52 replies to this topic

[DutchQuicksilver]

Force India has avoided becoming the next Formula 1 team to drop out of this weekend’s United States Grand Prix, with insiders reporting that the team is also in a struggle for survival.

 

http://www.gptoday.c...1_team_to_fold/

 

So apparently Force India was on the verge of collapsing as well. This is not good at all. We could have expected it from Caterham and Marussia, but Force India have proven themselves as best of the midfield runners in recent years and are a team that F1 definitely needs.

[Afterburner]

CVC: Mission Accomplished.

[Massa_f1]

Not looking good for F1. I don't follow costs much in the sport if I am honest, but surely these new engines have something to do with why these new teams are in administration or on the verge of.

[Nonesuch]

It's quite odd that multiple teams seem to have hit their financial limits at roughly the same time.

 

It seems to me to be worth a good in-depth article by people with more inside knowledge.

[l8apex]

It sounds like Force India, Sauber and Lotus are all on the ropes ... it would be a real shame to lose any one of these teams.

 

F1 is broken, with CVC taking most of the money, the rich teams only looking out for their best interest and the absurd sanctioning fees driving up ticket prices .... something needs to change.  

[wj_gibson]

Maybe that explains why Bob Fearnley was so openly scathing of CVC on the record this week, then. The teams have been silent in public about CVC for years. Now that several,stand on the brink of bankruptcy they're evidently feeling less prepared to bite their tongues.

[l8apex]

It's quite odd that multiple teams seem to have hit their financial limits at roughly the same time.

 

It seems to me to be worth a good in-depth article by people with more inside knowledge.

 

I wonder if Ferrari and Renault have a similar engine payment schedule to Mercedes?

[F1matt]

The technical changes this season could kill the sport as we know it, not for the poor engine noise of furl saving but to the astronomical costs to the teams at the back.

Why did the FIA not allow a gradual change and allow heavily restricted 2.4 V8 petrol engines, with air restrictions to the smaller teams?? They could bring the Jim Clark cup back!

[Risil]

The technical changes this season could kill the sport as we know it, not for the poor engine noise of furl saving but to the astronomical costs to the teams at the back.

Why did the FIA not allow a gradual change and allow heavily restricted 2.4 V8 petrol engines, with air restrictions to the smaller teams?? They could bring the Jim Clark cup back!

 

It's not the FIA's fault that Formula One manages its finances badly. The sport generates plenty of money to pay for the new engines. It's just that it's vanishing into private equity funds.

Edited by Risil, 28 October 2014 - 20:57.

[Ferrari_F1_fan_2001]

Looks like the rule changes really crippled most of the field.

Things will stabilise....but when is the question? How many teams have to file Chapter 11?

[Ferrari_F1_fan_2001]

Looks like the rule changes really crippled most of the field.

Things will stabilise....but when is the question? How many teams have to file Chapter 11?

[discover23]

There is something going on here that we do not know about.. I feel most of the teams with the exception of Ferrari, Mercedes and RedBull enter the season on promissory notes just so that Bernie does not look bad in front of the promoters and the events can take place - what a joke.

[F1matt]

It's not the FIA's fault that Formula One manages its finances badly. The sport generates plenty of money to pay for the new engines. It's just that it's vanishing into private equity funds.

Actually it is their fault as they are the governing body of Motorsport who sold the rights for the price of a McDonald's happy meal.

[sopa]

Not looking good for F1. I don't follow costs much in the sport if I am honest, but surely these new engines have something to do with why these new teams are in administration or on the verge of.

 

The new power units have indeed increased costs.

 

Maybe there is an additional issue - sponsors are losing interest in teams, who are struggling in this new era. As we remember, before 2014 many teams said it would be the "make or break" year for them. But there are different aspects for this question. For top teams like Mercedes to rise to the very top - had they failed, maybe the Merc HQ's would have pulled the plug or at the very least viewed their funding differently. But for several smaller teams it was the matter of survival. Success or failure in adapting to new sets of regs could motivate investors to either further believe in this project, or not.

 

Interesting that in 2009 also several teams pulled out - this was also when we got a new set of regs, but pull-outs were more due to recession and by car manufacturers (BMW, Toyota). But also before 2009 we heard that season was going to be a very important year for several teams to either "make or break".

