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Old 14th May 2015, 10:48   #1
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Default How Formula 1 distributes revenue to the teams

Interesting article on how FOM distribute revenue to the teams:

Ferrari, Red Bull paid more prize money than Mercedes
http://www.grandprixtimes.com/news/display/10239

I suppose the increased 'Premium' earnings to the top teams can be classifed under appearance fees that is common to various sports around the world.
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Last edited by Hatari : 14th May 2015 at 10:59.
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Old 14th May 2015, 12:00   #2
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Default re: How Formula 1 distributes revenue to the teams

I went through this article too. Its no surprised the smaller teams want to leave. This premium 15% fee for manufacturers is a bit of a dampener for the others. Surely the percentages need to drop.

Then again, its probably the only way for Ecclestone to lure more manufacturers. Rumours of Audi coming to F1 seem to be gathering speed but it should be a couple years before they attempt getting into the sport.
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Old 14th May 2015, 12:53   #3
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Default re: How Formula 1 distributes revenue to the teams

Quote:
Originally Posted by Fullrevs View Post
I went through this article too. Its no surprised the smaller teams want to leave. This premium 15% fee for manufacturers is a bit of a dampener for the others. Surely the percentages need to drop.

Then again, its probably the only way for Ecclestone to lure more manufacturers. Rumours of Audi coming to F1 seem to be gathering speed but it should be a couple years before they attempt getting into the sport.
The smaller teams knew this very well when they signed upto Bernie's contracts. They can whine on this, though. Market conditions and economoics are not great and so the focus shifts on the big teams and the moolah they rake in. Minardi did quite well and so did Jordan, they never had any of the big budgets. At the end of the day, they will be bought out or close down.

No one talks about Caterham F1 already and in few years the name will again fully be consigned to history books.
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Old 14th May 2015, 13:25   #4
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Default re: How Formula 1 distributes revenue to the teams

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Originally Posted by polopm View Post
The smaller teams knew this very well when they signed upto Bernie's contracts. They can whine on this, though. Market conditions and economoics are not great and so the focus shifts on the big teams and the moolah they rake in. Minardi did quite well and so did Jordan, they never had any of the big budgets. At the end of the day, they will be bought out or close down.

No one talks about Caterham F1 already and in few years the name will again fully be consigned to history books.
Yes but the situation with Minardi and Jordan were quite different to what Manor and the others have to deal with. F1 stayed with the V10 solution for quite a while which is when the Jordans and Minardis existed. More so, Eddie Jordan was a smart businessmen and his team had a decent track record to get title sponsorship from DHL and even rent out his wind-tunnel to other companies (non F1) for testing and beyond.

Now we have regulations changing every year which is quite hard on the small teams as even their suppliers are charging them quite a hefty sum for engines, gearboxes, MG-U kits etc If Bernie doesnt do something about this soon, we will be having 3 cars per team quite soon. I think thats an idea that not many like. F1 have a bit to learn from the WEC and even the WRC to an extent. The latter is on a bit of a revival with many new manufacturer teams stepping into it.
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Old 14th May 2015, 13:37   #5
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Default re: How Formula 1 distributes revenue to the teams

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Originally Posted by Fullrevs View Post
Yes but the situation with Minardi and Jordan were quite different to what Manor and the others have to deal with. F1 stayed with the V10 solution for quite a while which is when the Jordans and Minardis existed. More so, Eddie Jordan was a smart businessmen and his team had a decent track record to get title sponsorship from DHL and even rent out his wind-tunnel to other companies (non F1) for testing and beyond.

Now we have regulations changing every year which is quite hard on the small teams as even their suppliers are charging them quite a hefty sum for engines, gearboxes, MG-U kits etc If Bernie doesn't do something about this soon, we will be having 3 cars per team quite soon. I think that's an idea that not many like. F1 have a bit to learn from the WEC and even the WRC to an extent. The latter is on a bit of a revival with many new manufacturer teams stepping into it.
Agree, we are in the transition phase and change hits hard. Else you might want FIA to subsidize stuff for the poorer teams like how our government does. Get Cosworth to do an engine and give it at a lower cost.
But then the FIA might not want to get into this kind of an arrangement. The fact remains that there are too many players who want to voice their opinion. As expressed before by Bernie, you might need a dictator to decide things not democracy. Let us see what comes out of this steering committee. Donald McKenzie-CVC and Bernie's boss is attending too , throwing weight to the proceedings. See this - http://www.planetf1.com/driver/3213/...t-versus-teams

Last edited by polopm : 14th May 2015 at 13:40. Reason: typos !
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Old 14th May 2015, 15:43   #6
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The exact payment structure is complicated and unknown due to the various bi-lateral contracts between the parties involved.
One thing that is known is that the past performance get rewarded as it encourages teams to stay longer in F1, than just running away after winning a championship.
In the case of Red Bull, their payments not only reflect the fact that they finished 3rd in 2014, but also their championship victories in 2013 and 2012 – similarly, thanks to Ferrari finishing in 2nd and 3rd in 2012 and 2013 respectively, they are still given a fairly healthy payment too (asides from the much debated premium for their brand). As for Williams, their situation is the reverse – whilst they finished 3rd last year, they only managed 9th in 2013 and 8th in 2012.

