing so that its all about driving and overtaking.
    (4) Make the cars look like they are running in the 2030s and not the late 1980s.
    (5) Face facts big noisy engines only appeal to old men (like me) and a few boy racers – the future is electric or fuel cells.
    (6) Get rid of much corporate stuff as possible, ie. have different podiums at every race for a start, I am sick to death looking at the same dreary spectacle week after week.
    (7) Sort out the TV coverage which makes everything look dull – HD does not compensate for contextual shots which show the speed. (Seriously I have a movie i shot on an iphone at the British GP qualifying which shows just how fast they are going….I show people and they always say something like “Wow, I never realised they were so fast!” I mean come on TV people sort it out.
    (8) Get TV commentators who inject excitement not dreary old men with dull voices moaning about politics.
    (9) Realise that fans like it when cars retire unexpectedly, it doesn’t ‘ruin the race’ it makes (or used to make) racing tense with a sense of jeopardy.
    (10) Either that of just give the whole thing up as an anachronism from the 20th Century.

  20. Do either the pillar of “Competition, action, unpredictability” or the strategic initiative of “Regulations” encompass track design and track limits?

  21. Nobody asks the obvious question; how does F1 benefit from the $0.9 billion that goes to FWONK every year.
    Answer: no benefit at all. That $0.9 billion simply provides the required ROIC on the legacy of Bernie and CVC.
    If I have to explain myself further you likely won’t understand. Marchionne does. Whether or not he acts, we’ll see.

    1. At least half of it goes towards covering costs of operating F1 – and increasing dramatically as F1 ramps up marketing spend and expensive headcounts – and the rest to pay down debt. Of course it’s a crazy deal, but it is what it is til 2110 because Liberty owns the rights til then. Marchionne is not the only guy who understands it – hence regular threats of a breakaway since 1998.

      1. @dieterrencken, and don’t forget that Ferrari themselves are complicit in this situation, the last time the teams had a strong hand to negotiate a more equitable share of revenue Ferrari took Bernie’s 30 pieces of silver to betray FOTA.

        1. Actually the first to jump ship was Red Bull in 2012, only then did Ferrari capitulate

  22. Looking forward to seeing something better than it was, no it wont be perfect but then again that was never going to happen.

  23. “By reducing (and equalising) the costs of going racing, Liberty hopes to persuade the teams to accept a reduced take of F1’s annual $1.8bn (and hopefully growing) revenues, in turn benefitting the FWONK bottom line.”
    I’m all for a fairer distribution of wealth (be it F1 or otherwise) but for the teams to accept a not far off half of the revenue is far from fair. Without the teams, there is no show. More money is no bad thing, unfair distribution is.

    1. +1.

      That’s always been the flaw (or great feature) in the Bernie revenue model.

    2. Then the teams and just go off and make their own racing league then. See how good they do on their own when they have no experience actually hosting stuff.

  24. My thought here is let the free market dictate the teams. If you can afford spend the money if you can’t then leave. Once teams start leaving the rich teams will be forced to give up money so they actually have other cars to race against.

  25. So Liberty wants to cut the costs to be able to pay less to teams, not for better racing itself.
    Teams must not accept a smaller piece of the pie.

  26. @dieterrencken – curious about Ferrari’s $200M from their tobacco company sponsor – does the cap mean no extra sponsorship money can flow to the team above the cap amount?

    1. No, all teams will be capped at $150m (with the exclusions) and any revenue generated over and above that budget figure (plus the costs of the exclusions) must be written back to profit. So if Ferrari received $100m from Philip Morris, but only needs 30m of that to top its budget, 70m gets written to profit. One of the objectives is to make teams independently profitable, which has not been the situation this Millennium – in other words since the commercial rights were hived off.

      The same applies to any other team: Mercedes, for example, generates sponsorship income well above $150m – if the team continues to do so, then it writes the excess to profits.

      The long-term effect will be that teams can afford to cut back on their rates, which means either that sponsors will partner more than one team, or simply reduce their spend – which in turn means others can afford to come in.

  27. Great article! Going to be very interesting couple of years. It will all work out and Ferrari and Mercedes will still be here. I think they (FIA, Liberty) need to go hard now for the future of the sport. Short term pain for long term gain?

    1. @johns23 – Short term pain for long term debt servicing = long term pain for long time fans.

  28. I’ve often wondered why the smaller teams stay in F1. The budget disparity means they will never be at the pointy end of the competition. The financial pressure of keeping a “small” team afloat in the current conditions must be horrendous. All pain with little gain…

    These new proposed changes don’t look capable of altering that situation enough to my mind. Considering this, a 2021 exit must be looking attractive, especially to teams that may already be on the brink. I do hope that we don’t see them folding before that option becomes available to them.

  29. I’m sure I don’t understand, but how does “racing 100%, 100% of the time” correlate with removal of the heat recovery system? Doesn’t that system contribute to the overall efficiency of the power unit? A larger kinetic energy system could make up the loss, but doesn’t that mean a driver will have less “instantaneous” control of the braking, as more braking will be done by the kinetic energy recovery system? And an increase of rpm by 3000 (I like!) will also increase fuel consumption, right? They are not talking about refueling again, right? Increased fuel capacity would only increase the weight of these overweight cars more.

  30. One of the key things people are missing is that no one is telling Mercedes, Ferrari, Renault, etc that they need to reduce their staff compliment or their overall spend … only that they have to do so in Formula 1.

    Nothing is stopping any of the F1 teams from competing elsewhere alongside their F1 activities, & retaining all their staff to do so. Mclaren are already making provisions to do so, & Mercedes can stay in DTM instead of bailing out while massively overspending in F1. Williams, Sauber, etc can easily build cars for future LMP regulations, & even run teams there if they want to.

    As far as engines go, there will always be suppliers looking to be involved in just about any series … especially F1, but as long as the barrier to entry is a billion dollars and still coming in with 7 years less R&D, no-one is going to be interested. If all of the current manufacturers announced tomorrow that they are leaving at the end of 2020, rules could be adapted that would see another 3 manufacturers take their place in 2021 … and those rules should be the direction for future engine direction.

    Liberty are missing one small trick as far as I can see on the funding model though, & that is provision and support for incoming teams to make up the 12 the sport is supposed to have. Those are far more important than legacy payments to Ferrari, who if they had a sulk and left would take a huge business marketing loss to the tune of far more than $40million … and would be back tail between their legs within a year of two.

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