While fielding questions from investors on Liberty Media’s second quarter earnings Formula 1 CEO and chairman Chase Carey remarked that the sport’s commercial rights holder was hoping to attract another US-based team.we’d love to add to that with a high-profile US team. Down the road, you’d love to have a US driver, [but] that probably takes longer.”
Aside from the fact that his comment obliquely suggests Haas is not ‘a high profile US team’ the question is why any US-based entity would wish to join F1, particularly in view of the treatment Haas has experienced.
Haas is currently embroiled in arbitration against Liberty over the latter’s decision to pay Racing Point a share of the prize money it does not appear to qualify for under team agreements. When Haas joined the sport it did so in the knowledge that for two years it would not qualify for up to $60 million in so-called Column 1 money.
Subsequently, to Haas’s surprise, last year Racing Point was promised (and paid) Column One monies by Liberty when it took over the assets of Force India and entered the sport legally as a new team. Haas feels short-changed; hence the ongoing dispute.
When Haas entered F1 it did so by exploiting a gap in the regulations that enabled it to ride on the back of Ferrari by procuring ‘non-listed parts’ from Maranello, and having listed parts – those to which teams need to own the intellectual property to – designed and (largely) manufactured by Dallara.
So the team has filing cabinets filled with technical and commercial agreements with Ferrari and Dallara, supplier agreements with such as Pirelli, and employee contracts; team equipment is leased, whether trucks, the race base in Banbury, etc… The team hit the ground running with top six finishes in its first two races and within three years had bagged fifth in the constructors’ championship.
This is an oversimplification of the Haas operation and is of course not intended to diminish the efforts of team owner Gene Haas, team principal Guenther Steiner or the rest of the crew; indeed, precisely the opposite, for it points to their astuteness in exploiting the letter of F1’s regulations. But it explains how and why Haas was able to beat five teams in last year’s constructors’ championship despite drawing on the smallest budget ($130m) and headcount (250) of all.
Others with way more finished well in arrears. Naturally, this has not endeared Haas to its rivals: The team’s modus operandi was widely lambasted by direct competitors. Before they had even turned a wheel in anger a number of regulatory loopholes closed after requests for clarification were submitted to the FIA by others.
It took Haas almost two years to establish the necessary infrastructure – despite not having its own factory in Europe, and leasing Ferrari’s aerodynamic facilities. Thus, it stands to reason that it would take any newcomer a similar period at least to get up and running – assuming the incoming team is permitted to adopt the Haas model under the new (2021-onwards) regulations.
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Given that these will only be published after October 31st, no clear road map for the 2021-25 period currently exists, and therefore no planning is possible before that date.
As outlined previously, from 2021 the parts which comprise a Formula 1 car will be categorised as follows:
- Team-specific components (TSC): whose intellectual property is owned by a team, effectively ‘listed parts’
- Standard supply components (SSC): manufactured by a single supplier via the FIA tender process
- Stipulated Design Components (SDC): manufactured to specification stipulated by the FIA
- Transferable components (TRC): supplied by teams to teams, at prices agreed under cost cap regulations
Until clarity is provided as to which of a race car’s 6000-plus highly complex components fit into which of the four categories, no informed decision about entering a new team into F1 can be taken. Even then a Haas-type entry is dependent upon finding a ‘mothership’ willing to sell technical secrets and a production race car manufacturer with F1 capacity. There are not too many of either about.
Even then the earliest any team, regardless of domicile, could hope to compete respectably would be 2022. And there are still two more major elephants in the room: The unresolved question of team revenues, more precisely the level of income teams may expect from CRH in return for their participation and commitment to the championship for that period; and Ferrari’s veto.
For the sake of argument, let’s assume that an eternal optimist exists somewhere in the USA (or anywhere else for that matter), one willing to gamble a billion bucks – the minimum spend over five years – on competing in a sport with a commercial survival rate of less than 10 per cent. How would he or she go about it?
