Finances in F1 - the gap between the haves and have-nots

by dyrewolfe Thu 6 Nov 2014 - 15:22

In the wake of the well-publicised problems with Caterham and Marussia, I was intrigued by the recent BBC article regarding F1 finances Formula 1: Where does all the money go? and prize money. Using a bit of guesswork, I put together a table that shows some alarming disparities between Ferrari and everyone else, the top 5 and bottom 5, as well as the top 10 and those unfortunate enough to find themselves bottom of the pile.

Finances in F1 - the gap between the haves and have-nots F1PrizeMoney_zps7713dd40

Finances in F1 - the gap between the haves and have-nots F1PrizeMoney_zps7713dd40

My guesses may be a bit off, but even allowing for that, you can understand why some teams are so unhappy with the current arrangements and why the back-of-the-grid teams are so desperate to finish in the top 10.

EDIT: an e-cigar to anyone who spots the ~~deliberate~~ mistake in the total figures. Just noticed it myself but can't be bothered doing another image to correct it.

by CaledonianCraig Thu 6 Nov 2014 - 15:43

I think it is all too apparent that this situation arose from when the 'big five' teams threatened to leave F1 a few years ago. They got payments assured to them from Bernie Ecclestone as a sweetener to remain and that situation has seen the gaps between those big five grow into a chasm all because they made sure they got a good deal for themselves and sod the rest of the teams. Bizarre really as I recall at the time those pushing for a breakaway were insisting they were doing it for the good of all F1 teams when in fact they were only interested in lining their own pockets.

Now today we hear Christian Horner calling for the smaller teams not to make it a public issue and that the big teams should not be funding the lower teams. Err Christian the money being divied out is F1 money not money that is guaranteed to only a privileged few as is the case with the current set-up.

I sense a temporary fix will come about with CVC coughing up money for the smaller teams but the big teams will continue creaming off the lion's share of the money. That has to be addressed otherwise the situation will not improve.

Also on another note I think it is rather suspicious and confirms my thoughts that CVC are creaming off far too much money for itself or else how come they can pull £100 million out of the air just like that.

What a mess.

by dyrewolfe Thu 6 Nov 2014 - 17:39

Again, can't help but agree Craig...especially the bit about CVC taking far too much.

That said, they are a venture capital firm, used to dealing with billions, so finding a spare £100m down the back of the boardroom sofa probably isn't too hard. Wink

Also agree that the sport won't become more competitive until there is a serious restructuring of the way prize money is handed out.

Personally I'd like to see these idiotic bonuses done away with and have teams receive an equal payment of half the prize pot, with the rest awarded on a performance-related basis.

In fact, just add the existing bonues to the main prize fund, so the base payments can be larger, as well as having larger performance-related payments.

I would also beef up the payments to those outside the top 10, to give them more of a fighting chance. You really have to feel for Caterham when you see what they can expect to get, compared to even the mid-grid teams.

by CaledonianCraig Thu 6 Nov 2014 - 18:52

The whole funding system of F1 needs a complete overhaul from the top (Bernie and CVC) to the bottom (F1 teams). I'd sooner this was done by a neutral outside party so there is no skullduggery or bias in the results.

The investigation could unearth all the financial facts of how much CVC earn from running F1 and how much of those earnings are they actually putting back into the sport as there is obviously a big deficit between the two figures. From here a larger sum of money could and should be released to ALL F1 teams.

Now to the way the cash is structured. Well first I'd disband this set up where the five big teams have the full say on what each team earns as they have clearly seen to it they get the lion's share of the money. That must stop. From the TV deals all teams should get an equal split of the money. Prize money per race is fine staying as is I would say as teams should be best rewarded for being the best in the race. Any bonus payments should be scrapped in my opinion.

Any talks on future financing should see ALL teams having an equal say on how funds are distributed and not be left in the hands of the big five as obviously they'll only look to feather their own nests again.

by Guest Fri 7 Nov 2014 - 13:01

Looks like Marussia are finished, no buyer could be found & the 200+ employees will be made redundant. Shame.

by dyrewolfe Fri 7 Nov 2014 - 13:16

Well, I guess that leaves an extra spot open for any other interested parties - if they want to make it a 12-team grid again.

Could be another one if Caterham go the same way - they're still on very shaky ground, last time I heard.

