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F1's chickens come home to roost

2014-10-28 08:31

9 ON THE GRID: The 2014 US GP is going to be an interesting race as there will only be 9 teams on the grid for the first time in F1 since 2005. Image: AFP


LONDON, England - Talk of financial crisis in Formula 1 is nothing new but the absence of back-markers Caterham and Marussia from this weekend's (Nov 2) US Grand Prix in Austin, Texas, after they went into administration has concentrated minds.

For the first time since 2005 there will be only nine teams in the paddock and some of them are competing in straitened circumstances.

It's a long-standing joke that the best way to make a small fortune in F1 is to start with a large one but securing even a basic budget is proving increasingly difficult in a sport that burns through cash at eye-watering speed.


Sauber has made no secret of its problems while Force India owner Vijay Mallya continues to make headlines since being declared a "wilful defaulter" in September 2014 by state-run lender United Bank of India.

Speculation has also swirled around Lotus, which has had serious financial problems. The signs of trouble have been there for years, with regular warnings and calls for cost caps along the way. The plight of Caterham and Marussia, each hoping to find a buyer, comes as no surprise.

Max Mosley, a former president of the governing International Automobile Federation, told The Times in England on Monday (Oct 27 2014): "It seems the chickens have come home to roost."

Mosley helped three new teams into the sport at the start of the 2010 season, after a manufacturer exodus, with a promise of budget caps and regulation tweaks to ensure they could compete on a level field.

The R706-million equivalent annual budget cap never happened; the big teams refused to countenance such a measure and by the end of the 2010 season Mosley spelled out the risks implicit in that rejection. He declared at that time: "For 2011, you need the equivalent of R1-billion, with R330 or R440-million from Bernie Ecclestone and perhaps R220 to R275-million from sponsors or the drivers.

"I'd say six teams are wondering where the rest is coming from. It's quite possible we will lose two or three teams."

Mosley's words would have been just as valid now. He added on Monday: "The budget cap was absolutely the right thing to do. Clearly no sport can survive properly when some teams are spending four and five times more than the smallest.

"There cannot be proper competition that way."

  • Caterham, which started life as Lotus Racing under Malaysian entrepreneur Tony Fernandes, was supposedly sold in July but went into administration last week (Oct 23 2014) amid a paper storm of accusations and counter-claims.

  • Marussia, which made its debut in 2010 as Virgin Racing, followed on Monday (Oct 27) for financial reasons.

  • Spanish-based HRT folded at the end of 2012.

The US GP will be the first race since 2009 without any of those new teams and risks being remembered as the end of a bold experiment that might have succeeded but was ultimately doomed by vested interests and a lack of vision.


Of the three, only Marussia scored points and that was in May when French driver Jules Bianchi finished an astonishing ninth for a team so hard up it couldn't afford celebratory Champagne. And Bianchi now lies critically injured in a Japanese hospital after an horrific crash in Japan three weeks ago (October 5 2014), a personal tragedy that was also a disaster for the team.

Even without the nightmare of Suzuka, Marussia was on borrowed time with the team desperately trying to stay afloat in a very deep ocean. Its budget of about R885-million was generally regarded as the smallest of all the teams when compared to the equivalent of R3.5-billion plus for the likes of Mercedes and Ferrari.

F1 has seen more than 120 teams come and go, with Ferrari the only one to have stayed the course since the championship started in 1950. About 50 never scored a point.

To some, that is the nature of a sport that carries no passengers and in which only the fittest survive; the F1 scrapyard is piled high with illustrious names once considered immortal but there are many who question whether teams should still be folding in a sport with an annual turnover of more than R16.4-billion and an annual prize fund of more than R8.2-billion.


Part of the problem lies in the distribution of that fund, with the big teams taking the lions' share and some, such as Ferrari, getting additional special bonuses.

Paola Aversa of London's Cass Business School said: "In every industry, successful companies stay in the market, less successful ones disappear, but if we consider that in F1 on average one company goes under every year and that even the successful firms struggle to break even, we must wonder whether the business model of this industry is actually sustainable.

"We should ask whether the distribution of wealth is proportionate to a point that allows all the players - administrators and teams - to get a fair share of the pie and thus achieve a reasonable turnover."

Aversa pointed to the major American sports as an example of a business model that ensured even small teams could compete.

Whether F1, in which a small team's engine supply alone costs around $20-million a year, has the will to change remains another matter. The talk now is increasingly about the big teams possibly running three cars rather than two, a move that would only increase the problems of smaller outfits that risk being squeezed even further out of the points.

The International Automobile Federation has made no substantial headway in reining in costs. Now, under former Ferrari boss Jean Todt, the governing body announced in 2013 that a cost cap would be introduced for 2015.

In April Todt said the plan had been dropped because the leading six teams did not believe it was viable.

Stay with Wheels24 for the 2014 US GP this weekend.

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