Parr says only eight teams next year, three car teams.

[mrluke]

For a formula so worried about top teams dominating it doesn't make much sense to give the most money to the top teams.

I cannot see a single good reason for the money not to be split evenly between all of the teams. Period.

[Ultra]

Well, running the numbers....

I looked for some data on exactly how much money a race 'makes'.

In 2014 F1 managed to bring in $1.6B and it 'gave' $700M to the teams.

Even if that $700M was distributed evenly, that is 'only' $58M each. Which is just a little over half of the recognised minimum entry ($100M).

If the entire $1.6B was distributed, that is 'only' $80M each.

I presume that F1 has to make a profit, pay taxes, pay Bernie etc.

So even if the $700M was raised to $1B and the distribution was even, then the $83M still is not enough to run a back marker team.

However, the BBC feel that

Last year, F1 generated around $1.6 billion in commercial revenues, of which $700 million was distributed to the teams. Roughly half of this cash fund is shared equally with the other half allocated according to where the team finished in the championship.

So the last few teams got 1/12th of $350M or ~$30M. Some teams - Ferrari/RedBull etc then got the lions share of the other half. Which actually seems reasonably fair.

So, if we assume that the $100M is a true estimate of running a back marker, it is obvious that it is pretty much impossible to put a car on the back of the grid and stay within the 107% rule without finding $70M or more from somewhere.

The company that I work for sponsors an F1 team, I know what we spent on 2014 putting our name on the car, on the team website, on the team outfits. It is a considerable number, it would employ me all the way deep into my retirement. The number is apparently rather good value according to marketing due to the teams performance this year compared with last year when the deal was worked out. Incidentally we looked into putting our name on a back marker too this year, but they wanted such a significant percentage of the current front-running team rather that we declined.

Given the numbers we pay, and basing the surface area that we cover, I figure that the team we sponsor must be pulling in at least $250M in sponsorship. Plus of course the $30M - so they probably have a budget of $280M or more.....

So really any team that is going to enter needs to have sponsorship in place that will pay them $200M /year just in order to compete. Also they would need start-up capital sufficient to design and build their car, their wind tunnel, their team. I have no real idea of just how huge this number is, but my guess is at least $200M.

So I guess that the entry cost is pushing half a billion USD.

Good post.

One wonders how much sponsorship dollars are generated within the top 4 teams as well as how much it cost Mclaren this year to not have a title sponsor.

[Aesto]

The company that I work for sponsors an F1 team, I know what we spent on 2014 putting our name on the car, on the team website, on the team outfits. It is a considerable number, it would employ me all the way deep into my retirement. The number is apparently rather good value according to marketing due to the teams performance this year compared with last year when the deal was worked out. Incidentally we looked into putting our name on a back marker too this year, but they wanted such a significant percentage of the current front-running team rather that we declined.

Given the numbers we pay, and basing the surface area that we cover, I figure that the team we sponsor must be pulling in at least $250M in sponsorship. Plus of course the $30M - so they probably have a budget of $280M or more.....

So really any team that is going to enter needs to have sponsorship in place that will pay them $200M /year just in order to compete. Also they would need start-up capital sufficient to design and build their car, their wind tunnel, their team. I have no real idea of just how huge this number is, but my guess is at least $200M.

So I guess that the entry cost is pushing half a billion USD.

Thanks for that post, it's usually really hard to find information like that.

And I take it the team you're referring to is Williams and you're working for either Banco do Brasil, Thomson Reuters, Petrobras or Genworth?

[Miguel]

Quite clearly Bernie is not interested in having teams ten and eleven.
What strikes me as bizarre, is that these teams are fully aware of what they are going to get in terms of prize money.

I'm not advocating this payout as sufficient, but why spend more than you earn, then complain you don't get enough when you know what the figure is?

Bernie is basically telling them to up sticks elsewhere.

I guess the problem is that spending the 10th place prize money doesn't get you even close to 107%. Heck, if that's 24 mega$, it barely pays for the engines! So starting an F1 team has the implied bet of trying to be at least midfield, plus investing in that. If you don't fight with, say, sauber in a few years, then the pit becomes deeper and deeper, and the only wise solution is bailing out.

It's a big problem, where even a fully equitative distribution (~60M$/team) of the prize money would require substantial sponsorship money in order to cover the budgets of even the more modest teams. Given that scenario, you end up having to endebt yourself in order to climb the grid, so that you get better sponsorship that pays for last years' debts. Even if you play that well, that's no guarantee of success, as Lotus can attest.

One of the things that really worry me is the feeling that, relatively speaking, these teams don't seem to have improved at all. If we compare Barcelona 2010 and 2014, the teams have gone from 5.8% behind pole and 1.5s behind the next worst to 5% and 1s, even after 4 years of experience. In these almost 5 seasons, Marussia/Caterham have made it into Q2, what, four times in a dry session? And I'd dare say it's *never* been due to pure pace. It can't be just because they employ the "dumbest" engineers out there.