Logic dictates that a candidate team would be drawn from an existing motorsport operation. Haas F1 Team grew tangentially out of Gene’s highly successful motorsport empire, which includes the winning Stewart-Haas NASCAR operation, the state-of-art Windshear wind tunnel and a Baja off-road team. However, this was only possible due to F1’s listed parts regulations, which are unlikely to continue.
Gene Haas entered F1 to promote his eponymous machine tool products, and does not need to scrounge for sponsors. He came into F1 at a time when his primary competitor – DMG Mori – backed Porsche’s Le Mans team. F1’s geographic footprint fits his product portfolio perfectly with races in major car building territories such as Europe, China, Mexico and Brazil.
However, that does not mean our hypothetical petrolhead billionaire owner of another widget company will find the same F1 ‘fit’ for his products and be willing to take a one-in-ten chance on making the respectability grade. The likes of Gene Haas are few and far between, and the mere fact that he put his (substantial) money where his mouth is, does not mean others will follow, particularly given the treatment of his team.
This applies equally to entrepreneurs across the world, not in only the US. It explains why no abundantly-funded team has entered F1 since Toyota in 2002 – an outfit which failed to win a single race in eight years of trying.
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Could an existing IndyCar team convert to F1, much as Penske and Vels Parnelli Jones did in the 70s? It’s highly doubtful. Back then both teams had established bases and were experienced race car builders, and even lasted three and two years respectively before heading back across the Atlantic to concentrate on what was then known as USAC and other US series.
Current IndyCar teams purchase specification chassis and Chevrolet or Honda power units, with few modifications permitted and thus race bases are more workshop than factories with design offices. Current IndyCar teams are akin to F2 operations, albeit with a choice of two engine brands rather than one and aero options to suit streets, road circuits and ovals. The two championships even share a common chassis manufacturer in Dallara.
That said, what was the last successful F1 operation to arrive from F2? To answer that we have to look past its predecessor GP2 to the Formula 3000 era. Stewart – now Red Bull – arrived in 1997 via F3; Sauber, which runs Alfa Romeo’s team today, made the F1 grade in 1993 with ‘Concept by Mercedes-Benz’ funding. Jordan (now Racing Point) is therefore the last team on the grid today have arrived from F1’s ‘feeder series’.
Having accumulated the necessary infrastructure during a period when chassis and engine choices from Formula Ford through F3 to F3000 were ‘free’ and development on both unrestricted, Stewart and Jordan were 50 per cent of the way there before making the leap into F1 – although Eddie Jordan now takes great delight in relating how he was plagued by bailiffs during his first three years in F1.
Jordan’s route to F1 vividly illustrates the stark difference between F3000 teams of yesteryear and current F2 or IndyCar operations. Where the former had (mainly) progressed up the ranks through a combination of engineering and performance, often building own designs along the way, the latter group basically ‘paints by numbers’, with every nut and bolt and washer being a specification part.
Yet, should they have designs on F1, they are required to build a complete and extremely complex car from scratch, one capable of participating in the world’s highest-tech racing series with aplomb. Any wonder the last four turn-key F1 operations either failed to even start a race (USF1) or collapsed within five years of incorporation (HRT, Manor and Caterham)? Haas is not, of course, a turnkey operation, relying as it does on Ferrari/Dallara technology.
Three decades ago the FIA entry list boasted no fewer than 20 teams, most of whom graduated from categories such as F3, F2 or F3000, then bought an engine and gearbox, and built a chassis. Some, such as Tyrrell (now Mercedes after spells as BAR/Honda/Brawn) and Minardi (Toro Rosso) swam while others sank – but the point is it was possible to graduate. The structures changed over the intervening 30 years, but F1 did not adapt.
Then there is the question of engines: with four suppliers and no proprietary engines available, incomers are dependent upon the largesse of manufacturers. True, there are supply regulations in place, but who in this age wishes to blow a billion bucks on an F1 project over five years, then be saddled with Renault power?
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F1 is not the only way for industrialists to blow their excess advertising dollars, and the sooner that fact is recognised by the sport’s commercial masters, the better for the long-term health of F1. Equally, prospective entrants need to be assured they stand reasonable chances of winning on merit, rather seeing podiums locked out Sunday after Sunday.
