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

First topic message reminder :

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.





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.

No, you're just sticking your head in the sand at reality

Fernando wrote: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.

I wouldn't say this is a good idea, long term, but in terms of solving the immediate financial issue for the smaller teams, it's a viable option. The GP2 cars might cost £4m currently, but the lower F1 teams would be able to put the upgraded engines in them & be able to spend alot more on developing those cars & making them even more competitive with their higher budgets, compared to GP2 teams. They'd be easily more competitive than Caterham, for sure. How competitive they got though, might be an issue for the bigger teams. Maybe, whoever won the secondary constructors championship could be promoted into the primary championship & earn financial rewards for getting there. That would make teams strive to succeed & innovate, in order to maximise themselves & be successful in the sport, instead of just grinding away each year achieving nothing. Maybe I'm getting carried away.

Another positive could be that it could possibly end the ridiculous need for pay drivers. Lower F1 teams wouldn't need the cash, therefore, we could actually end up having drivers in F1 on merit, instead of 'who's got the biggest cheque'. I mean, hasn't the last two GP2 champions failed to make F1 the following year?

So you are saying there is no problem whatsoever with how F1's funds are divied up at the moment?

The reality of that is that it is crooked. And as for what you see as reality - well no it isn't. That is a manufactured situation of Bernie, Mercedes, MCLaren, Ferrari, Red Bull and Williams making. Ask anyone if F1 is in a good shape at the moment then categorically the answer is no.

Whoever thinks there aren't problems is delusional or that losing Marussia, Caterham or teams from the back end of the grid isn't a problem. Bernie has shown time & time again that he has no interest in the smaller teams, if he wanted to give them money or redistribute, something would of been done by now. Instead, we have to listen to ridiculous ideas being thrown around like 'Super GP2', that don't solve anything but plug holes in gaps. This financial mess has shown that everyone who is in F1, isn't in it for F1, but in it for themselves. Everyone involved is just trying to use the sport for their own benefit or to promote outside interest. Bernie's shown he doesn't have the answers time & time again. Without someone in power, who's first priority is the health and success of the sport, F1 is cannibalizing itself.

F1 is in a mess, no other way of describing it or trying to paint another picture.

John wrote:Whoever thinks there aren't problems is delusional or that losing Marussia, Caterham or teams from the back end of the grid isn't a problem. Bernie has shown time & time again that he has no interest in the smaller teams, if he wanted to give them money or redistribute, something would of been done by now. Instead, we have to listen to ridiculous ideas being thrown around like 'Super GP2', that don't solve anything but plug holes in gaps. This financial mess has shown that everyone who is in F1, isn't in it for F1, but in it for themselves. Everyone involved is just trying to use the sport for their own benefit or to promote outside interest. Bernie's shown he doesn't have the answers time & time again. Without someone in power, who's first priority is the health and success of the sport, F1 is cannibalizing itself.

F1 is in a mess, no other way of describing it or trying to paint another picture.

That hits the nail on the head.

Super GP is just another random Bernie idea he throws around from time to time like artificial rain. As for F1 having problems, obviously, thats just Craig making up his own arguments to answer.

Marussia and Caterham are easily replacable and brought nothing to F1. Should I feel sad a team that hasn't been remotely competitive in 4 years and brought nothing to the product is gone?

I could band together a few mates, we could build a car over the weekend and enter it and have contributed as much to F1 as Caterham.

Let that sink in.

GSC, you have no mates. Secondly, how are you paying the extortionate entry fees set by Bernie? How are you paying for the new expensive engines, how are you paying your suppliers, how are you paying your staff & drivers? Oops, i forgot, you don't care about that side of the sport.

No idea about anything & the whole point of this discussion in regards of the financial mess.

Bit aggressive no

Everyone here barring you GSC can see F1 has chronic problems on the way funds are dollied out. Let this sink in - Marussia and Caterham pay the same entrance fees as any other team(a way too extortionate £75 million per season which goes into CVC coffers. Also into CVC coffers goes the TV money. Now that TV money is paying to cover F1 races and however they performed Marussia and Caterham were part of those races and paid the same money as the big five to enter yet they get paid a microscopic share of the TV money. Anyone who cannot see the wrong in that system I pity.

Caterham F1 will race at the final race of the year! Driver line up - Who knows.

