Tag Archives: 2014

Pit Stop – Tough time at the bottom – By Lewis Brearley

It’s a tough time for Formula One’s smaller teams at the moment. Financial worries are causing ructions within all but the largest teams and disappointingly no action seems to be in the pipeline.

Force India replaced Paul di Resta with Sergio Perez this week and with it gained an estimated $10 million from his Mexican backers and sponsors.

Many fans decried the fact that a very talented driver had lost out to a guy with a fat wallet. Yet this is harsh on Perez, a man who gave a world champion, Jenson Button, a decent challenge in a tricky car.

Indeed it’s arguable that Perez and di Resta are on the same level, unlikely to be world champions but capable of winning races when given the machinery. It’s not Force India’s fault that they need all the money they can get and it’s certainly not Force India’s fault that no other team has picked him up.

However, this deal is yet another sign that Formula One’s financial model needs to change. Another driver who is supported by a large amount of corporate money and another good driver destined to spend the rest of his career in sportscar racing, IndyCar or the DTM.

The answer is simple but it will be a complicated political process to implement it. The owners of Formula One, a private equity named CVC Capital Partners. With over $46 billion in investments and no passion for motor sport, their number one priority is squeezing profit out of Formula One and they do this very successfully.

For example in 2012 Formula One revenues were estimated at around $1.5 billion and CVC took a colossal $865 million from that. From the remaining revenues, the FIA takes a small percentage and then the teams take their share, decided by the all-important Constructors’ Championship standings.

Hidden within this share is a hugely unfair element however. Recently the teams signed up to a new payment structure which gives bonuses to teams who have won championships in recent years – Ferrari, McLaren, Red Bull – and also Mercedes thanks to an agreement between Bernie Ecclestone and the team that kept them in the sport.

So unfair is this structure that Ferrari could score zero points in next year’s championship and still receive more money than if Lotus managed to win the championship.

Why sign up to the thing then, you may ask? Well, it was forced upon them after Red Bull and Ferrari first signed it. Rumours swirled that the remaining teams had no other option than to sign up or else face watching a Ferrari Formula One World Championship sponsored by Red Bull with two constructors providing customer cars to the smaller teams.

Thanks to this unequal agreement and a bizarre lack of interest from sponsors, most teams are now struggling to stay afloat with soaring costs and declining revenues combining to crush their accounts.

If only there was a spare $800 million that could be shared between the grid. However, CVC will not give up this money easily. Aware of the financial difficulties they have an alternative answer: have five ‘constructors’ and five ‘customers’ which would sharply reduce costs for the smaller teams and allow CVC to keep even more of the revenues for themselves.

This isn’t an acceptable answer. It would reduce Formula One to a shadow of the fair, engineering battle that it is supposed to be and if one big team quit, the customer would be taken down with it.

The true answer as CVC are unlikely to be moved aside, is a budget cap. For this to happen Red Bull and Ferrari would have to accept that the good of the sport should be prioritised over the good of their teams.

Whether this will happen will be the background story throughout the 2014 season.

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Pit Stop – Engines at war – By Lewis Brearley

McLaren’s freshly announced engine partnership with Honda brings into focus the situation surrounding next year’s engine supplies.

Four teams have not yet confirmed which manufacturer they will use for power from 2014. Lotus, Sauber, Toro Rosso and Marussia are all still seeking final confirmation from their preferred choices.

With 11 teams on the grid and three engine manufacturers present next season, four teams for two manufacturers and three for the other appears to be the optimum and obvious solution.

However, upon further analysis it soon becomes clear that in reality this vision may be a little cloudier.

Renault has already confirmed deals with Red Bull, Caterham and Williams but has two more teams – Lotus and Toro Rosso – pitching for engines. If the Renaultsport management are to be taken at their word and a five team supply is indeed out of the question, that leaves one team left for either Mercedes or Ferrari.

In fact it’s this decision which is causing the logjam with the other teams’ engine supplies and Renault needs to make a decision quickly. But it’s not just a 50/50, random choice. Out of the two teams – Toro Rosso and Lotus – Lotus is the one most likely to deliver success and the worldwide promotion that follows. Yet on the other hand, Red Bull are pressuring the French firm to supply their sister team Toro Rosso and Red Bull is Renault’s number one, world championship-winning team.

Once this situation is resolved the rest of the grid will quickly be fully powered.
Mercedes, just like Renault, has three teams secured – Mercedes, McLaren and Force India – leaving space for the German manufacturer to pick up another should the need arise.

However, Ferrari has no engine supply deals agreed outside their works team. It’s very likely that they will supply their long-term partners Sauber and will very probably be contracted into supplying Toro Rosso should the Italian team be turned away by Renault.

This would leave Marussia, who can hardly cobble together enough money for an engine deal anyway, at the mercy of the generosity of Mercedes and Ferrari. Marussia hope that their signing of Ferrari academy driver, Jules Bianchi will persuade Ferrari into giving them a deal. But that is not a nailed-on certainly in even the slightest terms.

If this sounds complicated it’s simple when contrasted with the situation that would arise if Renault were to bow to Red Bull’s demands and Lotus were left at the doors of Mercedes and Ferrari.

The Enstone team’s first port of call would be Maranello, even if the name Lotus-Ferrari is anathema to the purists among you.

As bad as no Enstone team though? Because Ferrari have never in their history supplied a championship contending team (a rival) with engines and Mercedes would take some persuading to supply three championship contending teams when their own board are begging for success for their own team.

The die lies with Renault. When it is finally cast, one team reaches for the emergency plan.

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