Last year Sauber and Force India filed a complaint with the EU on anti-competition grounds against the current prize money distribution and regulatory governance model of Formula 1. The point here is that as small teams, they get no seat at the F1 Strategy Group table (well, Sauber doesn’t but Force India does as they finished 5th in the championship last year) in which to impact regulatory changes to the sport and they also get the smallest portion of the prize money at the end of the year and that’s if they are in the top 10 finishers in the Constructor’s Championship.
It’s easy to have sympathy for Sauber given they are not facing a level playing field with the likes of Mercedes, Ferrari, McLaren, Williams or Red Bull. It’s not entirely clear what Sauber would conclusively deem fair and this leaves many to speculate that it is an equally divided purse amongst all teams etc. That may sound great but it won’t work. The big teams, the ones that draw fans to races and sponsors to the sport won’t participate if they receive the same amount as Sauber which would be a drastic decrease in what they currently receive.
Sauber’s Monisha Kaltenborn has commented on the situation this week saying:
“Everyone knows how this deals were done and the worse part about it is not that you want to change something just because you don’t like it anymore, it is having a massive impact on our competition, and that’s the thing we are saying,” she said.
“It’s leading to a competition which is no longer a fair competition.
“It has to do with these privileges certain teams get in terms of rule-making and in terms of the commercial distribution.
“And if that reaches a point where it has an effect on the competition, that is something we are fighting against.”
Where she’s right is in the power that controls F1 and I would argue that much of that power is centralized around Mercedes chief Dieter Zetsche and Ferrari’s Sergio Marchionne. The most powerful power unit makers are holding a lot of pull in the sport. Simply look at Red Bull’s attempt to get a Mercedes or Ferrari power unit supply in 2015. Both manufacturers declined to supply leaving Red Bull less competitive to take the fight to the German and Italian team.
In 2013 the sport wanted to lure car makers back to the sport with the hybrid engine and changed the rules to usher in a 1.6-liter turbo V6. The power units are massively impressive pieces of engineering but few can afford to create and develop these engines and this leaves privateers in the lurch. The FIA has attempted to remedy this by obligating the manufacturers to supply the grid in 2017 to avoid the Red Bull syndrome of 2015.
It’s not all engines though. Sauber has a Ferrari engine supply so what’s wrong? They lack the resources (cash) to create and develop a competitive chassis to go with that power unit. This is where the prize money distribution format comes into question.
These days—and ever since the tobacco money left the sport—the reality is that the teams have all relied mainly on the prize money as their source of income. Some teams have learned to survive on that but most haven’t as Caterham, HRT and Marussia discovered. This relinquishing of individual contracts for sponsors and race promoter prize money was all done many years ago when F1 boss Bernie Ecclestone—then team owner of Brabham—did the underwriting of the races to ensure the teams weren’t being cheated by race promoters. This coincided with the famous FISA-FOCA war for control of the sport. The teams were happy to let Ecclestone take all the risk and manage the contracts.
All of that power, coupled with the purchase of the commercial rights of the sport for 100 years back in 2,000 made Ecclestone’s assets massive and he made himself and many team bosses multi-millionaires in the process. Unfortunately, he sold those assets and they eventually ended up in the hands of an investment group. Then the FIA got their piece of the pie increased and the F1 Strategy Group was born.
Now the small teams are finding it difficult to even survive and make payroll in which to have a team to compete and they’re continually sinking money into the program without increasing their revenue intake from prize money.
Haas F1 has entered the sport pushing the very limits of the customer car regulations with their tie-in with Ferrari and it will be interesting to see how long they last in F1 if they are not in the top-5 teams and getting big payouts from the prize money. Williams was heading in that direction until their switch to Mercedes engines ensured a top 3 finish in the constructor’s championship which means serious prize money.
It’s not easy and Sauber is feeling the pain as they have missed making payroll reportedly more than once this season. The powers that run F1 know that teams rely heavily on prize money and while they can suggest these teams cut their costs, it may not be possible to compete in the series with a radically cut cost structure due to the basic costs of chassis creation, engine supply costs and traveling around the world with a team to compete in races.
It’s a tough situation to be sure and ultimately the power in F1 has changed hands leaving the small teams out of the circle of wealth. It will be interesting to see what, if anything, Formula One Management can do to remedy the situation. The EU complaint could be a way to tear up the current contracts and start afresh if the decision goes against the sport. Deep down, I feel like Mr. Ecclestone wouldn’t mind that too much and not so he can make more money but it would be a way to get out from under a deal that wasn’t one of his best.
Hat Tip: Motorsport