Why is no one talking about teams not paying their bills?

First off it's clear that it's been mentioned, otherwise we wouldn't know about it. But why is no one talking about how unsustainable this is?

Hulk hasn't been paid, Kimi hasn't been paid, and word at the Lotus camp is that the guys on the team are getting paid as much as six weeks late. I also seem to remember hearing about a third team suffering from immediate financial trouble, perhaps someone can jog my memory.

Meanwhile teams are signing anyone who brings sponsor money with them in the hopes that they can stay alive, and we've already lost one team this year (HRT) due to an inability to pay the bills.

Clearly F1 in it's current guise is unsustainable financially. The fact that no one seems to be seriously talking about it kind of scares me. When you combine that with tires that are designed to explode....I mean drop off after two laps it's no wonder that teams are having trouble finding sponsors.

What's the fix? And why is the systemic financial troubles (25% of teams) not being openly discussed?

 

The timing of going to a new twice as expensive engine formula is not good either. I have heard the only teams that are not having financial issues meeting their obligations are Red Bull, Mercedes, Ferrari and probably McLaren. The fact that Lotus is seriously considering Maldanado over Hulkenburg shows how important pay drivers are. It will be interesting to see who McLaren announces as their lead sponsor on December 4th and what impact that will have on their driver selection.

 

This times 1000

 

F1 is going to die with out ms look at tv ratings . Fia is killing the sport if you make a mistake and hit someone stop and go and next race 10 spot grid penalty. They fia need to get out of writing rules every rule change cost 100 of millions . How much has krs cost alone and add to it drs and people sidestep it with bypass . The v8 was a joke no reason for it and now a v6 with a turbo fia banned them because of costs. The teams need to stand up and have a tea party .

 

Didn't know Hulk didn't get paid yet. I'm sure all will be resolved when the contructors championship is decided and every team gets their moneys.

Lol. The reason for some F1 ratings drop is not because of MS.

The people that stopped watching are because of one team winning constantly. They're also the same people that just look at the results and say ''see, I'm more intelligent than you because I saved 2 hours of my life because I knew the result''. They only care about the result and none of the other action.

Their loss, not mine.

 

Maybe it's finally time for Bernie to loosen the purse strings a bit? Better to have 50% of something that 75% of nothing.

 

F1 is pricing itself out of business.

It is no more than a technological war conducted by business company and their design teams. Limiting their budget and the staff number would be a first step to reduce costs.

Teams are allowed to spend a ridiculous amount of money on aerodynamics and simulators. Limiting wind tunnel time should be introduced.

If engine definition is frozen for a period, and a limited amount of engines/gearboxes is imposed, why the same thinking is not adopted to limit aerodynamic changes during the season?

Teams are allowed too many technicians to watch screens to monitor the car. The driver should be able to do that.

 

It seems like F1 is a money race, whoever has to most money,will win the race.

 

There isn't a hard-and-fast reason why people aren't getting paid. F1 is an expensive sport. Teams across the board are fighting for positions in the constructor's championship that mean millions in prize money, so personnel pay gets cut.

It's different for every team, but the practice is not uncommon from what I understand. It's only coming to light now because it's trickled down to drivers and they're speaking out about it. I was in the early interviewing stages with a couple teams last winter... while visiting the Autosport show in Birmingham a couple members of a team warned me of that inevitability, but they were quick to explain they were always made whole and that it was a worthwhile sacrifice to be directly involved in the sport.

Kimi, for the record, was still getting paid his salary. His performance-based bonuses for performance were delayed.

 

F1 going back to the 70s over have the drivers will have to find the money to be on the grid . F1 changed most when Honda came in they were trying to grow there band . That made mb come back in to racing and they found the best drivers one of them was ms . Mb what out of team running bizz thats why the mb gave the team to amg because they don't what to sponsor the team just give them the motor . The only person to make f1 work is bernie

 

Tell Toyota that.


It's everything combined, from designers, drivers, how the drivers interact with the stuff they've been given and the feedback they give back to the engineers to see how and where they can improve the car, to the tacticians and to a certain degree, sheer luck.

 

Actually, it is limited. They have limitations in the size of the wind tunnel model too.