To attract new blood the sport needs to provide stable regulatory platforms with sufficiently long runways to make it viable for entrepreneurs to embrace F1, with concessions granted for limited periods. Would Haas have entered F1 without hitching a lift with Ferrari? Only Gene could definitively answer that, but the odds are the answer is negative for he has related how the model made F1 entry attractive for his company.
However, F1’s inflexible structures make it a hard sell: A 14-month runway (or less) to a major regulation change with massive cost implications is simply unacceptable in any industry, yet seems to be the norm in F1. While F1 internally prides itself on such gung-ho ‘can-do’ attitudes, such arrogance causes potential entrants to walk away in bewilderment.
Equally, constructors should create cars, not simply assemble bits. F1 needs to find a happy medium between the two.
Current covenants expire at the end of 2020 and any of the current teams – whether Ferrari, Mercedes, Haas or any other – could choose to walk away. If that happens, F1 could well find itself with under its regulatory minimum threshold of 16 cars. A hoped-for high-profile US-based team surely won’t plug that gap.
A grid of 24 cars – or even 26, as permitted by the regulations – is a noble objective, as is another US team or one from any other place on earth. But to attract such entities F1 needs to make the sport attractive, both commercially and technically. Why this talk about ‘a high-profile US team’ when the sport already has one, and China’s car market is 30 per cent larger than that of the USA?
However it is sliced, Haas should not be treated as the sport’s whipping boy. And until F1 reinvents itself to make itself more attractive to newcomers the sport simply does not deserve them, regardless of their nationality.
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45 comments on “Where is F1 going to find a “high-profile US team”?”
21st August 2019, 12:53
Apart from doubts about any new entries I think that there are real possibilities for several teams to leave at the end of 2020.
1 Mercedes, what more do they have to gain and the risk of not winning will take the shine off the star.
2 Renault, Another poor year and I don’t see the board wanting to throw more money at it.
3 Haas, Will he still consider it a good return of investment particularly if rules are tightened re. parts allowed.
If either of the former two leave it also creates a question of PU availability. Would they continue as PU suppliers only?
Could 2021 mean three car teams with a choice of Ferrari or Honda PUs ? It could happen although I hope things don’t get that bad.
21st August 2019, 13:33
In that scenario for them to stay as an engine supplier i would imagine they would have to make it a worthwhile business and perhaps hike the engine cost up. Making life harder for start up teams!
21st August 2019, 15:33
Mmm hard to say.
Yeah I was thinking the same but they have just announced a couple of extended sponsorship deals with major sponsors till 2025, so maybe they are hanging in there.
I believe so far Haas is very happy with the return he’s getting from F1. His company has had an excellent sales increase that are related to his F1 racing.
21st August 2019, 15:52
Somebody’s been reading too many finger in the wind articles on the internet and completely ignoring both perceived and actual brand value from being in F1.
Mercedes is holding market share with demographics that have shunned it for decades, it’s not a coincidence.
21st August 2019, 15:59
Not so. I have been following F1 since 1960 and am just basing it on experience of trends over the years.
21st August 2019, 16:35
Your original comment just came across overly pessimistic without factoring in some key added value propositions that F1 offers.
Look at the average consumer glossing over the sports section, “Mercedes beats Ferrari” time and time and time again over the last few years. To the average consumer not familiar with Racing Points and Haas’s, this consumer starts looking at that smart new C class a little differently than before. The “AMG One” is already being received in an entirely different light than the SLR ever was, even with it’s McLaren ties. Mercedes has respect as an engineering entity on a par with Porsche right now.
Ditto the merch and brand value associated with Lewis, a few years ago you would never EVER see a Mercedes baseball cap at a beach club in St Tropez or a pool party in LA, now you do.
Very basic examples of what Mercedes have achieved as a result of being in F1. What do you think sells McLaren road cars as opposed to the myriad of other impressive hypercars cropping up weekly etc
21st August 2019, 18:56
Look at it this way, Mercedes can live off these glory years for several years to come without spending another penny on F1. If they continue with the possibility of a more level playing field with the rule changes wouldn’t coming second or third diminish their prestige?
