The Road Ahead
Liberty has outlined its plans for Formula 1's evolution, but how are teams likely to repsond - and how did we get here in the first place?
The silence was deafening after Liberty Media presented to the teams its vision of post-2020 F1. Partly this was because the teams had signed a non-disclosure agreement, but the silence also had a hint of the calm before the storm as Ferrari and Mercedes considered their positions. Liberty’s insistence on pressing ahead with a significant redistribution of income between the teams, plus a cost cap of $150 million, met with delighted approval from the likes of Williams and Force India, but stony hush from Ferrari and a note of concerned caution from Mercedes. Amid rumours of talks between Amazon and Ferrari about the possibility of a breakaway championship, F1 prepared itself for some possible turbulence to come.
Regardless of how it all plays out, F1 is going to be fundamentally different from 2021 – either through the changes Liberty envisages (which also include a totally new aerodynamic format as well as cheaper, more powerful versions of the turbo V6s) or through whatever happens in reaction to these proposals. F1 is a restless, constantly evolving entity forever at war with itself – with an extreme environment and extreme personalities behind it. The resultant tensions build until their force shifts the tectonic plates underlying the sport. This is set to be one of those times and can be seen in a historical context. Sometimes the agent for change is technical, other times commercial and occasionally the pesky outside world – but always F1 is moving relentlessly on, regardless of how much those at the top might wish it to remain the same. It has a life force of its own, pushing its story through unforeseen twists and turns.
Cooper: mid-engined meteorite
For much of the 1950s the sport was nestled in a cosy post-war alliance of the traditional continental factory teams, with Italy forming the centre of gravity, a dominant two-year foray from Mercedes-Benz notwithstanding. It looked much as it had pre-war, a romantic scene of sportsmen racing dangerous, snarling beasts through beautiful scenery. Enzo Ferrari now built and ran his own cars rather than managing someone else’s, but that was a detail difference. Then a meteorite hit the sport in the stub-nosed form of a mid-engined bitza car from Cooper, an upstart garage-based entity risen from the underclass of a post-war British racing scene energised by make-do ingenuity and the availability of disused wartime airfields.
The sport had stumbled into a mid-engined format – it was the convenient way to retain chain drive for the motorcycle engines that powered the Formula 500 cars which had brought Cooper to life. But its advantages became ever-more apparent as Cooper made its way through bigger-engined categories until Stirling Moss’s underpowered victory in the 1958 Argentine Grand Prix strongly suggested the concept’s superiority. Within a year it was winning the world championship. The meteorite had killed the dinosaurs.
It was an elemental change – and happened very swiftly. It was as if there was a sudden switch in the sport’s polarity as Cooper became the blueprint for hordes of new teams – British-based specialists assembling their cars from a network of suppliers and so no longer needing the depth of resource of a factory team to be competitive. Enzo Ferrari contemptuously referred to them as the garagistes.
The sport was now populated by a new younger generation, British and Antipodean rather than Latin. It made for a very different environment. Although a thread of Italian racing red still ran through it, this F1 was radical and progressive, rarely stopping on one idea long enough for an orthodoxy to form, forever in search of the next great performance leap. Revolution more than evolution. Maybe it was just the times, but it seemed there was something in the air.
The new performance equation
This group was able to flourish through the availability of an independent, commercially available competitive engine – initially from Coventry Climax, subsequently Cosworth. It was this, more than anything else, which gave F1 a strong skeleton independent of the whims of the car manufacturers and allowed it to move on from the boom and bust cycle. It allowed F1 to be populated by teams that had no independent existence outside of the sport, giving it a far more robust structure.
This ragtag group of brilliant radicals and misfits was dismissive of many of the sport’s traditions, not least because they needed the oxygen of money to feed their competitive urge. Start and prize money was no longer going to do it. The brash tobacco colours of commercial sponsorship appeared at about the same time as the monstrosity of wings on stalks – dangerous multipliers of performance with little appreciation behind their creation of the inherent dangers. The lap time was there for the taking, the consequences be damned. So the Lotuses of Graham Hill and Jochen Rindt took off and somersaulted into the Montjuïc barriers. Although the worst excesses of wings were trimmed one race later, the downforce genie was out of the bottle and would never go back in.
