Rudrum and Dewbery fix Formula One: Part two: The Cost

BY KIERAN RUDRUM (@Kieran_Rudrum) AND JAKE DEWBERY (@JakeDewbery)


(Photo: F1 Fanatic)

Formula One is in crisis; excitement and audiences are down, financial problems are hitting the small teams, the race calendar is threatening to let go of fan favourite circuits and it is under threat from a new series (Formula E) which could eat into support and become more relevant to manufacturers and audiences. We will be posting a series of blogs in the run up to the new season to discuss the issues bugging the sport currently in detail, and suggesting how to create a solution to these problems. This week we shall discuss the economic crisis faced by the teams and the state of the current formula of engines.

With two teams completely collapsing (Caterham and HRT), two teams only saved by takeovers (Lotus and Manor), one team only still surviving on pay drivers (Sauber) and with Force India still voicing vocal concerns about the cost of the sport, Formula One is still currently in crisis towards cost, especially towards the small teams. Such a monetary crisis has a knock on effect as it discourages big car manufacturers, such Volkswagen, from joining the sport (Audi has joined Formula E instead).

KR: This problem of cost has been a problem plaguing Formula One for a good decade now. The financial crisis of 2007-2008 led to the collapse of Midland, Spyker and Super Aguri. A £30 million cost cap was suggested in 2009, encouraging a mass number of teams to apply to enter the sport. The reason for the decline of HRT and Caterham can be explained by the fact this cost cap was abandoned once the established manufacturer teams  threatened to quit Formula One over its proposal (ironically half of those teams dropped out at the end of that season). It would be interesting, seeing what has happened since it was last suggested, if second time around the idea of a cost cap would get any further.  The problems with the original cost cap was that it was suggested by the FIA, who had no room for negotiation with the teams. If I was to bring a cost cap in, it would have to be the mean suggested cap by all the teams and the FIA, which in the 2009 spec should have been realistically about £60 million. However new engine specifications would increase this cap even further.

JD: The problem with a cost cap is there will always be teams like Mercedes who somewhat dictate their own success with their extensive finances and resources helping them gain advantages over ‘smaller’ teams and recovering quickly when they make mistakes. These teams don’t need a budget cap, they don’t want a budget cap and it would arguably be unfair to force upon them an overall cost cap just in an attempt to level the playing field. I just cannot see how an overall cost cap would be imposed without objection. I would prefer cost caps to be gradually introduced, as this is the most likely way they’ll be accepted. I propose initial cost caps to drivers salaries, for example if teams had a £10 million cost cap on driver salaries it would stop overspending on drivers and make the driver market fairer for the smaller teams. Currently Mercedes are paying £35 million a year on driver salaries alone, compared to midfielders Force India who are paying just £4.95 million. In fact, only three teams (Ferrari, Mercedes and McLaren) currently fail to meet this proposed cap.

(Photo: F1 Fanatic)

Motor Racing - Formula One World Championship - Chinese Grand Prix - Preparation Day - Shanghai, China

Nico Hulkenberg and team mate Sergio Perez are paid three time less than Nico Rosberg between them (Photo: F1 Fanatic)

KR: I largely agree with this idea. It seems a far more practical way of cutting costs to the sport than an overall cap which would cause a lot more resistance. Another big issue regarding the cost of the sport is the way the prize money is distributed. This has been the issue that smaller teams; especially Force India have been most vocal about. The current prize money system firstly gives an disproportional amount of prize money for the higher finishing teams to the low finishing teams, and secondly, guarantees a larger amount of the pot is distributed between the big teams (regardless of finishing position) than the smaller teams. This is clearly unfair, and the obvious solution is for the FIA to step in and create a fairer distribution of prize money.

JD: This suggestion is an absolute no-brainer and should definitely be implemented.

Alternative cost restrictions are hard to implement due to the cost of development, building and constantly modifying the cars. The only item which excessively stands out on the cost list of components are the engines. F1 engines have been the topic of numerous debates over the last 3 years and despite cries for change I can’t see any benefits from rushing now to change rules and regulations over them. For me there should not be any changes to the engine format for at least the next 3 years, purely to help warrant the immense costs invested by Mercedes, Ferrari, Renault and Honda already through the development of these engines. Any immediate change would cause outrage and be completely unsustainable. Furthermore Volkswagen recently said they are not considering entering Formula One due to the constantly changing technical regulations. Thus changing the engine format now only serves to reinforce this statement and helps discourage new manufacturers from entering the sport.

Despite this, I believe that a new format should be implemented in about 5 years. My idea would be for a standalone manufacturer to supply a single engine to all the teams, producing around 700BHP plus a standard ERS unit. However all engine manufacturers will then be allowed to develop this engine, although their development will be limited by the token idea that is currently used in F1. The tokens don’t work currently as everyone started from different performance points, meaning that once Mercedes had created a far superior engine no one could catch up due to token limitations. However with everyone starting at a level playing field the tokens should maintain a rough continuous level of performance.

Although development of the IC engine would be restricted, manufacturers should have a much greater reign over any energy recover systems that they can create. Hence this would promote the development of sustainable systems such as KERS or even solar panels in an attempt to gain an additional performance advantage. With less restrictions over development and F1 R&D budgets being used to develop these sustainable systems it will bring along technological breakthroughs that will not only return F1 to the technological pinnacle of motorsport (where it belongs) but will also encourage new manufacturers to join as these hybrid technologies filter down to the automotive industry as a whole.

KR: I agree that there should be some engine stability for a few years. The suggestions from the likes of Bernie Ecclestone who believe we should go back to the V8 engines is backwards thinking and diminishes Formula Ones place as the technological pinnacle of sport and brings it under attack to Formula E. As I know less about engineering than Jake I cannot bring forward my own idea of where to take engines next. However, the direction of Formula One technology has to be towards a greener future and to technological advancement. Failure to do this will lead Formula One to increasingly lose relevance in the world compared to Formula E. One more thing I will say is that Formula One cars do need to be faster than they are now, as they are too close to the lap times of GP2 cars. As time goes by one would expect for both KERS systems and hybrid systems to get lighter, but the FIA needs to create regulations which makes cars lighter and therefore faster.


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Formula E is quickly becoming a direct competitor to Formula One, with Renault, Audi and Citroen all with works teams. (Photo:Enter F1)

(Photo:Enter F1)

We have concluded firstly that the best way to tackle the cost of Formula One is to create budget restrictions in certain areas of the sport rather than an overall cost cap and for a fairer redistribution of the prize money. In terms of engines, we believe for the next few years at least, there must be some stability to protect costs and to attract manufacturers, while in the long term, we believe that technology in Formula One needs to become greener, at the forefront of automotive technology and to ultimately be lighter to create faster, more challenging cars for the drivers to race.



Next week we shall discuss the state of the Formula One calendar and how to improve it.

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