Dieter Rencken (@dieterrencken)
22nd August 2019, 9:07
I think you’re overlooking Lewis Hamilton’s contribution to Mercedes’s image upswing – do you believe purple baseball caps would be worn in St Tropez had Valtteri Bottas and Nico Rosberg shared 12 titles between them?
21st August 2019, 18:08
It’s not even certain that Honda will continue beyond 2020 and if they pull out, I fear it will be the end of the Red Bull teams as it is highly unlikely that they will go back to Renault engines and likely won’t get any from Mercedes or Ferrari.
Nathan Builder (@nathanbuilder)
22nd August 2019, 3:01
I’m sure Ferrari would be more than happy to sell them their old engines, like they do to all their costumer teams.
Red Bull will be fine.
22nd August 2019, 1:08
Why should Mercedes leave at the end of 2020 because “they have nothing more to prove”, maybe Ferrari will leave as well then, as having won 16 constructors titles and 15 drivers titles they surely have nothing to prove either …. strange logic.
22nd August 2019, 6:51
Not really. Ferrari’s road car program is very closely tied to their F1 brand.
Besides Ferrari get 70 mullion from F1 just for existing. And a veto. Even if that is going to be reduced, there is more than enough cross connection for them to stay despite their continues threats of leaving.
Mercedes as a company on the other hand, do not, certainly not for the amount they continue to spend on it. If they see no long term future in F1, then leaving and selling the team on a high. They are looking more towards electrification of their road cars, which FE is both more relevant and cheaper to participate in.
Jose Lopes da Silva
21st August 2019, 12:58
Maybe we need another big world recession, like the one predict by the negative US yield.
The last time we had a big recession, we got several exciting seasons in a row.
A world recession would force constructors out, take people to establish a minimum budget instead of a cap budget and Ferrari would be able to win the championship among several low-cost Haas replicas. The downside is that Mr Lawrence would place his kid in the winning car. Hopefully, the recession would hit him too.
Nathan Builder (@nathanbuilder)
22nd August 2019, 3:02
Oh, we’re getting another big world recession, don’t doubt that.
I’m just not sure F1 will survive.
I’m not sure WE will survive :\
21st August 2019, 13:04
The merchandising opportunities would be plentiful – and all linked in to ‘So You Think You Can Drive An F1 Car’ tv show.
21st August 2019, 13:31
Well the article leads me to expect to see Liberty selling the remainder of Commercial rights lease in two or three years time.
It seems that they are still learning what they were convinced they knew all about before they bought from Bernie, it just needed Americanisation (sorry that would have a Z in it, that’s Zed not zee) to bring it in line with proper US business methods.
In place of Bernie’s Gordian knot, tying all parties unequally into many different agreements, leaving some smug and others outraged, but having tied it all up; we have the Libertarian very large sized can of worms all sliding off in different directions with no lid in sight.
As Dieter pointed out, any high profile US team approached to join F1 would take a look at how Haas did it and what the rewards are. Then how is it run? There is a governing body who has little interest in it and may have broken an EU Directive regarding commercial reward.
Will Mr Trump impose a charge or tariff on F1 profits made in the USA. (I understand that all US companies must pay tax to the US wherever in the world they make their profit that’s a whole legion of accountants for an F1 type operation. Let alone the unworkable budget cap) They may realise that it could be more sensible to spent the money elsewhere.
21st August 2019, 15:43
That’s what I have thought from the start, they are an entertainment broadcaster with no previous ties to F1 or motor racing. I think they’ll build it up then sell with a deal to keep broadcast rights, unload the cost keep the cream. They have admitted that they intend to stay with the pay to watch model, but they did not say they would stay with Murdoch.
21st August 2019, 13:32
High profile US Teams? Rick Hendrick, Joe Gibbs, Chip Ganassi, Roger Penske, and Michael Andretti all say “no.” On to the next topic.
Steven Robertson (@emu55)
21st August 2019, 13:41
October 31 will be critical to the direction the sport takes, if the rules favor the top three teams, there is a risk the grid size decreases. If the rules favour the little guy by limiting the might of the top 3, then expanding the grid is a possibility.
