The madness of unneccessary F1 costs.

[Richard C]

Originally Posted by Moneyseeker

A factor not mentioned is the impact that Honda coming into F1 will have. We can be sure that they will pour money into McLaren over and above the cost of the engine programme.

If this is the case, it will force Red Bull, Ferrari and Mercedes to spend even more and cost cutting will be out of the window...

I generally agree, but I think "pour" money is a bit strong. I can see McLaren getting some level of extra money, but I don't expect it to pour. Rather, I think that Honda feels they have the right partner and that the attitude is more of "get on with it" vs. "out spend them". I think spending wisely vs. spending excessively is the answer. I don't see them triggering anything "new" with the other players unless McLaren rock the boat by building a competitive/winning car which is proving to be hard for McLaren these days and I suspect the problem is not directly due to a lack of funds.

I was reading in one of the another thread about a rumor of Honda is looking to invest directly in McLaren (ownership stake). If anything that is where I expect the extra money might go.

Richard

[Mike Harte]

Originally Posted by Richard Casto

I was reading in one of the another thread about a rumor of Honda is looking to invest directly in McLaren (ownership stake). If anything that is where I expect the extra money might go.

Richard

This "rumour" was reported by a "journalist" who, like so many of his colleagues, seems to have a really vivid imagination. For this to come true, there are so many hurdles that would need to be overcome that, in my opinion, it would be extremely unlikely. Especially if you take in to consideration the time and effort that Dennis took to buy back Mercedes-Benz's shareholding, and that was started before Honda re-appeared on the horizon.

Honda's successes in Formula 1 have only come whilst they have been a technical partner to a independent team, and they have much experience of this type of collaboration with McLaren. I see no reason why that formula should be different this time round.

[Richard C]

Originally Posted by Mike Harte

Especially if you take in to consideration the time and effort that Dennis took to buy back Mercedes-Benz's shareholding, and that was started before Honda re-appeared on the horizon.

Particularly good point.

Richard

[Moneyseeker]

I can't see why Honda would even consider buying a stake in McLaren, they've done the team ownership thing and paid a heavy price for it.

McLaren haven't rushed to sign a title sponsor this year, which makes me think that this is already sold to Honda and or an affiliated brand for next year.

[insane014]

Customer cars only make sense if they are current MY cars and not the previous season crap like they had it before.

Grid is still two tiered and with previous year customer cars it will remain exactly the same.

For the event that claimed itself as "pinnacle of automotive sport" its really a shame it's so fragmented, there is some absolute mediocrity in that pinnacle cream. So either give them a proper technology for less money or get rid of them and have other financially stable and striving five teams ride three or four cars.

[wnut]

FOCA or their representative made these rules, the lunatics run the asylum, the rules were designed to prevent the lower teams competing with the established teams, and now we are meant to worry about new entrants like Honda spending too much.

This competition is a spending war, at every tier from driver selection to simulator and wind tunnel equipment, if you can't pay don't play!

Else stop the stupidity and spec the aero and let outsiders participate in the club!

[JacobP]

Originally Posted by Mike Harte

This "rumour" was reported by a "journalist" who, like so many of his colleagues, seems to have a really vivid imagination. For this to come true, there are so many hurdles that would need to be overcome that, in my opinion, it would be extremely unlikely. Especially if you take in to consideration the time and effort that Dennis took to buy back Mercedes-Benz's shareholding, and that was started before Honda re-appeared on the horizon.

Honda's successes in Formula 1 have only come whilst they have been a technical partner to a independent team, and they have much experience of this type of collaboration with McLaren. I see no reason why that formula should be different this time round.

It's all about making sure that the team that uses your engines can actually win. Normally, when the engine manufacturer's sponsorship of a team goes beyond providing free engines, the manufacturer wants to own the team as they don't always feel comfortable pouring millions out of pocket without having a full control. During its Honda days, things were different. McLaren had a very good sponsor, Philip Morris. This is why they could develop the car with no expense spared. Honda probably would like to see a strong McLaren team that can stay competitive without additional Honda sponsorship, just like Renault doesn't want to run a team if there is already a successful independent team that uses Renault engines. If it turns out that McLaren is struggling financially, I think Honda may consider buying a stake.

It seems to me like recently the independent teams (the 'privateers') can no longer compete at the front. Observe that whole decade prior to RedBull's dominance started, all the championship winning teams were manufacturer teams, if you count McLaren is a Mercedes team since it was owned by Mercedes. RedBull changed things, but Red Bull not exactly a "privateer" team either. It's more like a corporate team that belongs to the corporation that sponsors it.

