Formula None

Formula None

Formula One is a sport that thrives in controversy. Thankfully, the element that could have undermined an entire Drivers’ Championship – Double Points – played no part in the end. That was a small rest bite during a time when F1 is under the microscope for different reasons.

With two teams in administration, and others close to the wall, its finances and wealth distribution require a review. Bernie and the large teams need to realise the product as a whole is only worth something if there is diversity across the grid. The current model almost ensures the big teams will remain near the top of the field but if this continues there’ll be no one else left to compete against. Three car teams would eventually become a three team championship.

Love or hate Bernie Ecclestone, the improvements made to the sport under his leadership can be clearly seen. It still is the pinnacle of motorsport and rather than keeping up with the times, it has defined them. New circuits, however bland some may be, come with state of the art facilities. The product generates more money than ever. Luxury companies pay a premium to be associated with each event. All this should bode well for the sport. But it somehow hasn’t helped abate the current situation.

It’s easy to see Bernie as a cantankerous old man. He’s holding all the cards, the ultimate power broker. He dismisses the pleas from the smaller teams out of hand. His remarks appear ill-informed and uneducated. With Caterham and Marussia heading to collapse he made numerous remarks, none of support, just disdain. Bernie doesn’t want to see begging jars in the paddock and claims the teams are mismanaged and haven’t ran their businesses correctly.

Berne F1

By doing this Bernie has quickly washed his hands of a problem he helped facilitate. These teams didn’t throw caution to the wind and spend big bucks to buy a title. They were scraping together the budget each season just to survive. When the now defunct HRT, Caterham and Marussia (badged as Virgin) came into the sport as the three fresh teams, they did so under the impression F1 would implement cost-cutting measures. Of course teams like Ferrari, with their seemingly bottomless pot of cash, felt uneasy levelling the playing field like this. A compromise of sorts was reached: the teams would slowly reduce running costs without a hard cap being installed. To this day it has never happened.

So the new teams haven’t been mismanaged as such, they’ve just been the victim of being told one thing then living another. To make matters worse the gulf in affluence is exacerbated by the distribution of wealth. Ferrari receives an extra cut of the cash, before any prize money is distributed, for just being in the sport. This is similar to the way Real Madrid and Barcelona negotiate their own TV deals in Spain. A fairer system is the English Premier League that splits its deal twenty ways. Obviously prize money will, and should, go to the most successful teams. But all teams need the same starting point. It’s ludicrous to give handouts to those that need them less.

It’s also clear that the teams can’t be trusted to introduce fair cost-cutting measures. The time has come for a fixed budget cap which excludes driver wages. When I have discussed Financial Fair Play in football, my tone has always been against the system. In that sport it handcuffs safe wealthy owners, maintaining a status quo for the elite teams across Europe. In any business a company should be able to make a loss in order to catch its competitors. However, the current system in F1 has created and facilitates a continuing status quo of its own. Smaller teams are losing money, but not to catch-up, just to stay in business.

USA F1 Empty Grid

The largest spenders, like Red Bull, McLaren and Ferrari, may resist a cap because it removes their advantage. But long term they may be racing amongst themselves, at which point, they’d also be at the back of the grid . . . and the middle and the front. Fans need variety. Imagine a future where every F1 race resembled the grid from the infamous 2005 United States Grand Prix. That’s where we’re heading. And Bernie doesn’t mind because the cash cow still has plenty of milk. Some circuits are paying around $70M just to host an event, and all the race revenues combined only equate to 30% of F1’s income.

Another 30% is from the television deals. This would be the first victim of a decline in the sport. If the ratings fell so would the sale price. It’s this fear that gives us the ever changing rules to make the sport more competitive. Tighter regulations to create a narrower band of creative manoeuvre. The best designer in the modern era, Adrian Newey, decided he’d had enough of these restrictions so took on a different role within the Red Bull group. It’s a shame that the pinnacle of motorsport is hindered by its own self-inflicted parameters. Rules to increase excitement that will never work as long as a gulf in spending exists.

All the teams need to realise they need one another. An independent body needs to be set up to implement the cost-cutting measures and to clarify what goes on in the murky waters of F1 management. At the moment Bernie and the big teams feels more corrupt than a FIFA World Cup bidding process.

It’s ironic F1 spends so much time and energy tweaking itself to make racing closer without making the money in the sport fairer. A much better model would be one that has a hard budget cap, and at the same time has wider design windows. Cars would be cheaper to run, so the small teams wouldn’t be facing extinction, but a relaxation of the rules would add greater variety across the design process. The more creative or forward thinking would have the ability to flourish. They could even return to multiple tyre manufacturers with a set price for the season support. The entire onus would then be on those tyre providers to produce the best rubber at an affordable price. The difference in compounds would create exciting races as different teams on different rubber face unique race strategies. There’d be less tyre management and more non-stop pushing.

Whether you agree with the idea of a fixed budget or not, Bernie’s ignorance is something that is fact not opinion. He recently remarked he doesn’t care for social media or the younger generation of F1 fans. That his product is aimed at wealthy men in old age. That no young man on Twitter is going to buy a Rolex, a product his sport is paid to advertise. This is sheer arrogance and short-sightedness. Sponsorship accounts for 15% of F1 income, another 15% from merchandise and corporate hospitality, but that 30% from TV deals should have greater importance to Bernie.

To ignore the poorer young fans is to care little for the viewing figures that account for a third of his income. The same people whom the regulations are forever tweaked to create closer racing. The people that could be watching the sport for decades to come. But Bernie isn’t a man of the people. He isn’t even a man that cares for teams within his own sport. Unless you’re a big red Italian car company, or a 70 year old man wearing a Rolex sat in a corporate box, he won’t give you a second thought.