22 replies to this topic

[FirstnameLastname]

https://the-race.com...nderperformers/

An interesting article - It raises the prospect of; in the future, someone entering F1 purely to ‘exist’, run the operation on an absolute shoestring so that they can cream money off the team.

I’m sure there are examples of this throughout F1 anyway, where someone gets rich under the guise of running a team, but it’s usually accepted that you lose money when coming into F1 - If every team can turn a profit, Caterham style outfits where they don’t invest and run on a shoestring could become the norm and actually increase the gap to the front rather than compressing the grid.

[pitlanepalpatine]

If the FIA sees teams starting to phone it in the 107% rule will be adjusted and changes may be made to the race format. Besides, even if the manager is trying to profit the drivers and engineers probably wouldn't stand for it. F1 isn't a customer service centre where you can cut costs and benefits, have a **** work environment and have people be scared of loosing their jobs and stay for that. You're not gonna drag a pile of highly educated engineers around the planet on that kind of pay, with that lack of job security if you're not making an effort to succeed. You try that and you won't have engineers.

[PayasYouRace]

Sounds like the fears that led F1 to having such a limited grid in the first place. F1 needs to lower the barrier for entry and let the sporting competition determine who fails. There’s nothing more brutal as a consequence for failure than failing to qualify for a race.

I feel that we’re still living through the reaction to such “embarrassments” as Life and Andrea Moda, but with one exception they never even got beyond Friday morning pre-qualifying. The actual well run teams, like Jordan, were able to put together competitive cars and make it to the grid.

With only ten teams on the grid, I don’t think F1 can afford to be brutal on any of its entrants. It needs to look after them until we can at least get a full grid.

[pdac]

https://the-race.com...nderperformers/

An interesting article - It raises the prospect of; in the future, someone entering F1 purely to ‘exist’, run the operation on an absolute shoestring so that they can cream money off the team.

I’m sure there are examples of this throughout F1 anyway, where someone gets rich under the guise of running a team, but it’s usually accepted that you lose money when coming into F1 - If every team can turn a profit, Caterham style outfits where they don’t invest and run on a shoestring could become the norm and actually increase the gap to the front rather than compressing the grid.

 

And what is wrong with this, exactly?

[FirstnameLastname]

If the FIA sees teams starting to phone it in the 107% rule will be adjusted and changes may be made to the race format. Besides, even if the manager is trying to profit the drivers and engineers probably wouldn't stand for it. F1 isn't a customer service centre where you can cut costs and benefits, have a **** work environment and have people be scared of loosing their jobs and stay for that. You're not gonna drag a pile of highly educated engineers around the planet on that kind of pay, with that lack of job security if you're not making an effort to succeed. You try that and you won't have engineers.

I’m not so sure about that, there have been many teams that have been routinely dragged along to races with no hope of moving forward or scoring points.

If F1 ‘franchises’ become easily profitable and turning an easy buck becomes a realistic prospect, you could absolutely phone it in and run an ultra basic effort and cream the profits off the top without needing to put in much effort.

[FirstnameLastname]

And what is wrong with this, exactly?

There would be nothing illegal, so in terms of ‘wrongness’ - nothing

However it surely isn’t the result that F1 is looking for - but then F1 has always been a breeding ground for unintended consequences 🤷🏼‍♂️

[TomNokoe]

This is a typical "F1" opinion !

FYI, The hyphen Race have a podcast about F1 between 1989-2005 and they dedicated an episode to talk exclusively about backmarkers and the pre-qualifying era, etc.

Link

It's a good listen, as is the whole series.

[pdac]

There would be nothing illegal, so in terms of ‘wrongness’ - nothing

However it surely isn’t the result that F1 is looking for - but then F1 has always been a breeding ground for unintended consequences ‍♂

 

But does anyone honestly believe that the grid would consist of 26 teams all telling their drivers to just amble round and bring the car back safely so we can minimise our costs and maximise our profits? No, very few (if any) would consider the question "what business should we go into to generate a healthy profit" and come up with "Formula 1" as the top answer?

 

I'd rather have 26 (or more) teams wanting to get into F1, knowing that they can take a punt and it's not going to bankrupt them than it dwindling down to a handful of teams with the same clinical attitude and approach.

[Lights]

It's an interesting topic. My initial response is to focus on making sure the sport survives short-term and that perhaps this isn't the right time to criticize disadvantages of the new cost regulations.

 

But right now I find it hard to argue either way. It's difficult to predict how the budget cap will really play out, so they could be right and we'll get cases of misuse.

 

A shame they don't offer a proposal for the issue they claim they are foreseeing.

[Risil]

At first I thought, huh, what a typical F1 bubble argument; Ferrari and Red Bull received major subsidies from Bernie regardless of how they perform, etc etc. But reading the full article I don't think that's Hughes's argument.