Obviously Ericsson terminated his deal this week, but I believe Kobayashi is still under contract. I guess it will probably be Roberto Merhi, who would be next in line to drive in Abu Dhabi, having tested for Caterham all year.

You actually pay more to enter depending on how many points you earnt.

Probably explains why Marussia went bust, unexpected costs

GSC wrote:You actually pay more to enter depending on how many points you earnt.

Probably explains why Marussia went bust, unexpected costs

However, you want to paint it the TV money should be shared equally and it certainly isn't just now. The performances of the teams are irrelevant as the quick teams already get rewarded with the prize money which is performance-related so there is no way the TV money should be anything other than shared out equally.

Actually it could easily be argued broadcasters pay far more based on Ferrari being in F1 than Caterham, therefore they should be entitled to more

GSC wrote:Actually it could easily be argued broadcasters pay far more based on Ferrari being in F1 than Caterham, therefore they should be entitled to more

Nonsense and goes against your pace-obsessed opinion on payments anyway. Ferrari have been off the pace in F1 for five years now or are you now arguing TV money shouldn't be all about pace now?

Besides as I said other payments are already made to Ferrari for their 'importance to F1 so that shouldn't come into it when divvying out the TV money.

Shouldn't really be surprised at the pedantic-isms by now.

If it makes you feel better insert Merc title battle.

Either way no broadcaster is paying for the rights to air the battle for 20th if it wasnt packaged in with the big boys so both gain far more than they would under a La Liga approach

GSC wrote:Shouldn't really be surprised at the pedantic-isms by now.

If it makes you feel better insert Merc title battle.

Either way no broadcaster is paying for the rights to air the battle for 20th if it wasnt packaged in with the big boys so both gain far more than they would under a La Liga approach

The broadcasters are paying for the rights to cover F1 - shame you don't understand that. Now until you can tell me you have seen a race when the screen goes black when one of the lesser teams come on the screen or only stays on the race leader 100% throughout the race there is no point in trying to argue. That being the case ALL teams deserve an equal split of the money which isn't happening. Have you ever thought that Ferrari have hung around for so long because they are making vast swathes of money out of it? Their 'loyalty payments, prize money payments and other back-handers leave them well-off and creaming themselves whilst other teams go bust. That is my gripe here. I have no issue whatsoever they make money from prize money as it is merited and is exactly what it is - a prize/reward for pace. The TV money is totally different - money paid by TV companies to screen every race and EVERY team and so every team should have an equal share.

230 Caterham staff made redundant. Team is still expected to race in Abu Dhabi but with 'skeleton' amount of staff.

Yes Craig you spectacularly miss the point of a hypothetical as always. In this hypothetical scenario (making it 100% clear that this, is in fact a hypothetical), Caterham would get a pittance just in case they ever did anything. They make more from TV money than they're worth, because they're attached to the Mercedes, Ferrari and McLaren of the paddock. Surely if I'm Mercedes, it'd be fair to have a bigger share if I bring more in.

GSC wrote:Yes Craig you spectacularly miss the point of a hypothetical as always. In this hypothetical scenario (making it 100% clear that this, is in fact a hypothetical), Caterham would get a pittance just in case they ever did anything. They make more from TV money than they're worth, because they're attached to the Mercedes, Ferrari and McLaren of the paddock. Surely if I'm Mercedes, it'd be fair to have a bigger share if I bring more in.

Well they don't get anything anyway from results-based payments and that is fair enough as that is what those payments are there for - rewarding results. The TV money is paid to cover the sport not Ferrari, Red Bull, McLaren, Williams and Mercedes and thus no one team can lay claim to a bigger share as they are not bigger than the sport. Even BE admits he has made errors in this area, as do a number of the teams and a number of pundits all of whom have been involved in the sport in some capacity and a majority of posters on this forum would agree as well. It would seem you stand virtually alone on this alongside those that are stuffing their pockets of course.

John wrote:Obviously Ericsson terminated his deal this week, but I believe Kobayashi is still under contract. I guess it will probably be Roberto Merhi, who would be next in line to drive in Abu Dhabi, having tested for Caterham all year.

Look spot on, John. Roberto Merhi is claiming he has agreed to race in Abu Dhabi.

Shame about the staff being made redundant. You fear Carerham running a car with a skeleton amount of staff though.

Well, I'm glad Caterham will be at Abu Dhabi...even if it is just to annoy GSC.

