Formula 1 consists of two classes: the spending-happy, slightly arrogant top teams who are willing to invest more than 300 Million dollars and the small teams, scrambling together a small budget and trying to stay in business. Due to rising costs, the latter found themselves in a precarious situation: they needed a bailout to make it to the first race.


Bailout is probably the wrong word. Bernie Ecclestone just advanced one of the payments teams receive based last year's success and special conditions. Every team was wired 10 million dollars to ensure a field appropriate for F1 - if Bernie wouldn't have agreed to helping, a 12 car field in Melbourne could have become reality, and that again would have cause problem for him: the contracts he as with race promoters include a clause that guarantees a certain amount of vehicles on the grid. 16 is the limit.


So how did the teams end up at the mercy of FOM? Well, first of all there's the cash flow problem: a team has to complete the final design of a completely new car and then actually build it. Until Melbourne, three chassis have to be completed, and so will be the first upgrades, all made of expensive carbon fiber. Add to that the more expensive V6 engine leasing rates, and the teams have a whole mountain of costs to cover in December, January, February and March, and the small teams don't have a cash reserve because they are running on the edge of bankruptcy.

Usually what they would do is pay later, in accordance with the money inflow they receive from sponsors, drivers and FOM. It's not unusual from what I've heard to get parts from suppliers and paying them 60 or even 90 days later. But after Caterham went out of business and left debt at many of those F1 suppliers and with Marussia still haven 56 Million Euros of debt, the tolerance for late payments vanished throughout the F1 scene.


Which is how it came to the bailout. What does the future hold? Rumour has it that Bernie is working on an emergency plan. See, with the early payment the illness has not been cut out of the system. It's been delayed. Once F1 comes back to Europe in the Summer, Bernie will at some point likely be faced with 3 teams close to defaulting. He could solve the causing, fundamental issues - ridiculous payment differences between teams, exploding costs driven by top teams, loosing market share of F1 - or he could come up with some place holding solution. Guess which one it'll be.