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We’ve been discussing the Formula 1 cost caps and expense of late and that’s simply because some teams have been commenting publicly about the issue of late. Today’s article by Mr. Noble at AUTOSPORT has an interesting commentary from Mercedes boss toto Wolff. Refreshingly he doesn’t drop the F-bomb in the story but he does share his thoughts on the current state of F1 expenditures:

“We are still spending less than some of the other top teams out there,” Wolff said.

“Efficiency is what is being asked from our mother company, but the gaps, if you take the highest spending team compared to the midfield teams like Force India, Williams and Sauber, are still huge.

“Probably the highest spending teams spend three or four times the money of those other teams. Is that sustainable and healthy? No.”

It’s an interesting comment given Mercedes AMG Petronas’s massive investment into the sport and yet Wolff says they are not close to the top-team spending levels…presumably meaning Red Bull Racing.

One common issue is today’s notion that the current level of spending is unsustainable and the disparity between top teams and mid-field teams is too large. That may or may not be the case but the sport has always had this disparity. Perhaps the gap hasn’t been as large as it is currently hence the increased amount of commentary we’re seeing from Ferrari, Lotus F1, Mercedes, Williams F1 and Caterham of late.

without an agreement that stops short of managing a teams balance sheet, is there any way, on a gentleman’s handshake, to get Red Bull, Ferrari or Mercedes to spend less on their F1 investment? Caterham’s Cyril Abiteboul says that’s unlikely given the pressure for success.

 

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An F1 fan since 1972, NC has spent over 25 years in the technology industry and as a CTO, he focuses on technology integration in commercial workspace design, AV systems integration, digital media strategies, technology planning, consulting, speaking, presenting, sales, content strategy, marketing and brand building.
  • @_canuck_

    Maybe if they only had one technical director they would save money.

  • Mike Steck

    Am I the only one who is incredibly alarmed at this? Okay…if MERC is saying the cost is unsustainable…
    This is exactly what so many of us have said for so long, the cost CAN be regulated. I was watching the new F1 doc ‘1’ the other night on pay-for-view, and it struck me again how elegant and clean the cars were. Okay, so I get it…cars evolve. However, the areo dependency and cost is rather crazy. Take front wings. They are super big, and super delicate. You even touch a winglet without a shower of carbon shards and sliced tires. To a racing fan…a lap time of .225 seconds slower due to a areo design in just the front wing that contains cost and moves back to a more simplistic design would make sense…
    but is that just me?

  • Schmorbraten

    The more I think about this catch-22 situation, the more I think maybe we just have to accept that F1 has had its day, especially the part about non-spec cars, individual designs etc., and they’re not coming back, and that it may just die some years down the line if no change to that core principle is allowed.

    It’s easy to build cars that go just as quick for a lot less money, like 10% or lower, given the right formula and tech rules. But to achieve that you’d make it a spec series, and we already have that with Indycar, and that’s not F1, therefore it’s wrong – that’s the common line of thinking. But did F1 really become so successful BECAUSE OF not being a spec series? I doubt it. If you paint all cars the same color, probably less than 1% of all viewers would be able to tell a Ferrari from a Red Bull, and even among techy-minded F1 fans you’d get less than 10 %. So is it really worth having the teams pump hundreds of millions a year combined into almost invisible differences?

    For a true driver competition, you’d want a spec series, but if you love the idea of innovative – while expensive – competition by technology, contributing something towards the real world, you could go A LOT further than just KERS, ERS, etc., and then we’d probably have to witness F1 just dying because the ROI isn’t good enough for most teams / owners / manufacturers.

    • tom

      Well, the more I think about it, the more I come to the conclusion that it would be best to reduce the amount of teams and have 3 cars per team.
      I rather have 7 teams that put all the ingenuity into their design they can than 12 teams that all have 50% of their parts in common

      Another solution would be to limit down-force. That would immediately put an end to the aero craze, although it could be very difficult to implement.

      • danfgough

        Limiting downforce would not limit the spending. They would just put more investment into drag reduction, engine power, transmission efficiencies, ride control, traction control, fuel innovation etc. etc. Its the ‘if they have the money and want to win, they will find a way to spend it’ routine. However, all of the above alternatives would actually have greater relevance outside of F1 than a subtle change to the curvature of a wing flip-up.

        If they can’t find a way to control the spending, wouldn’t it be better to frame the rules to channel teams towards spending in useful areas. Would that attract sponsors and partners therefore making it more sustainable?