Agree its a shame, but to be honest I don't think either one will be a big loss, as they had made very little progress in the time they've been around.

Of course, things could have been very different if they'd been awarded anything like a fair cut of the prize money. Hence the urgent need to restructure the finances of the sport.

Its ridiculous how much say the big teams have in the rule-making, finances etc. The only other example I can think of that even comes close is the Premier League.

Its obvious if you give power to those competing within a sport then they're going to abuse it and write the rules to their benefit. An utterly ridiculous scenario that needs changing ASAP.

by CaledonianCraig Fri 7 Nov 2014 - 13:22

dyrewolfe I think it is unfair to expect progress from teams such as Marussia and Caterham when their budget within the sport is throttled to the point of asphyxiation. We have not seen any progress from Sauber either and they are in the same financial boat and they are actually behind Marussia in the constructors championship.

by GSC Fri 7 Nov 2014 - 13:34

Feel sorry for people who lost their job.

Couldn't give a toss one of the two mobile chicanes have gone.

by dyrewolfe Fri 7 Nov 2014 - 14:20

CaledonianCraig wrote:dyrewolfe I think it is unfair to expect progress from teams such as Marussia and Caterham when their budget within the sport is throttled to the point of asphyxiation. We have not seen any progress from Sauber either and they are in the same financial boat and they are actually behind Marussia in the constructors championship.

Thats sort of what I was saying. Going on past performance they will not be missed, but at the same time its asking the impossible to expect them to compete with the higher-ranked teams, given the paltry prize money they were awarded.

Just seen another interesting tidbit from Eddie Jordan on the BBC's FP1 live text page. Apparently all the teams have to use a freight company owned by Ecclestone, to move their gear between venues...how convenient! Seems Bernie used to provide a £10m subsidy to each team for this, but recently withdrew it.

Gotta love these "incestuous" financial tie-ups. Laugh

by CaledonianCraig Fri 7 Nov 2014 - 14:44

I'll bet they have to even use Bernie's brand of toilet paper even though it must grate on the arse.

by Guest Sat 8 Nov 2014 - 10:44

GSC, are you not contributing to the crowd-funding scheme raising money for Caterham? Laugh

I heard they have already raised around £300k & need £2.25m to go racing in Abu Dhabi. Comical stuff.

by GSC Sat 8 Nov 2014 - 10:49

If you would like to donate to Caterham, and are unsure how, simply take a 5 pound note and burn it.

by GSC Sat 8 Nov 2014 - 10:52

Imagine actually giving your own money so a team who have yet to score a point in 4 seasons can race 1 last time.

by Guest Sat 8 Nov 2014 - 11:18

Horner has labelled it 'embarrassing' for F1

I can't believe they've currently got 977 backers & have raised, as it stands, £479,067. Of course, if they don't make the target, the backers get their money back, but this is just puzzling & stupid.

by GSC Sat 8 Nov 2014 - 11:19

It is embarassing. Fans are already paying for one of their seats

by CaledonianCraig Sun 9 Nov 2014 - 13:36

I fear not as embarrassing as the big F1 teams securing TV money they don't need whilst smaller teams go bust. Now that is embarrassing especially when you recall the same big teams were claiming to wish to create a breakaway series so that all teams got a better deal. They backed down after back-handers from Bernie but the pay out's went to the haves whilst the have nots could go take one (so to speak). So much for thethem wanting what was best for ALL F1 teams.

by Gerry SA Sun 9 Nov 2014 - 15:05

It's being reported that Ferrari and Red Bull Racing will both run 3 cars in 2015.

The death of F1...

by CaledonianCraig Sun 9 Nov 2014 - 15:15

First nail in the F1 coffin and once more Bernie gets his way.

by Gerry SA Sun 9 Nov 2014 - 15:21

CaledonianCraig wrote:First nail in the F1 coffin and once more Bernie gets his way.

Biggest Load of BS ever...

If ferrari do have 3 cars they could have Alonso, Vettel and Kimi all on big wages. How's the feasible when teams are bust?

by CaledonianCraig Sun 9 Nov 2014 - 15:41

Gerry SA wrote:
CaledonianCraig wrote:First nail in the F1 coffin and once more Bernie gets his way.
Biggest Load of BS ever...

If ferrari do have 3 cars they could have Alonso, Vettel and Kimi all on big wages. How's the feasible when teams are bust?

