Blog: The perils of the Party of Five
It appears that I may owe you all an apology.
I had thought that Bernie Ecclestone and the cabal of top F1 teams were merely selfish, complacent and blinkered. In the course of the Friday prior to the United States Grand Prix though I instead was met with the creeping realisation that I may have overestimated them; that rather they are idiotic and wilfully destructive. While remaining selfish.
What I had assumed was merely lethargy may well actually have been strategy.
We all know the state that F1 is in with its finances. We know its manifestations, particularly those of recent days and weeks. We even know in large part why it's happening - that cost control has flopped and what cash there is is massively concentrated among a few at the top. To the point that a couple of teams get each year guaranteed Bernie money just for being them that exceeds what the teams at the back spend on everything in a season. That it persists in large part because the teams - particularly the said big ones via the infamous Strategy Group - get a major say of the sport's governance, with the myriad potential for vested interests therein. All teams look out for number one; turkeys don't vote for Christmas (as was pointed out on Twitter by the inimitable Fake Charlie Whiting, can you imagine Man United getting a say in the laws on how throw-ins are taken?). And that the FIA has been neutered, only getting a third of the say on the sport that is supposed to be its own. As well as that Bernie seems oddly protective of the deformed model he's helped create.
But rather than sleep-walking into this state, due to no one taking responsibility for the sport's greater good, the creeping realisation that I mentioned is that Bernie and the top teams might actually have walked to here with eyes wide open. Deliberately and guided by a map that they penned themselves.
That – for whatever reason – they want the teams below to drop over the precipice so that the sport is an effective carve-up for them. With the resultant deficit made up either by three-car teams or as few as five constructors (which would be Ferrari, Red Bull, Mercedes, McLaren and perhaps Williams) each with a customer 'B team' buying a chassis from its parent. I noticed someone theorise on Twitter that Bernie may be planning this even as a 'GP1' style breakaway from the FIA (almost bringing us back full circle to the FISA-FOCA war of the early 1980s, except this time Bernie has the grandee teams rather than the garagistes on his side) – which if so would explain his latest round of public degenerating of the sport in the Austin weekend (engine noise and the like yet again). At the very least, even if this destination wasn't deliberate those powerful players don't appear too perturbed now that they've reached it.
Force India's deputy team principal Bob Fernley suspects too that F1 as a Party of Five is being engineered, and said so prior to the Austin race.
'The way I feel at the moment is that we are at a crossroads.' he said to Autosport. 'There is no point looking backwards because we have been there, knowing full well that this crisis was going to happen two years ago.
'As a result we need to look at where we are today. And clearly what it shows to me is that there is a plan between [F1's owner] CVC and five teams, which have been enriched and empowered, and they have a clear plan for the future of F1.
'F1 in 2015 will not be the F1 we have known. We are past that, the damage has now been done with the loss of Caterham and Marussia. And the question for me is how many more teams do they want to drive out of F1 before they achieve their goal? And more importantly what is their goal?
'Because for a normal F1 programme, neither the three-car team nor customer car teams works.'
Even in my fledgling existence as an F1 journalist I have been to enough of the sport's set piece press conferences to know that many of them are rather dry affairs; some end before even their allotted time is up, dying mainly of apathy. The teams' one on a Friday is a particularly common culprit for this. But the one just passed in Austin was a thriller, extending well beyond the usual half an hour with the air leaden with tension throughout. But that it was gripping only underlined just what a critical point that the sport has got itself to. As Lotus's Gerard Lopez said during it: 'now is not the time to be talking about, but to be acting about it'. The critical matters right now coming to a head were played out in full.
Even the arrangement of chairs was right, with the two at the front - Toto Wolff of Mercedes and Eric Boullier of McLaren – representing those thought to be in the charmed circle and the three behind – Sauber's Monisha Kaltenborn, Lopez of Lotus and Force India's Vijay Mallya – glaring down upon them as those left out of it. The have-nots repeatedly challenged the haves; the haves batted them away. Indeed they even sought to blame the have-nots for their plights.
