Perhaps it is just life and in some way or fashion we need to get used to it but when Formula 1 makes sweeping changes and the engineers and team owners get their teeth into those changes, there is always a knock-on effect that punishes the use of pragmatism that F1 seems to continually lead with when making these changes.
The new cost cap or budget cap set for 2021 is no exception. The largest, most recently successful team in the paddock—Mercedes—is going tp lay people off because of the budget cap. On one side fo that equation you could argue that this is the price to pay for these teams being so bloated to begin with and so be it.
On the other hand, you might be concerned for the people who will be made redundant and reading a piece by Chris here, clearly team boss Toto Wolff is concerned and trying to find opportunities for them. Regardless, many folks laughed and scoffed when Ferrari immediately indicated they would need to find other racing series in order to keep their company staffed as it currently is. Yet when Mercedes said the same, few tongues wagged and not a finger was pointed nor was there a hearty guffaw over the announcement.
‘The cost cap means there will be redundancies but we are giving it our utmost efforts to find interesting opportunities for the people we won’t be able to accommodate.’ Said Wolff.
As Chris points out in the article:
“However, job cuts are in the pipeline. Mercedes will need to lower its headcount next year to comply with a £115million ($145million) cap on F1 team budgets. Its costs came to £321.5million in 2018 according to its latest accounts and salaries represent 29 per cent of the total.”
This is on top of Toto’s comments about finding new revenue streams for the team such as rockets and space-related endeavors.
‘Space is a very early-stage discussion,’ reveals Wolff. ‘We are not going to build a rocket but we might provide services to somebody who wants to build a rocket.’
‘We see ourselves as a high performance engineering boutique,’ Wolff explains. ‘What we do is enhance performance on land, sea, air – and possibly space.’
One assumes the redundancies are for non-rocket scientists. The article doesn’t mention any updates to Toto Wolff’s expiring contract with Mercedes in 2020 and whether they have renewed it or not but it does mention the COVID-19 impact on Mercedes and how Toto sees the recovery for the beleaguered automaker market.
‘What we are seeing in the auto industry with Covid-19 is that the youth who normally say, ‘I don’t need my own car, I can rent one or I will take public transport’ are now saying, ‘I don’t want to go on any public transport and I don’t want to take a plane to fly somewhere.’
‘It is almost like being back in the 1970s where owning a car meant freedom. And there is a pretty big chance that these potential clients are looking for a Mercedes because it is winning in Formula 1.’
Mercedes have choked the rewards, success and accolades from the throat of Formula 1 for six years now and their baked-in advantage with the hybrid power unit has been unstoppable since its inception in 2014. The new rules are intended to change that dominance and balance the series but Wolff says it may not work.
‘we defined for ourselves that the best situation for Mercedes would be for the rules to change every three years because… keeping the regulations the same leads to a certain contentment. It’s the old industrial logic of diminishing returns.’
If you are tired of Mercedes dominance, this may not be great news for you but F1 seems to be content in remaining with this engine formula or a variation of it. This means that the brilliance of the Mercedes AMG Petronas team will continue to evolve their fantastic power unit and could possibly turn the regulations on their head and still continue to dominate the sport.
Hat Tip: Chris at this is Money