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Now two years after the sudden xodus of most of the team-owning manufacturers in F1 and that only Ferrari and Mercedes remains as teams, I'm still confused over what really happened?
From planning their own series to a collective walkout, what gives? Personally I suspect their market departnments got scared with MrM's various physical activities and when the breakaway series was scrapped, they had little alternative?
"I spent most of my money on wine and women...I wasted the rest"
Basically a very simple process. The manufacturer teams were in a cost race that was unsustainable anyway. The global recession following the banking crisis just triggered a very sharp reaction. Some firms like Ferrari use F1 as their total marketing mechanism and had no option but continue. Merc managed to reduce their cost fast enough to keep up the F1 engagement but apparently also at the cost of winning.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best ..............................organization, not to those with the biggest budget. (Dave Richards)
I beg to differ, when the Bavarians left, the financial crisis was still some months away, though it was later used by Honda and Toyota as an xcuse. Renault kept their cool however and now found a more elegant way of ditching MrE's circus.
"I spent most of my money on wine and women...I wasted the rest"
The recession started in 2007. By July 2009, when BMW announced their withdrawal from F1, it was in full swing.
However, I don't think that's the only reason why BMW left. They simply weren't competitive, and, unlike during the Williams years, they couldn't blame their lack of success on anyone but themselves. They were clearly lost without a clue when all of the extraneous aerodynamic devices they seemed to rely upon from 2006-08 were banned with the overhaul of the regulations. I have to think they would have stayed had their performance been improving rather than falling like a stone.
The same can be said for Honda and Toyota; though, I'm pretty sure Honda probably regrets pulling the plug just before a car they financed enabled Button and Brawn to win both World Championships. That probably still stings a bit.
The withdrawal of Toyota and Honda was inevitable it was not just the crisis Toyta had that big technical issues with car callbacks as well so the political correctness of financing a dollarguzzling entity with no real benefit for the company apart from showing technical expertise was always going to be weak especially when you cannot wave around with the silverware:Toyota. not even a grandprix win,Honda :decline to a backmarkerstatus within 3 years,BMW -fall from grace with the introduction of new regs...so the money coming from the advertisement guys will be instantly stopped as soon as you either do not deliver the goods or times are bad -sim ple as that.
Mercedes was the one company preparing for this reducing cost before the inevitable would happen.But in all honesty ..everybody interested could actually SEE those miriads of cars standing around unsold when everyone in the business still talked themselves into a rise and we are the greatest self assessment.If times aare really differnt todays ..I have my doubts ..but hey they sell cars like mad again so they are right...
Technology developed for F1 is not compatible with production vehicles. Engine Freezes, very tight rules making it harder to close the gap on any leader, and internal politics.
Its also an open secret that its the best car aerodynamically that will invariably be the best car on the grid. How is this in any way good for Ferrari/Mercedes/BMW in their efforts to be tech leaders for actual cars?
For the series to gain manufacturers again it needs to tone down the emphasis on Aero, and focus on getting the oily bits and suspension being game changers and areas where GP are won and lost. Open the rules up, but set real world limits on the amount of fuel/energy required to get through a race, with NO limit on the amount of recuperated energy allowed.
You would see technically led engineering firms and brains being enticed back into the sport rather than it be dominated by Aero wizards like Newey and Tombazis.
Of course it will take a paradigm shift for that to happen, but I reckon we will see it sooner rather than later.
It is noticeable that the two who succeeded (Merc & Renault) did so because they stuck to making engines, and left the racing to established teams (ie McL & RB). Their own-brand teams are less successful.
There is a magic ingredient to do with passion, ingenuity & rigour that is required to be successful in F1. It can't be artificially created or bought, and there are usually only 2 or 3 teams who have it right in any one era (currently RB, McL, Fer).
Finally, the archaic governance of F1 never kowtowed to their corporate might.
