Saving F1 (2018 edition)

[Ruslan]

Well, with Force India in bankruptcy and Williams clearly in trouble....F1 is nearing the end of its current approach to (mis)managing the series. Can't continue to have 3 teams dominating and the other 7 teams not even within a second. I gather lots of regulation changes are coming in 2021, including the most significant change, a budget cap. I gather Ferrari and Mercedes are still resisting that.

It is clear that Liberty need to keep Force India and Williams alive through 2021 and bring in a couple of more teams in the meantime. Don't know how they do that without providing some support. But, if they drop to 9 or 8 teams, its gets all the more difficult to field a full and interesting racing series. Right now, F1 is not attractive to enter.

They do need to get a budget cap in place sooner rather than later. Ecclestone's most damaging action in the last few years was scuppering Todt's previous attempt to put one in. It has led us to this point.

What else needs to be done? They appear to have reached another crisis point.

 

[Izumi]

I am not sure which problem in F1 - and there are several - you are thinking imposition of "budget" will solve, but it sounds like an ad hoc solution to a complex issue, when everyone in the room run out of ideas what to do. Mind you to follow up with some narrative regarding (i) which problem budget will solve, and (b) what's the number which will make everyone happy?

BTW, is F1 in need of saving? Saving from what?

 

[Ruslan]

Well, saving from continued decline. Quite simply, if in each season one pretty much knows after the first few races, who is going to win the championship....then this is not encouraging to the fans. If in each season, only the same three teams have any chance of being competitive..then this is not encouraging to the fans. If in each season, only three seats matter, because the other three are #2 drivers...then this is not encouraging to the fans. If in each season, the "tier 2" teams are not competitive and have no chance of being competitive....then this is not encouraging to the fans. If in each season, major stars are relegated to being also rans...then this is not encouraging to the fans. If the number of cars and teams continue to decline....so that the action and interest is also less....then this is not encouraging to the fans. Formula one works best as a three-ring circus....many seasons it is a one man show. Most sport series have 20 or 30 or more teams in a league...formula one has 10...and two are near extinction. What is going on to create a competitive, interesting and entertaining series in the long run?

I think they need full fields and all teams need to be at least semi-competitive. The only way I can see to get there is to impose a budget cap. I think it will have a big impact on everyone and change the nature of the series. Budget caps have been used in other sports series.

In the bigger picture, F1 is facing a major crisis over the next 10-40 years as the average car become electric and self-driving. They cannot at this stage afford to shrink, when there are real market challenges coming up. The car culture in the U.S. died in the 1970s. F1 cannot rely on cool cars alone to keep the series going. They need an interesting and competitive series.

If you want to watch how a series fails, look at the Can-am series from 1966-1974. They had everything that people claim they want in a race series, cool cars, cool teams, big throaty engines, good engineering, big name world class drivers, and of course it quickly burned itself.

 

[RasputinLives]

So those of you who have heard me put this rant out here before just bare with me:

I do not believe in a budget cap. I believe in limiting the amount of things that can have money thrown at it to make improvements. If I was in charge things would change thusly.

1 - The FIA would pay top money out to a team to design a standard chassis which would be tested to within an inch of its life. This chassis would then be supplied to the teams to test for a month. At the end of the month they can either decide to keep it or return it and build their own (those returning would get a reduced entry fee). This would then be the standard chassis for 3 years with teams doing as much development as they wish.

2 - The aero would be serverley restricted being cut back to basics like the current F2 car. Aero adds nothing to the sport and causes so many issues.

3 - The line between race teams and engine suppliers needs to be drawn. All engine suppliers will now have a contract with the FIA and not the teams. Each team will put in their engine preference at the end of the season and the engine supplier can chose who to work with but MUST supply a required number. This way we'll never get Ferrari not running Ferrari engines but we also won't get teams stuck without one. All engines will be supplied to the FIA directly who will them pass them randomly to the teams, this will eliminate anyone getting 'special' engines.

4 - In October of every year the FIA will release a list of 50 drivers deemed suitable for F1. The teams must chose off this list of 50.

I have more but you've prob heard them.

 

[Ruslan]

Here is what is owed at Force India (in pounds):

1. Mallya = 159
2. Rich Energy = 30???
3. Unnamed supplier = <10
4. Mercedes = ???
5. Perez = 3
6. Staff = ?
7. BWT = ?

Perez actually sent Force India into administration. Anyhow, total debt appears to be some figure over $200 million, most claimed by Mallya. This is a team that has a rumored budget of $110 million. It was 4th in the championship last year, so certainly got some money from that.