[discover23]

They should really ponder the idea of customer cars at this point.. 

[Timstr11]

FI will appear with a new aero package in Austin.

They recently re-signed Hulkenberg.

They will start using the Toyota tunnel full time next year.

To me, it doesn't sound like a team in trouble.

 

http://www.auto-moto...l-1-606153.html

 

gptoday picked one sentence from the article about the last installment to Mercedes for engines to create a sensationalist article. 

[jimjimjeroo]

When will f1 collapse!

[sabjit]

Not looking good for F1. I don't follow costs much in the sport if I am honest, but surely these new engines have something to do with why these new teams are in administration or on the verge of.

 

No, its not the engines, its Bernie. If he distributed the commercial rights more fairly rather than taking it all for himself then we wont have a problem.

[alfa1]

They should really ponder the idea of customer cars at this point.. 

 

And also more races in Europe.

I'm sure its cheaper to truck the cars to France than it is to fly to Korea/Bahrain/Whereeverstan.

[krapmeister]

FI will appear with a new aero package in Austin.
They recently re-signed Hulkenberg.
They will start using the Toyota tunnel full time next year.
To me, it doesn't sound like a team in trouble.

http://www.auto-moto...l-1-606153.html

gptoday picked one sentence from the article about the last installment to Mercedes for engines to create a sensationalist article.

I agree - I think it's a bit of a beat up.

[Doughnut King]

The engines are part of the story, but sponsors have fled the sport in recent years. And even in times of plenty, sponsors had a habit of not paying up.

[Al.]

FI will appear with a new aero package in Austin.

They recently re-signed Hulkenberg.

They will start using the Toyota tunnel full time next year.

To me, it doesn't sound like a team in trouble.

 

http://www.auto-moto...l-1-606153.html

 

gptoday picked one sentence from the article about the last installment to Mercedes for engines to create a sensationalist article. 

 

.....................What Timstr11 said.

(Although your spin on this wouldn't sell papers  ).

[George Costanza]

Would F1 be having these issues if tabacco money was back into it?

[JHSingo]

They should really ponder the idea of customer cars at this point.. 

 

They really shouldn't.

 

How is that going to help in the long run, if, say, one of the teams supplying cars to the minnows, decides to pull out?

 

Besides, customer cars do nothing to reduce the absurd levels of money still needed to compete. I don't know why this keeps being bandied about as some kind of "solution" to F1's current problems.

[loki]

Force India is in what seems like a perpetual state of struggle. Frankly I'm surprised given the history of Mallya's business dealings they have managed to remain in business at all let alone get some of the results they have over the last season or so.

[rhukkas]

Surely Sauber are the next to go?

 

Force India probably have a year or two left.

 

F1's USP from a marketing perspective has been superseded by the internet. It's only a matter of time before it goes bellies up.

 

Can you imagine 

 

Let's spend millions on a campaign in F1

 

or

 

spend millions with some unique and interactive content online with actual measurable results that can be infinitely diverse as well as truly global.

Edited by rhukkas, 29 October 2014 - 00:36.

[discover23]

They really shouldn't.

 

How is that going to help in the long run, if, say, one of the teams supplying cars to the minnows, decides to pull out?

 

Besides, customer cars do nothing to reduce the absurd levels of money still needed to compete. I don't know why this keeps being bandied about as some kind of "solution" to F1's current problems.

You can't think too much long term in F1.. Bernie's time as F1 supremo is just around the corner.. 

[Myrvold]

To me, it doesn't sound like a team in trouble.

Still, it's the team with the most "late payment" and "no payment" reports the last 5 years. That isn't a coincidence.

[montoyasminion]

In a perfect world, F1 would have revenue sharing like the NFL, all teams would get the same amount of money and be on a level playing field. But that makes too much sense.

[George Costanza]

In a perfect world, F1 would have revenue sharing like the NFL, all teams would get the same amount of money and be on a level playing field. But that makes too much sense.

 

Yeah that would be nice to see.... Perhaps it will occur one day.

[evo]

even if the profits were distributed more evenly, the teams will just find ways to spend even more.

