Trouble brewing in Formula One prize money fight

Michael Lamonato Columnist

By Michael Lamonato, Michael Lamonato is a Roar Expert

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    Formula One: All about that cash. (Getty Images / Red Bull Content Pool)

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    They say money makes the world go round, and there are few places in this turning world this truism rings more faithfully than in Formula One.

    Racing prototype cars isn’t cheap, and as the sport has grown over the years so too has its income stream swelled.

    Teams of but a handful of people have ballooned into companies of hundreds approaching thousands, car manufacturing has gone from an amateur pursuit to a scientific exercise, and drivers command among the heftiest pay packets of any professional athlete.

    Formula One today is now a billion-dollar business – yet grids have stagnate and even shrunk. Fewer teams can dream of being competitive, while some even struggle to compete at all despite multi-million-dollar budgets and collapse, putting hundreds into joblessness.

    Long-time followers of Formula One will already know the sport’s deeply inequitable structure for the distribution of its sizeable wealth to be the culprit.

    Autosport, which has long been keeping yearly tabs on Formula One’s team monies, published earlier this month that in 2017 the story is much the same, with Ferrari, despite finishing a distant and hapless third in the championship last season, earning the most amount of prize money of any team.

    Mercedes and Red Bull Racing are also guilty of creaming a little extra off the top, with both claiming something in the vicinity of $45 million each just for turning up – a quantum approaching the entire budget of a backmarker.

    These favourable Bernie Ecclestone-era sweeteners, designed to lock the teams into competing long term, have predictably locked the competitive order more or less in place at the same time. Consider that this year, when regulation changes have put added stress on resources, that the highest earners – Mercedes, Ferrari and Red Bull Racing – are unreachable from the midfield.

    Money buys performance, and while success isn’t a given – Ferrari hadn’t been consistently on the pace for years before 2017 – cash keeps you in the ballpark when ingenuity dries up.

    It was surprising, therefore, for Gene Haas, owner of Formula One’s lowest earner despite its impressive debut campaign, to come out in defence of the sport’s financial disparities.

    “Since we’re the newcomers in this business, our revenue stream from Formula One is nothing, so anything we get will be greatly appreciated,” he told Autosport.

    “We just have to be very, very careful in how you redistribute the wealth because there are some teams at the top that have spent 50 years doing this, that have earned some entitlement to how the costs are distributed.”

    There are of course only two team that has been “doing this” for 50 years: McLaren and Ferrari, with the latter happening to be a foundation partner of the burgeoning Haas team.

    It was Vijay Mallya, owner of fellow independent constructor Force India, a team in its 26th year of Formula One competition under one name or another, who was particularly incensed by the Italian connection.

    “It’s pretty obvious from the Haas car that they are more than just associated with Ferrari,” he replied.

    And Force India has a right to feel aggrieved, with its efficiency per prize dollar earned among the best on the grid, yet it is unable to compete at the front because it simply lack the funds of its largest rivals.

    Mercedes AMG Petronas British driver Lewis Hamilton


    “I find it actually disappointing that such a new entrant in Formula One, who has no previous experience of owning an Formula One team, makes such a profound statement,” Mallya continued.

    “Anybody looking at the income distribution pattern of Formula One will immediately, without even being prompted, realise how lopsided it all is.”

    Indeed so skewed is the distribution that Force India, fourth place in last year’s teams championship, earnt just 40 per cent of third-placed Ferrari’s total prize money, and it was also out-earnt by Williams and McLaren, both of which it easily beat in 2016.

    Formula One’s current commercial deals expire in 2020, and with CEO Chase Carey knowing full well that the competition is unviable in the long term with its current model, negotiations for the years beyond are already underway.

    Haas’s seemingly counterproductive approach to his team’s earnings hint at the battle to come between the sport’s largest and best-paid teams – and their allies – on the one side and the independent squads, who have long called for equal terms, on the other.

    But the likes of Ferrari, Red Bull Racing, and Mercedes aren’t about to surrender their favourable deals, and with most of Formula One’s revenue tied up elsewhere, Carey and co have little choice but to brace for another inevitable round of Formula One high-stakes politicking.

    Formula One might be on the right path, but its destination remains almost as far as it ever was.

    Michael Lamonato
    Michael Lamonato

    Michael is one-third of F1 podcast Box of Neutrals, as heard weekly on ABC Grandstand Digital nationwide. Though he's been part of the F1's travelling press room since 2012, people seem more interested in the time he was sick in a kart ? but don't ask about that, follow him on Twitter instead @MichaelLamonato.

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    The Crowd Says (3)

    • Roar Guru

      June 6th 2017 @ 10:44am
      Connor Bennett said | June 6th 2017 @ 10:44am | ! Report

      Those comments coming out of Haas are just bemusing. That’s the kind of thing a team would only say if they were financially safe, ie, being supported by a larger outfit, ie, Ferrari it would appear.

      For the sake of the sport, they need to restructure the financials. It’s like in any sport, the aim is to build the lower teams to create a more competitive arena, and that just can’t happen with the current pay packet situation.

      Force India is the perfect example of all of this.

    • June 6th 2017 @ 5:04pm
      Simoc said | June 6th 2017 @ 5:04pm | ! Report

      It’s doubtful McLaren would be on the grid without Honda money.

      Surely the prize money should be set at the start of the season like horse races where the prize money is known and raced for by everyone equally. If Ferarri weren’t in F1 they would become less relevant.

      Hopefully without Ecclestine around F1 will move in that direction.

    • June 6th 2017 @ 8:25pm
      Beny Iniesta said | June 6th 2017 @ 8:25pm | ! Report

      Mallya should stop whining and whinging and put in more money if he wants to be competing for the World Championship at the pointy end of the grid.

      Either that or shut up and get out of the sport! It’s not as if they didn’t know what they were getting into when they got into the sport!

      As for Red Bull Racing – they haven’t exactly been in the sport for decades have they? How come they have such a cozy financial deal? They must have played their cards smartly – certainly more smartly than Force India apparently have.

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