Totally agree. The way the F1 funds are dollied out stinks to high heaven. Top five teams sit in on funding talks with the FIA and arrange it so they dine on caviar whilst the smaller teams dine on stale bread and mouldy cheese.

by Fernando Sun 9 Nov 2014 - 15:44

Bernie has denied it so far.

by CaledonianCraig Sun 9 Nov 2014 - 15:49

Fernando wrote:Bernie has denied it so far.

Well that seals it - it is true.

by Bull Sun 9 Nov 2014 - 16:29

Caterham are almost half way on their fund raising thing with 5 days to go, they may just make Abu Dubai due to this.

by CaledonianCraig Sun 9 Nov 2014 - 19:15

What a pathetic way to respond to the totally unfair way F1 funding is distributed:-

http://www.bbc.co.uk/sport/0/formula1/29980194

I would say there is certainly substance to the three cars per certain teams next year hence why Alonso is holding back on committing himself just now. Also as to why McLaren are being ultra-cagey about their driving line-up as well.

by Guest Sun 9 Nov 2014 - 20:16

Exactly, something fishy is going on, hence the reluctance to announce these deals. If it drops to a certain number of cars, it's RB/Ferrari that will make the numbers up with a third car, I think that's all been agreed already. My question is, who's allowed in those third cars, young drivers/test drivers or would a Button be allowed to join RB in the third car. Very intriguing stuff.

by dyrewolfe Mon 10 Nov 2014 - 12:18

CaledonianCraig wrote:What a pathetic way to respond to the totally unfair way F1 funding is distributed:-

http://www.bbc.co.uk/sport/0/formula1/29980194

I would say there is certainly substance to the three cars per certain teams next year hence why Alonso is holding back on committing himself just now. Also as to why McLaren are being ultra-cagey about their driving line-up as well.

Well, in fairness Ecclestone does have a point. There is already plenty of prize money awarded...its just distributed in a grossly unfair fashion.

I don't think anything can be changed in the short term, as there are undoubtedly legal agreements ensuring the current payments, but as soon as the existing deals expire, drastic changes need to be made. Ecclestone has the power to make this happen and he damned well should make sure this happens ASAP.

I also agree teams need to draw up appropriate, sustainable business models to operate by, but that still doesn't change the fact that the Big 5 have a massively unfair financial advantage, thanks to the ay the prize funds are currently distributed.

With regards to the possibility of 3-car teams, that really would signal the beginning of the end for my interest in F1. All that would do is give a couple of the bigger teams an advantage in the Constructors' championship and pretty much guarantee them a bigger slice of the prize money...although a decent chunk of that would probably be offset by the cost of running a third car.

God F1 is in such a mess right now...

As for Caterham's crowd funding bid, I think its a brave, innovative move...and according to the BBC highlights program last night, they're nearly halfway towards getting the £2.35m they need to get to Abu Dhabi. I'd like to see them do it, just so they make the end of the season.

However, a F1 team can't survive long-term like this. They need to find themselves an investor who is prepared to give them decent funding for at least 2-3 years, to give them chance to make some progress.

If this doesn't happen, we can only hope the new teams who are waiting in the wings make a better go of it.

by Guest Mon 10 Nov 2014 - 14:32

I honestly don't think RB/Ferrari would be able to classify those third car points and/or put a star driver in that seat. It would make the constructors farcical & Mercedes et al would not accept that structure.

by GSC Mon 10 Nov 2014 - 14:34

Doubt Merc would care, an extra 50% added to their engine sales.

by Guest Mon 10 Nov 2014 - 19:08

I heard some ex Williams guy talk about third cars & he was saying the third car would have different drivers racing in it over a season. He said it's all about money making & some one like kobayashi would drive the car in Japan & for that race, the team he's driving for would get a big sponsorship deal with someone like Sony etc. then further down the line they would sign Alexander Rossi for Austin & get a big American company sponsoring. essentially, the third car is just a ghost car for pure entertainment purposes, to make money & to fill the grid, I don't see how it can score points either. Thats my understanding. You can't have RB/Ferrari running three cars & Mercedes/Williams etc running only two for an equal constructors championship.

by dyrewolfe Tue 11 Nov 2014 - 12:38

LiamB wrote:I heard some ex Williams guy talk about third cars & he was saying the third car would have different drivers racing in it over a season. He said it's all about money making & some one like kobayashi would drive the car in Japan & for that race, the team he's driving for would get a big sponsorship deal with someone like Sony etc. then further down the line they would sign Alexander Rossi for Austin & get a big American company sponsoring. essentially, the third car is just a ghost car for pure entertainment purposes, to make money & to fill the grid, I don't see how it can score points either. Thats my understanding. You can't have RB/Ferrari running three cars & Mercedes/Williams etc running only two for an equal constructors championship.

