What will F1 do next?

Harmony has long been an alien concept in Grand Prix racing – and its current absence makes the short-term future ever more uncertain. Here are the hurdles that must urgently be negotiated

As a microcosm of what is happening in the bigger world, Formula 1 is being hollowed out as the monetary gap between the factory teams and the traditional independents grows. This in turn is neutering the racing even though those factory teams are making some amazing technology breakthroughs in the hybrid turbo engine era. As we pointed out in the F1 Revolution feature two years ago, that basic dysfunction is what has created the various problems F1 is facing – and the artificial band-aid solutions that have been applied. 

There are three power factions within F1 – the leading teams that sit on the F1 Commission, the commercial rights holder and the governing body. For the purposes of analysis, they can be embodied as Sergio Marchionne, Bernie Ecclestone and Jean Todt respectively. They each have conflicting interests and thus widely varying visions of the sport’s direction as it closes in on 2020, when the current commercial agreement between the teams and F1 expires. As such, they are acting in their own interests rather than as a group and any action that is attempted by one is invariably neutered by the other two forming an alliance against them. This alliance varies according to the issue in question – sometimes Ecclestone and Todt against the teams, sometimes the teams and Todt against Ecclestone, occasionally even Ecclestone and the teams against Todt. Within the team grouping there is rarely accord, either, and this is regularly exploited by Ecclestone in furthering his own agenda. But the outcome is the same regardless: a dysfunctional state of suspended animation. The recent farcical situation regarding the qualifying format of the first two races – when F1 went into a second race using an ill-considered new system that had proven disastrous in the opening event – was just an outward manifestation of this, a symptom. It is in part what led the Grand Prix Drivers Association (GPDA) to issue a statement between the Australian and Bahrain Grands Prix saying, among other things, “The decision-making process in the sport is obsolete and ill-structured and prevents progress being made. Indeed, it can sometimes lead to just the opposite, a gridlock.” 

How did we get here? 

The virus was planted in the early part of this millennium, when Max Mosley extended F1’s commercial rights to Bernie Ecclestone for an extra 100 years. With Bernie licensed to sell those rights to the highest bidder, the 100-year deal hugely increased their value. Bernie eventually leased them out to CVC, the private equity company that has held a controlling share of the sport for 11 years – and slowly strangled it, taking huge profits out if it, exploiting rather than investing. Which is in the nature of private equity companies and why they are a wholly inappropriate type of owner for a complex sport that is constantly evolving and requiring careful management and investment. 

Max and Bernie used to act as one and the teams were not empowered in the decision-making process. That led to a revolt by the teams in 2009 and, indirectly, the standing down of Mosley from office. Now the commercial rights holder and the FIA no longer operated as one and, to dilute the power of a governing body that no longer had his ally presiding, Ecclestone exploited the FIA’s financial stress (caused partly through Mosley having set up the FIA Foundation) by cutting a deal with new president Jean Todt. This divested some of the FIA’s power between Bernie and the teams in exchange for the FIA receiving a bigger income from F1. Todt correctly points out that the formal system of governance has not changed since he came to power – in that the various groups propose things to the F1 Commission, which then votes and the result is then rubber-stamped by the FIA World Council – but the composition of the F1 Commission and the sway the leading teams hold has changed. This is what has seized the sport solid. Ecclestone essentially brought the leading teams further into the voting process precisely so he had a group with which he could align against the FIA when necessary. But of course those alignments can also work against him – and have.

Bernie has progressively lost power over the years. First, in selling to CVC; flawed financial deals are no longer solely within his remit to correct. Second, in the loss of his ally Mosley from the governing body. Thirdly, in his attempt at countering that, the potential for the teams to ally with the FIA to thwart him. Fourthly, the rise in political power of the manufacturers brought by the complex hybrid engines.  

Concurrently, the outside world had imposed its own stresses on the sport. Mosley’s initiative of aligning automotive research and development on hybrid engines with F1 brought about the current turbo hybrid formula – at considerable expense. The timing of this was unfortunate in that long-running repercussions of the global economic crash of 2008 had imposed big financial pressures upon the teams. But the big teams, by their very size, were committed to big spends. So they forced F1’s owners to relinquish more of F1’s income (from TV revenue and race-hosting fees) to feed their vast facilities. They did this through deals cut with Ecclestone that vastly increased their F1-sourced income. Which left less for the small, independent teams. The independents essentially subsidise the big teams, while allowing CVC to continue taking vast revenues from the sport. Meanwhile, Caterham has gone and Sauber, Force India and others are in a seemingly permanent state of financial crisis.  

The hybrid formula had another unintended consequence. Because of their complexity and the huge R&D necessary to devise them, they cannot feasibly be made by independent engine suppliers. Hence the increased political power of the representatives of those manufacturers making them – Ferrari, Mercedes, Renault and Honda – over Ecclestone. He cannot reduce their political power by reducing their competitiveness because a) unlike in Mosley’s day, the FIA will no longer sanction rule revisions that Bernie would seek to achieve that and b) he cannot offer the non-factory teams a competitive engine that would loosen the manufacturers’ hold. 

