Cost-cutting - drivers' salaries

[easy_rider]

Instead of standardising engines and other innovations that would be against the sport's character, has anybody considered an obvious way to cut teams' expenditures - reducing the amount paid to the drivers?

If Jenson Button is on a £20 million contract out of a total budget of £150 million, that means 13% of a struggling team's budget is going to just one employee (albeit an important one). When an institution is struggling for cash, that is surely too extravagant - especially as the drivers all want to drive F1 cars. I suspect that most of them would prefer pay cuts to being out of F1 altogether.

I can (just about) see the force of the argument that as they retire in their 30s they need to earn enough to live on thereafter in a short space of time, and not all of them can make the vast amounts through endorsements that Schumacher did, but even so, in such extraordinary times there needs to be belt-tightening all round and the drivers should not feel that they are exempt.

[chris.blades85]

[Gordy]

The teams all of them have signed the drivers contracts and have entered into them with their eye's open.

They could have signed a driver for free (I believe there are those drivers on the grid that already do that via sponsorship deals). They chose to pay Jenson et al a lot of money as they believe they are worth that. I don't see how that as changed?
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www.gordyhand.co.uk

[IMSA Racer]

[don't panic]

IMSA, your numbers are way off.
the only athlete that i am aware of that topped the 100 mil/year mark in 2007 is tiger woods, and it's mostly through endorsements.

the average salary of the top 50 most paid athlete was around 15 million dollars (per year). The top-earning 'team' player was Jeter, with 22 mil in salary (plus endorsements). Still a huge amount of money, but a far cry from over 100.

but it is true that some of them have total contracts in excess of 100 mil, spread along several years. in this case, if they change team they carry their contracts with them and if they retire they are paid everything they are owed until the moment they retired, regardless on the payment plan that was agreed upon (which in some cases extends over longer period of time than the contract itself).

[don't panic]

on a separate note,
after march, does jenson's contract (and everyone else's working there) get honored? who's responsible for that if the company folds? does Honda (the car company) pick up the tab of Honda the F1 team?
if someone buys the team, do they inherit the contracts as well?

[easy_rider]

[gourami]

Competition for those STR seats is hotting up - I hop e Taku gets his deal soon!
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Watching F1 since 1998 - follow me on Twitter @davidturnedge

[francisn]

I believe Jenson's contract is circa 16 million dollars, rather than pounds. If so, then perversely it has increased in value of late, but if I am right, at the time it was signed it would have been worth substantially less than £20m and under £10m.

[easy_rider]

Thanks francis, I was afraid that I had inadvertently given him a pay rise. Anyhow, it is still a substantial sum and as Max Mosley has said, the amounts the drivers are paid are more than they could earn doing anything else. Thus provided they act together, the teams are in a strong bargaining position to cut costs on this front, at least.

Of course I doubt that in itself it would be enough - but still, it is an area in which money can be saved without compromising the spirit of the sport.

[solarflare]

I think it's a fair point about drivers salaries.

However, what's REALLY needed is a breakdown in terms of the expenditure per time gained on track.

For example, how much time per lap does the driver bring to the team: i.e. how much does having a, say, Raikkonen give over, say, a Sutil (just for example). How many million dollars per tenth (or whatever it works out to be)?

And how does that compare against spending the same amount on an Adrian Newey, or equivalent designer?

Or against the equivalent expenditure on the windtunnel, or track testing time, or engine development, or computer CFD simulations?

This is why I think a budget cap could be interesting, if you audit the teams in such a way that everything (literally EVERYTHING) counts. The teams would all be able to spend the same money, but in different ways to achieve their targets in by differing means. Buy the star driver, or star designer, or test more, or develop more, or what?
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Life is.....the gap between Formula 1 Grands Prix

[easy_rider]

Those are very interesting questions, solarflare, it would be good if we could send in a team of researchers and see what answers they found.

Another idea is perhaps to ban cross-subsidy. I.e. F1 is only unaffordable to Honda because the parent company, now in difficulties, is having to pour money into the racing team to keep it going. Likewise, it is hardly worth the while of a private team like Williams to take part because they cannot match the funds the manufacturers pour into their teams and thus will not be competitive, and thus will not attract sponsorship.

The simplest way to reduce the amount of money spent is to reduce the amount of money available for spending.

My preference would be for CVC to sell FOM to a company owned by all the teams, thus the commercial revenue of the sport would be available for the teams. I don't see CVC being reluctant to sell FOM (but I do doubt whether the teams could afford to take it on, particularly with its current level of debt, but let's put that to one side for the moment).

Thus teams would only be allowed to spend their prize money, their share of the commercial rights, plus sponsorship which they would have to find for themselves, up to an agreed cap. They would not be permitted to receive support from other businesses within the same group as themselves, except through the sponsorship provision and limited by the sponsorship cap.

Such a system would be (a) more sustainable, (b) more likely to enable private teams to take part and (c) more likely to ensure a level playing field.

It would also be difficult to police, I admit. Still, it's worth thinking about.

[francisn]

All very nice in theory easy-rider. But whoever owns the rights will either be looking for a return on investment or paying interest on the cost of financing the purchase.

the sad fact is that Bernie took a whopping amount of money out of F1 when he originally sold, and now at least 50% of income will for the foreseeable future go to financing whoever owns the rights.

The only real answer is either for FOM to go bust or the teams to start a new series, unencumbered by the debts of the past. There is still plenty of money being generated by F1, even in a serious downturn. the trouble is that at least 50% of it is disappearing from F1.

[easy_rider]

That's true, of course. The best answer when asked what the sport should do to secure its future is that of the man who when asked for directions replied "Well, I wouldn't start from here..."

[IMSA Racer]