 

The situation right now, according to Hughes, is that every team bar Ferrari makes a financial loss. It's their fame and performance on-track that determines whether this is a problem for their shareholders, or whether it's an acceptable part of the game. It depends on the shareholder: their wealth, values and tolerance of risk. The Williams F1 team is on paper in a better financial position than most of its rivals, but it's what goes on off the balance sheet that means they're fighting for survival.

 

This situation is common enough to anyone who follows finances in English soccer, especially outside of the Premier League.

 

If you turn the situation on its head and cut costs so that participation in F1 is profitable, you change all the rules of engagement. Ownership of an F1 team could be defined by the money you can extract from it, rather than the losses you're willing to put up with. Again, look at English soccer -- and the declines of Arsenal and Manchester United in particular -- to see how that can go.

 

In soccer, one cure for the worst excesses of the modern game is ownership of clubs by charitable trusts. I can't even begin to imagine how that would be feasible in F1. From a more competitive standpoint, soccer also prevents the worst rent-seeking behaviour by imposing punishments for under-performance -- loss of European status and ultimately relegation. This might work in Grand Prix racing but would require greater reforms than anything Liberty or the FIA have seriously envisioned.

 

Anyway thanks for sharing FNLN, fascinating insight from MH as usual. 

[Sterzo]

https://the-race.com...nderperformers/

An interesting article - It raises the prospect of; in the future, someone entering F1 purely to ‘exist’, run the operation on an absolute shoestring so that they can cream money off the team.

I’m sure there are examples of this throughout F1 anyway, where someone gets rich under the guise of running a team, but it’s usually accepted that you lose money when coming into F1 - If every team can turn a profit, Caterham style outfits where they don’t invest and run on a shoestring could become the norm and actually increase the gap to the front rather than compressing the grid.

The article itself says very little; your comment is an extra thought but not, surely, a real worry. You mention Caterham: they were a genuine bunch of racers, Fernandes included, who deserved to survive. There was no creaming off of money going on there, quite the reverse.

 

Throughout business you'll have some individuals who run loss-making operations yet rake off a fortune for themselves. There's a forum thread somewhere about a supplier of empty tins  living the high life... But the question is: so what? Of all the problems F1 might have, this is not one of them. If the car's too slow, it doesn't start. That's enough to weed out unwanted teams.

 

Let's dream that somehow cost caps would attract thirty teams. Great, bring it on, let's have of non-championship races for those who can't get GP starts.

[FirstnameLastname]

At first I thought, huh, what a typical F1 bubble argument; Ferrari and Red Bull received major subsidies from Bernie regardless of how they perform, etc etc. But reading the full article I don't think that's Hughes's argument.

The situation right now, according to Hughes, is that every team bar Ferrari makes a financial loss. It's their fame and performance on-track that determines whether this is a problem for their shareholders, or whether it's an acceptable part of the game. It depends on the shareholder: their wealth, values and tolerance of risk. The Williams F1 team is on paper in a better financial position than most of its rivals, but it's what goes on off the balance sheet that means they're fighting for survival.

This situation is common enough to anyone who follows finances in English soccer, especially outside of the Premier League.

If you turn the situation on its head and cut costs so that participation in F1 is profitable, you change all the rules of engagement. Ownership of an F1 team could be defined by the money you can extract from it, rather than the losses you're willing to put up with. Again, look at English soccer -- and the declines of Arsenal and Manchester United in particular -- to see how that can go.

In soccer, one cure for the worst excesses of the modern game is ownership of clubs by charitable trusts. I can't even begin to imagine how that would be feasible in F1. From a more competitive standpoint, soccer also prevents the worst rent-seeking behaviour by imposing punishments for under-performance -- loss of European status and ultimately relegation. This might work in Grand Prix racing but would require greater reforms than anything Liberty or the FIA have seriously envisioned.

Anyway thanks for sharing FNLN, fascinating insight from MH as usual.

Now a relegation threat to F2 might be a good way to avoid that and encourage upward development/growth. It could bottom out at F3 or F4... include parachute payments or whatever, but it would be good if a decent F2 team could make the jump to F1 by winning the championship, and then automatically gaining the share of f1 profits which would allow them to make the jump up

Also, if Williams got relegated, presumably they’d be the best of the F2 grid... and spend a year of winning (albeit in a lower formula) to help rebuild confidence/mentality/fight

It would require customer cars though, as the development cycle/effort required for F1 couldn’t be undertaken by an F2 team ‘just in case’ they gained promotion.

