F1 Finance - What is going on?

[wnut]

Has anyone got any links to a definitive article on what is going on in F1 finance?

"According to Bild newspaper, however, Ecclestone might actually be Fabiana’s ‘bad boy’ because Formula 1 teams are angry with him about the unfair distribution of revenue under the new financial arrangements.
Red Bull, for example, is getting an ‘appearance fee’ of $72 million this year, while Ferrari gets a whopping $99 million, on top of lucrative Concorde Agreement prize money.
Struggling Lotus, however – although with only a few less points than Ferrari in 2013 – gets no such appearance bonus, according to Auto Motor und Sport"

from

http://grandprix247.com/2013/11/16/e...like-bad-boys/

Ferrari have the best infrastructure of any team, and then they bank $99M before anything else that is coming their way!


... and we wonder why the smaller teams can never get on an equal footing with the big ones!

[Dragger]

It does sort of explain how Lotus, besides several Championships since 1995, running up front with numerous podiums and two wins over the past two seasons still stuggles financially when compared to Ferrari and RBR. I'd be angry too, it seems like the Enstone team will always be the underdog team going against the current.

Being the underdogs is one of the reasons I'm a fan of them, and not so much of RBR.

[Marbot]

This is why there will never ever be a budget cap. The series epitomizes all that is wrong with big money in sport.

[GTRMagic]

Presumably WilliamsF1 is also a beneficiary of this appearance money... it is not likely they could run with so few commercial partners on the flanks...

[GTRMagic]

Originally Posted by Dragger

It does sort of explain how Lotus, besides several Championships since 1995, running up front with numerous podiums and two wins over the past two seasons still stuggles financially when compared to Ferrari and RBR. I'd be angry too, it seems like the Enstone team will always be the underdog team going against the current.

Being the underdogs is one of the reasons I'm a fan of them, and not so much of RBR.

How many ownership changes has 'Lotus' actually had? (Renault, Benetton, Toleman...) In their own name, in current times, in current ownership, Lotus has won races but not championships.

[JacobP]

Ecclestone is basically bribing the big teams to agree to sign whatever agreement he needs. This is of course unfair. The only fair way is to distribute the money according to championship standings.

[GTRMagic]

Originally Posted by JacobP

Ecclestone is basically bribing the big teams to agree to sign whatever agreement he needs. This is of course unfair. The only fair way is to distribute the money according to championship standings.

Is it more interesting for the punters watching the championship to have Ferrari involved, or a prodrive team sourcing last year's McLaren castoffs?

[Knowlesy]

This has been going on years. And yeah, it is ludicrous.

But Bernie is so tongue in cheek, great wind-up etc... Wonderful for the sport. Err...

[chunder]

To be perfectly honest F1 does pretty well in comparison with football.

How on earth that sport keeps its head afloat I have no idea, it surely can not carry on this endless stream of stupid wages and ticket prices.

F1 at least managed to stay a little bit above board in comparison. If you read Bernies book, you will sort of see the issue with Ferrari, it is as much about loyalty as anything else.

Although in this modern age, I see no reason why, but then again, as a fan, wouldn't you rather have Ferrari than a company who spends more simply to advertise a thing that helps to give everyone diabetes?

I know where my dollar would be going sorry

[Knowlesy]

Football does bring in a lot of money though. Some clubs overspend, but they are usually found out and crash through the divisions.

There are of course sugar daddy clubs who spend way more than the club earns, but it is the owners money being spent so you can't really say much other than it destroys the competition.

Also television and prize money is distributed on a fairly reasonable sliding scale that rewards league standing.

F1 makes a little money. This all goes to Bernie who gives it to favourites.

[Dragger]

Originally Posted by GTRMagic

How many ownership changes has 'Lotus' actually had? (Renault, Benetton, Toleman...) In their own name, in current times, in current ownership, Lotus has won races but not championships.

Sorry, I was referring to the Enstone team. I just see Lotus as the current name on the car.

