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Rearranging the deckchairs...

NEWS STORY
07/04/2020

If ever there was a time when it was rammed home that Formula One, indeed much of sport itself, lives in a bubble, courtesy of the coronavirus, it is now.

Last week, Liverpool Football Club, which paid Southampton 75m ($92m) for Virgil van Dijk in January 2018 and 67m ($82m) to Roma for Alisson Becker months later, put all of its non-playing staff on furlough.

It was only in the face of public outrage at the football club expecting the British taxpayer to foot the bill that led to it having a change of heart and following the example of other clubs, such as Manchester United, Manchester City and Chelsea in paying its staff out of its own (sizeable) pockets.

McLaren, 8-time Constructors' Champions and winners of 12 driver titles, was the first F1 team to take advantage of the government's furlough scheme, followed by Williams and then Racing Point, while F1 itself has put around 50% of its workers on the public payroll.

While Chase Carey talks of a 15 - 18 race calendar, the likes of Bernie Ecclestone - a man who actually understands the sport - calls for the 2020 season to be written-off.

The 89-year-old's call isn't out of schadenfreude in the face of being dumped by Liberty Media, but because he knows the sport, he understands the logistics and the cost - financial and otherwise - of making promises that cannot be kept.

While nobody wants to see the season scrapped and we all want to see the cars line-up on the grid as soon as possible, the reality is that the future of the sport is in the lap of the gods.

While F1 made the wise move in postponing the raft of new regulations originally intended for 2021 to 2022, and equally wisely decreed that this year's cars can be used again next year, it also opted to introduce the budget cap next season as planned.

For as long as anyone can remember a budget cap has dogged the sport, and better men than Mr Carey did their best to introduce one.

Though its introduction next season should be a mere formality, and by all accounts had been agreed upon, yesterday's video conference involving the ten team bosses, the FIA and F1, demonstrated not only that there is some way to go, but that none of those taking part appear to understand what's really happening out there in the real world.

Having previously agreed to reduce the original cap from $175m (140m) to $150m (120m), some wanted to reduce it further still, to around $125m (100m), though Zak Brown would prefer $100m (80m).

However, ignoring the fact that Jean Todt ruled out postponing the rule changes until 2023, it was business as usual in the self-interest department as some teams claimed that the budget cap should not be a 'one size fits all' measure.

Ferrari argued that as it develops parts that are used by customer teams it should be allowed a greater budget limit. Refusing to budge on the $150m limit, the Italian team was backed by Red Bull, while Mercedes - no doubt influenced once again by Daimler-Benz - was open to the idea of a lower limit providing it was not being used as a means of handicapping some teams.

Of course, while Ferrari provides a whole range of components for the likes of Haas, Racing Point relies heavily on Mercedes - much too heavily as far as some rivals are concerned.

With another meeting scheduled in the coming days, it is likely that the budget cap will be reduced to $120m but in stages, while allowances will be made for those teams that develop and supply components for rivals.

However, as the various factions squabbled over how much they should be allowed to spend, they appear oblivious to the financial nightmare the world faces once the viral nightmare it is currently encountering is out of the way.

The financial shockwave will hit, and it will hit hard. While normality will slowly return in some areas, the after effects may be felt in others for many years to come.

Despite F1's belief that it is all-important, as people fight to save their businesses, their jobs and their homes, sport will be a luxury.

The first thing anyone does when cutting back is to cancel cable TV, not to mention holidays.

The sport is already facing a crisis with three or more teams possibly leaving - and no teams contractually committed to the sport after the end of this year - and yet at a time there is genuine fear about the financial hit the sport is to take, the team bosses are arguing over how much they should be allowed to spend.

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READERS COMMENTS

 

1. Posted by NS Biker, 09/04/2020 4:41

"Deep in the sand.
But don't the deck chairs look nicely lined up.?"

Rating: Neutral (0)     Rate comment: Positive | NegativeReport this comment

2. Posted by ClarkwasGod, 08/04/2020 12:17

"From some of the comments below, looks like it's not just the teams' personnel that have their heads in the sand"

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3. Posted by zoom, 07/04/2020 19:56

"I'm opposed to any type of hard budget cap but I think a soft cap might benefit everyone. The way it could work (off the top of my head) is set a soft cap say 100 million (for an easy number). If a rich teams wants to spend more but every $ over the soft cap is subject to a "luxury" tax--say 50% up to 110% of the cap, then 75% for 125%, & etc--the %s are for examples only. The luxury tax pot is then shared with teams not exceeding the cap--perhaps in reverse order of %s the lowest budgeted team gets the largest share.

I can't see a down-side except the bickering, so common in F1, over the soft cap number."

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4. Posted by elsiebc, 07/04/2020 15:20

"@Editor: The teams have sponsors that are paying for and expect results. Hamper the teams' ability to produce results and you hamper their profitability. Your last paragraph treats them as rich people playing weekend racers rather than the businesses they truly are. "

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5. Posted by alvarezh3, 07/04/2020 15:02

"@ Editor:

Read somewhere else that a "token" system was proposed to allow a team to choose what part of the car (chassis) they would like to develop and limited by the amount of tokens received, much like they did with the current power unit that was later discarded.
Could you be so kind as to confirm with your well informed contacts on this being true and if so, give us any details you may obtain on how this would work?
Thanks in advance."

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6. Posted by Interestedparty, 07/04/2020 14:52

"Have you ever studied the cost structure? What is the difference in cost to an overseas 'flyaway' race compared to a European 'drive t'o race? How much does each race cost each team. Reduced number of races i.e. 22 costs more than 16 and overseas cost more - versus the increased revenue teams receive from the Commercial rights holder for 22 races? Why not increase the teams share of the prize fund? They provide the value not the organiser? Where is the core value generated? A dumbed down sport or a revised structure that focuses on the real value provided to stake holders not just shareholders and bankers (loans to F1). I think you need to take a much broader and wiser overview rather just budget cap !!"

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