P I T & PA D D O C K
WorldMags.net
Dieter Rencken
F1’s political animal
lthough all parties sought to downplay the severe
funding crisis faced by three independent teams,
there is no doubt that Formula 1 risked coming
catastrophically close to having but a dozen starters in
Australia. That would have been the sparsest grid since
the farcical US Grand Prix at Indianapolis a decade ago.
Although such suggestions have been contemptuously
brushed aside, well-placed sources have informed this
author that such disaster was averted only narrowly, after
three teams sought advances on their share of revenues
from Formula One Management. The uncomfortable
truth is that this remedy, such as it is, can only be
temporary. Disaster looms unless the root causes of
the teams’ financial pressures – inequitable revenue
distribution, declining income caused by dwindling
audiences, lop-sided governance and rampant cost
inflation – are properly addressed.
The bottom line is that the trio – which stressed
they were not ‘striking’ – urgently requested ex gratia
payments of at least $10 million each to fund their final
preparations, including travel to the opening rounds.
FOM’s expedient solution of advancing their February/
March paydays simply deferred the issue to another
day. Think payday loans, and you get the picture.
Ironically, F1 faces this situation despite being a
billion-pound business, with gross-profit percentages
comfortably in the seventies. Even after expenses – the
teams’ collective share – FOM’s parent company, the
A
they are “not in F1’s DNA” or that they do not address
,
the complexities of the all-important constructors’
championship table used for revenue distribution.
This reasoning, though, is utterly disingenuous. How
do you define the sport’s double helix, anyway? Since
when has F1 only been contested by pure constructors?
Indeed, this championship was introduced in 1958,
eight years after the drivers’ equivalent, while since then
proprietary chassis, customer teams and oddballs have
competed (with some, crucially, winning races and titles).
The teams of Frank Williams twice started as customer
operations, while Ferrari’s Juan Manuel Fangio claimed
the 1956 title in – whisper it – a rebadged Lancia chassis.
Tyrrell, the team that begat the current all-conquering
Mercedes operation, entered F1 with Matra and March
chassis before building its own design, while Renault
came into the sport in 1977 with a single entry. So much
for two-car constructor DNA…
Since when was hiving off F1’s commercial rights for
exploitation by a venture fund in its DNA? These factors
are conveniently overlooked as the anti brigade bangs on
about the alleged characteristics of the sport’s genome.
Nor is the constructors’ championship crucial to F1’s
financial structure, or even critical to its existence, as
the years 1950-57 and a variety of customer teams
prove. Indeed, you could argue that the championship
jeopardises F1’s sporting elements, for teams are more
concerned with earnings than outright on-track duels.
‘‘Of 15 constructors to win the title since its
inception, just five survive to the present day”
venture fund CVC Capital Partners, nets close to 30 per
cent, or around $400m (£300m) per annum. Two thirds
of this flows straight out of F1 to settle loans taken
by CVC to fund dividends.
Regular readers of this column will be familiar with my
criticisms of CVC’s lack of proactivity in reforming F1’s
financial structure. But the sport’s other stakeholders
must accept a share of the blame for the current state of
affairs. During last week’s Strategy Group/F1 Commission
summits, about the only agreed motion was a ban on
multiple helmet liveries during a season. Paris fiddles…
Virtually every cost-saving proposal, prepared by
respected management consultancy McKinsey &
Company after commission by the FIA, was rejected
or delayed, blocking their introduction until 2017 at
earliest. The proposals ranged from outright bans on
windtunnels through single-specification chassis to