Alarmism or realism? The home truths facing Formula 1

Formula 1 - long read

Alarmism or realism? The home truths facing Formula 1

F1 is facing one of the biggest crises in its 70-year history

Ian Parkes

Tuesday 7 April 2020 08:00

The comments of McLaren CEO Zak Brown ultimately came as no surprise.

It was only a matter of time before a senior executive involved in Formula 1 explained the stark realities being faced by virtually all of the teams.

These are obviously deeply worrying times, and that goes for everyone around the world, not just those fortunate enough to be involved in a sport they love.

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When McLaren placed the majority of its workforce across the Group on furlough leave, and drivers and management took pay cuts, it was the realisation that an industry that for so long has portrayed a glamorous lifestyle image was not immune to the threat being posed globally by an invisible enemy.

Williams has since followed suit, with drivers George Russell and Nicolas Latifi taking 20% pay cuts, along with senior members of staff, while the rest have been placed on furlough. Racing Point has adopted a similar policy.

George Russell and Nicholas Latifi have taken pay cuts to help Williams

As McLaren and Williams have both pointed out, such cost-cutting measures have been implemented to ensure staff will have jobs to return to when this current crisis has been averted.

It is Brown's words, however, that have painted a bleak picture. No gloss has been applied. Alarmist or realist? Whichever way you look at it, it raises concerns that need to be quickly addressed if not just the teams, but the sport itself, is to survive.

Brown fears that unless the budget cap that is due to come into force for next season is not further drastically reduced then up to four teams could disappear if the situation "isn't handled the right way".

A cap of $175million is the figure that was last year approved amongst the teams from next season, however, following recent discussions Brown has confirmed a further agreement has been reached which means the cap will now be $150million.

McLaren CEO Zak Brown has delivered a clear warning that F1 is "in a very fragile state at the moment"

Brown, however, believes drastic times call for drastic measures, and he feels the figure should be as low as $100million, although is apparently ready to accept a compromise of $125million.

Bear in mind, though, engine development, driver salaries, and those of a team's top three earning executives are all exempt from any cap, along with a myriad of minor add-ons, the bottom line of which would result in a significantly hefty costs figure.

It is no wonder Brown feels the cap needs to be slashed further if it is to have any effect, in particular, at a time when there is barely any income into F1 or for the teams.

Mercifully, the decision was recently taken that the major rules overhaul due for 2021 is now on hold until 2022, with talks taking place to potentially push that back to 2023. Development on the 2022 cars throughout the course of this season has also been banned. They are sensible cost-saving measures.

Plans for the 2021 car have been shelved until 2022 at least

It is clear, though, more needs to be done, simply to prevent one team from going under, never mind four.

All teams are staring at the prospect of significantly reduced revenues for this season, should there be any racing at all at some stage, primarily in terms of prize money and sponsorship.

It means whatever further savings can be made with regard to the budget cap will go some way towards repairing the financial damage currently being done, and that could take some time to recover from.

Brown claims one of the 'big three' teams is "willing to come substantially under $150million". While he refuses to divulge the identity of that team, the suggestion is that it is Mercedes, rather than Ferrari or Red Bull.

In a damning statement, Brown added that "a couple of the teams are putting their sporting interests well ahead of the greater good and missing the point that they are really running the risk of jeopardising the sport - and then we all lose".

Would Ferrari have to cut staff to implement a significantly reduced budget cap?

That has often been the way in F1, however, with a team thinking of itself rather than the bigger picture.

But there is another human element to this as well, at a time when teams are making tough decisions by placing staff on furlough and bringing in salary cuts.

If the budget cap is heavily slashed further, the likes of Red Bull and Ferrari - if they are the teams opposed - who possess 850-plus and 1000-plus workforces respectively, would surely have to consider redundancies in the future to guarantee meeting any new target. Almost a case of 'out of the frying pan into the fire'.

It is an incredibly difficult dilemma to weigh up - protecting the futures of your own staff while recognising thousands in other teams could be out of a job should they go out of business.

As Brown points out "F1 is in a very fragile state at the moment".

It would appear that F1, as we know it at present, is on the line.