No immediate financial concern for teams


Speaking in Australia, days before the plug was eventually pulled, Claire Williams admitted concern should further events go the way of the postponed Chinese Grand Prix.

"If we don't go to races, what happens to the prize-fund money? Does this decrease?" she asked. "At the moment we're just hoping that's not the case, and obviously we're having discussions about insurance."

Unlike the big three, who can basically afford to weather the storm a little longer, Williams is one of several teams already living on a knife-edge financially, and as a result extremely concerned how further race cancellations and postponements might affect them.

The good news is the all the teams will continue to receive prize money.

F1's biggest cost each year is the prize money it pays out to the teams. Last year's prize pot was around 890m ($1bn), 68% of the sport's underlying profits, and was basically allocated dependent on how teams finished the season.

Forbes reveals that F1 filings state that "there are no Team payments paid with respect to individual Events", instead "payments of the Prize Fund are made on the last business day in every month of the World Championship season (March to November), with the final payment in respect of each year being made on the last business day of the following February".

In other words, even though the teams are not currently racing, and probably won't be until the beginning of June, they are still receiving their monthly payments.

Of course, if some of the races that are postponed cannot be rescheduled this will impact the teams' income courtesy of the fact that organizers pay hosting fees - which averaged 25.4m ($28.7m) last year - and less races means less hosting fees and consequently reduced profits for F1 and thereby the teams.

"If an Event is not held, cancelled or does not receive international television coverage (for example, as a result of a technical problem), Formula 1's fees under the relevant advertising and sponsorship contract are likely to be reduced unless the advertising and sponsorship contract allows Formula 1 to substitute another Event for the cancelled Event and Formula 1 does so," state the filings.

Similarly, profits from the sport's hospitality outfit, the Paddock Club, would be impacted as the filings state that "if an Event is cancelled, Formula 1 will also be required to refund ... amounts paid for tickets", and then there's the little matter of the broadcasters, whose "contracts include a provision to reduce the fee payable to Formula 1 if there are fewer than 15 Events".

As one considers that broadcasting is the sport's largest single source of revenue, pouring 676m (762.8m) into the coffers, it's worth noting also that should Zandvoort, Barcelona and Monaco be dropped as expected, this would leave just 15 races.

The uncertainty over the season is likely to impact the planned introduction of the 2021 rules overhaul, yet in a way, with the teams already facing a sizeable financial hit this could be a godsend as if the rules overhaul goes ahead as planned it is this year that the teams need to start seriously investing.

Floated on Frankfurt's junior exchange, 52.3% of Williams is held by team founder, Sir Frank Williams, and though its resources are limited it is thought that it should weather the storm.

On the other hand, this could prove the final nail in the coffin for the likes of Haas and Renault.

Williams most recent financial filings, for the year ending 31 December 2018, reveal that its 635 staff were paid 58.1m ($65.5m), which, over the three months March, April and May averages 14.4m ($16.3m) a month. Receiving an estimated 79m ($89m) - an average of 23.6m ($26.7m) a month - in prize money, the Grove outfit should have enough in reserve to weather the storm.

Besides which there is always Mr Latifi... who has previously come to the aid of McLaren.

Article from Pitpass (

Published: 16/03/2020
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