F1 Budgets 2011: Who does more for less?

[bhall]

This cracks me the hell up. Apologies if it's considered off-topic.

Formula 1's frontrunning teams could face a dramatic increase in entry fees for next year's championship if plans being considered by the FIA come off.

As part of the ongoing negotiations between the teams, Bernie Ecclestone and the FIA to frame a new Concorde Agreement for 2013, talks have edged towards agreeing potential income that the governing body would like to receive from F1 entrants and the sport's commercial rights holder.

No deal has yet been reached, but high level sources have revealed that one option being considered is for the FIA to seek a much greater share of its funding from the teams - which it can then use to invest in its running of the sport and other road safety initiatives.

AUTOSPORT has learned that one idea that has been suggested to the teams is for the entry fee to rise from its current cost of 309,000 Euro to a level that could see several teams pay multiple millions for their entries.

In a bid to centralise the cost of extra services that teams use, and currently pay extra beyond the entry fee to the FIA for (such as the Meteo France weather service), the governing body wants to have everything included in one fixed price.

Sources have revealed that the proposal that has been put forward to the teams is for the entry fee to rise to 500,000 Euro per outfit, plus 7,000 Euro per point scored in the championship.

This means that the more successful teams would contribute much more to the running of the sport and suffer a dramatic rise in costs.

Taking last year's constructors' championship standings, the entry fees in Euro under that new plan would be:

Red Bull (650 points) 5.050 million
McLaren (497 points) 3.979 million
Ferrari (375 points) 3.125 million
Mercedes (165 points) 1.655 million
Lotus (73 points) 1.011 million
Force India (69 points) 0.983 million
Sauber (44 points) 0.808 million
Toro Rosso (41 points) 0.787 million
Williams (5 points) 0.535 million
Caterham (0 points) 0.500 million
HRT (0 points) 0.500 million
Marussia (0 points) 0.500 million

Although no team principal would talk on the record about the matter, several suggested that they were keen to discuss the situation with the FIA, and enquire about why the fees were rising so much - and exactly what the extra money was being used for.

This is an obvious refusal by Ecclestone to renegotiate the terms of the commercial rights deal between FOM and the FIA, which Todt has stated was one of his goals, because, obviously, Mosley basically gave them away with a stale baguette on the side. So, now the FIA has to get more money from the teams as it tells them they need to cut costs in order for the sport to survive.

(The irony is richly entertaining.)

Seriously, the teams and the FIA need to collaborate on Formula A and leave Bernie and his entire network the --- out. This is beyond absurd.

[Richard]

So the teams pay cash based on points won, and then win cash for points won?

As I recall the prizes come from FOM so the FIA scheme is grabbing a share of the money handed out by Bernie?

[bhall]

...to the teams. The FIA wants/needs more money, and because it seemingly can't possibly come from the one entity in this whole ordeal that's verifiably making money from this whole ordeal, FOM, they're going to take it from the teams' pockets.

Basically, what we're seeing, I think, is that absolutely nothing can part Ecclestone with money he doesn't want to part with. Circuits can and do go under, teams can and do go under, the FIA struggles, but nothing even slows down the Ecclestone money train, even though he adds positively nothing to the equation; he's a (very) glorified middle man and nothing more.

I honestly don't know whether to loathe him or to worship him as a deity.

[ESPImperium]

Hi,
ESPImperium, I am interested in the budget and staff figures you provided the forum with. However I cannot use them in my work without verifying their accuracy. Would it be possible to get the sources where you found the information please? I would have preferred sending you a PM but I am not allowed until I have posted 5 times on the forum, so now I am down to 4 :)
Many thanks in advance,
Cheers
Astrid

Hi ESPImperium,

Just discovered your post on F1 teams budgets. Are you able to share your sources?

Sources are Sports Pro and Formula Money/Pit Pass and some Autosport articles. All top quality and trusted and respected sources.

On the entry fee thing. Ive heard that it will be a minimum of €500k for those who dont score points, and €10,000 for every point, with a maximum of €5m. However this topic has been over this ground before in 2002, 2007 and now 2012, previouysly Bernie wasnt playing ball woith the FIA and the teams were against the success "income tax", and Max took it from the drivers by raising their Super Licence fee from €400 a point to €2,000 a point, a mid point of €1,150 was then reached.

Conciveable, If Bernie was to give the FIA 2 of the 3% they want and not the 1.5% on offer from FOM, the FIA woult take it as thats €60m of the €90m they need every year, then they could take a success tax from 2 sources in F1, the teams and the drivers.

Take €20M from the teams and €10m from the drivers, and push thrugh new driving standards regs as well with it. Either drivers want to be in the sport or they dont, teams for this would see certain regulation freedoms as their carrot, maybes give them more freedom somewhere. Also change a few rules with DRS where each car has 3.5 laps of the pole time in the race, and no DRS zone with unlimited usage arround the track, this would mean DRS would become a tactical tool like KERS to attack or defend.

[zyphro]

Seriously, the teams and the FIA need to collaborate on Formula A and leave Bernie and his entire network the --- out. This is beyond absurd.

=D> .

I've always personally thought that: the teams should run the sport.

[TzeiTzei]

Sources are Sports Pro and Formula Money/Pit Pass and some Autosport articles. All top quality and trusted and respected sources.