On a serious note, I don't see them competing next season, unless by some miracle they get a new owner. Its a very sad situation all round with the job losses. Also, as Liam said, you have to wonder what state they will be in organisationally, as well as mentally.

GSC wrote:Yes Craig you spectacularly miss the point of a hypothetical as always. In this hypothetical scenario (making it 100% clear that this, is in fact a hypothetical), Caterham would get a pittance just in case they ever did anything. They make more from TV money than they're worth, because they're attached to the Mercedes, Ferrari and McLaren of the paddock. Surely if I'm Mercedes, it'd be fair to have a bigger share if I bring more in.

I don't think anyone's disagreeing the bigger / more successful teams should get more.

Its the sheer gulf between the top teams and the middle / back-of-the-grid teams that most have a problem with, as it doesn't give the smaller teams any hope of ever bridging the gap.

As has been mentioned the bigger teams can also pull bigger sponsorship deals to supplement the TV money.

Its the smaller teams that need more help...now and in the future...if F1 is to avoid becoming effectively an exclusive 5-team clique, with the other teams just making up the numbers.

#fairprizemoney


In other news Ecclestone has decided to ditch the double points race next season...yay!

http://www.independent.co.uk/sport/motor-racing/bernie-ecclestone-will-drop-double-points-in-formula-one-next-season-9862218.html

dyrewolfe wrote:

GSC wrote:Yes Craig you spectacularly miss the point of a hypothetical as always. In this hypothetical scenario (making it 100% clear that this, is in fact a hypothetical), Caterham would get a pittance just in case they ever did anything. They make more from TV money than they're worth, because they're attached to the Mercedes, Ferrari and McLaren of the paddock. Surely if I'm Mercedes, it'd be fair to have a bigger share if I bring more in.

I don't think anyone's disagreeing the bigger / more successful teams should get more.

Its the sheer gulf between the top teams and the middle / back-of-the-grid teams that most have a problem with, as it doesn't give the smaller teams any hope of ever bridging the gap.

As has been mentioned the bigger teams can also pull bigger sponsorship deals to supplement the TV money.

Its the smaller teams that need more help...now and in the future...if F1 is to avoid becoming effectively an exclusive 5-team clique, with the other teams just making up the numbers.

#fairprizemoney


In other news Ecclestone has decided to ditch the double points race next season...yay!

http://www.independent.co.uk/sport/motor-racing/bernie-ecclestone-will-drop-double-points-in-formula-one-next-season-9862218.html

And the big teams already get more anyway in all areas which is why we have such a pace discrepancy.

I feel this question needs to be asked since most are going on the theory money = pace.

Why are Williams doing so well when they were Poopie last season and got 5 pts and very little money?


Williams has seen costs rise up to 20 per cent because of the new engine. Interim results published in September showed losses before interest and tax widening to £17.1m, compared with a comparable £2.7m loss in 2013.

Fernando wrote:I feel this question needs to be asked since most are going on the theory money = pace.

Why are Williams doing so well when they were Poopie last season and got 5 pts and very little money?


Williams has seen costs rise up to 20 per cent because of the new engine. Interim results published in September showed losses before interest and tax widening to £17.1m, compared with a comparable £2.7m loss in 2013.

Good question and a fair one.

I think its well established that money doesn't necessarily equal performance...just look at how Ferrari and McLaren have struggled lately.

However, those teams are relatively well funded (Ferrari obscenely so) and can afford to throw money at their problems until they get it right.

The issue here is about the smaller teams struggling just to stay in the sport, never mind compete. With fairer distribution of prize and TV money, they would be able to better afford basic running costs and maybe hire better staff / develop better facilities to improve their car designs.

However, there is no doubt that money, used wisely, can help a hell of a lot.

Williams went through a very bad spell but after some major restructuring (and a new engine deal) are being rewarded for their efforts. They certainly don't have the biggest budget, but benefit from being a top 10 team, getting the basic payment, plus performance-related bonus and then a handy £18m for being on the rule-making body. Which is a hell of a lot more than the £6m those finishing outside the top 10 get.

So they are better able to absorb losses and keep operating.

The Marussia Formula 1 team collapsed owing trade creditors £31.4 million - with Ferrari alone owed more than half that amount.

A summary of the liabilities of the team that has been submitted to the High Court by Marussia's administrators FRP Advisory LLP has revealed the extent of the money owed by the team.