The radicals conspired with the genie and in the mid-late ’70s found ways of training the air through the underbody to create a huge performance step. Ferrari was frequently out-manoeuvred by fleet-footed, quicksilver-minded garagisteColin Chapman and might have fallen into oblivion had not the Old Man been able to re-capitalise by selling out to Fiat in ’69, essentially making the Scuderia a factory team in all but badge. The push-pull tension between the resourcesbehind this prestigious brand and the mental resourceof its British rivals fuelled the sport through much of the ’70s, dramatically embodied in the Lauda vs Hunt season of 1976.
“This ragtag group of brilliant radicals was dismissive of the sport’s traditions, not least because they needed the oxygen of money to feed their competitive urge”
The turbo pushback
Such a great spectacle did the disparate community make that it became highly commercially attractive in the age of TV. Appreciating quicker than anyone else the spiralling link between exposure and income was the chief of all team owners, Bernie Ecclestone, who’d banded all the garagistestogether so they could no longer be financially manipulated by circuit owners. His next step was to negotiate TV deals that would commercially electrify the sport – justifying far greater sponsorship fees for all the teams. He did such a great job that the factory teams began to turn their heads toward the sport once more, as here surely was a fantastic marketing platform.
The instrument by which the first of them – Renault – returned was the turbo. So potent did this new technology – eventually - prove to be that it threatened the very survival of the core group that had populated F1 since the meteor struck. No independent engine manufacturer of the time was going to be able to provide a competitive, economically viable turbo engine for the garagistesand if other manufacturers followed Renault in with their own turbocharged motors, the garagisteswere going to be boosted out of existence.
This was great news for the sport’s governing body. The return of manufacturers gave it powerful allies in trying to roll back the power of Ecclestone and his band of teams that provided about three-quarters of the grid. So the years 1980-82 brought an elemental struggle between Ecclestone (aided by his legal advisor and former team owner Max Mosley) and the governing body’s president Jean-Marie Balestre.
A planned breakaway championship in 1981 got as far as a race at Kyalami, but an uneasy truce was reached thereafter. The Ferrari brand was probably powerful enough to decide which side was going to win but the Old Man wisely used that power to help broker a peace instead. An agreement was thrashed out between the teams and governing body at Maranello – and the Old Man insisted only on a Ferrari rules veto.
The spoils were shared, the manufacturers came in as partners to the garagistesand the governing body and Bernie eventually rubbed along OK, united by mutual interest. This was especially so after Mosley succeeded Balestre as FIA president. When Ecclestone then applied for – and was awarded (by Mosley) – the renewed commercial rights as himself, rather than as the teams’ representative, a new landscape of power was in place, and the teams hadn’t even seen it coming. Some of them – McLaren’s Ron Dennis in particular – felt that Ecclestone and Mosley had conspired to steal the sport from the teams. These team owners had become rich beyond their wildest dreams thanks to the vast money the car manufacturers pumped into the garagisteteams even after the turbo was outlawed. But that seemed not to matter and for the next couple of decades, every conflict between the teams on one side and the aligned
Ecclestone and Mosley on the other seemed to start from the teams’ premise that the sport had been stolen from them. George Orwell would have appreciated their plight – they’d been sold the dream of joint ownership of a farm co-operative and found themselves instead as farm workers, duped by the one who was more equal than the others.
The dictates of the outside world
Formula 1 doesn’t exist in a bubble, much as it probably felt like it did in the boom years. Ayrton Senna’s death on live TV, at Imola in 1994, brought an existential threat to the sport. Its very right to exist was being questioned in a world that had become far more squeamish and less tolerant of differences from the norm.
Max Mosley reacted, ensured the sport was seen to be doing something. Ever since, it’s been on a continual safety drive, with regular performance culls and a more prescriptive approach to passive safety. It also, incidentally,brought a much closer alliance between the FIA and the automotive industry as Mosley extended the safety research into road cars.
That prescription has narrowed the scope of innovation and thereby intensified the importance of optimised detail. Where once F1 had great rules freedom but limited resource, now with the vast wealth of the manufacturers supporting it, it had the very opposite. So a key differentiator in performance became computerised simulation, ever more sophisticated and expensive CFD programmes, test rigs and driver-in-loop simulators. This greatly increased the lap time benefit of each extra dollar spent.
The financial meltdown of the world economy in 2008 came at a particularly unfortunate time for F1. Honda, Toyota and BMW left while Renault would only stay if the turbo electric hybrid formula being discussed would be implemented, giving some automotive R&D relevance to the F1 programme. Mercedes lent its weight to the formula too and so, despite Bernie Ecclestone’s avowed disapproval, the FIA brought it into being in 2014.