Though, from previous experience, i fully predict the top teams advantage will be maintained, making the discussion of new entrants moot.
21st August 2019, 13:46
As a vehicle for advertising, F1 sounds like fairly risky investment. There are surely more cost-effective ways to spread brand awareness in the year 2019. And with the trend towards electric vehicles are we more likely to see new US entries in FE rather than F1?
21st August 2019, 14:19
Actually FE makes little sense either. The US market already has NASCAR and Indy, both of which will surely head towards hybrid and electric power. Why invest any further when the target markets are so similar. (I should think my arguments through a little before posting!)
22nd August 2019, 7:46
Formula E already has involvement from two major independent US motorsport teams in the form of Andretti and Penske.
Aleš Norský (@gpfacts)
21st August 2019, 13:51
Poor choice of words on Mr. Carey’s part…completely agree with @RacingLines as usual.
21st August 2019, 13:51
F1 has a real problem with how inbred it’s become. Mercedes would never have bothered if they hadn’t been able to buy Brackley, Renault the same with Enstone, and Red Bull with Jaguar/Stewart.
The prospect of building a multi billion dollar venture from scratch in a contest that frequently sees teams going bankrupt is lunacy. Haas only got onboard as a proof of concept for their efficient subcontracting business model.
The F1 old guards like Ferrari and McLaren are so good at what they do no one else stands a chance starting from scratch without disgusting amounts of money. And ultimately this may be what brings about F1’s eventual demise as the megaliths become too big and lack enough diversity to survive.
I even think Formula E has it wrong as well courting the huge corporations rather than innovative small operations.
21st August 2019, 14:52
Another good article, thanks Dieter. I particularly enjoyed this line:
It’s often been said that the 21st Century will be Asia’s century, with that in mind I’m surprised that F1 types continue to look West for a new team, when East is the direction that is more likely to get a result. I’d love a Penske, Andretti or Ganassi F1 team, but wouldn’t it be fantastic if Hyundai (already competitive in WRC) or Geely (using the branding of one of its subsidiaries such as Volvo, Polestar or Lynk & Co perhaps) got involved in F1?
22nd August 2019, 6:55
To be fair, Toyota gave it a go. Malaysia also was minorly involved with Lotus. Honda while not a team anymore, is still a big engine supplier.
Dewald Nel (@ho3n3r)
21st August 2019, 14:54
Pardon my ignorance, but I thought that’s exactly what Haas were? What classifies them as “low profile”?
I won’t blame Gene at all if he takes this as an insult.
21st August 2019, 15:09
Haas is a well-known racing operation, but it’s not a major U.S.-based automotive manufacturer or global brand. I think this is what Carey had in mind. Haas is not Mercedes Benz or RedBull.
22nd August 2019, 7:03
If that is the case then Carey is delusional. The big US automakers are all moving to trucks as opposed to cars because of the US consumer demand is leaning heavily in that direction with only 30% of sales being cars while the rest are mostly light trucks.
The industry over there aren’t doing the best either despite trucks keeping companied afloat so I doubt they would spend the money they would for F1.
21st August 2019, 15:59
More than likely just a foot in mouth moment from the desire to have a top running American team rather than one with 2 dud drivers propping up the lower-midfield. I don’t think it was intended as a slight on Haas as an organisation whatsoever.
21st August 2019, 16:11
Haas don’t target championships or even wins and have the lowest budget of any team
21st August 2019, 16:12
Sorry, meant for the parent comment
22nd August 2019, 6:43
As @philipgb says @ho3n3r, Haas seem relatively happy to be a solid midfield team; arguably, their current model won’t ever work for a team competing at the top, and they show little inclination to change in the near future.
Reading the title, and blurb:
I see ‘we are not here to inspire with up and comers, nor would we take a good driver who is wanting to keep options open’, ie. we want those that are in F1 but without chances of a top team.