[Mike Harte]

Originally Posted by JacobP

It seems to me like recently the independent teams (the 'privateers') can no longer compete at the front. Observe that whole decade prior to RedBull's dominance started, all the championship winning teams were manufacturer teams, if you count McLaren is a Mercedes team since it was owned by Mercedes. RedBull changed things, but Red Bull not exactly a "privateer" team either. It's more like a corporate team that belongs to the corporation that sponsors it.

I regret to say that your whole premise is factually incorrect, although you are at complete liberty to hold your own beliefs.

McLaren has never been owned by Mercedes-Benz; they did, however, purchase a 25% shareholding from the other three entities that originally owned all the shares in McLaren, and I am not even certain whether Mercedes even held a position on the board of directors. Whatever that position was, control of McLaren still remained independent of Mercedes, and they also had to obtain outside sponsorship to retain that independence. A number of years ago, Ron Dennis (also then a 25% shareholder) set out for McLaren, on behalf of the the other owners of the remaining 50% of the shares, to buy back Mercedes' holding. This was started long before the talks with Honda had even been contemplated, and the process is now complete, and McLaren, as it always has been, remains an independent team.

By the way, far from McLaren struggling financially, they chose not to have a principle sponsor this year, and stated that they could manage without one for a considerable time. If, and it's a huge if, they required financial aid, they could always turn to the 3 holders of the total shareholding of the Group. They are all extremely financially comfortable, and between them could prop up McLaren with a few hundred million without it making a dent in their finances.

Now let's have a look at Red Bull Racing. You seem to misunderstand the concept of being an independent team as opposed to being a factory, or works, team. In the most simplest form, the first is one that designs it's own chassis (or outsources it's supply) and is free to choose it's own supply of power units from all available sources. The latter is one that does everything under it's own control, but this is not quite as easy to describe as the former, as it can take a number of forms. RBR is most definitely an independent team, regardless of who bankrolls it, because it is completely at liberty to choose it's supplier of power units, as is clearly demonstrated when they decided to change engine suppliers and swapped around with Toro Rosso.

Fact is that currently there are two factory teams, Ferrari and Mercedes, and the other 9 are independent. In this day and age, privateers no longer exist (long gone are the halcion days when you could buy a chassis, an engine and run the car from a railway-arch lock-up garage) and there is no such thing as a corporate team.

[Moneyseeker]

Originally Posted by Mike Harte

By the way, far from McLaren struggling financially, they chose not to have a principle sponsor this year, and stated that they could manage without one for a considerable time.

Not according to Ron Dennis ....

"Our cars will not feature a title sponsor at the first event," he told reporters at the McLaren factory ahead of the season-opener in Australia next week.



"But they will definitely feature a title sponsor some time at the next few races."

[JacobP]

Originally Posted by Mike Harte

Now let's have a look at Red Bull Racing. You seem to misunderstand the concept of being an independent team as opposed to being a factory, or works, team. In the most simplest form, the first is one that designs it's own chassis (or outsources it's supply) and is free to choose it's own supply of power units from all available sources. The latter is one that does everything under it's own control, but this is not quite as easy to describe as the former, as it can take a number of forms. RBR is most definitely an independent team, regardless of who bankrolls it, because it is completely at liberty to choose it's supplier of power units, as is clearly demonstrated when they decided to change engine suppliers and swapped around with Toro Rosso.

"Independent team" is quite an amorphous concept. Sure Red Bull is independent if you define it as "not a manufacturer" team, but Red Bull certainly is not a privateer team. It's whole owned and run by a corporation, whose primary business is something other than racing cars. The real privateers struggle with staying in front of the grid. Lotus scored many podium finishes in 2012-13, but that nearly bankrupted them. Even McLaren struggled in 13-14, although I'd probably attribute these issues to managerial or engineering problems rather than financial. McLaren is the only privateer that has the potential to hang with the big leagues, and we don't know for how long. 13-14 season hasn't been very encouraging to McLaren fans.

[Moneyseeker]

Actually for the purposes of the world championship there is no distinction between 'factory' and 'independent' teams, they are all defined by the FIA as constructors of the cars - the engines are not referred to (unless they are in the entrant name).

You could argue, for example) that Mercedes F1 being a seperate entity within Daimler - makes it no more of a 'factory team' than Red Bull?

