May 9, 2017 by Joe Saward
Now that the Formula One group is listed on the NASDAQ stock exchange in New York, there is a solid argument that all of its financial dealings should be made public. The payments made to the teams are a key part of the system but until recently it has been very difficult to figure it all out because teams were so terrified of revealing anything. They have, after all, agreed to impressive confidentiality agreements as part of their contracts, but nowadays it seems they are less worried about retribution and so the numbers have become easier to find. This is not to say it’s easy and having someone to help is still essential, but there is less paranoia now. Once you know the system (and its many quirks) and the overall figure in the pot, one can calculate the revenue splits – as has been done in recent days. This information being made public is clearly something that is in the interest of the teams which think the system is unfair, and so they have revealed how the system works.
The thing about news leaks is that they are almost always done for a reason and the journalists involved need to understand why they are being manipulated and what impact the news is intended to have. Most don’t care. A story is a story and the impact not deemed relevant. ‘Exclusives’ drive traffic and are good for those who need recognition.
In this case, the leaks have clearly come from the disadvantaged because they want the world to see the system is unfair and for it to be changed. The big teams may be able to hide the numbers in their own accounts, but this is now useless. Will the press coverage change the situation? Or will it disillusion fans? The system has been unfair for many years, but it has not changed and unless someone rules it to be illegal then it will continue until the end of the contract, in December 2020.
The discussion now is what to do after that and obviously there is pressure for Ferrari (the Longest Standing Team) to give up its five percent ‘off the top’ share of the revenues, and for the other big teams to give up their pay-offs, which were disguised in various ways to justify them.
There is nothing wrong with the Column 1 and 2 prize money, which are basically percentage scales of payment for attendance and for results. Other funds are more dubious, such as the Constructors’ Championship Bonus, which gives the three teams which have won most races over a four-year period a big financial boost ($37 million, $33 million and $30 million). The Double Championship bonus of $35 million per year is arguable, but it would be wiser for the sport to do away with all these anachronisms and simply divide the money on an equitable basis, allowing for a small element of performance advantage.
The venerable old teams get more sponsorship, more merchandising and so in. They have innate advantages from their brand-building over the years. They don’t need more. The fact that they were given additional money was because they traded their political support for cash.
It is completely wrong that companies like Ferrari and Mercedes should have most of their F1 bills paid when their smaller opposition is fighting to survive. They will not agree to change that – turkeys don’t vote for Christmas – but a fair system, with budgets capped, would be so much better for the sport, not only in terms of finances, but also because it would probably improve the racing as well – and make it easier to promote. It would also make it more likely that other manufacturers would come. An even playing field is always attractive…
Now that the Formula One group is listed on the NASDAQ stock exchange in New York, there is a solid argument that all of its financial dealings should be made public. The payments made to the teams are a key part of the system but until recently it has been very difficult to figure it all out because teams were so terrified of revealing anything. They have, after all, agreed to impressive confidentiality agreements as part of their contracts, but nowadays it seems they are less worried about retribution and so the numbers have become easier to find. This is not to say it’s easy and having someone to help is still essential, but there is less paranoia now. Once you know the system (and its many quirks) and the overall figure in the pot, one can calculate the revenue splits – as has been done in recent days. This information being made public is clearly something that is in the interest of the teams which think the system is unfair, and so they have revealed how the system works.
The thing about news leaks is that they are almost always done for a reason and the journalists involved need to understand why they are being manipulated and what impact the news is intended to have. Most don’t care. A story is a story and the impact not deemed relevant. ‘Exclusives’ drive traffic and are good for those who need recognition.
In this case, the leaks have clearly come from the disadvantaged because they want the world to see the system is unfair and for it to be changed. The big teams may be able to hide the numbers in their own accounts, but this is now useless. Will the press coverage change the situation? Or will it disillusion fans? The system has been unfair for many years, but it has not changed and unless someone rules it to be illegal then it will continue until the end of the contract, in December 2020.
The discussion now is what to do after that and obviously there is pressure for Ferrari (the Longest Standing Team) to give up its five percent ‘off the top’ share of the revenues, and for the other big teams to give up their pay-offs, which were disguised in various ways to justify them.
There is nothing wrong with the Column 1 and 2 prize money, which are basically percentage scales of payment for attendance and for results. Other funds are more dubious, such as the Constructors’ Championship Bonus, which gives the three teams which have won most races over a four-year period a big financial boost ($37 million, $33 million and $30 million). The Double Championship bonus of $35 million per year is arguable, but it would be wiser for the sport to do away with all these anachronisms and simply divide the money on an equitable basis, allowing for a small element of performance advantage.
The venerable old teams get more sponsorship, more merchandising and so in. They have innate advantages from their brand-building over the years. They don’t need more. The fact that they were given additional money was because they traded their political support for cash.
It is completely wrong that companies like Ferrari and Mercedes should have most of their F1 bills paid when their smaller opposition is fighting to survive. They will not agree to change that – turkeys don’t vote for Christmas – but a fair system, with budgets capped, would be so much better for the sport, not only in terms of finances, but also because it would probably improve the racing as well – and make it easier to promote. It would also make it more likely that other manufacturers would come. An even playing field is always attractive…
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