Formula One bosses will meet in London on Tuesday in a bid to determine the future of the sport beyond 2021.
If that statement sounds familiar, it’s because it is. Ever since Liberty Media took control of F1 in 2017, it has been working towards a new framework for the sport, with the aim of making it more exciting, more competitive and more sustainable for the future. But with less than two years to go until F1’s new dawn, none of the sport’s ten teams are signed up to race beyond the end of 2020.
Tuesday’s meeting will be about convincing them to look beyond their own personal interests and towards a future that benefits the sport as a whole. But with such a wholescale change in the offing, it won’t be easy.
The terms on offer on Tuesday will not just impact the technical and sporting regulations in 2021, but also the structures that determine the commercial landscape and governance of the sport. As ever, the money — and where it flows — will be the main sticking point.
The existing deals with the teams, known collectively as the Concorde Agreement, were struck in very different times back in 2012. F1’s owners at the time, CVC Capital, were hoping to sell and were preparing for an initial public offering (IPO) on the Singapore stock exchange. Doing so without big names like Ferrari, McLaren, Red Bull and Mercedes attached to the sport would have lowered F1’s market value, and very favourable deals were offered to the top teams to ensure they were committed beyond 2013. Bernie Ecclestone was in charge of brokering those deals at the time and signed up Ferrari on the best terms before Red Bull and the other top teams fell in line. The IPO, however, never happened.
The result six years on is a sport unhealthily skewed in favour of the teams that got the best deals. Ferrari is effectively gifted £50 million just for turning up each year, while the likes of Racing Point, Haas and Renault can only hope of earning that much by fighting over fourth place. The gulf in spending between the top three and the rest of the field is so large that no midfield team has managed to bridge that gap and score a win in the last five years.
“You’ve got a group of teams that could finish last and still earn more than the team that won the world championship, and that doesn’t feel right,” Formula One’s motorsport director Ross Brawn said earlier this month. “If you were a big sporting company looking at Formula One today and you came into F1 thinking ‘what would we be able to get if we win the world championship?’, well even if you win you only get half of a team in the midfield because they have a better deal than you. How are you going to attract new teams when you have such an unfair distribution?
“All I would say is we want to have a fairer deal than we have at the moment, and I don’t think it’s fair that someone could come in and win the world championship and be getting half of what someone at the back of the grid is getting because they are not performing. That’s something we have to resolve. There are the grandees of the sport, but there is a balance and I think we’ve got the balance wrong and I think we all know why we have ended up where we have ended up.”
Brawn is the brains behind F1’s vision for 2021. As a former technical director at Ferrari and team principal at Mercedes, he is the archetypal poacher turned game keeper and aims to negotiate with the teams on their level. But for Brawn’s plan to work, all aspects of the 2021 plan must mesh together and that means convincing the top teams to sign up for less money while giving them fewer guarantees of success.
In theory, the pill will be sweetened by reduced costs facilitated by a cost cap to prevent runaway spending and changes to the technical regulations to include more standard parts. But that in itself removes two of the key performance differentiators the top teams have historically leant on to ensure they remain on top. Ultimately, the package for 2021 aims to tease some of the levers of success away from the top teams while democratising the pursuit of the podium for everyone else. Not an easy sell you would have thought, but one that may just be starting to resonate against an argument of making the sport healthier as a whole.
“I feel that there is some momentum in the process and we are all keen on understanding how 2021 looks,” Mercedes team boss Toto Wolff said of the upcoming meeting. “Mercedes is certainly interested in having a cost cap implemented at the right levels so that it makes sense for everybody — get the big teams on board in a way that is implementable and cap us to make sure we are not running away with it with higher costs each year.
“Regulations are another building block that is important to get over the line before June. Let’s see how it goes after next week, but what I hear is making it optimistic.”
But the top teams have already pushed back on some aspects of the original 2021 plan and, in turn, F1 has made concessions. A glide path for the cost cap is likely to implemented so teams that currently exceed the planned $150 million cap aren’t faced with laying off large numbers of staff from one season to the next. The cap is now expected to be set at $200 million in 2021, $175 million in 2022 and $150 million from 2023 onwards. Still a big step for F1, but one that will allow the top teams time to adapt.
What’s more, the engine regulations — which have formed the basis of the political power dynamic between teams in recent years — will only be tweaked very slightly compared to original plan of simplifying the hugely complex V6 turbo-hybrids. As a result, Mercedes, which has won every championship and 75 percent of the races under the current engine regulations, will retain one of the key ingredients of its success and avoid the investment — and risk — of designing a new power unit to new regulations. They will also, along with Ferrari, retain their two customer teams and the potential voting power that comes with them should F1 achieve a more democratic form of governance in the future.
Which brings us on to the thorny issue of ‘B-teams’ — a subject that currently divides post-2021 thinking among the ultra-competitive midfield teams. For McLaren, Williams and Renault, business models such as the one employed by rivals Haas are a major sticking point. Haas has risen to almost immediate midfield success despite employing a fraction of the staff of its rivals, outsourcing the manufacturing of its car to Italy-based Dallara and, significantly, buying as many off-the-shelf components as permitted from Ferrari.
The plug in-and-play model has proved hugely successful for the American team, much to the frustration of McLaren, Renault and Williams which invest significant amounts of money designing and manufacturing their own parts only to find they are not a match for the Ferrari components being used by Haas. For Ferrari the deal makes sense because it can profit from its investment in its own R&D, safe in the knowledge that Haas will never be able to cross the chasm that exists between the top three and the midfield. Such is the success of the Haas model, that Toro Rosso has also taken a step in that direction now that it shares Honda power units with sister team Red Bull. Meanwhile, Racing Point and Alfa Romeo have expanded their technical deals with Mercedes and Ferrari respectively to help accelerate the development of their own cars.
And aside from the obvious arguments against ‘B teams’ listed above, there is also a concern that if the proposed cost cap is not properly regulated, there could be the potential to turn the relationships into two-way streets and divide the cost of developing parts between satellite and parent teams. Such relationships would effectively hamstring any team not in alliance with a smaller outfit, making the sport more political — and expensive — as large teams look to foster relationships to help build their overall capacity. The increasingly tense debate goes to the very core of what it means to be a constructor in F1, and McLaren, Williams and Renault are keen that the 2021 regulations provide protection for truly independents.
But while all of the above is being debated, the clock will be ticking on F1’s plan for 2021. The FIA’s Sporting Code requires a set of regulations by the end of June this year if no new governance structure can be put in place first to circumvent it. Brawn claims a “definitive” set of regulations were given to the teams in January and F1 has been meeting with them individually ever since in order to preempt some of the likely concerns that will be raised on Tuesday. Failure to do so will only result in further politics and critical delays in the decision making process.