[chillibowl]

thats how i understood it. since each team is required to construct their own chassis they are all constructors while those that have a greater level of factory support are still constructors but also 'works teams' (i believe thats right as this terminology doesnt seem to get used much anymore).

where that line gets drawn its hard to know as all teams enjoy factory support to varying degrees in relation to their PUs.

i guess if i was making a distinction of works team i would ask who do the majority of race team employees work for, who pays the them and is there a flow of people between the race team and the road car division.

although i have no idea how you would classify Caterham and Marussia, and Lotus also....just 'Constructor' seems the most apt description to me.

[Mike Harte]

Originally Posted by JacobP

"Independent team" is quite an amorphous concept. Sure Red Bull is independent if you define it as "not a manufacturer" team, but Red Bull certainly is not a privateer team. It's whole owned and run by a corporation, whose primary business is something other than racing cars. The real privateers struggle with staying in front of the grid. Lotus scored many podium finishes in 2012-13, but that nearly bankrupted them. Even McLaren struggled in 13-14, although I'd probably attribute these issues to managerial or engineering problems rather than financial. McLaren is the only privateer that has the potential to hang with the big leagues, and we don't know for how long. 13-14 season hasn't been very encouraging to McLaren fans.

I believe that you still misunderstand the concept of being a "privateer" as was the accepted description from the 60s, 70s and possibly the 80s. These were wealth individuals who, on the whole, went out and purchased usually a single chassis (there may have been 2, the second as a spare which was allowed in those days) from a source such as Brabham or March and then shoved, most often, a second hand Cosworth V8 with a Hewland gearbox in the back. They often worked out of lock-up garages, and relied on their wits to keep going.

You now impossible to equate the likes of McLaren as they are now, or even the minnows such as Marussia, to the privateers as they were when the term was used many years ago. Now we only have independents and factory teams, yet even nowadays the likes of Luca di Montezemolo look down their noses at teams such as McLaren and Red Bull because they are not factory teams and he still sniffily refers to them as "garagistes" much like Old Man Ferrari did.

Back to McLaren, as far as finance is concerned, you really are overlooking the most basic facts that it is 100% owned by just three entities; Ron Dennis who has a personal fortune running into the hundreds of millions pounds sterling, Mansoor Ojeeh who is one of the world's wealthiest individuals and lastly the Bahranie Royal family's own wealth fund which has assets, including a lot of cash, running into the hundreds of billions of pounds.

I would suggest that, if there was any doubt about the financial stability of any team, then McLaren is one that will be of no concern. And I regret to say, I really don't care how "fans" of any of the teams feel about them, the same as I don't care about who wins a race or the championship. I just want the best driver and car to win, whether it be Red Bull, Ferrari or even Caterham.

[wnut]

Originally Posted by Mike Harte

Ron Dennis who has a personal fortune running into the hundreds of millions pounds sterling,

All made out of the too expensive to survive in F1 series!

[Casper]

Originally Posted by wnut

All made out of the too expensive to survive in F1 series!

That is clearly a wrong and inappropriate statement.

[wnut]

Originally Posted by Casper

That is clearly a wrong and inappropriate statement.

Okay, feel free to tell us what is wrong and inappropriate?

As far as I know F1 is wholly and solely responsible for Ron's net worth!

[Tourer]

Originally Posted by wnut

Okay, feel free to tell us what is wrong and inappropriate?

As far as I know F1 is wholly and solely responsible for Ron's net worth!

I think that you'd be largely right - the road cars and technology projects (all driven off the F1 success mind you) would have contributed though.

[Mike Harte]

Originally Posted by wnut

Okay, feel free to tell us what is wrong and inappropriate?

As far as I know F1 is wholly and solely responsible for Ron's net worth!

There is no escaping the fact that Formula 1 underpins his financial success and is the foundation upon which he created the McLaren Group of companies. However, those other divisions of the group are all, or so I believe, highly profitable. There is the road car company, which seems to be able to pre-sell every car that it makes, and one must not overlook the division that produces the pretty successful GT3 cars for sportscar racing.

Then there is McLaren Applied Technology, who have clients in so many different fields as well as motor sport. We all know that they supply the standardised ECU for F1, but did you know that they also do the same for CART and NASCAR and probably some other branches of the sport. They also supply some of the other F1 teams with their telemetry equipment and other pieces of both hardware and software. Away from motorsport, McLaren supply avionics to, obviously, the aviation industry, and other instrumentation and equipment to the naval industries.

