As news emerges of potential ideas to reduce cost in the future, I thought it may be interesting to examine the history of the sport to determine what is driving the escalation of team budgets. The big three teams today (Ferrari, Mercedes and Red Bull) all have enormous budgets (£305 million for Ferrari excluding engines estimated, total of £350 million) which are much larger than the smaller teams like Force India, Williams and Sauber ($97 million for Force India). While a large part of the budget is the manufacturing costs and transport costs of the team, a significant part of the total is the staff costs. Current teams employ between 225 (Haas) and 960 (estimated for Ferrari excluding engine personnel, estimated at a further 440) personnel, with further teams employed in the design and production of the power units.
In 1954 Stirling Moss couldn’t get a works drive, so his manager Ken Gregory bought a Maserati 250F from the factory for £5,200.00. He started by running the car privately; the team consisted of Gregory, Moss and Alf Francis who was the mechanic who also transported the car from race to race, rebuilding it when necessary. After a few races the factory team were impressed enough by the results that they agreed to support Moss as a works driver (so they paid for the parts as required, although Alf Francis continued to be the mechanic), as a result the car turned from being painted green to red with a green nose. More details can be found in the excellent book Alf Francis Racing Mechanic.
Stirling Moss was the first driver relying on motor racing as his sole source of income (earlier drivers had been independently wealthy and could afford to race without relying on start or prize money to survive). As a result he entered every race he could, often racing in every event at each race meeting he attended (F1, F2, F3, sportscars and saloon car races) so that he maximised his earnings. In his busiest season he competed in nearly 200 races, which make Fernando Alonso’s commitment to 26 races this season look rather low. Times have certainly changed.
For the following year, Moss was signed for the works Mercedes team, this was the utterly dominant force at the time and the team ran up to four drivers in F1. However the team ran in not just F1, but sports cars as well, which was common for the large works teams at the time.
In this decade a number of F1 drivers decided to set up their own teams to build cars (Jack Brabham, Bruce McLaren, Dan Gurney etc.). These teams typically had a dozen employees in total, but they bought engines and gearboxes from outside suppliers who specialised in producing racing engines (e.g. Coventry Climax and later Cosworth) and gearboxes (e.g. Hewland). The entire team would travel to the races to run the cars. Teams like Ferrari and Porsche built the entire car, and as a result had a greater number of employees. However they also built road cars, so it is harder to find the exact size of the race department, and this team would also build and run cars for other events (sports cars, F2, rallies etc.) as well as building cars for customer teams. Although it should be noted that McLaren also built car for CanAm and Indianapolis with their small team of people.
In 1968 the regulations in Formula 1 changed, and cars were no longer required to be painted in the national colours of their entrant, and instead they could carry the livery of a sponsor. This approach had been commonplace in US racing for some time, and it provided the opportunity for additional sources of income for the teams. Previously such sponsorship was restricted to suppliers of parts for the car (spark plugs, brakes, tyres, fuels, lubricants etc.) who could use the success of the car in their own advertising.
At the start of this decade March were selling customer chassis for £6000, the customer would need to add an engine and gearbox (again available off the shelf from Cosworth and Hewland) and then they could go racing. Ken Tyrrell’s team started the 1970 season running March 701 chassis for its two drivers and negotiated a price of £9000 for two chassis. Cosworth DFVs were available at £7500. At the same time they were developing their own chassis, this decision was forced on them as Matra would no longer supply them with a chassis unless they also used a Matra engine. The Tyrrell chassis cost £22,000 over four times as much to build as the customer March did to buy, but I with their own chassis they were able to regain the driver’s title in 1971. The team at the time had less than twenty employees, including the two drivers and the boss. In the early days Tyrell often drove the transporter to the races, a feat he repeated in the late 1980s when no one with the necessary license was available to drive one of the team trucks to a European race.
When Renault introduced their 1.5 litre turbocharged engine to F1 at the British Grand Prix in 1977, it started a much wider involvement of mainstream motor manufacturers in the sport. By the early 1980s they had been joined by BMW, Honda and Porsche in addition to a greater number of independent engine specialists. While not necessarily increasing the size of the teams themselves, because there were now a greater number of engine manufacturers involved, the number of people working in F1 had increased. The requirement for the constructors to sign up to the full season also meant they concentrated on F1 and were less likely to compete in other series. In the early 1980s Lotus reckoned they needed £1 million a year to run in Formula 1.