Cost was never an issue for the big teams*. The issue was return. A manufacturer could, and would, spend billions on F1 - if the returns made sense. But the technical limitations and endless meddling of the FIA put the value of F1 on a downward slope. The economic collapse hastened that trend to the break point, since the return on sponsorship money isn't as great in a recession and the manufacturers had to concentrate their marketing dollars where they were effective. In this case, that was the ecobox, since that is essentially a new market where the manufacturers need to stake their claims.
When you cost cut a premium/luxury product, like F1, value will inevitably take a hit. In a manufacturing business, you can make that strategy work if you can recoup lost up-market sales with new down-market sales. But F1 is free to consumers, so going 'down-market' really made no sense. Plus the technical limits meant that the manufacturers' money wasn't being spent on visible, marketable areas that gave them the required return. F1 should have concentrated instead on increasing it's value to provide more incentive for existing teams to remain and new teams to join. Instead of setting up roadblocks, the FIA should have embraced the manufacturers and moved the sport further to the technical forefront instead of backing away from it.
But I don't think either the FIA or the manufacturers were far-sighted enough to see the sudden market shift toward the ecobox that the recession catalyzed. It should have been obvious, imo, but whatever. That shift meant that F1 became, almost overnight, a liability to some of these manufacturers, and I think that alone would have sent one or two fleeing. The previous drop in value of the sport just made their decision a no brainer. Had they anticipated the shift, it actually could have made the sport more valuable to the manufacturers, since it would have been a fantastic tool for proving that their eco offerings would still deliver the same performance as before.
Anyway, it's not an exodus - more of a sabbatical. They'll be back soon enough; but not until '13, when the new engine rules will bring the sport back in line with the manufacturers' marketing needs.
As far as the results argument goes, I think that results are incrementally important to their efforts, but simply having a presence in the sport is the greater portion of the value. Provided they weren't completely embarrassing themselves, I don't think results were make or break.
*To a point, of course. Cost does come into play when the public perceives the manufacturers as being extravagant in their expenditures, or buying championships. Mosley was very effective in using those arguments against them, which put them in a position of having to support cost cuts, too, at least publicly.
I posted this a couple times, and is good to lay out everything that happened and when, to understand when and why the teams left.
January 2008
Mosley understood as the teams didn't seem to, that budget's of 400-500 millions were simple unsustainable.
-He called a meeting with the teams and Bernie in Paris.
-He raised his concern that with 6 manufacturers in the sport who were riding record profits from 2007, something could give.
-Lehman brothers was yet to collapse.
-All teams agreed action was required, and a study was initiated into the introduction of a budget cap for F1.
-These measures were ready to be to be passed into regulation in the summer of 2008. Only one or two teams objected. If circumstances were normal, they would have been carried through, but the teams were taking too strongly to Max's spanking.
-No action was taken, then in Autumn 2008, the financial world went into meltdown.
-Now the e6 manufacturers were wroth 160e billion and not 500e billion.
-Honda, a firm entry for 2009, pulled out suddenly.
-FOTA created in summer of 2008.
December 12, 2008 - Monaco meeting with Max, and the teams,
-All teams agreed costs needed to come down
-They had many proposals, but Max felt they restricted technical freedom, but the FIA was prepared to accept their ideas.
-weeks go by, and there was no progress.
-Max repeatedly asked for meetings, and the teams refused to talk
-it became clear that the teams wanted to figure this out without their governing body, the FIA
Private meeting in Febuary
-Max addresses concernt they are going to lose more manufacturers, unless thigs got rolling soon, or the 2009 season would have not enough cars on the grid
-Luca promised signed letters from the CEO's of the remaining 5 manufacturer teams that they would remain.
-Soon it became clear that Luca could not produce these letters, even from his own company, FIAT.
-Luca assured that teams could run 3 cars if more manufacturers pulled out, but he could also not back that with letters or guarantees of any kind.
At this point, unable to have a meeting with the teams, the FIA had to make a choice.
A - Do nothing and hope for the best
B - Publish some rules to attract new teams so of the worst happened, there would still be enough cars for a credible championship.
New potential teams were consulted, and the FOTA teams still wouldn't agree to meet. Even though Max was fighting the bad publicity of how he likes his ass spanked, he was getting on with business.
