Brawn: Merc in ‘vicious’ spending loop; do we need Friday Practice?

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Photo by: www.kymillman.com/f1

The sport of Formula 1 has reached a point where team budgets for the top performers are so large that regardless of success, the long-term prospect of sustaining that budget level isn’t sustainable. It’s why many have been asking for a cost cap in F1 and that’s something new owners, Liberty Media, are trying to take very seriously.

According to Forbes, F1 boss Ross Brawn has suggested that the current budget levels for a team like Mercedes isn’t sustainable over the long run:

“If you take the current dominant team, Mercedes, they have the biggest resources in Formula One. They spend around half a billion dollars on their Formula One program a year to get the results they get on the track, and that’s a fantastic achievement. The problem is, they are four seconds quicker than the guys at the back of the grid, and that’s no good for the business. Also it’s not really sustainable.

“What happens is, when they are winning, those budgets have grown. During their period of domination, they spend more to stay dominant. When that domination fades away, the budgets become awkward because they are not succeeding, yet they are spending a huge amount of money.

“Those teams, particularly the boards of those teams, have come to us and said: ‘Please save us from ourselves because we have to get in that loop of achieving success. We want a regulatory authority. We want control over what we can and can’t do and to make the business more sustainable. To bring the budgets down to a level that, even if we are not winning, we can still justify it.’

As we’ve argued many times here at FBC, the hybrid power units are impressive but they are a bridge too far and have bankrupted three teams and placed all other customer teams on life support. Technology is fine but there are two distinct issues that F1 are facing, the hybrid debacle and the reliance on aero that prevents close racing. On the engines, Brawn said:

“The powertrain of these cars really is very impressive but it is inordinately expensive and for the manufacturers who are running their own teams that’s fine. It’s all part of the package. But if you’re a customer team, because a number of teams in the pitlane have to buy their engines from the suppliers, the costs are extortionate.

“The cost of an engine these days is about twice what it used to cost before these engines were introduced. That was never a factor that was considered when the regulations were introduced. There was a feel that we needed to get a more relevant engine – we have got a hybrid engine now – but the commercial side of it, particularly for the independent teams, was never considered properly.”

I am still confused as to what control F1 has over these technical regulations and where the FIA come into the equation as this is actually their turf that Brawn is walking on. Getting the engine costs under control is part of the issue while reducing the aerodynamic impact on racing is another. Then there is the entire concept of more races and the cost that implies.

“The teams have logistical issues the more races we add,” Brawn said yesterday. However, he added: “One of the things we are doing is looking at the format of a race weekend to see if we need to change that to make it logistically easier for them to do more races. So we have got a very open mind about how we go forward.

“I think the core race is still, for me personally, very important. We are not looking at changing the core event, but open question, do we need Friday running? Because if we didn’t have Friday running, we could do more races because logistically it is better for the teams. But Friday running is important for the promoters and the broadcasters. How do we find the right solution?”

Saving money by not running on Friday may be true but I can’t imagine that the teams would favor doing away with Friday Free Practice session as this is a very important part of setup for the race. Perhaps as the season moves along, they become less critical as the car is developed and relatively stable but adding more races would surely be more expensive than running on a Friday? It is an interesting read here at Forbes about the costs and how F1 may look to invest in its future.

If race sanctioning fees represent 36% of F1’s revenue, then you can see how adding more races at lower prices for hosting would had a negative net effect on the team’s revenue stream as well as F1 via reduced prize money intake. Lower sanctioning fees have been offered in the minds of fans as the single biggest reason for high ticket prices and yet as I explained in last week’s podcast, a 3-day ticket General Admission (GA) to the US Grand Prix in 1973 was $15 and adjusted for inflation, this year’s 3-day GA ticket was less money.

Ultimately it is a balancing act and F1 has a lot of work to do and perhaps one potential reduce revenue offset could be a fully produced digital streaming feed for 2018…we’ll see.

Hat Tip: Forbes

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mini696

How is it not sustainable? It’s been like this for 50 years.

Salvu Borg

Brawn sounds like he either lost the battle he gave the impression he had a right to start or somebody must have told him that he and his boss do not own FI and so they do not make or change the rules.

the Late Idi Armin

the answer is simple. the return of the 2.4 V8 or the 3l v10 or v12 and adjustable wings

Salvu Borg

The 1.6l direct injection single turbocharged hybrid PU is here to stay.
The battle for a new simple twin turbo engine for 2021 is as good as lost.
The present four manufacturers experience/knowledge and IP’S will not be shared by those that are not winning, and neither by the valve covers plastic stickers producers.

p1ngu

How are teams supposed to get any seat time for new drivers if the only on-track time are the test weeks, plus a single practice sessions then qualifying?