But that doesn't make much more sense.

You'd have some teams running a third car and not getting any benefit from it, points-wise. I also doubt sponsors would put much money forward for 1-off races with reserve drivers.

Either all teams have to run 3 cars or none should.

Preferably, another team can be found to come in next season, alongside Haas, to get the grid back to 11 teams. Would be even better if a third could be found to get back to 12.

On a different subject, I was amused to read Christian Horner is complaining about restrictions on engine development and suggesting they revert to the non-turbo V8 engines, if they're not allowed to develop the current powertrains for next season...which Renault wanted to move away from in the first place!

http://www.bbc.co.uk/sport/0/formula1/29993990

Apparently a unanimous decision is required to open up engine development for next season, while only a majority vote is required to do so for 2016-18.

by Guest Tue 11 Nov 2014 - 14:22

Horner is embarrassing, when RB were on top, he was acting just the way Mercedes are now. Now, he's acting like a bad loser, he can see his empire falling around him & the next cycle of domination, which is natural in F1 to occur, is well under way with Mercedes. He needs to suck it up, like the rest of the paddock did, during those four years of the finger. I don't see any unanimous decision being made for next year, costs need to be controlled, especially if third car's are approved.

by GSC Tue 11 Nov 2014 - 14:25

Spoiler:

by Guest Tue 11 Nov 2014 - 14:35

Mercedes don't want to run a third car & want an engine freeze. Therefore, RB could bargain with them & say, 'We will agree to keep the engine freeze for 2015, but we will run three cars against your two of Hamilton/Rosberg & those three cars which we will run, will be able to score points for the Constructors Championship'. That would be a good compromise. It keeps Mercedes happy with an engine freeze, they will believe their domination carry over, could still see them win both titles in 2015 with only two cars & it also gives RB another car & more opportunity to score points. Ferrari would probably also run three. I don't see everyone else running three cars, Lotus, FI, Torro Rosso etc can't afford a third car.

by Guest Wed 12 Nov 2014 - 12:12

Anyone read Bernie's crazy new idea? It's 'Super GP2', whereby F1 has a two tier championship, the primary constructors championship contested by the 'top 5' & then a secondary constructors championship, run by five customer teams with essentially GP2 cars, but have them running with upgraded engines. picard

by CaledonianCraig Wed 12 Nov 2014 - 13:14

Oh FFS.

by dyrewolfe Wed 12 Nov 2014 - 13:27

John wrote:Anyone read Bernie's crazy new idea? It's 'Super GP2', whereby F1 has a two tier championship, the primary constructors championship contested by the 'top 5' & then a secondary constructors championship, run by five customer teams with essentially GP2 cars, but have them running with upgraded engines.

Yay - then it'll be just like the BTCC! Rolling Eyes

I'm not sure the "Other 5" would like that...nor would their sponsors.

Image and status are such a big part of F1 business and sponsors wouldn't be prepared to shell out as much for 2nd class teams.

I can't see it going over well with fans either to watch what is essentially a 5 team championship (who is really going to care about the Super GP2 winners?)

Only way I'd see it working is if the bottom F1 team got relegated into the Super GP2 series next season and the GP2 winner got promoted to race with the big boys. Even that doesn't really appeal to me though.

Its 2 steps forward then 1 step back with Bernie. Just as I start feeling some respect for the guy, he goes and sticks his expensive loafers right in his wrinkly old gob again. picard

by CaledonianCraig Wed 12 Nov 2014 - 13:32

What was his one step forward? The only steps forward he makes is to the bank to cram in his millions of pounds a year creamed from running F1 whilst teams suffer from his own admitted incompetence.

Right now I hear The Moody Blues singing 'Go Now'.

by Guest Wed 12 Nov 2014 - 16:07

Bull wrote:Caterham are almost half way on their fund raising thing with 5 days to go, they may just make Abu Dubai due to this.

