Money makes the wheels turn

It is just over a month since Frederic Vasseur, team boss of Alfa Romeo F1, indicated that teams must become more flexible to ensure the future of the sport. He was referring to the ongoing discussions regarding a F1 team budget cap – a hot issue for many years.

Recent discussions have resulted in a cap set at $175-million (R3.2-billion) for the year. Several of the less financially sound teams want that reduced by a further $75 million, but not everyone agrees. One pushing for the $100-million
cost cap is McLaren’s Zak Brown, who believes if this is not accepted it could result in four of the current teams dropping out of the sport.

On the other hand, such a dramatic reduction could have disastrous results for some of the larger teams. They are reportedly spending between $250 and $300-million per annum, a large percentage of this on the salaries of team personnel. It is possible the proposed cost cap could lead to a considerable reduction of the teams’ workforce, while certain regions around the globe that are home to many F1 teams, would be drastically affected.

It is estimated the cap of $175-million could result in the loss of 1 600 jobs in the UK alone. Budget caps have always been a tricky subject in F1. It is a world where the whole concept of equality between teams has been a complete anathema to those at the top. It is certainly a topic guaranteed to cause dissension due to the huge differential in financial assets between the teams.

The old adage of “there’s some that’s got it and some that ain’t.” summarises F1. But is this not the case in every sport that employs some form of technology and more so when the manufacturers of such technology are entrants? Having the financial backing to allow research within the rules and regulations of any sport has to be an advantage – a situation that has existed in motorsport since its inception.

Even at club level, there are competitors in a position to afford the best of everything and if the driver has reasonable talent, he or she is generally near the front of the field. Throughout the history of F1 there has almost always been a dominant team and it was normally due to a better car, a bigger budget and better drivers. Yet, very few complained and still followed the sport.

The current situation where Mercedes are the dominant team dates from the start of the hybrid-era and has continued up to the present. Perhaps the fact the German manufacturer has long been involved with research, development and production of hybrid power units for production road vehicles gives them an advantage.  To level the playing field the concept of a budget restraint was introduced but has never really sat well with the teams.

Manufacturers have their own agenda for being in F1. It can never be described as an inexpensive activity, but some companies use it as a means to rapidly develop technology that will ultimately become a system employed on the company’s road offerings. Ferrari has made no bones that F1 is its main laboratory. But this year things have changed dramatically.

The effects of Covid-19 requires a substantial rethink as owners, organisers and teams face a situation threatening the very future of F1. Costs have to be cut to ensure the teams survive and are able to continue racing, plus being able to convince the board, in the case of manufacturers, that the expenditure is going to be worth such huge investment.

The global market for vehicles has suffered a major downturn in sales and profits, so will the shareholders be willing to accept their investment being used for motorsport? Take a look at the plight of the DTM series where this issue has resulted in the major manufacturers withdrawing.

In an interview with Sky Sports, Ross Brawn, CEO of F1, stated that, following discussions between FOM and the FIA, the teams have received a proposal for a budget cap of $145-million to be introduced at the beginning of the 2021 season.Brawn said: “The cap’s objectives were a more competitive field and with the situation we have now the economic sustainability of Formula 1 is the priority.”

If accepted by the teams the $145-million budget cap will be implemented next season. Thereafter it will reduce annually, initially to $140-million, then to $135-million from 2023 onwards. Both Ferrari and Red Bull have raised objections, but this is no longer the problem. The FIA’s World Motor Sport Council changed the rules when it approved a motion stating that the unanimous approval of all teams is no longer the benchmark –only five teams need to approve any motion. This allows a much speedier implementation of any changes required.

Apparently the FIA agreed this change “in view of the unparalleled Covid-19 crisis”. Perhaps there is a lot more to the decision than meets the eye. It could be a means to provide the governing body with a powerful “tie breaker”.

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