The consultation process with the new potential teams led to the rules draft stating 30e million, but ended up at 40e million after much talk with each team individually, as they still refused to meet as one, and get some work done.
Teams were not keen to take a budget cap at this amount, even if it meant new technical freedom, looking towards innovation instead of chucking piles of money at a problem to go fast.
Early in 2009 three teams came up with the DDD, to the protest in Australia of Ferrari and Reanult to get the device banned.
-Protest begun, Ferrari's lawyer was in Australia ready to go.
-They lost in Melbourne, Malaysian, and the appeal in Paris
-They were furious, and the fury was directed directly at Max.
-Instead of admitting their designers had missed the loophole, they did nothing and hoped for the best.
The FIA had been one of the few sports or businesses that had foreseen the financial meltdown and tried to make steps to avoid damage, and nothing could be done due to the teams, and the spanking.
Mid March - New Rules Draft written
April 29th - Still no dialog with FOTA, they refused to meet.
-the FIA had no choice, went to the WMSC, and published detailed rules on April 29th.
FOTA claimed this was a dictatorship.
Publishing the rules and allowing for the minimum 20 day period under the ISC befroe the opening of entries at last brought FOTA to the negotiating table. Better late than never.
-When the FIA raised the question the cost cap, and make no mistake, "Mad Max" was acting on their behalf and also much of their ideas, Toyota stopmed their feet and stormed from the room, trying to get everyone to follow, and Ferrari launched legal proceedings, which failed.
May 22nd - New meeting in Monaco.
-FOTA was prepared to talk finally. Better late than never.
-They demanded three things
A - clear rules of governance
B - Stable regulations
C - gradual reduction of costs to compete
-FIA offered the governance and stability of the 1998 Concorde Agreement and to hear the teams for ideas on the third point.
May 29th
-deadline for entries reached
-the eight FOTA teams submit conditional entries rejecting the 2010 proposals outright,, and excluding the International Sporting Code as well. The FIA had until June 12th to accept or reject entries
June 11th - Meeting with FOTA
-Everything agreed to except mechanism for cost cap
-agreed that Cost cap / Resource Restrictions were virtually the same
-agreed to put their fianancial experts together (FIA and FOTA) to agree on the methodology.
FOTA immediately tears up this agreement
Following Monday FIA financial experts were confronted with a blank refusal to discus any of the FIA cost cap provisions, notwithstanding the 2008 agreement with the teams.
FOTA then announces breakaway series
Before I do anything I ask myself “Would an idiot do that?” And if the answer is yes, I do not do that thing. - Dwight Schrute
The issue I have with F1 is that change occurs painfully slowly. It's a big reason why I wanted the breakaway to happen.
It is very clear it needn't be a slow chaanger, with many exmples of big rule changes there to testify. It just needs the right rule changes for Manufacturers to return.
FOTA did the numbers and had huge support, but then the FIA held Ferrari over a barrell(contractually speaking) meaning any breakaway would happen without the participation of Ferrari, however badly they felt towards the FIA.
This stopped the breakaway there and then.
It would have been very interesting to see what FOTA would have come up with as an alternative to F1, because I think they would have actually looked at what makes the sport so attractive in other categories and utilised the lesson to produce something a bit more attractive.
As I posted before, rely more on engines/suspensions and tyres rather than aero and they could have produced something spectacular.
As it stands F1 is in a good position, alot of water has passed under the bridge and Max is no longer in charge.
Therefore with all this goodwill going on I think the time is right for the Overtaking Working group, FOTA and the FIA to sit down and discuss the problem of Aerodynamics and how to circumvent the problems so that 2013 will usher in a true new golden era for F1. It just depends how brave the suits want to be....
Don't waste your time finding reasons for the casualties. It was just not being able to justify the spending with results. Big companies that imagined they could buy into success.
The constant rule change, restriction on engine development, and possibility of standardizing engine, simply doesnt make sense for car manufacturers to continue investing in F1. It will be interesting to see how Ferrari and Merc; who are known for their V8 V12 engine will react when F1 start running the 1.6L engine.
