More Financial Troubles

[Kiwi Nick]

Caterham, Marussia and now Force India. Sauber is not looking too good either. The F1 grid could be down to 7 or 8 teams in 2015.

See this article http://http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/11219309/Force-India-auditors-question-teams-finances.html (http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/11219309/Force-India-auditors-question-teams-finances.html)

[eddie]

Bernie doesnt seem to care, last heard. Not good really....

[stefa]

This is really bad for the future of this sport.

[eddie]

I think Sauber should be ok, they secured a multi year with NEC.

[Kiwi Nick]

I think Sauber should be ok, they secured a multi year with NEC.

It would be a crime if Sauber were lost, given their importance in giving a break to young drivers.

[Rob]

the sport suffers while the commercial rights holders get richer and richer. Joke.

I know not the place, but the money teams would spend on 3rd cars could be used in engine development.

[stefa]

the sport suffers while the commercial rights holders get richer and richer. Joke.

I know not the place, but the money teams would spend on 3rd cars could be used in engine development.

Completely agree with you!

[eddie]

the sport suffers while the commercial rights holders get richer and richer. Joke.

I know not the place, but the money teams would spend on 3rd cars could be used in engine development.

You are so right. They seem to be milking the cow to its death. F1 should be about continuos development.

[Hornet]

I think this is a complex situation because there's two sides to the issue.

Bernie's stand is that CVC have given enough money to the teams, collectively. So he said he can't give them any more and it's up to the bigger teams to give the smaller teams a bigger share of the pool of money (close to 1 billion according to Bernie).


Ecclestone, though, says he cannot give the three teams any more money and it is up to rivals to relinquish some of their income.

“We’re not allowed to,” he told Sky Sports F1.

“The only way that that could ever happen is if the teams agree to share their money. They are getting nearly a billion, so maybe they can chip a few quid in between them.”
http://www1.skysports.com/f1/news/12433/9555465/bernie-ecclestone-rules-out-cvc-giving-more-money-to-lotus-sauber-force-india


Therefore, one one side, there's the opinion that the bigger teams are hogging too much of the money and they should rightfully give a bigger share to the smaller teams. This will be for the good of the sport and so they (bigger teams) stand to benefit too.

On the other side, there's the opinion that Bernie and CVC can, and should, save the smaller team by giving them extra money. The bigger teams have signed agreements with Bernie and so they are unlikely to budge. So it should be up to CVC to give the smaller teams extra money, for the good of the sport which CVC stands to benefit from.

So unless someone is willing to budge, this problem may never be solved for now.

[Rob]

I think this is a complex situation because there's two sides to the issue.

Bernie's stand is that CVC have given enough money to the teams, collectively. So he said he can't give them any more and it's up to the bigger teams to give the smaller teams a bigger share of the pool of money (close to 1 billion according to Bernie).


http://www1.skysports.com/f1/news/12433/9555465/bernie-ecclestone-rules-out-cvc-giving-more-money-to-lotus-sauber-force-india


Therefore, one one side, there's the opinion that the bigger teams are hogging too much of the money and they should rightfully give a bigger share to the smaller teams. This will be for the good of the sport and so they (bigger teams) stand to benefit too.

On the other side, there's the opinion that Bernie and CVC can, and should, save the smaller team by giving them extra money. The bigger teams have signed agreements with Bernie and so they are unlikely to budge. So it should be up to CVC to give the smaller teams extra money, for the good of the sport which CVC stands to benefit from.

So unless someone is willing to budge, this problem may never be solved for now.

how much revenue does F1 make every year?

[Hornet]

how much revenue does F1 make every year?

I don't really know how much CVC makes, but regardless, I don't think they are the only one to blame. They are being greedy, it's what they do as the the whole reason CVC invested in F1 is for the money. And they are doing what everyone else in F1 is doing, which is to look after their own interest only.

Clearly they do not see much value in smaller teams, when we look at how much more money they are giving to the bigger teams. The smaller teams doesn't have much negotiation power with them. So the only way the smaller team's interest could be taken care of is through FOTA, in my opinion. FOTA managed to get the Concord Agreement amended, they could have easily asked CVC to set aside say 100mil every year as an emergency fund for any teams in financial trouble. If only they managed to work together and signed a new concord agreement instead of individual teams going to sign their own agreement with Bernie.

With the failure of FOTA, every team is left to fend for themself and so it's not surprising that the smaller teams are falling. Despite everyone saying the smaller teams are important, both sides doesn't seem to act like so.