The F1 strategy group meeting is the latest talk in town.
Ecclestone controls six votes, the FIA has six, and Mercedes, Ferrari, McLaren, Red Bull, Williams and Force India have one apiece. Ideas that gain support are then forwarded to the F1 Commission, where all the teams are represented.
While every F1 fan hopes that they come up with good proposals and decisions to submit to the F1 commission and then to the world council, the increased engine allocation for 2014 proposal already looks doomed, with Mercedes-powered Williams and Force India against it on grounds of cost and a reluctance to help Renault-powered rivals Red Bull in the championship battle.
Any proposal that gets passed to the F1 Commission will require unanimous agreement from the teams to get the green light. Such is the self interest among certain teams that there is already talk that they might scupper any bid by Marussia (Manor) to return to the grid, with an eye on the (rumored) 35m prize pot the British outfit has yet to claim.

One obvious agenda from BE is the threat of a cheap V8 engine which has parity with the current V6 hybrids to be used to force manufacturers to cut the prices they charge customer teams.
He tries to counter the argument that they are not the same by saying “The people that are running eighth today will be eighth. It’s not nice what I’m going to say, but it’s probably true. If you give some of those teams the current Mercedes car and engine they will still be in that position – or probably just a little bit better off.”
It is believed that a compromise over tweaks to the current hybrid units to put out 1000bhp could get a consensus.
Further talks over the direction of car design, the ban of wind tunnels and whether to change the philosophy of the tyres as Pirelli's tender comes up for grabs is also likely to be brought up, notably a move to wider rear tyres.
More interesting is that the Pirelli proposed 18 inch wheels have received a boost as Michelin publicly backed the idea for an increase in the size of F1 wheels. There are technical reasons for increasing wheel rim size in F1 from a tyre manufacturer’s perspective, though at present the teams say that a change in wheel rim size fundamentally affects their current aero modelling and design. All the data the teams have collected over the years the sport has regulated for 13 inch wheels, becomes devalued if the rim sizes are enlarged. Again more testing & associated costs are brought up.

Some believe that the teams have to give up their rights on the sport’s regulations and in return, they must be offered sustainable levels of income to cover the ‘minimum’ annual cost that prevents them in future having to do separate deals with BE complicating the decision making process.
FOM’s various contracts weave a web of strong restrictions on the various parties so there is little room for creative maneuvering. Maybe some of those contracts will be broken, which may enable more freedom for key players to maneuver.

Jean Todt and the FIA are very quiet…

Last edited by jfxavier : 14th May 2015 at 15:50.
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Old 14th May 2015, 16:56   #7
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Default Re: How Formula 1 distributes revenue to the teams

Quote:
Originally Posted by Fullrevs View Post
I went through this article too. Its no surprised the smaller teams want to leave. This premium 15% fee for manufacturers is a bit of a dampener for the others. Surely the percentages need to drop.

Then again, its probably the only way for Ecclestone to lure more manufacturers. Rumours of Audi coming to F1 seem to be gathering speed but it should be a couple years before they attempt getting into the sport.
In Golf/Tennis/Athletics the top stars too get a appearance fee which is fair and thats what the premium is about. Though Red Bull have really got a fantastic deal from Bernie.
Wonder how.

It is tough on the smaller teams, even if they agree to come together and negotiate as a group, a Sauber should be entitled to more than say a Marussia. So we are back to square 1.

The entry cost is just too high now.

Last edited by Hatari : 14th May 2015 at 16:59.
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Old 14th May 2015, 18:35   #8
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Default Re: How Formula 1 distributes revenue to the teams

Not to be left behind, F1 drivers have decided to take matters into their own hands by asking fans what they would like to see.
They intend to use social media to canvass views on a wide range of issues - technical, commercial, audience behaviours, etc - even asking fans whether F1 should be viewed as sport or entertainment.
The Grand Prix Drivers' Association, chaired by former F1 driver Alexander Wurz, discussed the idea at the Spanish Grand Prix and plan to launch the survey over the Monaco race weekend, from 20 to 24 May.

http://www.bbc.com/sport/0/formula1/32719280
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Old 15th May 2015, 19:23   #9
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Default Re: How Formula 1 distributes revenue to the teams

The customer car proposal being carved up will consolidate the big teams' power and revenues even further, as the process to ‘assess costs and feasibility’ of a customer car programme will be evaluated by what is called the ‘Constructor Championship Bonus Teams’, Mercedes, Ferrari, Red Bull and McLaren.

Williams, long time opponents of this idea, are out in the cold.

Adam Cooper reports that, “Lotus, Sauber, Force India and Manor will be given ‘first refusal’ on whether or not they want to switch to using customer cars", which is misleading. It is not a veto of the concept, these teams will be offered – but ‘first refusal’ on customer car allocations the big teams will be offering. Adam makes no mention of Williams.

The big teams will end up with even more of the share of the sport’s revenues, because they will be charging their ‘customer car teams’ for at least the chassis in this plan. It is not yet clear whether suspension gear box and aero parts will be on offer too.

Many are concerned that Formula One race will consist of two different battles; One the works racing machines and then the cars bought from off the shelf.

Last edited by jfxavier : 15th May 2015 at 19:25.
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