Smaller F1 teams face another hard season

Formula 1 stands accused, ahead of a new world championship season set to generate even more revenues for the billionaire sport, of burying its head in the sand about a looming cost crisis.

Some of the smaller teams are still fighting for survival, with Caterham now gone, even as double world champion Lewis Hamilton and Mercedes negotiate a new deal that few others could afford.

There are those who fear the division between haves and have-nots is becoming untenable.

“I think we are at very significant risk of losing more teams. We said that last year and nothing’s changed,” Force India deputy team principal Bob Fernley told Reuters.

“I think it’s a sad reflection… on our industry that we are not recognising there are some issues and that we are probably doing a bit of an ostrich trick which could easily come back to haunt us.”

The calls at the end of last season by Lotus, Force India and Sauber for more money and significant cost cuts have produced little.

Force India have struggled to get their new car ready, running it for only three days in testing, while Sauber’s driver selection has been dictated by finance as much as talent.

The sport boasts an annual turnover in excess of $1.5 billion, with more than half of that paid out to the commercial rights holders. But while teams will share more than $900 million, the pot is not split equally.

In 2013, Ferrari received an estimated $166 million, according to Autosport magazine.

Marussia, who have only just extricated themselves from administration and are battling to return, were paid just $10 million — half the cost of an engine supply — although they stand to get much more now after finishing ninth in 2014.

“What we were hoping for is that there would be a recognition, particularly by the manufacturing teams and the sport as a whole, that we need to do something that is innovative and constructive,” said Fernley.

“Unfortunately that is not forthcoming. In fact it is vehemently opposed. The four (big) manufacturing teams don’t want to give any concessions. They have demonstrated that for the last 18 months.”

The likes of champions Mercedes, Ferrari, Red Bull and McLaren, whose annual budgets are estimated to be in excess of $250 million, deny they are unsympathetic but argue that the sport has always been this way.

“It’s a normal way, up and down, related to Formula One,” commented Ferrari principal Maurizio Arrivabene.

“I think the aim of everybody is to have as many teams and competitors as possible to enhance the show, but also to avoid people who come into Formula One just to put the car on the grid and after a couple of races say ‘Goodbye and Thank You’.”

Mercedes motorsport head Toto Wolff pointed to former champions Williams as an example of a team that had turned themselves around.

“The team has not complained. The team has spent what it had to spend, did not go into major debt but took it step by step. You can see the fruits of that,” he told reporters.

“I think these are the kind of stories we need around Formula One now, that probably don’t make the headlines in a spectacular way.”

Fernley said costs had to be reduced in a sport where running a team capable of scoring regular points requires an annual budget of between $140-160 million.

“You can’t do it for less,” said the Briton, calling for a “root and branch review” of the sport.

“It’s too much. Because with the revenues that are coming in, the gap between that amount and the expenditure is too high.”

Cash-flow is a problem for smaller teams over the winter months, when factory costs are high due to the production of new cars but revenue payments do not start until March.

The demise of Caterham and Marussia’s failure to pay hundreds of unsecured creditorshas made the situation tougher, although Force India, Lotus and Sauber have been offered an advance to tide them over..

Fernley said some suppliers faced ‘massive losses’ as a result and could no longer afford to be flexible.

New sponsors are thin on the ground, with even McLaren now entering their second year without a title partner.

“Sponsorship for Formula One, as for all sports, is under pressure because there is so much choice for the sponsors,” said Fernley. “So we have to be smarter and more competitive and we are not prepared as a sport to recognise that.

“If we are not careful we are just going to drive the sport into an alleyway where there is no escape.”