Friday, 31 October 2014

Special feature - Formula One needs to do something fast to react to the financial problems facing the sport

(Sahara Force India Formula One Team)

Formula One is facing an uncertain future following the news in the last week that both the Caterham and Marussia F1 Teams have entered administration. It was not a surprise to see the two teams forced into this situation as they have struggled to compete since they entered Formula One in 2010.

Formula One welcomed three new teams into the sport in 2010, with Virgin Racing, the Hispania Racing Team and what was then the Lotus Racing team. The Hispania Racing Team were the first team to after folding following the conclusion of the 2012 Formula One season.

In 2012, the Lotus Renault team was renamed the Caterham F1 Team as team founder Tony Fernandes bought the Caterham car company and renamed the team.

After initial funding from Richard Branson’s Virgin Group the Banbury based team was sold to the Russian car company Marussia and was rebranded the Marussia F1 Team in 2012. Following the collapse of the Marussia car company in April 2014, the Formula One team which was a separate entity to the car company continued to trade and compete in Formula One.

In the last five seasons of Formula One four teams have collapsed with Super Aguri Honda, the Hispania Racing Team, Marussia and Caterham all forced out of the sport due to the mounting costs involved in running a team.

Super Aguri entered Formula One in 2006 running what was effectively a Honda B team as they were racing with the 2005 Honda chassis and were receiving a Honda engine.

This season as a result of winning the Constructors championship the Mercedes AMG PETRONAS F1 Team can expect to receive in the region of £100 million compared to the Marussia F1 Team who if they retain 9th place in the championship can expect to receive in the region of £40 million.
It is about time that Formula One embraced a system similar to the financial fair play system in operation in Football.

The Sport already has a Research Restriction Agreement in place amongst the teams and it would be very easy for a budget cap to be put in place of say between £60 - £80 million which if a team were to go over that during a season they could receive a sporting penalty or a a reduced share of the team rights money.

Formula One generates an annual revenue of over £! Billion a year from global ticket sales and TV rights however the money is not divided equally among the teams in the sport. 

There is a three level system in place in the sport at the moment where in 2014 you have the top teams of


Infiniti Red Bull Racing

Williams Martini Racing


Then there are the midfield teams of

McLaren Mercedes

Sahara Force India


Toro Rosso

While you have Sauber, Caterham and Marussia at the back. However it is now just nine teams on the grid with Caterham and Marussia missing from the field this weekend. 

We very nearly had the Sahara Force India Formula One team on the side-lines for the United States Grand Prix in Austin as they had problems with power unit supplier Mercedes in relation to money however that was sorted out at the last minute and the team are in Austin this weekend.

The Lotus F1 Team and the Sauber F1 Team have also struggled financially in recent times and where a number of years ago they would have been able to attract big money sponsors this is no longer the case.

The last major sponsorship deals to be concluded in Formula were earlier this season when the Williams team announced a new long term title sponsorship agreement with Martini which has seen the Grove based outfit renamed Williams Martini Racing.

While the Sahara Force India Formula One team concluded a sponsorship deal with Smirnoff. The Silverstone based outfit have also just this week announced a digital partnership with Accelerate which will build and maintain a brand new website for the team.

It is time for Formula One and the governing body to unite and come up with a solution to the financial problems facing the sport before we lose another team. Formula One in its current form is unsustainable.

© Ben Johnston 2014

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