So it was money. The lack of, to be exact. Lotus F1 have been rumored to be struggling with cash and the sale of a large stake in the team to Infinity Racing was thought to have helped but in the end, Kimi Raikkonen made the change to Ferrari because he hadn’t received his promised salary. Kimi told AUTOSPORT:
“The reasons why I left from the team are purely on the money side, and the things I haven’t got, my salary,” said Raikkonen. “That is an unfortunate thing.”
It’s understood that it’s not a simple bonus that missing but Raikkonen’s actual salary. It brings to light the very serious fact that Formula 1 is a struggling series. Sure, they seem to all be plugging along but ultimately Sauber, Lotus, Marussia, Caterham and Force India are all struggling to keep the ink black on the balance sheet and to participate in the series.
Even in bad times there will be companies who continue to thrive and Red Bull, as well as Ferrari and possibly Mercedes, are some of them. The continued profit and sustainable balance sheet for Red Bull have allowed it to spend more than other teams and win championships as a result.
On one hand, being one of the anchor teams of Formula 1 and having cash to keep the wheels of F1 turning is an important role to play (like being the anchor store of a shopping mall). The right decisions and contracts made by the commercial rights holder, led by Bernie Ecclestone, are also critical to the series. But does three healthy teams and a handful of grand prix hosting contracts make a series? It would appear so…but is it sustainable?
This is where the FIA’s Jean Todt has intimated that they regulatory body of Formula 1 is going to get tough on cost-cutting. Teams are running losses and barely able to keep vendors paid or the cars on the grid—let alone their drivers paid—and the FIA reckon it’s time to make some austerity moves just as every other business and nation in the world has done during the financial collapse.
Formula 1 is a series that is made up of 10 teams and if only 30% of your business model is healthy and firing on all cylinders, that’s a problem. If the commercial rights holders are still making money—sanctioning fees for new and existing races are still being paid and signed—then Formula One Management has an enviable position.
If the series isn’t healthy, perhaps the business model needs to be tweaked or adjusted for the times. The FIA would like more of the commercial revenue and so would the teams. FOM would like them to shut up and race and to be honest; I can’t say the teams have done the best job of marketing, promotion, sponsor shopping and revenue seeking. Paying drivers is not the magic solution. From FOM’s point of view, instead of the teams waiting for their ship to come in, they should start building their own.
If the mall isn’t doing well and customers aren’t coming to shop, the anchor stores don’t mean much and the entire mall closes. It is possible to ruin the series even if three teams are doing well financially and the commercial rights holders are making money. The 2014 regulations will be very expensive and it remains to be seen if some of the smaller teams can actually afford the changes.
In the end, you can’t blame Kimi Raikkonen for leaving. He was promised a salary and wasn’t paid. Notice that his choice was to move to a team that can pay and that means there are eight seats (Red Bull, Ferrari, Mercedes, McLaren) in Formula 1 that have the best chance of actually paying your salary…eight! A driver has a 36% chance of getting a salary check that actually doesn’t bounce. Eight seats out of 22 and that’s a sad state of affairs for Formula 1.