[chillibowl]

Originally Posted by chunder

Although in this modern age, I see no reason why, but then again, as a fan, wouldn't you rather have Ferrari than a company who spends more simply to advertise a thing that helps to give everyone diabetes?

I know where my dollar would be going sorry

for sure a team that subliminally advertises a thing that helps to give everyone cancer is a better trade off!

seriously thought the part that frustrates me is not that Ferrari get extra money its that despite the extra money they threw in the towel so early this year. no attempt to push til the end, no desire to steal a final win just to save face but rather just a couple of tirades against their driver for suggesting that the team do more.

and whats particularly frustrating is that we understand all too well the financial realities so we act as apologists for that team by rationalizing why its important to know when to quit and start focusing on next year.

this year wasnt boring because one team dominated. it was boring because all the other teams decided that trying this year was not in their best interests.

[wolfhound]

There would appear to be a number of reasons why there are a number of teams are struggling and others are getting richer.
In my view it goes back to when FOCA threatened to start a break away series a few years ago and Max brought in the 'budget cap' teams (now Caterham & Marussia). If the breakaway had happened Bernie and CVC would have had nothing to promote and sell to TV companies to make their billions.

With the new Concorde agreement Bernie wanted to make sure he had the important teams namely Ferrari, McLaren and his mates at Red Bull/Torro Rosso. To do this he offered them good financial deals to sign up. He then included Williams and Mercedes after much haggleing. The rest were left with take it or leave it deals and it appeared as though he wanted to get rid of Marussia by not giving them anything. However the midfield teams get a lot less than the top teams. How the non favoured teams are going to survive long term is anybody's guess because trying to raise money inthe unequal struggle will become extremely difficult for them.

Bernie was making sure he had all the important teams covered so that he andd CVC could continue with their gravey train for another few years. What will happen when Bernie leaves the scene is anybody's guess but i suspect we will have a major civil war.

[csirl]

Originally Posted by wolfhound

How the non favoured teams are going to survive long term is anybody's guess because trying to raise money inthe unequal struggle will become extremely difficult for them.

Bernie was making sure he had all the important teams covered so that he andd CVC could continue with their gravey train for another few years. What will happen when Bernie leaves the scene is anybody's guess but i suspect we will have a major civil war.

When you're 83 years old, there is no such thing as long term, just the here and now.

+1 on the civil war - probably end up being in the courts for years.

[wnut]

Originally Posted by csirl

When you're 83 years old, there is no such thing as long term, just the here and now.

+1 on the civil war - probably end up being in the courts for years.

If all the parties involved have half a brain between them they will all agree to a mediated settlement and leave the legal system well alone!

[wnut]

Originally Posted by chillibowl

this year wasnt boring because one team dominated. it was boring because all the other teams decided that trying this year was not in their best interests.

Letting this year go early is a high risk strategy if you are also rubbish next year! All your sponsors start heading for the door!

[wolfhound]

There have been some interesting rumours on the F1 structure front. In an Autosport article there is a suggestion that we may have 8 teams with 3 cars each in the near future. This idea is being driven by Bernie & CVC to reduce the cost to them of F1 and hence line their pockets even further.

The idea came out of the failure of the customer car concept which was not acceptable to the F1 teams.

The new idea would see both Caterham & Marussia being merged / taken over by other teams. Toro Rosso would be absorbed into Red Bull.
The two smaller teams are said to be already in talks with other teams and an anouncement might come shortly.

The majority of teams are said to be in favour of this plan. There are a number of ideas that the third car could run in different colours and or to be driven by a young driver.

It will be interesting to see if any of this plan happens. It will be toughest for the midfield teams left to finance the running of an extra car as it could be very difficult for them to score points under this system.

http://plus.autosport.com/premium/fe...-on-f1-agenda/

[wnut]

Originally Posted by wolfhound

There have been some interesting rumours on the F1 structure front. In an Autosport article there is a suggestion that we may have 8 teams with 3 cars each in the near future. This idea is being driven by Bernie & CVC to reduce the cost to them of F1 and hence line their pockets even further.