By the latter half of this decade some teams (Williams, Lotus) were experimenting with active suspension, and the additional skills required to make this technology work had resulted in an increase in team size. The front running teams now employed nearly two hundred people to field two cars over 16 races.
Increasing restrictions on tobacco advertising had made sponsorship of sporting teams and events popular with the tobacco companies, as this neatly sidestepped the restrictions of placing direct adverts on the television. By the end of the decade, drivers were sponsored by either Marlboro or Camel, and were placed in teams that had similar allegiances.
At the start on this decade the number of so called driver aids (active suspension, anti-lock brakes, semi-automatic gearboxes, traction control etc.) had increased, and teams were running full time test teams to evaluate new developments. Team sizes for the front of the field had thus grown to over two hundred people, while for new starters Jordan they were able to make a good impression in their debut season despite having less than 50 employees.
With the banning of much of the driver aids in 1994, this should have seen a reduction in team costs. However the teams simply found another area of development to spend the money. The banning of turbo charged engines in 1989 hadn’t resulted in a reduction in the number of engine manufacturers involved in the sport, and as the decade progressed a greater number of major motor manufacturers decide they wanted to participate. These were courted by the teams in order to replace the sponsorship from the tobacco companies now that an increasing number of nations had banned the cars from carrying tobacco logos when racing in their county. With their involvement, budgets and team sizes continued to rise, and by the turn of the century the front running teams had annual budgets of $240 million compared to $50 – 100 million for the smaller teams.
Budgets and team sizes continued to rise through the beginning of the new century until the financial crash in 2008 saw several manufacturers pull out (Honda, BMW, Toyota and Renault). Attempts at a cost cap were thwarted by the bigger teams not wanting to reduce their size, and restrictions on testing and wind tunnel time led to development of more complex and realistic simulators where teams could spend their money. Similarly restriction on the number of personnel travelling to races (70 per team) have not limited the team employees, they simply send data back to the factory where rooms of data analysts look at the telemetry from the cars remotely rather than in the back of the garage.
By the end of this decade, the top teams were spending over $300 million while the three new teams (HRT, Caterham and Manor) who came in to replace the manufacturers who had left were trying to build up from a promised budget cap of $50 million. They never managed to catch the midfield, and slowly all fell by the wayside as the money ran out.
While reducing the number of engines and gearboxes allowed in the season helped to limit expenditure in the V8 era when the engine development was frozen, this hasn’t been the case now with unlimited development of the current power units. The power unit manufacturers have invested heavily in dynamometers which can simulate the forces experienced in the car to allow development to continue even though testing is heavily restricted. Similarly the aerodynamic developments are progressing at the same rate (or faster) thanks to improved CFD modelling, even though this is now limited as are wind tunnel hours.
Haas have shown that by making maximum use of the regulations and buying all the non-listed parts from Ferrari, it is possible for a new entrant to be a competitive mid-field runner. Their budget is at a similar level to the other mid-field runners and the difficulty now is for the team to progress further up the very competitive field. Force India showed in 2017 just what is possible on a limited budget, but the budget gap between the top three and a very competitive mid-field may just be too big to cross. This is especially true with a works Renault team and potentially McLaren, both better funded, also hoping to make the leap to the top three.
The ratio of budget between the small teams and the big teams is possibly lower than it has ever been at around 4 to 1, however the costs of competing in F1 have massively outstripped inflation. History has shown that even if some avenues of spending are restricted under the regulations, the top teams will simply find less efficient ways of spending the same money. Much of the increase in budgets are due to the massive growth in team size, and ideas such as reducing the power unit complexity are unlikely to result in mass firings of staff. They will simply spend their time, effort and money in developing the ‘simpler’ power units. The cost to the customers will then remain at the current levels, leaving them with proportionately less to spend on developing their chassis and aerodynamics. However at the moment the field is as competitive as it has ever been (three teams fighting for wins, 18 cars finishing on the lead lap).
One solution may be to limit the number of employees in each team to say the number that Haas, Williams, Toro Rosso or Force India has. Teams that currently have more employees would have to run more than one design of car, so Mercedes, Ferrari, Red Bull would have to split into two or more satellite teams each building their own listed parts, but could share everything else like Haas do with Ferrari currently. This would increase the number of cars competing while protecting employment for those working in the teams currently.