Wolff stated the importance of spending within your means (a concept since repeated by Boullier and Bernie). It's a fair enough point in itself, though also easily said from his position of having the biggest budget in the sport and the vast pot of Mercedes lucre behind him ('check your privilege' as the kids of today like to say). Nevertheless Williams for one has shown what is possible - both in security and competitiveness - from careful budgeting. But even Williams reportedly has made a £20m loss this year.
Lopez retorted that plenty of the costs that the teams in the midfield and back have faced were hardly matters of choice; that there's a minimum cost just from turning up that in practice is non-negotiable.
'I take the example of Marussia, of Caterham' he said. 'I kinda guess what they must have paid for the engine this year and what they have paid for developing around that engine and I guarantee that in the budgets that they have, there was not a whole lot left – so it's not like they had a choice. And the choice of the engine was not made by these guys.
'It's all good and fun and so on to say that you shouldn't spend more than what you have or not. But at the end of the day, certain decisions on budget are forced up on you. Just by the fact that that's what the market is giving you. If I went to Pastor (Maldonado) or Romain (Grosjean), I told them that next year they're pedalling their car, they're not going to be particularly excited. It would be way cheaper for us, and financially for me, as an entrepreneur it makes a lot of sense for me 'cos I might actually make money - but it's not going to be very competitive. So if you want to stay competitive at a minimum level, you are forced to spend at a certain level.
'I guarantee you that of the teams, let's say the back row teams, if there was an engine manufacturer out there that could offer an engine for five million, or six or seven, that would have decent performance, I guarantee you that everybody would take that engine...the fact is there's a minimum budget that is required today to even exist in Formula One. And that minimum budget has actually killed two teams. And they did not decide to spend their money on the kind of things that they had to spend it on.'
Max Mosley indeed last week opined that the sport seriously missed a trick in not severely capping the price that the manufacturers could sell the new power units for this year to its customer teams. Tony Fernandes recently ex of Caterham on TV said in addition that tyres now come with a heavy price tag, whereas when his team first entered the sport the Bridgestone tyres were free.
As for fears that F1 would be dumbing down with budget cuts, Lopez used the comparison with GP2 to demonstrate that at the sport's current spending levels it is now splurging king's ransoms for lap time gains that are minuscule.
'There's something called the Law of Diminishing Returns' he said. 'I take a GP2 team, or a GP2 car, and I make it race around this track. It's not going to be ridiculous. It's going to be down by a couple of seconds, four, five, six, maybe seven seconds. The whole GP2 team for the whole season is going to cost €4m. Are we really that much better? I mean are we really better to the point that a team needs to spend €300m to be six seconds faster? We're not. I wouldn't accept that argument from anybody.
'So it's a bit ridiculous to say that you need to spend that kind of money to have that kind of performance - because that makes us the worst managers in the world. If I took a financial view of this sport, comparing GP2 to F1, and the so-called Law of Diminishing Returns, we are most probably the worst managers there are.'
Seriously, why haven't we heard more from Gerard Lopez before? The man has a properly good line in common sense.
Wolff nevertheless sought to stick to his guns: 'This is a high entry barrier sport. I'm getting overboard now, but if you want to set up an airline tomorrow, it’s going to be difficult, because Lufthansa is going to eat you up. If you want to go motor racing and you want to do Formula One like the new teams decided four or five years ago, you need to understand that this is the very top.'
Again true up to a point. F1 should be the elite, and I wouldn't welcome either a sort of opposite extreme of F1 such as in the 1970s when anyone with a modest budget in the tens of thousands could go Grand Prix racing akin to a Toad of Toad Hall. A balance should be struck. But the balance is way too far off in the other direction right now. Building from the bottom Frank Williams-style has seemed a virtual impossibility for a decade or more. And I suppose too a difference between Lufthansa and Mercedes in F1 is that while Lufthansa would love to have a monopoly and it would be very good for the firm, no one would watch a Mercedes circulating a track by itself, thus its 'eating up' opponents would be ultimately to its own detriment. You wonder if this has entered its calculations.