 

[Galahad]

Teams have gone out of business throughout F1's history, in the good times and the bad. The full story of Force India and Vijay Mallya will surely be written at some point (by someone with a good lawyer at their elbow!) and will be fascinating; but essentially FI have always been reliant on VJ to provide financial backing, and his decision that he wasn't able/willing to continue this has precipitated this situation.

I would support budget capping if I thought it could be implemented and enforced fairly. Unfortunately F1 is completely unlike other sports in respect of the spend on R&D as well as manufacturing, investment in facilities and machinery in addition to salaries. Most F1 teams use a network of hundreds of subcontractors to produce parts: auditing that would be a full time job for an organisation much bigger than the FIA - whose revenues are pretty limited. Engine development is a huge issue: how do you measure spend, and then set a fair benchmark between Ferrari, who do everything in the same facility as the race team, and Honda, who don't own a team and provide engines to Toro Rosso free of charge? And then crucially, enforce it in such a way as to satisfy the committed fan that there is indeed a level playing field? I'd have to give up on forums at that point!

F1 needs to decide what it is. If it's about the ultimate in performance, and car manufacturers, then it needs to do more to attract them, in terms of relevant, future-looking technology; and accept that they will spend what they like, create an uneven playing field and come and go as they please.

On the other hand if F1 is supposed to be entertaining (which seems more Liberty's field of expertise) then by all means restrict the regulations further, up to spec chassis if you wish, implement a crowd-pleasing engine regulation that is cheap and can be produced by Ilmor/Cosworth or whoever (at this point Mercedes, Renault, Honda are not interested) to allow private independent teams to break even, or make a modest profit, from the TV money and other commercial deals, topped up with sponsorship.

Trying to bridge these two conflicting requirements is what has got us to this unsatisfactory compromise: where we're stuck with only a few manufacturers dominating; everybody else is doing Formula E, absurdly, and the racing still isn't any good.

 

[Ruslan]

Teams have gone out of business throughout F1's history, in the good times and the bad.

But these are the good times! There are no teams waiting in the wings to join F1. It is not like the days when there were 20 teams out there.

Now, most likely Force India will be bought up by someone and some poor underfunded team will continue, but if Force India is not salvaged, then there is no one coming into the series to replace it.

 

[RasputinLives]

I think 3 car teams are now inevitable, maybe even as early as next year. Certainly from the top 3 and Renault. Ferrari have been pushing for it for years anyway. I've always been very much against it but if the team who have been regularly finishing 4th in the constructors championship can't survive then I don't see any other solution.

 

[Galahad]

I think there is a lot of overreaction. We've had 18 car grids before - a lot fewer than that if you go back far enough. Force India will find a buyer, no doubt about that - Joe Saward's article mentions about a dozen interested parties. FIA and FOM need to do more to attract new teams, but 12 would be the absolute limit anyway, and most "new" teams historically have simply been taking on the assets of former entrants rather than being genuinely new.

 

[cousinDave]

We can't have 3 car teams.... they won't be able to call it a Noah's Ark grid any more

 

[Greenlantern101]

best way to save money is to have standard parts everyone uses and development is banned on. Parts that add nothing to the spectacle is the obvious route to go down.

Gearbox
Suspension
MGU-K
MGU-H
Batteries
Brakes
Electrics

etc etc

 

[Il_leone]

When the power trains were being produced the promised costs was $8m a season for engines but this has ended up nearer $15m which has not been policed and no incentive to make Mercedes, Ferrari and Renault reduce the bills?

 

[Izumi]

best way to save money is to have standard parts everyone uses and development is banned on. Parts that add nothing to the spectacle is the obvious route to go down.

Gearbox
Suspension
MGU-K
MGU-H
Batteries
Brakes
Electrics

etc etc

Automakers strive on development, making system smaller, more efficient, and less expensive. Freezing all of that, they might just as well double cylinders count, get rid of batteries and live in the past.

 

[Izumi]

When the power trains were being produced the promised costs was $8m a season for engines but this has ended up nearer $15m which has not been policed and no incentive to make Mercedes, Ferrari and Renault reduce the bills?

Interesting; I've searched for this info for years, and all what I have found was an old quote from Ecclestone (paraphrasing), "no one knew it will that expensive".

Suppliers attempted to find the elusive bottom line for cost reduction per unit, when they were at 20 MM (Honda 30 MM), and if memory serve, the number was 12 MM. Mercedes then suggested to increase reliability and run with 3 PUs instead 4 or 5, and decrease cost for customer that way. (My recollection might be not totally accurate.)

