Joe says that the next big thing in F1 isn’t Leclerc replacing Raikkonen, it’s actually something a lot more mundane – something that’s taking place behind the scenes.
Now you may think that Charles Leclerc joining Ferrari in place of Kimi Raikkonen is a big deal. It isn’t! It’s just Ferrari making sure that they’re on the pace.
The next big thing in Formula 1 is something that was first mentioned back in 2004 by Richard Parry-Jones, the then Chief Technical Officer of the Ford Motor Company. He was looking at Formula 1 in a most unusual fashion – through a corporate lens. Parry-Jones was a very smart man, but Formula 1 thought it knew better and the team bosses of the era found it all very amusing. How naive these corporate people were, to think that the competitive people of F1 would respect a cost cap – and could be policed. The world moves onward though, and in the course of the last 15 years, the folk in F1 have discovered that they may have to accept this corporate mindset after all. Parry-Jones retired years ago, but his thinking lives on. Why would manufacturers become involved in F1 unless it makes sense finally? The old buccaneers of F1 have largely disappeared and corporate thinking is taking over!
The private teams cannot compete with the big corporations, and so now they want to find ways to stop the car manufacturers spending. This makes sense, because no manufacturer in the modern world can afford to waste money. The industry is all about margins and cost-effectiveness, and so it’s hard for any manufacturer team to argue that there should be no constraints. And so they argued that such cuts would change the nature of the sport and make it unattractive. It was an implied threat, but it was also clear that no manufacturer who wants to be in F1 is going to walk away because they’re forced to save some money. Initially, Ferrari was making the most noise about Liberty Media’s plans for a $150 million budget cap by 2021. By the end of June, however, Ferrari chairman Sergio Marchionne’s attitude was softening. He had a positive meeting with FIA President Jean Todt, but then things went quiet. Marchionne was in hospital. A few weeks later he was dead. It was a big shock to Ferrari and to F1. For several weeks things seemed to have stopped, but Todt now says that a deal is in the pipeline and that the new Ferrari CEO Louis Camillieri is ‘a very bright person, who loves motor racing. While having a very different style to Marchionne, he is a very talented businessman.’ In other words, he gets it. Ferrari team principal Mauricio Arrivabene says that the decision will be made by Camillieri and the new chairman John Elkann, but he believes that ‘in the end, we will find a solution.’ He says that everyone wants to save money and reduce costs. ‘The question is not the “what,” it’s the “how.” How do we want to do it? How do we want to maintain Formula One at the pinnacle of motorsport as it is? It is not an easy question. It depends how you do it.’
Todt believes a deal is close. ‘I am sure we’ll find a solution,’ he says. ‘The Formula One group wants it. The FIA wants it and the teams want it. So, we should be able to do a good job. I’m very optimistic. I think it’s good for the sport.’
Mercedes F1 boss Toto Wolff prefers not to talk publicly about his company’s position, but it’s clear that the German manufacturer wants to stay in F1 in the long term – and wants to enjoy the promotional value that F1 provides.
Cyril Abiteboul, the team principal of Renault F1, is more strident. He says that a budget cap has to happen.
‘The current financial structure is the legacy of a system that dates back to 2012 and 2013, and which has led to huge discrepancies between the teams – which is leading to a two-tier F1,’ he says. ‘A sport with two tiers is okay, but a sport with no way to move from one tier to the other is starting to become unsustainable. If manufacturers get the same return for a third of the cost then I think they would be more than happy, but you need to make distinction between the corporations and the racing divisions. And maybe the people talking about the budget cap should not be the racing people, because otherwise you have a conflict of interest. It’ll be very complex to implement, but is that a good reason not to do it? I still think the necessity is greater than the difficulty of doing it...’
Ross Brawn says that the goal of Formula One is to reduce the gap between the big teams and the smaller operations. ‘The problem is that the gap is too big and we want to stop that by bringing in constraints on the amount of resources you can use. At the moment, a top team spends around twice the amount of a midfield team. There will still be an aura around the big teams, but a midfield team doing a great job will be able to compete. We are making progress on the economic initiatives. We are looking to introduce it in a soft form, with dry runs in 2019 and 2020, and then it’ll be become regulatory in 2021. I would say that barring some last-minute discussions that’s pretty much finalised now. We hope this will make smaller teams more sustainable, as they’ll be in a better position to show sponsors and investors that they have a chance of getting on the podium and, in the right circumstance, of winning a race. To support that there are a number of technical regulation changes we want to implement in areas of the car where we don’t feel the competitive differential is something that the fans appreciate. Right now, the costs of marginal gains in a number of areas of the car are significant. If you’re developing your own transmission, you’re spending between $5-10 million dollars a season, but no-one sees the difference. It’s the same with the brakes and the suspension.’
Teams such as Haas, Williams and Racing Point are not affected at all, as their budgets are way below the cap being proposed.
‘The big teams are going to have to downsize,’ says Gene Haas, ‘but maybe they will endorse it and say: “Yes, we are spending too much money.” The thing is that they always want to beat each other and spending the money is the way to do that.’
Racing Point’s Otmar Szafnauer agrees. ‘I think we should all be in favour of a budget cap,’ he says, ‘but sometimes we need someone to help us save ourselves from ourselves. I think you can create a budget cap in three years and that is better than not having anything. It will bring the grid closer together and, anyway, what is wrong with teams having a profit and a value?’
And there you have it. That was what Parry-Jones was on about all those years ago. Smart guy, uh?
Joe Saward has been covering Formula 1 full-time for 30 years. He has not missed a race since 1988.