Small teams and big teams, commercial rights owners, shareholders, sponsors and management companies. It’s all part of the process that is Formula 1. It’s just that recently these disparate, yet symbiotic, groups aren’t seeing eye-to-eye over the financial stress the series is under in 2014. It has now turned into a war of words and that is rarely pleasant.

The big teams have individual contracts with Formula One Management (FOM) and they are lucrative deals in which they receive the lion’s share of the prize money each year. This is weighted by merit depending on where the teams finish in the Constructor’s Championship but it is understood that Ferrari get an extra heap of cash for simply being Ferrari—that’s to say they’ve been in the sport since the very beginning and have poured more resources into F1 than any other team as well as the second most recognized brand name in the world. So yes, that Ferrari. Fair? You be the judge but there is little question that FOM feels it is.

Caterham and Marussia are the first fatalities in 2014 with both teams entering administration and they follow HRT who, combined, were the three newest teams in F1. Now the knees of the middling teams are starting buckle under the weight of the cost to participate.

While very few in the paddock or press like discussing the main reason for this financial crisis, it is patently clear that the move to become green and usher in a new hybrid engine has become the death knell of the small teams. Renault and Mercedes were adamant that F1 go green as it would justify their presence in F1 as a road car relevant expense and even threatened to leave the sport if they did not change to the current V6 turbo hybrid format.

That new format has effectively doubled the cost of engine supplies for the customers of Renault, Mercedes and Ferrari engines. Engines have always been expensive but a leap of 100% in just a few months is an increase in expense that is very difficult to cover even when you are taking money from drivers to drive your cars.

This outrage has culminated in talks with FOM at the last three races and even threats of a boycott in Austin Texas were on the cards. The reaction from FOM boss Bernie Ecclestone was that F1 didn’t need teams with begging bowls and that has really thrown petrol on a lit match. He apologized this weekend for his comments.

That reaction compounded by the fact that the big teams have little interest in taking less prize money to keep small teams afloat as well as a rumored reaction by, it is believed, Red Bull team boss Christian Horner has really set Lotus F1 team boss Gerard Lopez over the edge saying:

“One of the team principals in a big team joked about Caterham and Marussia and that got me quite angry,” Lopez added. “I hit the limiter on that one. It was a complete lack of respect and from someone paid to be here rather than paying to be here.”

Lopez met with Ecclestone and CVC Capital’s Donald Makenzie over the issue and relayed his concerns over the choice of words Bernie used in describing the small teams:

“We brought it up and there was a retraction. They understand you can call a beggar a beggar if he is doing nothing for his money. That is not the case for us. They heard and saw loud and clear or arguments.”

He’s not alone as Force India boss was also present at the meeting and said:

“I made the point very clearly that any such unparliamentary language did not do good for Formula One and all the stakeholders, particularly the sponsors. If someone holding a rather important position in Formula One makes a disparaging remark, it has to have consequences.”

It was even exacerbated when Malya took to Twitter to torch Horner for being disqualified from the Abu Dhabi qualifying session over illegal front wings saying:

“A big F1 teams that says we small outfits should not come with bananas to a gun fight, grab maximum money and cheats on the regulations”

F1 pundits believe the FIA to be impotent in the situation but claim it is they who could have demanded that the engine suppliers cap their prices so small teams could afford the new green technology. This seems antithetical as R&D costs would have to be swallowed so small teams could play along and most business models factor those costs into the price of the product.

While Red Bull’s Christian Horner has been taking heat from Lopez and Mallya, he has also been very vocal about jettisoning the hybrid engines or at least reducing the technology to a more manageable cost. First he suggested going back to last year’s V8 engines and this weekend he has stated that a V6 with dual-turbo and a more traditional harvest system would cut costs dramatically.

FOM did cover the cost of freight and team transport to Abu Dhabi this year for Caterham as they struggled to get to the grid and even used an online crowdfunding scheme in order to raise cash.

Regardless of the outcome of this weekend’s meetings, something will have to be done and it remains unclear as to what options all teams and stakeholders would agree to but suffice to say, no matter what the outcome, there will still be people in the paddock labeled beggars and bastards.

Hat Tip: The Telegraph

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forestialJohn The Race Fan (@JohnTheRaceFan)MIEjohnpierre riveraAndreas Recent comment authors

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The Captain
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The Captain

I just really pisses me off that the FIA didn’t have the stones and it was never on the table to tell the Merc and Renault fine if they want to run a V6 turbo hybrid thingy they can, but they v8 would still be a legal engine to use. If the manufactures really thought that the hybrid V6 was a better long run project for their companies and could beat the V8s then they would have done it anyway. Instead Merc and Renault basically bullied the FIA into having F1 (and all the teams) front a large portion of… Read more »

Rapierman
Member
Rapierman

In examining the sport in all its component parts, I cannot help but feel some indignation. As emotional as it may sound, I cannot help but believe that the scenario was caused by the “Deadly Sins” of Greed, Avarice and Vanity/Pride. I’m not sure at whom I should point the finger of blame, nor can I be sure upon whom should receive divine retribution. I can only say that there needs to be an accounting and punishment of all who are involved in these sins that damage the fabric of Formula 1 and auto racing in general, whomever they may… Read more »

Andreas
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Andreas

Am I being overly suspicious if I suggest that there might be a connection between the Bernie – small teams meeting and the last minute change in representatives from Lotus, Force India and Sauber in friday’s team principals’ presser? Originally, Gerard Lopez, Bob Fernley and Monisha Kalterborn were all going to be in the press conference. Sauber were dropped to make room for Finbarr O’Connell, while Lotus and Force India sent Federico Gastaldi and Otmar Szafnauer, respectively. Consequently, there were no repeat of the Austin press conference. Thankfully, Joe Saward threw in a few tough questions which livened the event… Read more »

johnpierre rivera
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johnpierre rivera

Nice piece Todd. But I can’t help but zero in on your last observation.

“it remains unclear as to what options all teams and stakeholders would agree to but suffice to say, no matter what the outcome, there will still be people in the paddock labeled beggars and bastards.”

So true, so very true….

MIE
Editor
MIE

As teams are allowed to miss three events a season (this has emerged since Caterham and Marussia withdrew from Austin), Marussia must surely retain ninth place in the championship (unless either Sauber or Caterham finish tenth in double Dhabi). When would that prize money be paid, as the approximately $50 million should go a long way to clearing the team’s debt?

I think that I read somewhere that the money wasn’t paid until late in the following season, but I can’t remember where.

John The Race Fan (@JohnTheRaceFan)
Guest
John The Race Fan (@JohnTheRaceFan)

Well, well, well….
I woke up the morning of race day to do some work (*mumble*grumble*) and this article was in my Facebook feed: http://www.motorsport.com/f1/news/ecclestone-ready-to-tear-up-income-contracts

“The F1 supremo reportedly even apologised for calling struggling teams Lotus, Sauber and Force India “beggars” as they look for a fairer distribution of the team’s almost $1 billion in annual revenues.”

Bernie apologized?!?!?!?

forestial
Guest
forestial

Love the “Bernie says: …” banner. Endless possibilities here

Bernie says: “Think before you:
– bribe
– sign a deal with me
– expect a cost-cap promise to be honoured
– adopt a 21st century engine spec