 

[Il_leone]

Ruslan

In response to Force India situation, they finished 4th in the constructors but they only get the money by making sure they complete this season as well in some stupid agreement about the money for their constructors to stop people taking the money and running off immediately. So teams are delayed in getting their money, for big teams it does not matter because of the resources but small teams it could make a difference between racing and survival.

Also the biggest teams were getting royalties payment based on how long they've been in F1 with Ferrari off course getting $50m a year and Williams getting a smaller amount as they are the 3rd longest team in existence in the paddock

The smaller teams like Force India were pretty much frozen out of the arrangement or got a small crumb

Even then with the cost of F1 being expensive, the money has been all used to develop the car and there is very little money left available from sponsorship to fulfil other financial obligations

The unnamed supplier possibly the taxman - HMRC ? At least one creditor wanted the team to wind up which would have been catastrophic.

VJ is the main financial contributor but all his assets are being frozen and he does not have access to them until he explains himself about his failed businesses. Similarly their other major owner Sahara - are almost invisible to comment on the teams current situation

 

[Il_leone]

Izumi "No one knew it was expensive" is not a plausible argument, you do the research and analyse the findings and then cut out the unnecessary parts that is costing more .... apparently you do that it will cost people jobs

These 3 are global car manufacturers they always look at ways to be operationally efficient and maintain quality ie share car parts, commercial partnerships, joint ventures, global sourcing . Its part of the way they work to sell cars so I don;t buy that rubbish they can't reduce the costs down

 

[Ruslan]

I think 3 car teams are now inevitable, maybe even as early as next year. Certainly from the top 3 and Renault. Ferrari have been pushing for it for years anyway. I've always been very much against it but if the team who have been regularly finishing 4th in the constructors championship can't survive then I don't see any other solution.

If people are unhappy about there being #2 driver on the top teams, how is it going to look with #2 and #3 drivers? I am not sure that this is the answer.

 

[Ruslan]

I think there is a lot of overreaction. We've had 18 car grids before - a lot fewer than that if you go back far enough. Force India will find a buyer, no doubt about that - Joe Saward's article mentions about a dozen interested parties. FIA and FOM need to do more to attract new teams, but 12 would be the absolute limit anyway, and most "new" teams historically have simply been taking on the assets of former entrants rather than being genuinely new.

I have no doubt that Force India will find a buyer. But now they've gone from the fourth best team on the grid to being a serious backmarker. I think the last 18 or less car grid was in 1982 as a result of the FOCA strike. Before then, it was back in the 1960s. This is F1 not growing...but declining. If a business is in decline while the economy is growing....this is a bad sign. I don't think my concerns are an overreaction. While the problems may be temporarily solved over the next couple of years, it is the long term trends that are an issue. F1 needs to correct its problems or it will be in permanent long-term decline.

 

[Il_leone]

3 car teams will only suit top teams but then the issue is always the 3rd car cannot score points and be on the podium and essentially be a mobile chicane in races to defend their teammates from other teams scoring points

the 3rd driver is normally the rookie or young driver

---------------

F1 is finished once everyone starts following Formula E or Moto GP more closely . Liberty Media need to tear up the SKy contract and they need to play hardball with Ferrari getting $50m a year.

If most of the teams that leave F1 by 2020 say then they need to make sure 2021 the new entrants are there for the long term

F1 is so expensive to run , they should take a leaf out of Moto GP where they've managed to peg the difference between factory and satellite teams

 

[Izumi]

W
In the bigger picture, F1 is facing a major crisis over the next 10-40 years as the average car become electric and self-driving. They cannot at this stage afford to shrink, when there are real market challenges coming up. The car culture in the U.S. died in the 1970s. F1 cannot rely on cool cars alone to keep the series going. They need an interesting and competitive series..

There could be a problem with this focus. On one hand I am hearing complains about absence of noise we remember from era of normally aspirated engines in the past, and now they will fall in love with no noise of electrical engines? Well, maybe, but I doubt that is a main problem.

I would rather suggest to look elsewhere.

1. Market over saturation (too many races), with lost of exclusivity. Rare and elusive becomes mundane, predictable and boring.
2. New digital generation and its attention span. Do they prefer watching the race, or participate in the race (in brainstorming fashion - having enough on their iPads they can "advise" driver HOW TO, before, during, and after the race and live with his decisions, etc.)

I am not a marketing man, but it is clear to me that how I am watching the race and how 9 year old kids do is vastly different. I can sit there 3 hours, however they watch 10 min and heading for the fridge, yet let them drive the car (active participation), not watch it (passive consumption), and you will have difficult time to tear them off it.