The news that neither Caterham nor Marussia will be on the grid at Austin next weekend means that the grid will be reduced to just 18 cars, the smallest grid the series has seen since the 2005 Spanish and Monaco Grands Prix when the BAR team was banned for two races for a fuel infringement.
The number is critical: if the grid size falls below 20 cars, then it triggers a clause in the highly secretive commercial regulations that require teams to enter a third car.
That’s not going to happen in 2014 – we understand there’s a 60-day notice period that has to be given – but it might be a prospect for 2015 unless someone comes in to rescue one of the two backmarker outfits (and that’s also assuming no other team hits the wall in the interim as well).
Third cars and customer chassis’ increases the power and dependence on the bigger teams and would ultimately lead to the death of the smaller teams.
The current situation is an appalling indictment on how the sport is run, where the commercial rights holder and its investors, CVC Capital Partners, are determined to bleed as much cash from the sport as possible while saddling the teams with confidential agreements that give each wildly different slices of the prize revenue that make it almost impossible for a small outfit to compete on level terms.
With a renewal of the Concorde Agreement having been impossible to negotiate, Bernie Ecclestone has had to negotiate individual bilateral agreements with each of the teams.
As far as Constructors’ Championship finishing positions are concerned, the winner gets around $120 million and the tenth-placed team $50 million, while a one-off $10 million handout is given to the eleventh-placed team.
There’s a further 7.5% of the sport’s commercial revenues (called the Constructors’ Championship Bonus Fund, worth about $120 million) that is carved out to the top-three teams based on their tally of race wins over the preceding four seasons.
Ferrari also gets upwards of $90 million a year just to show up under a clause it negotiated for itself, and that’s before the additional revenue it gets based on its finishing position in the Constructors’ Championship standings.
The discrepancies in the earnings of a frontrunner to a backmarker outfit are in the hundreds of millions of dollars.
It is hardly a recipe for the sport’s survival, and despite repeated pleas from the smaller outfits to implement sensible cost containment measures and negotiate better slices of the prizemoney, the big teams have refused to yield and are now (potentially) faced with their own cost pressures of possibly having to field a third car in 2015.
The first owners of Caterham and Marussia both entered the sport in 2010 on the premise of a $40 million a year budget cap, but that was repeatedly delayed and ultimately scrapped. It is no surprise that both will join fellow 2010 debutants, HRTF1 (nee Hispania Racing) in financial ruin.
Based on current form, the best that Ferrari – which has been the biggest proponent of third cars or customer entries – could hope to finish a race stacked with three-car teams would be tenth.
The issue about entering third cars in Formula 1 is extremely murky. The rules governing third cars are kept in commercial confidence, so what we do know is a combination of educated guesswork and some off-the-record information.
In order to get an agreement for everyone to run third cars, it would require the agreement of all the existing teams (including Caterham!). A way of getting around it would be to randomly assign selected teams the task of entering a third car at selected Grands Prix.
What is known is that a third entry from any team cannot score any points for the Constructor in question. The team has to nominate its ‘third car’ ahead of the weekend, and should one of its lead cars retire, the ‘third car’ does not inherit the mantle of now being a points-scorer.
All that a third car serves to do is deprive a rival squad of the opportunity to score more points. Let’s say a three-car team locks out the podium, the fourth-placed car from another team won’t inherit the third-placed car’s points (and so on).
Based on current form, if all the teams ran third cars and they were reliable, the best that (for example) Ferrari – which has been the biggest proponent of third cars or customer entries – could hope to finish a race would be tenth. The likes of McLaren, Force India and Toro Rosso wouldn’t even have a prayer of finishing in the points at all.
It will simply force rival teams further down the pecking order and limit their availability to make more prizemoney. It’s a slippery slope and a fundamentally flawed idea.
The time for strong leadership from the FIA is long overdue.
No one knows if third cars have to run in the same livery scheme as its two sister entries, or whether it can use a different scheme and have different sponsors which would help cover the cost of what is essentially a useless entry.
What is also not known is what happens between FOM and the FIA now that the grid has shrunk below its critical 20-car threshold. The two entities signed a 100-year agreement that stipulated the minimum number of entries that must appear each weekend, but the details covering what allowances are made if there is a breach are not known. Could the FIA cancel FOM’s agreement and reclaim the sport’s commercial rights?
The answer lies with the FIA, which now needs to act and quickly to force a restructure in how the sport is run. Cost containment and an evening out of the prizemoney would be a good start, but given the off-the-record perception that the FIA is weak under the leadership of Jean Todt, it looks to be an insurmountable task. The time for strong leadership is long overdue.
While Formula 1 did once allow – in the pre-Ecclestone days – for third cars and customer entries, it’s a far cry from what the sport has evolved into and what makes it unique: a least ten teams designing and building their own cars from the ground up and competing against the best in the world.
If one team can buy another team’s design, then the competition is devalued. Becoming the best in the world is a position earned, not gained as a result of access to wads of cash and simply buying your way to the top against a team which has worked for decades to get where they are.
The IndyCar Series (in its CART days) went down the path of customer chassis’, and within a few years almost a dozen chassis-builders had been whittled down to two. CART and IndyCar split, with the former collapsing after just a few years.
Today the IndyCar Series has a single chassis supplier and two engine builders: sure, it allows the smaller outfits to compete against the big boys and occasionally beat them, but it’s a pale shadow of what the series used to be and trying to compare it to F1 (badly run as it is at the moment) would just be insulting.
Opening up third cars or customer chassis’ would force the back half of the grid to decide whether it wants to work its way forward on its own merits, or simply write a big cheque to buy results. Taking the latter path simply makes it dependent on its bigger supplier team, while the smaller independently run teams would be further displaced.
It would increase the power and dependence on the bigger teams and would ultimately lead to the death of the smaller teams. Formula 1’s manufacturing base would be destroyed – putting hundreds of talented people out of work – and there would be the very risk of further grid shrinkage if one of the big teams that supplied customer chassis’ decided to up sticks and exit F1. The grid could shrink by half a dozen cars in an instant.
Building a grid with at least ten independent two-car teams is the only solution, but that needs good governance to curb the insane amount of spending while also ensuring that the commercial revenue is more evenly distributed among the teams. Not all teams will be competitive, nor will they be able to attract the same level of sponsorship, but all will be giving it a go.
Images via F1 Archive, Ford, XPB Images
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