Financial difficulties in F1: Towards the implementation of customer cars?

Bernie Ecclestone, the president of the Formula One Group, indicated that in the context of the very serious difficulties faced by the back-of-the-grid teams – primarily Caterham and Marussia –, some F1 teams could help competitors in a difficult financial situation by providing them with a car.

The Daily Mail claims that the Marussia team notified the High Court of London on October 7 of its intention to be placed in administration. A few days ago, it was Caterham that went through this procedure, following the issues encountered concerning the team’s purchase by Engavest from Tony Fernandes.

The two structures are expected to miss, at a minimum, the upcoming two Grand Prix, which would reduce the grid from 22 to 18 cars. Other teams are also in a delicate situation, such as Sauber, Lotus, or even Force India.

Bernie Ecclestone, head of Formula One Management (FOM), which manages the commercial rights of F1 and the agreements between the various stakeholders of the discipline, constantly repeats that a rule exists which would require teams to run a third car to prevent the grid from dangerously flirting with the minimum required number of 16 cars, this clause resulting from agreements made with Grand Prix organizers.

The challenge for Ecclestone is to avoid the questioning of commercial agreements, which could represent a substantial loss linked both to the penalties to be paid to Grand Prix organizers and, more importantly, to what could jeopardize FOM’s control over the commercial aspect of the sport.

Now, it seems that a third car, contrary to the commonly accepted idea that it would be engaged by the manufacturing team, could simply be provided to a struggling team: « They could provide a third car to someone else so if, for example, Sauber disappeared, a team could contract with Sauber. Ferrari could say: “We are going to give you a car, everything that goes with it, and we want you to put this sponsor on it. You have your own sponsors but we want you to include this one as well and we want you to take this driver.” The team wouldn’t have to disappear, would it? If Red Bull decided to give a car to Caterham, for example, it would solve their problems, » indicated the F1’s chief financial officer.

For the moment, however, urgency is not necessary: « We do not need to introduce a third car for the moment because they can miss several races. » Indeed, the commercial agreements between the teams and the FOM stipulate that the teams may not participate in three races in the season. « They lose the money they would have had for these races, but they do not lose their position in the championship. I don’t know if Marussia will do it in the long term. It would be better if they did not go as far as bankruptcy. »

This system is reminiscent of the fact that the issue of customer chassis was rejected earlier in the season, notably on the grounds that a manufacturer can only be considered as such by making its own chassis. Similarly, all the discussions aimed at reducing costs in F1 have failed, due to the lack of agreement between the leading teams.

A ready-to-drive car would allow the team benefiting from it to save in many areas such as research, development, manufacturing, or engine purchasing. Expenses related to the technical team and drivers could potentially be covered by the revenues associated with this third car. For instance, Marussia spent 96.2 million euros in 2012, with 40.4 million related to development and 29 million related to manufacturing and the engine.

Formula 1 has already experienced, in the 1950s, 1960s, and 1970s, cases where some manufacturers, in addition to running their own official team, supplied cars to other teams. However, some figures in the discipline view such a solution with concern, like Claire Williams, deputy director of the team of the same name: « We do not believe that customer cars and three-car teams are in the DNA of our sport. I think a more important question is to understand why we are having these conversations: it’s because there are teams that are currently under financial strain. I think we need to address the cost issues in Formula 1 to support the teams that are there. »