 

its one thing to suggest that FOM is solely to blame, but the teams are not doing themselves any favours with unsustainable business models.

[loki]

In a perfect world, F1 would have revenue sharing like the NFL, all teams would get the same amount of money and be on a level playing field. But that makes too much sense.

The NFL only shares TV revenue in that way. Which by reports is a pool of about US$6 billion.  Any team or venue sponsorship deals as well as merchandise, concessions, gate, etc varies depending on the market and stays with the home team.  In F1 FOM has control over VIP hospitality, trackside sponsors, official  "whatever" of F1 and the revenue from the Paddock Club.  And the F1 TV deal isn't nearly as lucrative as the NFL deal (or the NASCAR deal either).  The point is it's going to have to be more than just TV money for F1.

 

It's a good model to use as a comparison for a place to start crafting a more equitable deal not only for the F1 teams but for the circuit promoters as well.

[loki]

even if the profits were distributed more evenly, the teams will just find ways to spend even more.

 

 

The point isn't so much to stop the top teams from spending more because they'll spend what they can and have to.  It's about a more equitable distribution of the income so the small team are less hand to mouth.

[pingu666]

even if the profits were distributed more evenly, the teams will just find ways to spend even more.

 

its one thing to suggest that FOM is solely to blame, but the teams are not doing themselves any favours with unsustainable business models.

 

there stuck in a box, there too big by far for any other series, every single team is struggling for sponsors, fi are mostly mallya company backed, and simply the staff and things required just to run a f1 team, even on a hrt level is now really high

[Brother Fox]

Looks like the rule changes really crippled most of the field.

Things will stabilise....but when is the question? How many teams have to file Chapter 11?

Force India, Lotus and Sauber have been on the ropes for a long while, well before these new regs.

[RedRabbit]

The NFL only shares TV revenue in that way. Which by reports is a pool of about US$6 billion.  Any team or venue sponsorship deals as well as merchandise, concessions, gate, etc varies depending on the market and stays with the home team.  In F1 FOM has control over VIP hospitality, trackside sponsors, official  "whatever" of F1 and the revenue from the Paddock Club.  And the F1 TV deal isn't nearly as lucrative as the NFL deal (or the NASCAR deal either).  The point is it's going to have to be more than just TV money for F1.

 

It's a good model to use as a comparison for a place to start crafting a more equitable deal not only for the F1 teams but for the circuit promoters as well.

 

The NFL way is the right way though. Equal distribution from TV rights would be a great start. FOM really does control too much of all the revenue streams. It's honestly ridiculous that the circuits have such a limited way to make some money back.

[DanardiF1]

It's the right way because it ensures that the league is giving each team a budget that they can use to compete in that season... whatever extra money the teams themselves can generate to make their team better is up to them, but at least they've got the money to last the season.

[indian]

I was wondering when the "Force India in trouble" would come up. Vijay Mallaya is in trouble with the banks over his failed airline - one bank has had him declared a wilful defaulter by the court and others are planning to do that as well. He is thus also in danger of losing his chairmanship of UB group. The other main partner in Force India, Subrato Roy of Sahara group has been in jail for over 3-4 months now over repayment of about 2 billion dollars to investors.

[ClubmanGT]

Hasn't the Force India saga been ongoing for years? It's a bit like the Lotus stuff - it's always there in the background. 

[Lee Nicolle]

how many teams will get to the double points race? 12-14 cars?

[Sash1]

FI will appear with a new aero package in Austin.

They recently re-signed Hulkenberg.

They will start using the Toyota tunnel full time next year.

To me, it doesn't sound like a team in trouble.

 

http://www.auto-moto...l-1-606153.html

 

gptoday picked one sentence from the article about the last installment to Mercedes for engines to create a sensationalist article. 

 

You can make a lot of plans and sign a lot of deals, take on projects and people for the near and far future. And you also agree payment plans for that. With this package you go to your sponsors and make a strategy for sponsor money, private money, pay driver money and price money. You go to race with that plan and budget. But any of those parts could fail. Not only next year, but also this year. A sponsor late with payments could bankrupt, your pay driver does not cough up the money. Your no 1 driver is so succesful that the contractual agreed bonusses can't be met. The drivers write off a couple of chassis or a kazillion wings in the season. Your tech guy was too optimistic about the time needed for a major aero update or the update doesn't work. Money wasted. Whatever.