[wisepie]

Thanks for trying to clarify what is a very murky subject, Hornet. I hold CVC and Bernie equally to blame for creaming off so much money for themselves and shareholders at the expense of the teams who provide the entertainment and keep us hooked. There is no easy way to make things more equal when some teams have so much more disposable income and are backed by manufacturers, but it seems to me that no-one is trying hard enough to find a solution before it's too late.:Hmm

[mirafiori]

Thanks for trying to clarify what is a very murky subject, Hornet. I hold CVC and Bernie equally to blame for creaming off so much money for themselves and shareholders at the expense of the teams who provide the entertainment and keep us hooked. There is no easy way to make things more equal when some teams have so much more disposable income and are backed by manufacturers, but it seems to me that no-one is trying hard enough to find a solution before it's too late.:Hmm

Let's be honest wisepie this sport is now for the big boy's, It's like the corner shops trying to compete with Tesco and Sainsburys, maybe not the best example. After the last race in Abu dhabi I'am sure all the top teams will sit round a table to come up with a solution for the good of the sport.

[Rob]

Let's be honest wisepie this sport is now for the big boy's, It's like the corner shops trying to compete with Tesco and Sainsburys, maybe not the best example. After the last race in Abu dhabi I'am sure all the top teams will sit round a table to come up with a solution for the good of the sport.

but if more of the revenue was put back into the sport to the teams, be alot better, mybe not alot bette, but would help. Also our historic payment i dont see why we should get it now. That could go to smaller team.

[Aberracus]

The sport makes 1.6 billion a year, roughly half goes to CVC and the other half goes to the teams.

So Bernie and CVC are making more than 800 millions a year from the sport, only running FOM as cost, i think they are the greedy guys in the story.

Greed is not good

Red is better :D

[abbottcostello]

It's a counterproductive arrangement for distribution of the teams share among the individual teams.

The worse you do - the less you get... the less you get, the less you can develop your car... the less you develop your car, the worse you do.

What a sure formula for success, no????

They should increase the percentage that goes to the teams & come up with a functional formula for distributing those monies equitably among the teams, unless they really think racing with 4 or 5 teams is a viable alternative. Eliminate or at least limit the legacy payment that Ferrari gets (does any other team get this type of payment?). I think it was a necessity for Ferrari's survival when it was instituted, now I think we can stand on our own 2 feet.

[fratelliferrari]

It will be very tough for Caterham to get to Abu Dhabi. The crowdfunding went rather fast in the beginning but now they are stuck at 50% of what they need with only 3 days to go. To be honest I don't think they'll get the money in time.

[Senna4Ever]

It will be very tough for Caterham to get to Abu Dhabi. The crowdfunding went rather fast in the beginning but now they are stuck at 50% of what they need with only 3 days to go. To be honest I don't think they'll get the money in time.

I guess you will be right .... even it was a impressive move of their fanbase to gather such a big amount of money ... but I don't expect that it will be enough thou ...

[eddie]

Don't think Caterham will make it back. Heard that there are still alot of unpaid bills to settle first...

[ferrari4life]

the future of F1 has been in jeopardy for a while now. The regulation changes dont make any sense. the ideas of cost cutting but then forcing the new technologies just doesn't add up in my opinion.

personally I am glad that this happened and someone will take notice and put and end to this idiotic way of thinking.

[ManFromMilan]

'Super GP2' plan mooted to boost Formula 1 grid
By Jonathan Noble Wednesday, November 12th 2014, 08:15 GMT

Sochi GP2 start 2014

Formula 1's small teams say Bernie Ecclestone has floated a plan to boost the F1 grid with 'Super GP2' cars.

During discussions between teams and Ecclestone at the Brazilian Grand Prix, one idea put forward was for a two-tier F1 to be created in the future.

As well as the usual constructors, the grid could be filled with upgraded GP2-type single-make cars, which would be run by customer teams.

Force India deputy team principal Bob Fernley said the idea had been laid out as a possibility, and that it had fuelled fears that Ecclestone wants the smaller teams out.

"There is an alternative, which is 'Super GP2'," said Fernley. "It would be similar to a GP2 car with an upgraded engine.

"The clear direction we are getting is that there is a desire to have five constructor teams and five customer teams, which will be the best way that they [the sport's owners] feel to go."

Sauber team boss Monisha Kaltenborn thinks that the vision of a customer scenario like Super GP2 is worrying because it shows Ecclestone and CVC are looking at a future without smaller outfits.

"Looking at the proposals which have been made, we have to believe that there is some agenda here," she said.

"The agenda seems to be that people are looking at four or five names to remain in here and, when ideas are offered to us of a year-old chassis or engines which maybe are a different spec or whatever, or even a different series, there must be an agenda.

"And since nobody is reacting to it in front we don't know whose agenda it is."

She added that the current atmosphere and the nature of solutions being suggested was making progress tough.

"These things are changing every day. But the fact is it cannot go on like this, it's no way we want to work and can work," said Kaltenborn.