Ecclestone has thus formed a close alliance with the only non-manufacturer major player – Red Bull. Their mutual interest in neutering the power of the manufacturers is obvious. This has only increased the belligerence of the manufacturer group – or rather that of its de facto head, a new Ferrari boss, Marchionne, determined to play hardball. As well as invoking Ferrari’s regulatory veto, he’s made it clear he’d be prepared to go legal should Ecclestone and Todt, for example, try to push through the ‘independent client engine’ and the associated balance of power equivalency for which Bernie has been pushing.   

That’s two sides of the power triangle. The third – Todt – has adopted a passive attitude, as he feels he has no choice, and so favours neither one nor the other of the two sides, thereby prolonging the gridlock. “I am not a dictator,” he says. “The day of the dictator has passed. I have been entrusted by 250 FIA members to be president. I cannot allow myself to have the FIA sued and lose. We see in much more important matters than sport what is happening to dictators today. It always fails. We have a governance and as long as I am president I will follow it. Is the governance good? That’s a different question. No, it is not good. But it is what we have until 2020.”

All the above is necessary background information in understanding the crossroads at which F1 stands and where it might be heading. 

The conflicting visions

1) Factory F1 team 

Marchionne’s vision would be for a sport owned by the competing manufacturers, probably with Ferrari as the central stakeholder. Anything which prises away control from CVC and Ecclestone would almost certainly find favour with him. Already it’s being rumoured that in the next three-four years he will retire from his role at Fiat-Chrysler to concentrate on establishing a new F1 commercial entity.

This F1 would likely continue with hybrid engines, would lead to small independent teams being replaced with associated satellite operations, not necessarily factory-owned but using hardware produced by the factories – very much along the lines of the current Haas team.

It would be an F1 run via a conventional corporate structure, with experts heading the relevant key roles of racing, finance and marketing. It would likely be technologically rich as manufacturers could justify participation as part of their research and development budgets. As such, regulations might be expected to be framed around power efficiency and drag reduction. There could be manufacturer-supplied budgets for full research into subjects such as aero regulations that would produce raceable cars. The fastest would not constantly be reined in, in the interests of artificially close competition. If someone found an advantage, it would require the others to catch up. 

It would be professional and well run, but the long-term sustainability of such a structure must be questionable. The history of factory-controlled championships is a dire one of boom and bust, right from the mass manufacturer pull-outs of grand prix racing in 1908 and 1928, through to sports cars, rallying and touring cars in more modern times. Once a manufacturer is finishing last repeatedly, spending huge budgets on so doing, it tends to pull out, leaving someone else in the depleted field to finish last – and the process is repeated until the category implodes from its own top-heaviness. Different manufacturers would assign different budgets to being competitive and that’s a crucial fault line that always ends in withdrawals. A category is much less secure if it is not largely populated by teams whose only reason for existing is racing.   

2) Red Bull-Ecclestone independent F1

Ecclestone has reportedly suggested to Red Bull’s Dietrich Mateschitz that they should form the Red Bull Grand Prix World Championship for loud, normally aspirated cars with an independent engine supplier. 

It would be immune from the automotive world’s R&D direction, and would be self-financing through TV deals and race-hosting fees. 

Either Red Bull and/or Bernie would purchase CVC’s controlling shares – or it would separate from the official FIA F1 world championship. The rules would regularly be tweaked to make it as competitive as possible, but it would primarily be an aerodynamics-dominated category with engines equalised in an attempt at a modern recreation of the DFV era. Any automotive manufacturer supplying engines would have to be prepared to supply as many as required to the independents at a set price. In theory it would be a more sustainable championship than the manufacturer vision. But it implies all the charges of manipulation levelled at the current era of F1 and would be technically sterile outside of aerodynamic innovation.  

The current issues

Tyres: the pirelli effect

Ecclestone’s favoured tyre supplier Pirelli is so because it has been open to providing a tyre to produce whatever he has requested. So since 2011 it has been providing heat-degrading tyres that do two critical things.
1) They reduce how much extra performance can be found from downforce. Because the tyre is easily ‘saturated’ by the demands put upon it, it limits the lap time advantage of an aerodynamically superior car. 2) They encourage diversity in race strategies. 

But what they have also done is turn the racing on Sunday afternoons into endurance-style contests where drivers have to run as much as 3sec off the pace in order to make the stint lengths required to minimise total race time. Run any harder than that and the heat-degrading composites within the rubber fry, permanently hardening, drastically reducing rubber flexibility and tyre performance. 

This has become deeply frustrating for the drivers and is – together with aerodynamics unfriendly to wheel-to-wheel racing – behind the GPDA’s voicing of its concerns about F1’s direction.  