[pitlanepalpatine]

Now a relegation threat to F2 might be a good way to avoid that and encourage upward development/growth. It could bottom out at F3 or F4... include parachute payments or whatever, but it would be good if a decent F2 team could make the jump to F1 by winning the championship, and then automatically gaining the share of f1 profits which would allow them to make the jump up

Also, if Williams got relegated, presumably they’d be the best of the F2 grid... and spend a year of winning (albeit in a lower formula) to help rebuild confidence/mentality/fight

It would require customer cars though, as the development cycle/effort required for F1 couldn’t be undertaken by an F2 team ‘just in case’ they gained promotion.

 

Kimi racing in F4 in his 60's? 

[FirstnameLastname]

The article itself says very little; your comment is an extra thought but not, surely, a real worry. You mention Caterham: they were a genuine bunch of racers, Fernandes included, who deserved to survive. There was no creaming off of money going on there, quite the reverse.

Throughout business you'll have some individuals who run loss-making operations yet rake off a fortune for themselves. There's a forum thread somewhere about a supplier of empty tins living the high life... But the question is: so what? Of all the problems F1 might have, this is not one of them. If the car's too slow, it doesn't start. That's enough to weed out unwanted teams.

Let's dream that somehow cost caps would attract thirty teams. Great, bring it on, let's have of non-championship races for those who can't get GP starts.

Indeed - but once he realised the effort/money required to ‘make it’ - he withdrew interest/funding and the team were left making up the grid recycling worn old parts - in fact I’m sure there were stories of them cobbling together cars with parts that engineers thought were dangerous to be using, such was their state.

Thrifty can become dangerous in such a sport.

[FirstnameLastname]

Kimi racing in F4 in his 60's?

😁 I meant the teams, not drivers...

Interesting idea for the drivers though!

[FirstnameLastname]

This is a typical "F1" opinion !

FYI, The hyphen Race have a podcast about F1 between 1989-2005 and they dedicated an episode to talk exclusively about backmarkers and the pre-qualifying era, etc.

Link

It's a good listen, as is the whole series.

Just listened to this on my morning stroll round the countryside. Absolutely superb, have bookmarked the rest of the series to listen to them all. They are very informative and the back marker/ pre quali stories are the sort of stuff I love - almost more than the championship battles at the front. Love an underdog story

[Anderis]

I see a very simple solution to this. Of course with the budget cap in place, the FIA will know how much the teams are spending and what does the money go for.

 

A team that doesn't spend at least as much money as they received from the TV money pot in the previous year will not receive any TV money the next year (maybe you can adjust or modify this rule to work even better but the basic idea is there. The adjustments could include the necessity to spend at least TV money received + x million and specify in what areas a % of the money has to be spent to ensure it's spent on being competitive as well as some potential good ideas I couldn't think of but the F1 brains will).

 

For the smallest teams, the TV money will probably be more than a half of a typical budget of a back of the grid team so there's not much competitiveness to be lost even if they try to not spend beyond that.

 

But there's not much incentive to try to do that anyway, as trying to limit your spendings to just as little as you have to spend will probably limit your ability to attract any money outside of TV money- nobody will invest big money or sign big sponsorship deals with a team that tries to spend so little money that it hampers its competitiveness, even pay-drivers are not keen to do that anymore (with superlicence requirements reducing the pay-driver pool to just basically very competent racing drivers). So as long as you risk losing all of your TV money, there's not much incentive to do that and not much money to be earned this way.

 

I'm optimistic it would be enough to ensure that underspending is not a huge problem for the quality of the show.

Edited by Anderis, 12 June 2020 - 07:33.

[maximilian]

someone entering F1 purely to ‘exist’, run the operation on an absolute shoestring so that they can cream money off the team

 

Basically describes the Williams team over the past several years.

[Kalmake]

Basically describes the Williams team over the past several years.

Not at all. Williams budget has been fairly typical for a non-works F1 team.

[ArrowsLivery]

If it becomes “easy” to make a profit in F1, you will get a lot of new teams entering. As only 26 cars can start a race, that will put a limit on how cheap the backmarkers can go before they are unable to actually race and get a share of the wealth. I think we as fans win either way, certainly more so than the current system.

[William Hunt]

F1 should allow any new team that wants to enter and that follows the rules & succeeds in the crash test of their car to enter. That's how it used to be: open competition. Blocking new teams to enter is not only ridiculous, it goes against free competition. With more teams entering there would be considerable competition in the midfield and the bottom of the grid and thus also more competition for prize money. No team would be guaranteed their share of prize money if enough teams compete for it. Again that's how F1 used to be, make it affordable AND an open competitio that anyone who wants to enter can enter again 

[Dolph]

With the budget gap theres plenty of F1 engineers out of a job of whom several new teams could be formed

[grunf77]

Basically describes the Williams team over the past several years.

And Minardi...  crap car, year after year with mostly pay drivers.