"The more these ideas are coming up, the more we three get the feeling that maybe some people don't want us to be around and maybe the sport is supposed to be changed in a very different way."

http://www.autosport.com/news/report.php/id/116734

[ManFromMilan]

Too much meddling and scheming and not real racing in F1. This sounds like just another stupid idea.

[Kiwi Nick]

At its base, F1 is a commercial enterprise. CVC certainly is a commercial enterprise, and it has been very, very lucrative for its owners. But like any commercial enterprise, its ultimate size is determined by the size of its market and, by extension, the money available in that market. Sponsorship money, ticket revenue, promoter fees, television rights, owners investment, etc.; add up all those components and you have the capital available to run the enterprise. We've now reached the point where the cars and technology are so expensive that the available capital won't support 22 cars, maybe not even 16 cars. Unless you are a proponent of the greater fool philosophy of capital formation.

So, the math is pretty simple, either expand the pot of money available to run the enterprise, reallocate the money flowing into the enterprise, or make cars far less expensive. I don't doubt that Bernie and the race promoters are trying to expand the sports popularity, but that is a big ask in times of global economic troubles. Reallocating money coming into the sport would require that CVC distribute some of their profits amongst the teams in an equitable way that did not favor any particular team or type of team. CVC certainly has been very profitable for its shareholders. Making the cars less expensive would require dumping the current formula. F1 could nibble around the edges by reducing the use of some exotic materials, reducing road and wind tunnel testing, going to steel brakes, etc. But, the real source of cost reduction is the PU.

A change to the PU could result in a $20mm reduction in costs per team. CVC could provide an additional $10mm to teams at the midpoint of the season and still get a return on their investment of about 50%. Interestingly enough, that $30mm is just about equal to Force India's current losses.

So, F1 is in a dire state. Teams going bankrupt and dropping out. Talks of mixing GP2 cars in to fill the field (essentially cars without the expensive PU). Mercedes threating to leave is there are changes made to the PU. It can all be fixed, but there will have to be some adults come to the table.

[Kiwi Nick]

'Super GP2' plan mooted to boost Formula 1 grid
By Jonathan Noble Wednesday, November 12th 2014, 08:15 GMT

Sochi GP2 start 2014

Formula 1's small teams say Bernie Ecclestone has floated a plan to boost the F1 grid with 'Super GP2' cars.

During discussions between teams and Ecclestone at the Brazilian Grand Prix, one idea put forward was for a two-tier F1 to be created in the future.

As well as the usual constructors, the grid could be filled with upgraded GP2-type single-make cars, which would be run by customer teams.

Force India deputy team principal Bob Fernley said the idea had been laid out as a possibility, and that it had fuelled fears that Ecclestone wants the smaller teams out.

"There is an alternative, which is 'Super GP2'," said Fernley. "It would be similar to a GP2 car with an upgraded engine.

"The clear direction we are getting is that there is a desire to have five constructor teams and five customer teams, which will be the best way that they [the sport's owners] feel to go."

Sauber team boss Monisha Kaltenborn thinks that the vision of a customer scenario like Super GP2 is worrying because it shows Ecclestone and CVC are looking at a future without smaller outfits.

"Looking at the proposals which have been made, we have to believe that there is some agenda here," she said.

"The agenda seems to be that people are looking at four or five names to remain in here and, when ideas are offered to us of a year-old chassis or engines which maybe are a different spec or whatever, or even a different series, there must be an agenda.

"And since nobody is reacting to it in front we don't know whose agenda it is."

She added that the current atmosphere and the nature of solutions being suggested was making progress tough.

"These things are changing every day. But the fact is it cannot go on like this, it's no way we want to work and can work," said Kaltenborn.

"The more these ideas are coming up, the more we three get the feeling that maybe some people don't want us to be around and maybe the sport is supposed to be changed in a very different way."

http://www.autosport.com/news/report.php/id/116734

This could be Bernie's backdoor attempt to show that even a GP2 car with a powerful engine, as opposed to an expensive PU, can race with the big boys in F1. If the GP2 car was allowed the same aero rules as F1 and then was allowed a petrol engine that produced 650-800 hp, you would effectively have an F1 formula that allowed cars powered by a PU or an equivalent hp engine. This has been done before with normally aspirated engines and turbo engines.

So, why bother with the "Super GP2" meme, just permit teams to run either PUs or engines. The only trick is to get the outputs to be similar so that one if not favored over the other. I'm sure that there are some engineers who could figure that out in about 10 minutes.

Which would Ferrari choose, a real blood and guts heart-pounding engine or a greenie-weenie PU?

[wisepie]

Nice to have your usual constructive and intelligent comments, Kiwi Nick, I just hope that someone is listening!

[Kiwi Nick]

Nice to have your usual constructive and intelligent comments, Kiwi Nick, I just hope that someone is listening!

You and some guy in Miami...that's probably it.