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Heritage vs. Necessity: Formula 1’s Increasing Challenge

ONZ2473When Adam Parr, the former Chairman at WilliamsF1 put out a tweet on Sunday morning suggesting that Formula 1 would increase to three-car teams in desperation to keep the series healthy, a flurry of internet posts and social media speculation hit the motorsport scene like wildfire.

With 11 teams entering a mandatory two-car lineup, the current state of Formula 1 currently rides in a tricky balance of measuring the sport’s heritage vs. the sport’s need to look forward.

The current challenge is that quite a few teams currently in Formula 1 are on the rumored brink of closure. Allegedly on life support, the teams of Marussia, Caterham, and Sauber have been incurring very public battles with their financing and desires to be bought out, meanwhile teams like Lotus and Force India continue to be vocal about their challenges to sustain the current operational costs of Formula 1.

On the optimistic side, we will likely have two less teams in 2015, and on the pessimistic side we could lose up to five. Doing the math, this could conceivably leave us with grids of 12 cars, which would be a disaster for the sport.

 

f1-caterham-pit-cr 2595358bHence, the rumor of three-car teams. If we only have six or seven teams on the grid, then giving those teams the option to run a third entry could go some way toward adding a few cars to the grid. Equally important, if these were quality teams, it would also mean adding quality cars that could have a shot at winning. This would actually be a welcome change from the “field fillers” we’re currently seeing with some of the aforementioned financially strapped teams.

 

On a pure cost level, there’s actually some logic to this. The bulk of a Formula 1 budget does not come in the expense of a car running during a race, it comes in the process of getting to that point. The design of the car, starting with computer simulations, and then modeling, and then wind tunnel testing… followed by the manufacturing of it all,  then testing and development, and of course the additional challenges of an engine program is a huge expense all to itself. Throw in a marketing team and PR staff to encompass this all, and you have a profoundly expensive endeavor before the car’s even arrived at its first race. Top teams such as Ferrari and Red Bull spend a rumored 250-300mil to compete during a season, but only a small portion of that comes in the specifics of staffing and operating the car on a Grand Prix weekend.

In other words, the additional cost of running a third car is not as high as some might expect. No doubt it’s an expensive endeavor to us mortals, but the additional manufacturing required for a third car, the additional staffing, is minimal compared to the R&D and overhead expenses that are already invested whether it’s two cars or three.

lauda11The controversy really comes in heritage. For decades, Formula 1 teams have been two-car programs; nothing more, nothing less. This was originally a process of economics, then a process of heritage, followed by a mandate.

However, Formula 1 historians will tell you that three-car programs are not unfounded. Look no further than the story of Niki Lauda recently portrayed in the movie “Rush,” whose Ferrari team added a third car for his replacement driver, Carlos Reutemann, in case Lauda was unfit for the job when he re-emerged for the 1976 Italian Grand Prix. One year later, the team would pull a similar move at the Canadian Grand Prix, fielding a third car at the Canadian Grand Prix for local standout Gilles Villeneuve.

The larger story here, however, is the age-old relative cost vs. value. With the advertising industry as a whole going through a paradigm shift in the last 10 years, motorsport has been caught on the wrong side of the formula. To boot, the prize money structure for Formula 1 teams grossly favor the teams who do well, thus making it even harder for smaller and lesser-performing teams.

As a result, we see a mathematical formula that makes it very tough for sponsors to adorn their logos to a two-car program.

10 b start nurb 2011 2BUT, what if we could increase a sponsor’s visibility by simply adding one more car with their brand on it? What if we could increase the spectacle of Formula1 by having more competitive cars going for the win? What if the branding guidelines of Formula1 began to allow teams to run multiple liveries? Increased spectacle, increased branding viability, these all seem like good options.

However, the heritage of Formula1 favors two-car teams, and it favors them all to style their cars identically. In an era where your marketing efforts and message have to be dynamic and fleet-footed, the sport currently leaves a lot to be desired with its resistance to fundamental changes, leaving a large question on what the future viability really holds.

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