[Andres125sx]

It's a big problem, where even a fully equitative distribution (~60M$/team) of the prize money would require substantial sponsorship money in order to cover the budgets of even the more modest teams. Given that scenario, you end up having to endebt yourself in order to climb the grid, so that you get better sponsorship that pays for last years' debts. Even if you play that well, that's no guarantee of success, as Lotus can attest.

Is that different from any business?

Going into debt to grow, and lack of guarantees are inherent of any business, we can´t expect F1 to be different. But with fully equitative distribution this risk would be assumible, while today the debt would need to be too high, so none is willing to do such a high bet

[FoxHound]

A poster earlier mentioned Football(Soccer) as model of fair distribution. Yet if we look at the Premiership league over the last 20 years, only 4 teams have won the league. Arsenal, Manchester United, Manchester City and Chelsea.
2 of those, Chelsea and Manchester City have poured billions of £'s into the club to get them winning, with a third(Manchester Utd), now having to follow suit to regain competitiveness.

In comparison, F1 has had 8 different teams win the constructors championship the last 20 years.

Then we look at what happens to the teams in football that have not done a great job and get relegated from the premier league, into the lower and less well funded championship league.
Leeds UTD, Portsmouth FC, Bradford, Charlton, QPR, Crystal palace, Wimbledon(now defunct), Coventry, Southampton FC, Leicester City, Derby County, Barnsley , Luton, Ipswich Town, Sheffield Wednesday and Hull city all went into administration due to loss of income from relegation.

And this list only deals with teams that have reached the top tier, then got relegated. If you look further down the leagues, man it makes for some sorrowful reading.

This can relate to F1 in many ways. It is my view that Marussia and Caterham, sadly, do not add anything of value to F1 other than to make up the numbers.
The grid is less competitive with them participating, than had there been a 3 car team mandate as bernie is proposing.

But if it is proposed that these lower rung teams receive larger portion of the pie, what is to say that this money does not get squandered as it does in other forms of sport? And what value does the spectator get from Marussia having an extra 30 million?
Investments year on year of over 100 million in addition to whatever income is had, for a good 3/4 years is needed to see any semblance of progress for these guys. Who has the appetite for that? Not even the boss of Caterham, Mr Fernandes.
So, F1 is clearly not the place for them.

I also see alot of people anti 3 car teams. But if we actually think about it for a moment....
Midfield teams could run 2 fully fledged racers and one pay driver, more income from FOM, more sponsorship money, more intra team battles and a secure Sauber, Force India.
We then also have a delicious prospect of a Menage a trois for the championship. Amidst all this Alonso hoopla....imagine for a second, he is waiting on the 3rd car ruling to jump into a W06 next year?

Rosberg, Alonso and Hamilton all in the same car? There is a very remote possibility of it happening. And when the theoretical dust settles on this theoretical prospect, who will swap that for Caterham and Marussia?

Not I.

[MOWOG]

I think the way the money is distributed in F1 should be changed, but while you guys are talking about football, it reminds me of the experience of major league baseball. For many years, MLB has imposed a "luxury tax" (a term borrowed from the game Monopoly) on payrolls above a specified amount. The teams are free to spend as much as they want, but above the luxury tax maximum payroll, they have to fork over an additional 10% to the league, which then distributes that cash to the lesser performing teams.

The theory is that there are big market teams like New York, Boston and LA who have a lot of money to spend and small market teams like Toronto, Tampa Bay and Arizona who don't. So the league gives money to the little guys so they can go out into the market and obtain better players and become more competitive.

Except it doesn't work out that way. Those small market teams usually funnel the extra cash into the pockets of ownership and keep putting the same dreadful teams on the field.

An analogy could be drawn with Ferrari, McLaren, Red Bull and Mercedes as the big market teams and all the rest being the small market teams, Funneling more money to the small fish may - or may not - produce more competitive grids. We all love our sport with all our hearts, but as Bernie has shown us for the past 40 years, when you get right down to it, it's just a business.

Mercedes hasn't thrown a half billion dollars into its engine package because it loves racing. They have done it because they expect to reap a benefit for their core business of making and selling automobiles. Red Bull does this and about a zillion other sporting endeavors to sell more beverages - nothing more and nothing less.

There are still some teams who do it for the love of the sport. Ferrari and McLaren come to mind, Probably Williams and Sauber fall into that camp as well. But the rest? If any of them got that extra $100 million that Ferrari gets, would they be any more competitive? In all honesty, the answer is "Probably not."

Should the financial structure of the sport be revamped? Yes. Will doing so make us happy as fans of the sport? Probably not.

[FW17]

There are still some teams who do it for the love of the sport. Ferrari and McLaren come to mind, Probably Williams and Sauber fall into that camp as well. But the rest? If any of them got that extra $100 million that Ferrari gets, would they be any more competitive? In all honesty, the answer is "Probably not."

The question should have been, had they got extra $100 million would they have spent it on racing. The answer YES

You need competition when you call it the world championship. It does not matter how far they are back but they there is always a group within which they compete.

Caterham and the other 3 teams that were to join F1 in 2010 would have been in a much better position had they been allowed access to a top car's IP for the first 2 years before they got their design teams in order after the budget cap failed. F1 the last few years have been great among the midfield; in most years (2010-2013) they were so close to the top 3. We even had some races where in more than 10 cars were within 1 second of the other.