    • Schmorbraten

      I forgot to come back to what I wanted to say: currently, F1 is in a no man’s land somewhere in between these two extremes. Desperately clinging to the principle of individual car designs (with huge costs implied) while all big innovations get outlawed very quickly, and the rules allow less and less scope for any tangible differentiation (to keep the costs down) – that’s just ridiculous, because it’s combining the negative aspects of both extremes while chucking out the positives.

      We as fans may have become accustomed to this, but that doesn’t prove it’s a sane way to run one of the top racing series in the world.

      • PeterFan

        In my opinion F1 has to decide what is it. Is it an entertainment show/sport or engineering challenge. Though out its history its been both in certain degrees. The question is which one is more important to the managers/owners of the series.

        Series which put the drivers as the most important factor would be purely entertainment oriented. Casual viewers want to see distinctive personalities which they can identify with. If drivers are to be the major factor, then development should take a back seat. This would mean more spec oriented series.
        Although that we’ve seen quite a lot of development and fresh ideas in the last 7-8 years, the specs are getting tighter and tighter. F1, in my opinion is heading the way of spec series. Maybe not as extreme as NASCAR and Indy, but in the same direction.

        Series oriented towards being an engineer challenge might turn out to be less entertaining to the general public. Profits might be sustained by attracting big business as competitors or sponsors. To do that the series would have to be developing technologies which would translate into real world. Rules will have to be made less strict in areas where business needs development and tighter in areas which are irrelevant to it.
        For example – car manufacturers would find very valuable any development in fuel efficiency, suspensions and traction control. F1 aero dynamics, sticky slick tires that work within a tight temp range, or ingenious use of very rare and expensive materials would not be relevant to them. Le Mans 2014 rule set is a good example of this approach.

        F1 is a business and profits are what drives the decisions. What would generate more profit in F1 – more NASCAR or more Le Mans?

  • StephenB

    It’s already been stated with Ferrari and Chrysler or with any other team and a detached auto manufacturer but what’s to stop say Red Bull from having Infiniti (or Nissan) do some “secret work for another project” and, somehow, stumble upon a bag of money from the team’s parent company (Red Bull)? Be it in a lump sum, motorsport sponsorship, driver program offering or what have you.

  • niyoko

    Yeah, F1 is expensive I understand that after hearing everyone from team boss to hospitality greeter give an interview about it. I agree with The Canuk in saying that if they let go all but one of the multiple million dollar technical directors they have and trimmed the fat off their payroll, Merc would be in a better situation.

    Wolff is talking about financial unsustainability, when his own team is over spending on personnel and trying Toyota’s strategy to get to the top.

    • tom

      I would say that Mercedes is trying to do the opposite of Toyota: Quality instead of quantity. Get the smartest heads in F1 instead of mindlessly throwing money at the F1 project.

  • Mike Steck

    totally agree with alot of these points folks are making. And, the ridiculous point is that with all the MILLIONS it costs to create/test and produce a winglet..some of the machines are just as fast when bits and pieces are taken off in a brush with another car.

  • Matt

    Like everybody else I think the cost of F1 is crazy, but I also think it is very hard to enforce any sort of cost cap to be enforced and I also don’t regulating the cost out of F1 is a solution either. The strange thing is that from the outside there appears to be plenty of money in the sport. I think the TV contracts are very profitable and it is well known how much money it costs to host a race. Part of the problem is Bernie has all of this money locked up and pays it out with some sort ambiguous prize money system that is mysterious. I know it is not a great comparison, but the NFL is a 9 billion dollar sport and all of that revenue is largely created in one country. F1 is popular world wide so either I am greatly over estimating how much money F1 takes in or they entire revenue model of sport is just wrong.

    Teams have to be given an incentive to want to be in F1 and I am not so sure if manufacturers want to be want to be in a spec series. There are not factory teams in lower formulas or Indy car. It may not be a bad thing if there are not factory teams, but the FIA has recently been doing all they can to lure manufactures back in the sport.

    The way I can see costs coming down is if the sport turns into a unified franchise model like American teams sports. Then I think you could more easily enforce a cost cap or luxury tax system. Also since this would be one main body they would in theory have more negotiating power in getting the TV money back into the sport. I doubt any sort of merger like this could be agreed to, but I guess you never know. The other options would be the teams just stop spending money which is not going to happen because there is always incentive to try and be just a little better than the next team. Or the series is going to implode and you are going to be left with 4 teams and then their revenue drops off because no one is going to watch 8 cars race.