Also what about fans? What on earth would I do at Spa on Friday (other than get plastered on the campsite) if I didn’t have the free practice sessions?

the Late Idi Armin

get rained on?

darkalman

Run a couple non-championship race weekends with looser rules so that the teams can try new things. Use those weekends to test rules tweaks like changes to the qualifying format and to try out new venues. Allow 3rd cars in those weekends so teams can run previous year spec cars for testing drivers. Simplify the power plants with standardized parts like batteries and turbos. Introduce more standardized parts for stuff under the hood that doesn’t significantly affect performance. Allow teams to sell pre-built chassis to other teams without aero parts. So a smaller team can buy a Ferrari or a… Read more »

p1ngu

Some of those would reduce costs, but running non-championship races would add to the costs, as would adding 3rd cars. Obviously no-one would be forces to take part but all teams look for additional track time for development.

Active suspension’s the same – would add a staggering amount and would ensure the gap between Mercedes and Sauber would get bigger rather than smaller.

darkalman

The argument for active suspension comes from the wide spread use of FRIC type suspensions in the past couple of years. The teams are spending outrageous amounts of money to develop these high tech suspensions to duplicate the effect of active suspension and the smaller teams just can’t keep up.

Vs running hydraulic active suspension with a tight set of rules would probably be cheaper to develop and has road car significance. (Not like that actually matters in F1)

FryDaddy

Darkalman is right. Active suspension will be cheaper than the current efforts. The delta will shrink.

p1ngu

As things currently stand, you may well be right, but if you think that (without incredibly stringent controls) Mercedes wouldn’t find a way of spending eye-watering amounts of cash on active suspension then I think you’re fooling yourself.

You could always standardise suspension components, but then you’re starting down the path of a spec. seried, and I can’t think anyone wants that.

subcritical71

I don’t like spec racing so much, but I believe there are certain components which could/should be standardised. Does that make it spec racing, I don’t know. Would it be similar to the 50% rule for construction(?) The ECU’s/displays are standardized but each team has a different way of implementing their particular software, so I think in the end this is good. Same goes for the tires, the strategy of tire allocation is left to the teams. You could give the teams an active suspension system and say, if you choose to use it there are no mechanical modifications allowed,… Read more »

FryDaddy

I agree that they’d be willing to spend the money. I disagree that they would get any substantial performance advantage by doing so. And if they don’t gain a significant performance advantage ten why would we care.

FryDaddy

It would be very interesting to see the breakdown of where the teams are actually spending their money. We are rightly critical of the PUs, but I suspect there’s that much and more spent on suspension and aero. I tend to think that allowing active controls would drive the performance delta smaller, due to the already well developed automotive technologies. Most would agree that a two second performance delta would likely make for a better race than a four second one. What I really wonder about is the impact of that performance delta on teams’ willingness for additional investment. In… Read more »

FryDaddy

Well written Todd. Tab Clearing… As a manufacturing guy, it always bugs me when people start talking about cost controls without considering the impact on profit or their customers. F1 has multiple customers in the form of teams, drivers, spectators and downstream linked vendors, none of which are interested in scrapping Friday Practice. Since Ross Brawn clearly isn’t an idiot, this sounds more like the opening line in a negotiation. We all pretend that it’s the FIA that sets the rules and they pretend to believe us. Ultimately, the FIA will enforce and certify the rules of/for/by whoever pays them.… Read more »

jjredfish

Get rid of *all* downforce aero so the cars can pass again. Get rid of gimmicks like DRS. No team communication with the driver after the race starts – the race is completely his to run, at his discretion. No supercomputers on the other side of the planet deciding when to pit. No “fuel” races. Every car has to carry more gas than it can possibly use. Tires that don’t “save” – drivers get better times by pushing them at 100% all the time and getting a new set than limping them along for half the race to avoid a… Read more »

Negative Camber

The challenge I have with all this talk of canceling Friday Practice is that Liberty said they want the event to be weeklong and like an NFL event. Parties, celebrations, live music…canceling all running on Friday seems antithetical to that notion.

Tom Firth

Ever more convinced that the intent is to make the FIA’s role closer to that of the FIMs in MotoGP.

B52RockLobster

I don’t understand how you control cost in F1. All teams want to win. In order to win, you have to find any advantage you can. This will result in teams spending tons of money on ANYTHING that can be changed/optimized. The cost of the engine is a straw man/red herring in my opinion. If F1 mandated 1 engine to be used by all teams with 0 modifications, the teams would just spend all of their money on Aero/wind tunnel time. The bottom line is that the OEM’s have tons of money to spend, so they are going to spend… Read more »