Racing towards disaster? F1 should fix its business model or die

The 2014 Formula One season has been one of the most captivating in years. We’ve seen a change of guard at the top forced by what some would say are the most radical rule changes ever in the sport’s history. We’ve been treated to a championship battle that has escalated into a full-blown rivalry played out between two childhood friends driven apart by their burning, and ultimately selfish desire, to win the title. And – notwithstanding Mercedes’ dominance – we’ve seen some brilliant wheel-to-wheel racing on track. Formula One should be in rude health. But it clearly isn’t and, as the season moves towards its endgame, words like ‘crisis,’ ‘woes’ and ‘boycott’ scream off the back pages of the world’s newspapers, detracting from a title battle set to go down to the wire. Formula One finds itself mired in negativity, with a season of truly thrilling racing dotted with negative headlines, and it has only itself to blame. At the start of the year, some of the sport’s biggest names talked down the new rule changes, criticizing the lack of sound, when they should have been highlighting the benefits of the change to smaller 1.6 litre hybrid engines and celebrating the technological prowess that went into building them. [caption id=“attachment_1784869” align=“alignleft” width=“380”]  Representational image: Reuters[/caption] Then there was Bernie Ecclestone’s trial, poor crowd numbers at such iconic venues as the Hockenheimring and Monza, and questions about the sport hosting races in certain politically-sensitive parts of the world in its bid to penetrate new markets. But while these issues, though not good for Formula One, were mere distractions that momentarily stole the spotlight from the spectacle unfolding on track, the reasons that led to the slide of Caterham and Marussia into administration have brought the sport to the brink of a crisis which, if left unaddressed, threaten its survival. That the sport’s business model is broken and unsustainable has been clear for years now and Caterham and Marussia’s slide into administration within days of each other, for all the shock and outrage it has created, should come as no surprise. Costs in Formula One have been far too high for far too long. As recently as last season, two teams made headlines because of their financial troubles. Sauber, the fourth oldest team on the grid, faced questions about whether they would make it to the end of the season before a mysterious Russian consortium threw them a lifeline. But perhaps even more absurd was the fact that Lotus, a race-winning outfit and regular podium scorers who were at least token – if not genuine – title contenders were famously unable to pay star driver Kimi Raikkonen “a single euro” all year. Indeed, early last year former McLaren team-principal Martin Whitmarsh warned that seven of the eleven teams on the grid were operating to financially unsustainable business models. Exacerbating the financial malaise plaguing the field is the sport’s unfair revenue-sharing model which is heavily skewed in favour of the bigger outfits. Apart from the money awarded to them according to their finishing positions in the constructors’ championship from the communal pot of TV rights prize money, the most successful teams in recent years are handed an additional bonus payment for that success, while Ferrari gets another slice off the top simply because of its legacy in the sport. Amid reports of a threatened boycott by the privateer teams over the US Grand Prix weekend, Ecclestone, who doles out the prize money, admitted that the sport’s financial woes were partly his fault and expressed a willingness to distribute revenue more equally. But as he admitted, a solution to the latest crisis is hard to find, and any redistribution of income needs the agreement of the ‘haves,’ the teams who get the bulk of the television rights money. “I think the situation is such that if enough people want it resolved we can resolve it,” Ecclestone was quoted as saying by Reuters, among a group of select media invited for a discussion to his office in Austin. “It’s a case of the people that are involved in the sport will have to want to look after the sport and be prepared to make some sacrifices.” And that’s the tricky part. Formula One teams have over and over again showed that they only act in their self-interest and are unable to put the sport first. In the two seasons this writer has covered the sport, costs have been a regular topic of discussion in nearly every team-principals’ press conference. Yet despite endless talk, meetings and discussions, Formula One seemed content to stand by and watch Marussia and Caterham slide into administration. Divisions on how to tackle the problem persisted in Austin in Friday’s team-principals’ press conference. Even as the privateer outfits cried out for change, representatives of the larger outfits, while trotting out that now only-too-well-used line about how costs are a concern, appeared to stick to their guns. Formula One risks being run into the ground by a failure to respond. The financial malaise plaguing the sport has so far claimed two of the backmarker teams but extends beyond the back rows of the grid. If costs aren’t urgently addressed there’s a real danger the sport could well be left with just the manufacturer teams. Manufacturers come and go as they please. Unlike the privateer outfits, racing is not their raison d’etre. And if we lose the privateer teams that are the life-blood of the sport, a manufacturer will inevitably finish last. At which point the parent company’s board may well decide competition is bad for their brand and pull the plug, setting in motion a chain reaction that can only end with the death of the sport. Formula One is the pinnacle of motor-racing and it needs to be a brutal business. The barriers to entry must be high ensuring only the fittest make it in and survive. But the fittest need not mean the richest. Not so long ago a man by the name of Frank Williams was so strapped for cash that he ran his Formula One team from a telephone booth. But, a proper racer, he survived the sport’s law of natural selection and has come a long way since, leading his team to nine constructors’ championships. Formula One’s success has been built on the backs of men like Williams but when a team of hardcore racers like Marussia – men and women in the same mold as the Briton – finds it difficult to survive let alone compete, it calls for a break from the past. It’s high time the sport came first.