The on-track power struggle was one of F1’s main talking points in 2017, but an equally critical confrontation is now brewing behind the scenes
Here it begins, the battle that was always coming – the beginning of the end of the honeymoon period between Liberty Media and F1.
Two recent meetings (one outlining future engine proposals, the other budget controls) put the teams and Liberty in the same room. The fault lines became clear. Firstly between Liberty and Ferrari/Mercedes but also between Ferrari/Mercedes and the other teams. The jockeying for position ahead of a post-2020 commercial agreement has already generated talk of a breakaway championship for 2021. Here we go again. See also 1980-81 and 2009-10. All that’s really changed is the number of dollars.
F1 income is slipping gently downwards – and this has been the first time in eight years the teams as a whole have suffered a reduction in payments from the commercial rights holder. It has proved impossible to maintain race-hosting fees at the high level they’ve been set over the past few years, plus the era of the massive money TV deals is also coming to an end as other (currently less profitable) electronic media impose their reality upon the sport. That is just the environment F1 is in. Liberty has plans for other income streams, but their timing and extent are far from predictable.
That much was known when they bought the sport. The planned solution is to reduce the teams’ costs by at least as much, or more, than the reduction in their income – which is where it gets very tricky. Various people have tried to get F1 to adopt imposed cost savings over the last decade – and it has never flown. The big teams try to derive their advantage over the other big teams by outspending them. So they are vehemently, philosophically opposed to the idea of a spending limit even before the practicalities of how to achieve it are considered.
As that process of upping the spend bar in order to beat rivals has proceeded, so the teams have employed more people, invested in ever-more expensive facilities and technology. That cannot just be turned off. So to get from a current top spend of $400 million per year down to Liberty’s suggestion of $150m (slightly less than Williams currently spends) would be severe.
So, how to do it? Standardisation of parts forms a major component of Liberty’s proposal. How standard? A uniform bottom end for the engine, perhaps, with manufacturers left free only to design their own cylinder heads? “Absolutely not,” say both Ferrari and Mercedes.
Which is the take-off point for Ferrari’s Sergio Marchionne to stake out his strategic position in these ongoing discussions. Dismissing the engine idea as ‘NASCAR’, he went onto say: “Liberty has got a couple of good intentions in all of this, one of which is to reduce the cost of execution for the team, which I think is good… but there are a couple of things with which we don’t necessarily agree. One is the fact that somehow powertrain uniqueness is not going to be one of the drivers of distinctiveness. I would not countenance this going forward. The fact that we now appear to be at odds in terms of the strategic development of this thing, and we see the sport in 2021 taking on a different air, is going to force some decisions on the part of Ferrari. I understand that Liberty may have taken these into account in coming up with its views, but I think it needs to be absolutely clear that unless we find a set of circumstances, the results of which are beneficial to the maintenance of the brand, and the marketplace, and to the strengthening of Ferrari’s unique position, Ferrari will not play.”
There it is, in bald terms. Ferrari is using the power of its brand to dare Liberty not to acquiesce. Mercedes currently sits in Marchionne’s slipstream, right there but allowing him to do the sabre-rattling. Red Bull, like all the other independents, is more in the Liberty camp than the Ferrari/Mercedes one. You can see where this is going, can’t you?
If the income is less than the spend for an entity like Mercedes or Ferrari, it’s not a long-term threat to their survival. So they are not particularly motivated by the idea of surrendering their ability to spend in order to make F1 participation a profit centre. On the other hand, the independents absolutely need that equation to balance out into the black – otherwise they go bust. No solution can ever be ‘one size fits all’.
What usually happens next is that the big spenders – led by Ferrari – talk of doing their own championship after the current agreement ends. The smaller teams side with the logic of the official championship on the grounds that they can better afford it – until those small teams are then leant upon by the big teams that supply them with engines, with the promise they will look after them in the brave new world.
Cue Mercedes’ Niki Lauda: “I’m worried,” he told Gazzetta dello Sport. “It was right that the American owners needed time to understand what F1 is – but that is about to expire. And what they think about the future is worrying me. The FIA, Chase Carey and Ross Brawn repeat that we need to level off performance, but F1’s DNA is the opposite. You are a fool if you think that to make Grands Prix more attractive you need a different winner every weekend. F1 is about competition. Developing cars is an important foundation, as well as the bravery of the drivers. Instead, you want to penalise the best teams, and protect the drivers as if they are babies – with the halo’s introduction for example.”
Battle lines drawn. Stand by for another three years of this.
Since he began covering Grand Prix racing in 2000, Mark Hughes has forged a reputation as the finest Formula 1 analyst of his generation