Formula Money, Pit Pass or anything that is in any way related to Christian Sylt is not to be trusted, and most certainly is not a respected source.

[bhall]

Seriously, the teams and the FIA need to collaborate on Formula A and leave Bernie and his entire network the --- out. This is beyond absurd.

=D> .

I've always personally thought that: the teams should run the sport.

Well, I think it should be run by the teams by way of a commissioner of sorts: an independent figure elected by the teams to represent the collective business interests of F1. The artist formerly known as FOM would then be a non-profit organization in and of itself. All money would flow to the teams.

This is the model North American sports have used with great success. The NFL, NBA and Major League Baseball comprise three of the top-four leagues in the world in terms of revenue, and they continue to grow by every measurable parameter. This could work for F1, and the FIA could still play its role as the sanctioning body of the sport.

It will never, ever, ever, ever, ever, ever happen, though. For one thing, Ecclestone won't allow himself to be pushed out. He's only alive to play his money game. His pallor would quickly turn to rigor mortis if he somehow found himself unable to bend over and sodomize circuits, teams, fans...basically anyone who wants anything to do with F1 and has two nickels to rub together. The palatial American estate he bought for his twit daughter is nothing more than him gloating over his success.

Even if Ecclestone somehow got moved out, CVC wouldn't just allow the sport to run itself. They paid through the nose for F1's commercial rights, so much that they're still servicing the interest on the debt. The teams would have to purchase F1 from CVC for an astronomical sum to achieve autonomy.

Even if they did that, I'm convinced the teams could never, ever, ever, ever reach a revenue-sharing deal amongst themselves. It is this fact alone that keeps Ecclestone and CVC in business. The teams aren't required to deal with each other; they deal with Bernie. Frankly, I can't imagine an inter-team process that would allow Ferrari to maintain its hallowed, over-the-top-earner status.

If anyone involved with F1 truly had concern about the well-being of F1, they'd move toward reducing the money across-the-board so that circuits wouldn't be forced to drop in and out of the calendar due to a lack of funds. (Whenever you read something about circuits having trouble, read that as fans having trouble. Circuits = fans, always, even the rich circuits in the Middle East. They just happen to have rich patrons, who are intrinsically the fans in question.)

F1 is pricing itself into irrelevance, because it doesn't even attempt to cater to its customers. We don't exist in the eyes of F1; we have no power; we're meaningless. This is evidenced by the fact that F1 has to commission formal --- surveys to gauge fan interest. That's unheard of in other sports, because ticket sales are supposed to gauge fan interest. But, that - us - means nothing to F1.

For my sanity, I have to abruptly sto

[Tommorris747]

Sources are Sports Pro and Formula Money/Pit Pass and some Autosport articles. All top quality and trusted and respected sources.

Formula Money, Pit Pass or anything that is in any way related to Christian Sylt is not to be trusted, and most certainly is not a respected source.

I disagree. The boss bought a copy of Formula Money and the annual expenditure valuations for the three F1 clients we work for were within plus or minus 10%. It actually made me wonder if the client leaked the figure in one of the cases as it was bang on. Cannot vouch for Pit Pass or Auto Sport though as I don't read them frequently.

[bill shoe]

ESPImperium—

I am not buying the figures you give here. I don’t think they’re even close.

You write the Ferrari F1 expenditure, including engine program, is 440 million Euro (half a billion $) per year.

If Ferrari sells 5000 road cars per year then the F1 team is spending $100,000 PER ROAD CAR as a marketing/image excercise. Not plausible. Don’t tell me they get this money from x, y, z, etc. It would never make sense to spend $100K per car on marketing/image.

You write the Cosworth engine program is 70 million Euro (~ $100 million) per year. Yet at most they were doing leases to 3 or 4 teams for, what, $5-10 million per year? How does an independent company like Cosworth make up the gap between income of $25-50 million per year and expenditure of $100 million per year? They don’t. The figure isn’t accurate.

I have seen breathtakingly large F1 budget figures for several years now, and I think they originate from people who want to create shock value, or justify their own budget going up, or whatever. I don’t think these types of figures are plausible, much less true.

It’s like you tell me that 3 good sources have confirmed that Barak Obama weighs 400 lbs. I look at any picture of Obama and conclude there is no plausible way he is 400 lbs. I conclude the sources must be wrong.

[Tommorris747]

According to the financial aggregator website Duedil, Mercedes had a budget of $327 million in F1 in 2010 so I think this must be a good indication of the amount available for Ferrari (not precise but roughly)

[Petroltorque]

I'm afraid the figures quoted for team budgets are well wide of the mark. I take an avid interest in the smaller outfits and Luiz Perez Sala that HRT's budget for this year is euro 50 million that equates to the initial cost cap figure of £40 million. Graeme Lowdon and John Booth have constantly stated that they are still operationg within a cost cap. If one takes the upper limit Mosely suggested of £45 million that equates to less than euro 60 million even with currency fluctuation.
I appreciate that Budget figures are difficult to obtain but they figures quoted look like they've been thought up by someone that's simply invented them for impact value.

[Tommorris747]

The Marussia budget stated at the top of this thread is £45m which as you mention is within the cap. In fact, according to the aggregator website Duedil, Marussia spent £48.8m in 2010......
https://www.duedil.com/company/07059597 ... financials