Formula 1

Formula 1 can't just throw money at clear economic problems

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Formula 1 bosses seem to be waking up to the financial problems hitting the smaller teams in the sport.

As Marussia and Caterham fell into administration and were absent from last weekend's United States Grand Prix, Bernie Ecclestone has finally admitted something needs to change.

"The problem is there is too much money probably being distributed badly," he told reporters in Austin adding the remarkable statement, adding that it is "probably my fault.

"We have to decide the best way to sort this whole thing out. Frankly, I know what's wrong but don't know how to fix it," he added.

"I think the situation is such that if enough people want it resolved we can resolve it. It's a case of the people that are involved in the sport will have to want to look after the sport and be prepared to make some sacrifices."

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Won't budge

However, based on comments from some of those Ecclestone would likely require to 'make some sacrifices' it seems they aren't ready to budge just yet.

Ferrari are historically the highest paid of the 11 teams normally on the grid because of their history, success and various threats to leave over the past decade or so, and their team boss Marco Mattiacci believes it shouldn't be a redistribution of current funds to benefit the smaller teams but instead an increasing of the percentage of income given to the teams.

"Ferrari is very focused on making the cake bigger, not on changing the way of how to slice the actual cake," the Italian told ESPN.

"We don't have to overreact, we need to look at first how to increase revenues - that's priority No. 1 - and second to make sure who comes in Formula One is very aware of the challenge of Formula One. This sport is innovation and innovation costs money, a lot of investment and long-term investment.

"Ferrari is very focused on making the cake bigger, not on changing the way of how to slice the actual cake" - Marco Mattiacci

Red Bull point the finger elsewhere

Red Bull too also suggested they wouldn't be particularly co-operative in renegotiating their current percentage of income but team boss Christian Horner did strike an important area.

"Every team has negotiated his deal with the commercial rights holder and I think it is an issue that needs to be asked of him about the distribution of money," he said

"We have signed agreements, and I am not convinced that even if you double the money to Caterham and Marussia it would have solved their issues. Their issues are more fundamental on what are the cost-drivers rather than what is the income."


That final point is exactly where the current F1 apple is rotting away, its all well and good suggesting the smaller teams should get more money, but it does nothing to stop the issue of spiralling costs.

One team boss suggested that to be a competitive midfield team in F1 a budget of $200m is required while just to put a car on the grid with occasional updates a budget of $150m is needed, nearly four times the cap suggested by former FIA President Max Mosley for 2010. 

Its not a case of lacking choice over where costs could be cut neither. If limits on the amount of development in certain parts of the car could be imposed during the season that would cut one of the key costs for small teams as would a limit on simulator and wind tunnel usage.

Two-tier championship

A suggestion I often make when discussing this topic is why F1 can't introduce a two-tier championship.

If you have the big teams like Ferrari, Red Bull, Mercedes etc. all spending ridiculous sums of money per year then there should be a secondary championship with different rules and greater financial management that allows smaller teams to fight for something without trying to match the power houses at the front.

We have something similar in WEC with LMP1 and LMP2 and surely if there is not a more wide scale solution to the problem it should be something to consider.

Of course the battle to finish as high up the current Constructors' championship acts as an incentive with the increasing amount of income given the higher up a team finishes but that too doesn't solve the issue of cutting costs.

More money not the solution, but it helps

There is certainly some benefit to the notion that smaller teams should at least be given a percentage of income that goes some way to covering the basic costs of participating in F1.

An idea being suggested is that small teams receive a base payment to compete each year from Ecclestone that would at least mean a team wasn't fighting to make ends meet and Lotus boss Gerard Lopez is hopeful a deal can be struck.

"I know CVC and Bernie have been looking at this, but it's going to be a base payment given to the smaller teams, the racers, which is essentially going to make it possible for a normal budget to be pretty much closed here," he also told ESPN.

"To be honest, it's really not a complicated thing to do. It just requires a bit of good will. The overall amount we're discussing, we're not talking about a half of that, a third of that, or anything like that.

"Once you start dividing it by the number of teams, it suddenly does not become that massive. There is a way to build a proposal in the next couple of days."

Meeting the modern F1 world 

Sauber boss Monisha Kaltenborn added her belief that the current system had to change to meet the different environment F1 is in, in 2014.

"We three teams that have been speaking to each other have agreement on that. Nobody is asking here for anything unreasonable," she said.

"Nobody is asking here for anything unreasonable"- Sauber boss Monish Kaltenborn

"I think we have to recognise that times have changed, the level to enter Formula One has changed. There was a reason for the system earlier, now things have really changed so one has to rethink that.

"We all have put in too much investment in to this that you can't just let it fizzle out. Those times are long gone where a bunch of people got together on the weekends and went from track to track and raced."

A dose of reality

The past few weeks have given the sport a dose of reality that after years of ignoring the topic, it was in fact putting the future existence of F1 under threat.

With the subject of three-car teams seemingly not winning much favour within the F1 paddock, despite the political tones being displayed early in the weekend at Austin, bosses and top teams need to realise that while they may not offer much competition to them on the circuit, the small teams can cause major ramifications off it.

There are those who will point at those teams failing to make ends meet and argue that its their own fault for overspending and trying to makes two times two equal five but actually those teams are having to do so out of necessity.

To solve it will take compromise and major changes to how the sport is run, but this is something that will benefit all in the long term and keep F1 as the pinnacle of motorsport.

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