For 2017 the FIA has tasked Pirelli to come up with a bigger tyre – to increase mechanical grip – that does not feature this heat-degrading mechanism, that is not permanently destroyed when pushed hard and simply degrades with wear in the conventional manner. It has also been asked that the tyre can be safely operated at pressures close to those of the performance optimum unlike at the moment, when Pirelli imposes super-high minimum pressures in order to keep excessive loads off the outer shoulder. However, time is running out to test such a tyre adequately and it would be accurate to say not all the teams are confident that Pirelli will be able to deliver. The challenging set of demands placed upon Pirelli and the lack of progress in getting what it needed had it threatening – between the Bahrain and Chinese Grands Prix – to leave F1 altogether at the end of this year. Or possibly even sooner… 

Looking back to our F1 Revolution feature, it has at least been acknowledged that the idea of having drivers deliberately driving off the pace is fundamentally wrong. That’s progress of sorts. 

2017 chassis regulations

On Ecclestone’s initiative, the F1 strategy group was last year tasked with devising aero regulations that would make the cars faster and more demanding to drive, to eclipse the qualifying records of the old V10 cars of more than a decade ago. It was a typically F1 piece of unconnected policy. Much of the previous few years had been spent finding ways to make their aerodynamics more overtaking-friendly, which is why they’d become slower. 

The strategy group proposed wider cars (2 metres, up from 1.8, taking it back to where it had been pre-1998) and bigger tyres. After discussion between the teams about bodywork regs, three different proposals were considered. In ascending order of downforce, they were the proposals of Williams, McLaren and Red Bull. As things stand, the strategy group is set to recommend the McLaren proposal. Mercedes believes even this will be excessive, that it will generate too much downforce, that the wider cars will force the teams to build them longer too (in order to keep the current aero balance), making them even heavier and more truck-like, placing even more demands upon tyres that they do not have faith in and making overtaking even more difficult. 

“I think we should leave the regulations alone,” said Toto Wolff in China. But, the way F1 is structured, doing nothing is not on the table. Just as with the change to qualifying procedure, once the strategy group has been charged to come up with a proposal, the mandate is followed – and the proposal must be made. An unofficial show of hands was recently taken between the teams – and eight out of 11 favoured leaving the chassis regs as they are. But it’s happening anyway. Because that’s the governance… 

Red Bull is happy for the change to come – as it believes it will give it greater scope to beat Mercedes. “Mercedes doesn’t want to change because it has an advantage with these regulations,” says Christian Horner.

In the proposed ’17 regulations, the relationship between the wheels, bodywork and front wing will force teams to prioritise airflow outboard of the front wheels. The Williams proposal would have made it advantageous to send more of the flow inboard and through the underbody. This would have given a much cleaner wake, and thereby less turbulence for the car behind. Red Bull’s objection to this was that it would make drag from the wheels a much higher proportion of the total – and therefore would more heavily favour cars with more power over those with less…  

Mercedes’ estimate of the drag is only one-third of what Red Bull expects. It’s fair to say, this has not been at all well researched, that most do not want it, but it’s happening anyway. Agendas are at play.  

As we said in the Revolution piece, the ideal aero configuration requires a huge and lengthy research programme. What we are set to get in 2017 – still with stupidly intricate front wings very prone to losing a lot of performance in turbulent air, a wake that is more turbulent and shorter braking distances – will probably make the racing worse. Most teams know this and don’t want it.  

Engines: the sound of silence

Here’s the most divisive topic of all. Fans don’t like the noise, and Bernie has inflamed this view because it meets with his agenda of reducing the clout of the manufacturers. Plus they are too expensive for the independent teams, given how little of the prize money they receive even if they do well. Rather than increase the money paid out to the small teams (which would cost CVC), Ecclestone had allied with Todt on this issue to attempt to force the manufacturers to sell the engines at a pegged price of €12 million (currently between €18-24 million) from 2018, to make proposals that will reduce performance disparity between the four engines and to guarantee a supply for any team that needs it (the apparent Red Bull engine
crisis of last year underlining this very conveniently) and to increase the noise.

Ecclestone’s client engine proposal (a simpler, bigger, cheaper engine with a balance of power equivalency factor that would make it competitive with the best of the hybrids) enlisted Todt’s provisional support. But as soon as the manufacturers agreed in principle to come up with an answer to the four tasks listed above, Todt dropped his support of the independent engine, much to Ecclestone’s dismay. 

The four-part assurances had to be incorporated into regulation by the end of April (after the time of writing). If no agreement is forthcoming – and, Horner maintains, “They are nowhere close” – then the independent engine comes back onto the horizon. And possible legal action from Ferrari. 

Where is it all going? 

Impossible to call. Maybe as Ecclestone suggested in Bahrain: “In times like this you need a coup.” But against who, and by whom? It feels as though there is too much discord to stumble on for another four years, when the current commercial agreement ends, feels like something will break – and send F1 into emergency mode, breaking the stalemate. As Todt said, “If there is accord between the three parties we could rip up the agreement tomorrow.” 

Perhaps a Pirelli pull-out might trigger it. Or the planning of an alternative championship. Or the sale of CVC’s shares to someone with a more holistic vision of what’s required. But although Ecclestone’s past actions are in large part responsible for the current mess, in many ways his proposed vision looks more realistic and achievable than the alternative, even if it’s from the moral low ground. The manufacturers’ vision looks likely to lead only where manufacturer championships always end up – dead. Out of the ashes, an F1 more akin to what we outlined in the Revolution feature might rise.