There are plenty of perils indeed with the design – if that's what it is – for the sport to become a Party of Five in whatever form. Partly that with customer cars we may in effect have a two-tier formula, akin to sport fattening out the grid with F2 cars as it did on occasion in the sixties when again the F1 turnout got paltry. And the sport's history in creating equivalency formulae is not an encouraging one.
As Martin Brundle noted too on TV over the Austin weekend that with Marussia and Caterham not present Williams is now at the very bottom of the pit lane. Reminding us that – whatever its renaissance this year, sitting third in the championship – just 12 months ago it was only beating the B class (and not by far). There have to be opportunities for the teams' order to ebb and flow in other words. Drawing an arbitrary line in one moment in time under which everyone falls out of the bed rather flies in the face of this.
But the main and overarching risk in reducing the sport's number of effective constructors is that you vastly increase the volatility of the sport's entrants. Teams always have walked away or similar; it's a constant. And the fewer competing units there are the bigger the chunk of the grid that is removed in that eventuality.
Further as Brundle outlined a few weeks ago in Monza when this chatter was set in motion by an Adam Parr tweet: 'Even in a front-running team somebody's going to be last. We've seen Toyota, Honda pull out, BMW disappeared. We need to be really careful.' In other words presumably members of the haughty and lavish big five would be particularly minded to walk away if it was the one - without the independent teams behind it any more - to end up at the back.
Michael Schmidt of Auto, Moto und Sport smacked the nail square on the head in his question in the same press conference: 'As we now have only nine teams, so P8 and P9 are last and last but one. Three weeks ago it was P10 and P11. Next year it might be P6 and P7, last and last but one. If only big teams are left, are you not afraid that one day you might be among them and then your whole business model doesn't pay off any more because you've spent much more money to lose than the current teams are spending to lose, which are at the bottom of the field?'
Apparently not, judging by Wolff's and Boullier's responses.
Vijay Mallya would say this of course, but in my estimation he's absolutely right that: 'You can't have Formula One with only manufacturer teams. You need smaller teams, it’s part of the DNA of Formula One for several decades... they are heart and soul, names like Sauber, Force India and Lotus need to stay in the business.'
While for the likes of Red Bull, Mercedes and Honda – which are not in F1 as their raison d'etre – as we have seen before frequently the decision to quit would be a brutal and instant one. As Jackie Stewart noted on such things a few years ago: 'the decision won't come from their trackside personnel, but from the Board of Directors. There's no racing passion there. It will be a straightforward and cold-blooded decision.' Pinning the future of the sport on their continued involvement seems foolish.
The issue has moved on a little in the days since, with Bernie saying the situation was probably his fault. True (no ‘probably’ about it) but also too little too late. And then in his next breath suggesting that the responsibility lay with the teams was disingenuous. In any case the points may be moot. Adam Parr – ex-Williams CEO – reckoned it was simply more of the same, an attempt at divide and rule of the big teams versus the small.
In a major plot twist however CVC of all entities has since intervened reportedly (for the first time anyone can remember) and done so in terms of promising to help the struggling teams out, perhaps by giving up some of its own financial cut. Which of course may tell us something much bigger in terms of the relationship between Bernie and his employer. Certainly if Bernie’s ploy for the small teams to drop off was indeed a strategy it appears that CVC does not support it.
After the team principals' press conference, on the TV station I was watching it was followed immediately by one of the Brunswick archives' rather wonderful season reviews, that of 1977. Seeing an example of the sport's rich and extended history, and in an era wherein there were plenty of competing constructors in an competitive fight (though also ironically enough some private entrants and even three-car teams...), the contrast with what we'd just seen - and the future of the sport apparently being framed - clattered much heavier than usual. This game indeed has a common thread; a DNA. And those with power seem now determined to alter it beyond recognition.
I don't care what contracts say. The sport is not theirs. Not theirs to chew up for their own sustenance. It belongs to all of us. They shouldn't forget that.
Author: Graham Keilloh
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