8 teams is not a world competition.

The problem was we had dick heads in F1 like LMD and FB, thank god they have been dumped.

[astracrazy]

@foxhound

I know the point your trying to point out, but your not giving a clear account. I did just post a big essay on correcting this, but its an f1 forum so i removed it.

2 teams paid for success (About £500-£600M over 5 years), but paid a hell of a lot less to get it than f1 teams spend over 5 years for nothing. A lot of teams went/go into admin, but its all from miss management. Far far more carry on with no problems.

[emaren]

8 teams is not a world competition.

Eight well funded competitive teams fielding 3 or more cars each, is, in my view, considerably better than watching no-hopers that are multi-seconds a lap off the pace poodle along at the back.

If we lost Caterham, Marrusia, would it be any loss to the quality of racing this year. Heck the same argument could be applied to Sauber and Lotus too - both teams have been pitiful this year and not really involved in any actual racing, more 'making up the numbers'.

If F1 replaced Lotus with, say, the Mercedes 'B' team would that be more interesting ? I'm fairly sure that they would beat the 2014 tally of a pair of 8th places as the highlight of the year.

Sauber have been even worse, their highlight appears to have been a pair of 11th places, sure the Ferrari engine has been horrible, but their drivers are pretty good. If they were Ferrari 'B', surely that would be more entertaining ?

[pob]

I think your view on whether 3 car teams or B teams are better for F1 than having struggling underfunded teams at the back is coloured mainly by whether you routinely support the underdog. Just occasionally these teams will have a gem of a race/season, and without the backmarker teams there is less chance of a romantic performance (e.g. Bianchi's points in Monaco) and F1 is worse off without this possibility.
Would Panis's '96 Monaco victory have been so special if Ligier had been officially called "Benetton B team"?

[adrianjordan]

I'm actually all for some variant of B-Teams or customer-cars.

Why not allow less well funded teams to buy a front-runner's design and run it. Okay, so maybe they still have to build it and develop updates for it themselves. I have no problem with that. And perhaps you also have a rule that they can only use the same team's design for a maximum of 3 years (arbitrary number) before either buying a different design or designing their own car - which they could develop from the previous customer car.

Seems like a way to make the field more competitive and, hopefully as a result, more sustainable...

[emaren]

I think your view on whether 3 car teams or B teams are better for F1 than having struggling underfunded teams at the back is coloured mainly by whether you routinely support the underdog. Just occasionally these teams will have a gem of a race/season, and without the backmarker teams there is less chance of a romantic performance (e.g. Bianchi's points in Monaco) and F1 is worse off without this possibility.
Would Panis's '96 Monaco victory have been so special if Ligier had been officially called "Benetton B team"?

I've always been a fan of the underdog.

Pierre-Luigi Martini's exploits at Minardi were extremely interesting to me.

But watching 2-3 teams fight over 19th place, it seriously dull.

any 'giant killing', more-with-less performance is awesome to watch, but what has Caterham achieved in the 55 races in which it has competed since it began ?

- No Poles,
- No fastest laps
- Two 11th places
- 22 retirements (20% failure rate)
- 1 DNS

Of the small teams, Damon Hill leading the Hungarian GP in 1997 in the horribly uncompetitive Arrows was an incredible 'show'. Had he done it in a Minardi, it would have been even better......

But we have not seen this in the last few years.....

[rohit1594]

I think your view on whether 3 car teams or B teams are better for F1 than having struggling underfunded teams at the back is coloured mainly by whether you routinely support the underdog. Just occasionally these teams will have a gem of a race/season, and without the backmarker teams there is less chance of a romantic performance (e.g. Bianchi's points in Monaco) and F1 is worse off without this possibility.
Would Panis's '96 Monaco victory have been so special if Ligier had been officially called "Benetton B team"?

I've always been a fan of the underdog.

Pierre-Luigi Martini's exploits at Minardi were extremely interesting to me.

But watching 2-3 teams fight over 19th place, it seriously dull.

any 'giant killing', more-with-less performance is awesome to watch, but what has Caterham achieved in the 55 races in which it has competed since it began ?

- No Poles,
- No fastest laps
- Two 11th places
- 22 retirements (20% failure rate)
- 1 DNS

Of the small teams, Damon Hill leading the Hungarian GP in 1997 in the horribly uncompetitive Arrows was an incredible 'show'. Had he done it in a Minardi, it would have been even better......

But we have not seen this in the last few years.....

Noteworthy performance of smaller teams in recent years would be Canada 2007 (Super Aguri), Monza 2008 (Torro Rosso), Spa 2009 (Force India) & Monaco 2014 (Marussia). Only Torro Rosso won out of these four, but nowadays even a points scoring finish or a podium (like in Force India's case) would be considered a good performance, sadly.

[astracrazy]

so with that in mind a two tier championship may well be better?

We are all saying the backmarkers are boring to watch, bring nothing to the sport. But there would be more interest if they were fighting for a championship as well no? to jump up into tier 1.

just saying btw