Of course, as this article implies, learning to find your competitive angle in F1,let alone becoming a sustained top competitor, currently takes a lot of effort, time and money, while Haas might still be building experience to be a consistent competitor, but in the next five years, there is no plan or inclination to move to the top. And Gene Haas seems to want them to be solid, and reliable, and in a sense ‘boringly’ part of the sport, as his typical livery choice reflects, and as is befitting his machine brand.
To me, they are an interesting feature in the sport, but not a team I look at for inspiration. Apparently neither are Liberty.
22nd August 2019, 7:06
To be honest these days it is a miracle for any team to join at all. Surviving in F1 as a new team is inspiration by itself.
So is exploiting regulatory loopholes, a long F1 tradition.
Pauls F1 fix
21st August 2019, 16:26
It all depends if say an indycar team wants to do F1 and they can bring Chevrolet into the fray, they also need to sign a few big blue-chip sponsors to support them. I still like the Haas model on how they go about their racing, F1 or and the FIA could encourage this type of structure to go racing. More teams are welcome in F1 if you ask me but they need full support…
Nick Wyatt (@nickwyatt)
21st August 2019, 22:36
Well yes they will do. But it’s worth recognising that any new team will face active aggression and resentment from existing teams rather than support, for the simple reason of money. If F1 welcomes more teams, the income per team (excluding bonuses) will go down. Haas, Racing Point, Torro Rosso and Williams et al stand to lose millions if another team enters.
Personally, I don’t see it happening.
21st August 2019, 17:29
Very good read. Indeed, it will be easier to have an Asia team than another US one. But I can imagine Mercedes and Renault pulling out in the short term. That’s when Ferrari and Red Bull will propose for 3 cars per team! :)
21st August 2019, 19:02
If anyone I’d imagine ford.. the new engines would fit in with their ECO boost thing
21st August 2019, 21:11
American companies don’t know about passion and are strictly for profit. They are not going to throw millions or billions into any racing project.
Its the individual who has the passion.
Squabbling with the atmosphere over a tenth or half a tenth in aerodynamic gain, is not their thing, because it cost way too much money. But they’ll be more than happy to market the same engine with 4 different names.
Point is, a lot that goes on in F1 doesn’t make economic sense, because F1 is a different kind of phenomenon.
22nd August 2019, 2:31
Really? Chevrolet and American Honda have been building engines for IndyCar a long time. Corvette racing has won over a hundred races world wide including LeMans. The Ford GT has won a few many races, including LeMans. Acura (Honda) NSX is winning races which was designed and is built in America…
22nd August 2019, 7:58
Don, the Ford GT project has now shut down, and to be honest only got off the ground because the ACO was prepared to break their own rules to allow Ford to compete – the car didn’t meet the ACO’s homologation requirements, but they decided to let it compete anyway, mainly because Ford was also paying for a major exhibition for the ACO.
Also, strictly speaking, wasn’t the NSX that you are referring to actually based on the earlier Super GT car that Honda had produced, and therefore not really quite as US centric as you suggest?
21st August 2019, 21:37
@dieterrencken – I hate to offer so little in the way of comment but I thought that this was really great summary of the issues/situation. Good read. And all points that F1/FIA need to be considering.
22nd August 2019, 2:57
Once again the Carey/Bratches machine seems to have opened its mouth and come up with yet another “we’re going to make America great again” statement. Not surprising really given that Carey was addressing an investor group that must be losing patience.
The really funny part is that it would be far easier to get a US driver into a current F1 team than a new “high profile” team yet he thinks that getting a US based team would take less time that getting a driver.
With that sort of fairlyland statement, is it little wonder that F1 fans globally (other than some few who think that they are the second coming) despair as it yet again demonstrates a real lack of understanding of F1.
You really have to admire a former used car salesman who managed to pull off the greatest sale of all by selling F1 at a massively over inflated price to a group of unwitting buyers.
22nd August 2019, 13:38
I dont see any American team coming into F1 if they don’t get free engines and chassis.
I don’t see any American car company coming into F1 if developing engines costs $300 Million to $1 Billion.
If costs are down to about $15 – 35 Million and they can guarantee wins, a couple might have look in.
24th August 2019, 12:33
In Saudi-Arabia?!?! :-/
Comments are closed.