When FIA limits something, teams spend their money in another thing: they limited the wind tunnel time, so teams started spending money in supercomputers to do dynamics simulations. Then limited the computer size so teams started spending money in simulators, building more wing variations, etc...

 

Which is one of the many reasons why the test ban is stupid

 

There is a lesson in free market economics buried in here somewhere....

 

Completely agree. It's been doing that for decades now. Read a good article in most recent F-1 magazine - John Barnard talking about F1 and how they waste money... people are being paid huge ridiculous amounts of money for mediocher performance. Ferrari are really responsbile for that - especially after Enzo died... he at least had some understanding of keeping money & making a profit.

today - people are being paid huge sums just becuase of their experience - percieved knowledge etc... its crazy. I think its good for F-1 to run into a brick financial wall. It will be sad to see from a fan perspective but perhaps something good will emerge.

There is no reason Running an F-1 team has to cost $200 Million... the cars are basically fixed formula - all this aero stuff is really just crazy ... its not technology that can transfer and really be used to earn money -its just wasted.

When you go into the modern paddock - its like a small village of high tech high end clubs... why do they need that? sponsors spend their time in the paddock club - etc... its nutz!

 

Well Ferrari did threaten to leave the sport the last time they tried to implement budget caps.

Nothing will change unless the big teams want to play ball.

 

I thought of Toyota there too. They certainly are an exception to that axiom. Massive investment and very little to show for it, unfortunately.

What about Honda as another? After years of heavy investment with little return, they pulled the plug one year too early and the championships were credited to their old team as Brawn GP rather than Honda - must have been a disappointment to Honda to say the least. Maybe they'll have more luck with McLaren when they go back to supplying engines rather than running a whole team.

All the best,
Andrew.

 

I agree. In my mind I always credit Honda with the car though. Apparently they spend half a billion on it all in and then end of 08 the big boss pulled the plug. Wrong timing but ''right thing to do''.

I always wonder how much money Brawn made on that deal; He bought it for pennies and at the end of the season it made £100m profit...and then sold to Merc. Brilliant stuff there from the man with the large brain...

 

I recall reading that he borrowed money to buy the team and then the team entity borrowed money for operational costs throughout the season. After the season was done and all the loans had been paid back, he personally had made £7.5m - if the report was accurate and I'm remembering it correctly. I've no idea how much he might have made selling the team to Mercedes.

I apologise for being unable to cite any sources for that.

All the best,
Andrew.

 

Still sounds pretty OK to me

 

Not bad, but expected more...

In the end he came out on top . Got an additional 4 years with Merc and I'm sure they didn't pay him with paperclips and coupons for free popcorn on Tuesdays at the cinema

 

Thanks for the correction Andrew, I'm glad things aren't as bad as feared. I've heard similar things regarding how wages are fairly low in F1 due to the prestige of being involved with the sport.

That said clearly this all is a warning sign and things will likely get worse from here. I think we can all agree that F1 is no longer a pure sport, and it hasn't been a sport for a long time.

The question is what is the next step in cost savings? Clearly changing the formula every 5 years, forcing teams back to the drawing board, and then freezing development isn't working. Clearly an enforced spending cap isn't working (too many creative accounting practices, and Ferrari threatened to take their ball and go home the last time it was tried). Is there a way? Or is F1 doomed to die?

I don't know, but frankly we shouldn't be hearing about any teams having troubles paying their debts much less arguably one of the top teams.......even if Eric boullier is a massive ****** nozzle (at least Flavio was entertaining).

 

It sounds like cash flow problems. At several teams. What revenue stream so they all have in common?

Doesn't a lot of the cash to the teams come from FOM?

Maybe Bernie is slow paying them?

I'm sure some of you know more about how that revenue stream moves than I do

 

IIRC the money from FOM/Bernie is staggered based on the previous year's performance...so RB will get, say $50mm (pure speculation) and Marussia will get $5mm (pure speculation).

spend a few years at the bottom of the ladder and that becomes a huge delta.

also very few proper primary sponsors in F1 at all, especially at the back of the grid; and huge costs in R&D, personnel, and logistics/equipment for each team and it's no surprise a few are having cash flow problems.

and I would not be at all surprised if "the check's in the mail" is a frequently heard sentence by teams when asking Bernie where their $$$ is

 

Right... I wonder if the cashflow bottleneck isn't actually FOM.