So, you can now see that the McLaren Group are very far from being one dimensional, and it is the whole group that have helped Dennis reach his current financial status.

[davyboy]

Originally Posted by Mike Harte

So, you can now see that the McLaren Group are very far from being one dimensional, and it is the whole group that have helped Dennis reach his current financial status.

That's true, but most of these facets of the business are recent developments. With the exception of the F1 road car, P4-McLaren, has largely been a tobacco underpinned F1 business for most of it's life.

Anyway, back to the madness of unnecessary costs, it seems that there is a relatively small number of people/entities that benefit significantly from the model the way it is now. They include Bernie, Ferrari and McLaren. While they occupy the pound seats - pardon the pun - it seems very unlikely there'll be any cost control changes to the 'sport'. Meanwhile wealthy enthusiasts [aka fools] will come, prop up the rear of the grid for a while, loose their shirts, and then foxtrot oscar.

[Adam43]

Check out Autosport for the latest on this.

[hondafan37]

Originally Posted by Gingers4Justice

I think part of the reason why F1 is so expensive is that it's so restricted. Rather than teams and manufacturers concentrating on developing their own answers to the question, everyone is racing almost exactly the same thing, so they have to spend millions of dollars/euros/pounds and spend countless human hours on developing tiny parts to gain the slightest of margins on their rivals. The new boys are treading water behind the teams that can afford or are willing to do this. The rules are so restricted that all the cars effectively have the same development path, meaning the ideal F1 car is actually out there and attainable, if you have the money to pull in all the best designers and engineers.

If you look at the WEC, where the current LMP1 care are arguably even more technically challenging, the are several different answers to the same question. A 2 litre, turbocharge V4 with ERS-K and ERS-H, a NA 3.7 Litre V8 with a super-capacitor, a 3.6 Litre V6 Turbodiesel with a flywheel hybrid system... but despite these cars having to run at spectacular speeds for 24 Hours, I'd bet the development costs of these power units were a lot less than the F1 versions.

The truth is the rule book is so restrictive that there is no room for innovation. There are some incredibly talented, young people at the lower teams who might be able to pull something surprising out of the bag if they were just allowed a bit more freedom.

I hated the World Engine concept for a number of reasons, but wouldn't it be nice if a manufacturer could develop an engine which actually COULD be used in more than one series. I just hated the idea of this being a certain type of engine. Wouldn't it be a great story if Red Bull ditched Renault for the Porsche V4...or if Ferrari gave the Indy 500 a go with their F1 engine in the back of an IndyCar...etc, etc.

We were told this year would be exciting because one of the manufacturers would get it seriously wrong. Well they haven't. They've all had to design the same engine, and guess what, will millions of pounds invested with the cleverest people, they're all pretty reliable and pretty close, all things considered. If they actually had the chance to balls up an engineering decision by choosing the wrong displacement, energy recovery system, or number of cylinders then the engine manufacturer with the most money could also have got it the most wrong.

Tear up the rule book. Let manufacturers spread their investment accross more than one series, and at least give the back markers half a chance of doing something outside the box and bagging a result for their sponsors.

I think like you, more restrictions does not cost reduction.
It's simple, regulation is more and more restrictive and yet more and more budget is needed.

[Casper]

Originally Posted by hondafan37

I think like you, more restrictions does not cost reduction.
It's simple, regulation is more and more restrictive and yet more and more budget is needed.

It is surprising that the main media commentators have not latched onto this view. Mind you I don't read much of what they write but I have seen no reference to any of them expressing opinions along the same lines.

[Adam43]

The point of the restrictions is not to reduce spending, it is to reduce the effectiveness of spending. Hence the historically tight grids we've seen over recent years. Although perhaps more consistent grid line ups.

[wnut]

Originally Posted by Adam43

The point of the restrictions is not to reduce spending, it is to reduce the effectiveness of spending. Hence the historically tight grids we've seen over recent years. Although perhaps more consistent grid line ups.

Exactly! Well put.

[davyboy]

Originally Posted by Adam43

The point of the restrictions is not to reduce spending, it is to reduce the effectiveness of spending. Hence the historically tight grids we've seen over recent years. Although perhaps more consistent grid line ups.

In motor racing, the cost of performance is a logarithmic curve. When restrictions are tight, but not fully closed, it means that there's a coalescence up at the top end of the curve where each increment further up is at its most costly.