A business can't stop planning for the future, even when the cash is running out this season. 

[Sash1]

Would F1 be having these issues if tabacco money was back into it?

 

The tobacco growth market is not in the US or EU and besides that, the advertising is politcally banned in many countries. So the FIA/FOM would have to deal with a lot of countries to get it back on the cars. And the countries for sure are not going to let that happen. 

If the tobacco companies were paying the bill, F1 would only be active in Russia, Asia and third world countries. I am not sure that is F1 we should want.

[MikeTekRacing]

Force India have managed to build pretty competitive cars, it would really be a shame to lose them

[thiscocks]

Customer cars and 3 car teams

[billm99uk]

Surely Sauber are the next to go?

 

Force India probably have a year or two left.

 

F1's USP from a marketing perspective has been superseded by the internet. It's only a matter of time before it goes bellies up.

 

Can you imagine 

 

Let's spend millions on a campaign in F1

 

or

 

spend millions with some unique and interactive content online with actual measurable results that can be infinitely diverse as well as truly global.

 

Which 95% of your carefully targetted audience filters out with Adblock ;)

[Kraken]

No, its not the engines, its Bernie. If he distributed the commercial rights more fairly rather than taking it all for himself then we wont have a problem.

Last time I saw quoted figures it was 70% to the teams and 30% to Bernie/CVC. Hardly sounds like all to me.

 

At the end of the day even if the teams received 100% of the money it still wouldn't be enough to cover their running costs. Until the teams stop thinking of themselves and the short term only then things won't get any better.

 

Other series bring in rule changes all the time to make the races better for spectators and reduce costs. All the F1 teams ever do is argue and block anything that isn't in their own personal interests.

[bonjon1979a]

Last time I saw quoted figures it was 70% to the teams and 30% to Bernie/CVC. Hardly sounds like all to me.

 

At the end of the day even if the teams received 100% of the money it still wouldn't be enough to cover their running costs. Until the teams stop thinking of themselves and the short term only then things won't get any better.

 

Other series bring in rule changes all the time to make the races better for spectators and reduce costs. All the F1 teams ever do is argue and block anything that isn't in their own personal interests.

Yep, this is spot on. They need to get control of this as the smaller teams are getting driven out completely. The amount the top teams get should be much closer to that of the bottom team. There needs to be a sensible budget cap so teams can actually compete. Even if it's 100 million per year on chassis that would make a big difference. CVC haven't got the sports best interests at heart - they're there to make money for themselves. However, if F1 suddenly goes tits up then they lose everything, so it's in their interests for the sport to do well. I feel we're a heartbeat away from 3 car teams.

[TheRacingElf]

I think F1 is so in it's own world that if several more teams drop out, they still don't recognise the real problems..

[MinT]

Dont panic - the bigger teams and powers that be - will act - once it reaches a level where they realise the gravy train is about to hit the buffers......there is no way they will just sit there and watch F1 disappear.

 

Fairer distribution of wealth, 3 car teams, customers cars or clowns in go carts - they will do something. It will just be a lot later than most of us would consider comfortabel.

Edited by MinT, 29 October 2014 - 10:53.

[P123]

FI will appear with a new aero package in Austin.

They recently re-signed Hulkenberg.

They will start using the Toyota tunnel full time next year.

To me, it doesn't sound like a team in trouble.

 

http://www.auto-moto...l-1-606153.html

 

gptoday picked one sentence from the article about the last installment to Mercedes for engines to create a sensationalist article. 

 

Agreed, just a bit of sensationalism to sell a story on the back of the demise of Caterham and Marussia.

 

However there is a real problem for F1, in that half the money generated by the sport disappears, and what is left is heavily weighted towards three or four teams, making competing in the sport unviable for anybody who minds blowing a few $100m.  The only income stream left is through sponsorship, and FOM directly competes against the teams for that, with the advantage of being in control of the TV footage.  F1 is basically eating itself...