Formula One bosses outlined their vision for the sport’s future at a meeting with teams in Bahrain on Friday.
By all accounts, the meeting was a presentation by F1 rather than a discussion involving the teams, with F1 CEO Chase Carey and F1 motorsport boss Ross Brawn revealing further details of how they plan to cut costs and make the sport more exciting. Following the 90-minute meeting, a five-point plan was released to the media with a broad-strokes vision of what the sport’s owners are hoping to achieve. The target date for the ‘new F1’ is 2021 when existing commercial and engine deals expire. That looming deadline means there is increasing pressure to make decisions now in order to give teams the necessary time to react.
F1 insists it is open to constructive feedback from the teams but it is also becoming increasingly clear that it is willing to push the rules through if a consensus cannot be reached. The teams, meanwhile, have the freedom to walk away from the sport at the end of 2020 if they are not satisfied with its direction for the new decade — a threat that carries significant weight from Ferrari as the sport’s longest-standing and most popular team. Although the fine details of F1’s vision were sparse in Friday’s press release, three key areas are likely to become political battle grounds over the coming weeks.
Revenues and costs
As is always the case in modern-day professional sport, money is at the centre of the debate. One of the key statements in Friday’s press release was the assertion that « how teams spend money must be more decisive and important than how much money the teams spend ». It’s a noble goal that aims to level the playing field and reward ingenuity above all else, but it is also a massive cultural shift for a sport oiled by big budgets.
Key to the success of F1’s vision will be a budget cap that is expected to be pitched at $150 million (not including driver salaries, executive salaries and marketing spend). For some teams that will require little to no adjustment, but for the biggest outfits — including Ferrari, Mercedes, Red Bull and McLaren — it will require some big changes. To make the reduced budget easier to stick to, more parts will be standard on F1 cars. The hope is that will eradicate some of the extensive spending on components that make no difference to F1’s entertainment value while retaining freedom on the development of some of the bigger performance differentiators.
But for teams spending over $300 million annually a clear glide path needs to be put in place to prevent dramatic cuts and layoffs among F1’s top teams. What’s more, the wealthiest F1 teams will be reluctant to give up arguably their biggest competitive advantage: their deep pockets.
If a budget cap can be introduced, the FIA will then be presented with the significant challenge of policing the budget cap. Big car companies have various R&D facilities and making sure F1 technology is not being developed elsewhere will be tough to police. Ultimately, the FIA will need an accounting department capable of monitoring all the teams’ spending and some draconian punishments to prevent manufacturers blurring the lines.
Tied to the budget cap will be a revised revenue distribution and prize money system. The current formula devised under Bernie Ecclestone rewards F1’s biggest teams disproportionately, making it almost impossible for small teams to compete.
None of the teams that benefit from the current system are likely to want to sacrifice their extra income, but by introducing a budget cap simultaneously it will reduce the hit of the loss of income. Last year Ferrari reportedly earned $180 million in total from F1’s revenues but spent over $350 million. With a budget cap of $150 million in place, if Ferrari had their current revenue earnings halved they would still be left with less of a gap to make up from sponsorship and other forms of revenue to hit their budget for the year.
The plan is to make the new distribution criteria « more balanced » while still rewarding success based on the previous year’s constructors’ standings. Rather cryptically it added « F1’s unique, historical franchise and value must and will still be recognised », which will likely mean Ferrari will still receive a significant financial bonus based on its history in the sport on top of the prize money all teams are entitled to.
Power units
The vision outlined for F1’s future engines will be familiar to anyone who read the proposal released in October last year … only with less detail. That original proposal provoked backlash from existing engine manufacturers in F1, with Ferrari the most vocal in its belief that it dumbed down the technology of F1’s power units.
The fact Liberty’s overarching targets remain the same — cheaper, simpler, louder, more power, fewer grid penalties — suggests it is standing its ground on the key concepts, although it is not yet clear if concessions have been made on some of the finer, more contentious details. The scrapping of the MGU-H — the most technologically advanced and most expensive-to-develop element of the current power units — was not addressed in Friday’s press release and is likely to remain a sticking point for Ferrari and Mercedes, who have both mastered their systems.
Ultimately, a proposal that is technologically advanced enough to satisfy the existing manufacturers is unlikely to tally with one that is cheap and simple enough to attract new manufacturers, but at the moment F1 seems to be leaning towards the latter. However, it is important to note that engine manufacturers will also receive money from F1’s revenues – rather than just the teams — and that could also help entice new manufacturers who are struggling to muster a big enough budget to enter the sport.
Governance and regulations
The section on governance was the shortest in Friday’s press release, with a brief statement saying « a simple and streamlined structure between the teams, the FIA and Formula One » will be introduced. That is likely to result in the controversial Strategy Group, which was introduced in 2013 and skews power towards F1’s top six teams, being ditched.
Teams are still likely to be given a say in technical working groups, before ideas are voted on in the F1 Commission (with FIA and F1 votes outweighing the collective voting power of the teams) and rubber stamped by the FIA World Council. With a long enough lead time on the 2021 regulations, F1 is hopeful a rule book can be agreed upon that promotes overtaking and driver skill without the team’s self-interest skewing opinions.
http://www.espn.com/f1/story/_/id/23049432/analysis-how-realistic-f1-vision-2021