Mosley had by this time gone, his not standing for re-election part of an agreement that staved off a proposed breakaway manufacturer-led series. Ecclestone had sold the commercial rights to CVC Capital in 2006 but continued to run the show on their behalf. In order for a proposed floatation of F1 on the Singapore stock exchange to work, the owners needed the top teams to sign a commitment in 2013 to remain in F1 until 2020. Given their position of strength in this negotiation, the top teams extracted a much bigger share of the sport’s revenues than before – at the expense of the lesser teams. More than ever, this helped to freeze in an unhealthy competitive stasis. The floatation never happened and CVC sold out to Liberty – leaving it to inherit F1’s structural problems.
“Orwell would have appreciated it – they’d been sold the dream of joint ownership and found themselves as farm workers, duped by the one who was more equal”
At the crossroads
“These hybrids are miracles of engineering but they’re too expensive, too esoteric, too ‘out there’ and it’s not a great racing engine,” says Liberty’s Ross Brawn, leaving unsaid the fact that most of the fans hate them because of the lack of noise.
“Massive respect for the commitment the manufacturers have made with these engines,” Brawn adds, “but the drawbridge [of F1 participation from others] has been raised and we need to lower it if we are to get new entrants coming in.”
Hence the proposal for a simplified version of the turbo V6, without the complexity of an ERS-h. It would be louder and more powerful than current engines (through an increase in fuel flow and therefore revs), it could be raced at 100 per cent of its potential for 100 per cent of the race. It would feature more standardised parts. The intention is to make it feasible for an independent engine manufacturer to build a competitive, commercially available engine, thereby reducing the political power of the manufacturers.
Ferrari’s Sergio Marchionne has been dismissive of this proposal, dubbing it ‘NASCAR’ and not aligned with the brand values of Ferrari. What isn’t clear is whether this position is related to the financial terms being offered for Ferrari’s continued participation beyond 2020 – which are believedto be not quite as good as those it has enjoyed since 2013 as Liberty seeks to redistribute.
What was outlined in Bahrain was a redistribution that would cause Ferrari, Mercedes and Red Bull to lose some income, with the saving spread to the lower teams. Claire Williams commented in Bahrain: “The way the sport is structured today, with the financial disparity between teams, the likelihood of Williams’s survival into the medium- and long-term was looking pretty bleak. Everything Liberty presented from revenue redistribution to cost caps is absolutely everything that we want to see from 2021 and beyond. If Liberty/FOM do everything they say they are going to do, then from our perspective I know that Williams’s future is safe.”
Hand in hand with the income redistribution is a proposal for a $150 million budget cap (excluding driver salaries, marketing costs and the salary of the highest paid employee). This would represent a reduction of something like $300 million for Mercedes or Ferrari. Mercedes F1 boss Toto Wolff has dismissed this – though not out of hand. “There are things that seem so very difficult that they are almost unachievable, like a cost cap of $150 million,” he says. “That is from today’s stand quite tremendously difficult but it is clear we are living all in the same financial reality. We need to contain costs; there needs to be a downward slope and I am very keen on engaging in such a discussion.”
Ferrari’s position is unclear at the time of writing. Although it would make more money, not less, if it could achieve the cost cap, simply switching off that level of resource is no simple matter and would undoubtedly mean culling staff numbers. As with Mercedes, there is scope for them to be redeployed elsewhere in the company – or perhaps even to associated satellite teams currently below the cost cap. But something has to give.
Without Liberty’s cut (currently around 40 per cent) there might be scope not to have such a severe cost cap – and that’s almost certainly part of Marchionne’s thinking as he contemplates setting up a breakaway series. But that would require such a series to generate comparable income to current F1, which is far from given. For such a thing to fly would probably require Mercedes’ support – and that seems less than unequivocal at the moment.
Liberty seems intent on calling Ferrari’s bluff on this one – although one obvious game-changer would be if Ferrari set out its breakaway championship stall around loud naturally aspirated engines. That would surely be a massively popular prospect with the fans. Because of Liberty’s desire to be aligned with the FIA and Jean Todt’s insistence on being aligned with the road car manufacturers, F1 is shackling itself to an engine format that fans and most teams don’t want. That might yet prove to be a crucial weakness in fulfilling Liberty’s vision.