The idea came out of the failure of the customer car concept which was not acceptable to the F1 teams.

The new idea would see both Caterham & Marussia being merged / taken over by other teams. Toro Rosso would be absorbed into Red Bull.
The two smaller teams are said to be already in talks with other teams and an anouncement might come shortly.

The majority of teams are said to be in favour of this plan. There are a number of ideas that the third car could run in different colours and or to be driven by a young driver.

It will be interesting to see if any of this plan happens. It will be toughest for the midfield teams left to finance the running of an extra car as it could be very difficult for them to score points under this system.

http://plus.autosport.com/premium/fe...-on-f1-agenda/

It would appear there is just no end to some people's greed!

Killing the goose that lays the golden eggs?

[wolfhound]

Originally Posted by wnut

It would appear there is just no end to some people's greed!

Killing the goose that lays the golden eggs?

To the best of my knowledge most series organisers charge a commission of about 10% but CVC want 100% if they could get away with it.

They made over £550 million in 2012 from F1 and have all sorts of side deals with suppliers that it is difficult to workout exactly how much more. If £450 of that was shared between the 7 teams outside of the 4 big teams it would keep them in a nice position financially.

However must not forget the GP organisers who have to get about £300 from every spectator to make ends meet.

[wolfhound]

If you think that Bernie is the boss in F1 well he is but he has to answer to CVC and the man in control of that is Donald MacKenzie. He was in court recently to outline his side in the Bernie Eccelstone court case. He is not seen very often in the F1 paddock but what ha said can be found in the link below

http://www.bbc.co.uk/sport/0/formula1/25020379

[Marbot]

Originally Posted by wolfhound

To the best of my knowledge most series organisers charge a commission of about 10% but CVC want 100% if they could get away with it.

They made over £550 million in 2012 from F1 and have all sorts of side deals with suppliers that it is difficult to workout exactly how much more. If £450 of that was shared between the 7 teams outside of the 4 big teams it would keep them in a nice position financially.

However must not forget the GP organisers who have to get about £300 from every spectator to make ends meet.

As I've stated in another thread. It's not that the teams don't have enough prize money to survive, it's because some of the teams insist that it's shared out unfairly.

http://www.autoweek.com/article/20131006/f1/131009861

[Marbot]

Originally Posted by wolfhound

If £450[m] of that was shared between the 7 teams outside of the 4 big teams it would keep them in a nice position financially.

You would hope so!

That amount ought to keep all of them going!

And many high profile companies would consider a profit of £550m to be a poor return for such a high profile company.

[wolfhound]

A few words from Joe Saward on a Budget cap who can see the possibilites if one was brought in. However as usual the F1 teams cannot agree on anything so they end up in a spending arms race with Bernie as the ring master.

http://joesaward.wordpress.com/2013/...f1-budget-cap/

[chillibowl]

thanks for the link. i think he quite rightly points out the possible commercial benefits to a budget cap and alludes to a possible shift in public perception concerning how much is both spent and earned.

long run, if F1 goes public for 10bil is there a government in the world that could justify subsidizing the sanctioning fees for what basically amounts to a niche sport?

davyboy posted this link in a different thread and i thought it had some relevance here as well.

http://motorsportstalk.nbcsports.com...ar-comparison/

so the top team spends US$470mil and the bottom team spends us$75mil.

granted there are 9 other teams spending at various points in between those two extremes but still the disparity between top and bottom has got to be one of the largest among mainstream sports leagues.

putting notions of budget caps aside its a bit ridiculous that a top team would even want to race against a team with so much smaller of a budget. its like an adult taking pride in fighting children.

i cant define what pure racing is but its not that imo.

[JeremySmith]

Originally Posted by wolfhound

A few words from Joe Saward on a Budget cap who can see the possibilites if one was brought in. However as usual the F1 teams cannot agree on anything so they end up in a spending arms race with Bernie as the ring master.

http://joesaward.wordpress.com/2013/...f1-budget-cap/

Thank you for the link. Its a good piece and worth reading. I am not sure how this problem can be cured, if at all..