Two days to go & they only have £1.2m, that's 52% of the target. I doubt they will do it, thankfully. To make it more embarrassing, there would of been the chance Alice Powell, who was awful in GP3, could of been driving in FP1, having paid about £35k to drive in that session.

by Fernando Wed 12 Nov 2014 - 16:26

Well currently GP2 cars are around 6 seconds off an F1 car and cost about 4m a season compared to Mercedes rumored 300m

If give an upgraded engine they would be better then Marussia/Caterham & Probably Sauber/Lotus currently tbh.

Not a great idea in principal but money wise could work well for smaller teams.

by GSC Wed 12 Nov 2014 - 16:29

I'll donate to Caterham if they give me a pass to the paddock.

by GSC Wed 12 Nov 2014 - 16:34

In other news, Erikssons cancelled his contract, presumably avoiding being part of a circus for 1 race

by GSC Wed 12 Nov 2014 - 16:36

Fortunately it seems they won't make it, were there any danger of them doing so I'd have hoped someone would've stepped in to end this sad joke.

by CaledonianCraig Wed 12 Nov 2014 - 16:49

Yes GSC it is always good news when 200+ people lose their jobs. Rolling Eyes

With talk of a super GP2 it would seem BE is conceding the break-up of F1 as we know it. Still if it means he can continue stuffing hundreds of millions of ppounfs per annum into his bank account why should he care.

by GSC Wed 12 Nov 2014 - 16:55

GSC wrote:Feel sorry for people who lost their job.

Couldn't give a toss one of the two mobile chicanes have gone.

As stated before you get on your soapbox again

by CaledonianCraig Wed 12 Nov 2014 - 17:10

Empty words GSC. I am sure the ex-employees can read between the lines and see your glee. One thing interests me in your stance - how many teams do you think should be on the grid out of those that started the season bearing in mind you have wet yourself at Marussia and Caterham going bust and bear in mind Sauber actually lie behind Marussia in standings so would you pray they get the chop as well.

Also I kind of get the impression you feel F1 should be a closed shop to any new teams without at least £1 billion budgets. In that case you are closing F1 to any teams entering.

by GSC Wed 12 Nov 2014 - 17:52

I hereby apologise to any Caterham or Marussia former employees reading this forum.

Why should any F1 fan mourn the loss of teams that were seconds behind midfield and only got on tv when they a. Brought out a SC or b. Got lapped several times by the leaders.

Explain that in F1 terms without resorting to these cowpat cry my a river soliloquys' you favor so much.

by GSC Wed 12 Nov 2014 - 18:00

And here's the thing.

Take Caterham and Marussia away.

What changes in 4 seasons? What impact have they made on the sport. Aside from 1 Monaco race, absolutely nothing is your answer

by CaledonianCraig Wed 12 Nov 2014 - 18:21

F1 fans have mourned and are mourning the loss of these teams so let's dispel that myth. The Marussia of Jules Bianchi scoring two points this season was a stand out considering the team being financially starved of money by the big five - that sort of achievement is noteworthy. Probably a better achievement than teams that have scored more points on a much greater budget which their teams have wangled from the FIA at the expense of the smaller teams.

As for your safety car comment - how odd? All teams have been responsible for the bringing out of safety cars so let's not pretend the lesser teams are the sole guilty party.

Also you have never grasped why the lesser teams struggle have you? They have been starved of money by the big teams and the FIA by crooked way of making payments. They have been forced (unjustly) to work on a shoestring budget and remember that Lotus, Sauber anand Force India back up these facts and are deeply unhappy at being fleeced.

Mark my words GSC if you and I were to start an f1 team and you had ten times as much spending power handed to you by the FIA then you would have the quicker car. But don't kid yourself that is down to any superiority of ttechnology or budget management but down to getting a grossly unfair advantage.

by GSC Wed 12 Nov 2014 - 18:25

You vastly missed the SC car comment. The only times they were noticed was when they brought one out.

The same people that are mourning the loss of Jenson Button no doubt. Its called PR talk.

As for the rest I did ask to be spared the soapbox soliloquy you keep spouting

by CaledonianCraig Wed 12 Nov 2014 - 18:30

You have your idea of what F1 should be and I have mines. Simple.

At least I am not sticking my head in the sand at the obvious corrupt way money is dollied out in F1 with five teams ruling who gets what money.

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