As well as the fixed and floating charges of £13.1 million owed to Lloyds TSB and £14.6 to Marussia Communications, the document breaks down how much is owed to trade creditors.

The three biggest creditors are Ferrari (owed £16.6 million), McLaren (owed £7 million) and Pirelli (owed £1 million).

Also included on the list is former driver Timo Glock, who is owed more than £600,000. A number of F1 circuits and the FIA are also on the list.

The British tax authorities, HMRC, are owed £1 million for outstanding tax and national insurance payments.

Another major creditor is Capsicum Grand Prix Ltd., which represented Max Chilton's interests in F1 and is owed £3.1 million.

The statement of affairs says that Marussia's assets of £6.3 million are only likely to realise £2.2 million.

The total estimated monies owed to creditors, taking into account floating charges, is £62.3 million.

However, when issued and called up capital is taken into account, the estimated final figure of liabilities is £194.7 million.

Marussia's ninth place in the constructors' championship last year put it on course for £35 million prize payment this season, but the team would have to race to qualify for it.

Wow.

That would suggest Marussia were being seriously mis-managed. No amount of prize money they could realistically have expected to receive would have dug them out of that hole.

Still, the original point stands that smaller privateer teams that aren't backed by auto companies or huge multinational corporations, need a bigger basic share of the prize money and more generous performance-related bonuses, if they are to have any chance of being more than back-markers.

There also needs to be some way of introducing more transparency into team finances, so auditors can check what they're spending and impose sanctions if there is evidence of mis-management, spending way beyond their means etc.

Cheglakov (one of Marussia's owners) was stretching out the team so it would make his home GP in Russia. The team was already in bad shape long before this, but he injected just enough money to keep it going until then. Without one of the other owners stepping up (e.g. Chilton sr.) the team was always going to pull out after Russia, even without Bianchi's tragic accident.

Well, it looks as though they could be competing next season (which should make GSC really happy )

Marussia F1 Team Close to Rescue Deal

Marussia boss John Booth is hopeful the team can put together a rescue deal in time for them to take part in the first race of the new season.

...A planned auction of the team's 2014 cars, which they would need to race in Australia on 15 March, has been halted.

The auction was due to take place on 21 January but has been called off indefinitely while Marussia try to finalise their plans.

Administrators FRP Advisory confirmed Wednesday's auction was cancelled "to allow for discussions to continue with a third party".

"Postponing the auction gives us a bit more time to explore it," Booth added.

Asked what his level of confidence was that the team would be able to put a rescue deal together, Booth told BBC Sport: "Pretty high."

They would need special dispensation from the FIA to use their 2014 cars this season, as the would be technically illegal due to the new rules on nose design. Given their lack of competitiveness though I'm sure that wouldn't be a problem - unless there was some perceived safety issue.

It's already been agreed that they can use the 2014 car at the strategy group meeting, it just needs rubber stamping.

Whats the ****ing point.

I mean the 2014 cars were already miles off the 2014 pace.

GSC wrote:Whats the ****ing point.

I mean the 2014 cars were already miles off the 2014 pace.

Well, if nothing else, having back-of-the-grid teams continuing to struggle will help highlight the fact they need more financial assistance to become competitive (mis-management notwithstanding) and to help improve the sport as a spectacle.

If it becomes too difficult for newcomers to break into (and stay in) the sport, we will eventually end up with a small group of big teams, which will be detrimental to its global appeal in the long term IMO.

I'm with GSC, running the 2014 car, it will be about 5 seconds + off the pace, given the improvements made this winter by its competitors. I understand the need to maximise the F1 grid & help re-employ original staff, but in my eyes, watching a car crawl around & struggle wouldn't be right, in a desperate attempt to use it as propaganda for more equality in the financial distribution of the sport. Has to be an easier straightforward way.

LiamB wrote:I'm with GSC, running the 2014 car, it will be about 5 seconds + off the pace, given the improvements made this winter by its competitors. I understand the need to maximise the F1 grid & help re-employ original staff, but in my eyes, watching a car crawl around & struggle wouldn't be right, in a desperate attempt to use it as propaganda for more equality in the financial distribution of the sport. Has to be an easier straightforward way.

Yep there is.


Kidnap Bernie, stick him in a crate and airmail him to Tierra Del Fuego!

Rumors suggesting Gene Haas is trying to buy Marussia. Let's face it they have a deal with Ferrari too so probably works out for the best if they do buy them...