FT SPECIAL REPORT The Business of Formula One Friday March 14 2014 www.ft.com/reports | @ftreports Then there is the introduction of the controversial rule, derided by fans as totally artificial: awarding double Inside » points for the final race of the season in Abu Dhabi. Off­track Cynics argue it is a knee-jerk reac- tion from Mr Ecclestone to last sea- Cost controls son’s yawn-fest. Vettel has called the idea “absurd”. Time is short for It raises the question of how far F1 an agreement as should go down the road of artificial- distractions ity when prioritising entertainment sport divides over over sport, as it agonises over dimin- cap on spending ishing TV audiences and an ageing fan base. Page 2 Around the corner is the inaugural season of Formula E, the electric car championship in city centres, starting Green moves aid cast shadow in Beijing in September. Largely dis- missed by F1 as a sideshow, it may image makeover offer an intriguing alternative to the Sponsors bang the sport of car racing. Then there is the uncertainty drum for more over F1’s own attempt to present its sustainability green credentials. The new 1.6 over season litre hybrid turbo engines and power- Page 2 ful energy recovery systems, repre- Red Bull falters ‘How far should F1 go Engine changes set Political, regulatory and technical upheavals in down the road of to reintroduce a sport struggling to attract fans contribute to artificiality when prioritising element of surprise sense of farce, write Roger Blitz and James Allen entertainment over sport’ to the racing Page 2 here is an odd-looking shape Sebastian Vettel’s fourth consecutive sent the biggest change in F1’s to Formula One cars this sea- world championship last season was technical regulations for 30 years. Ecclestone and son. Safety concerns have such a turn-off. The idea of the Fédération Interna- brought a “nose job” at the Not his fault. Halfway through a tionale de l’Automobile, the governing Todt face future front of the vehicle to pre- season that was turning farcical body, is to move away from gas-guz- Beleaguered boss Tvent cars somersaulting on impact because of tyre degradations, he and zling V8 engines, shed the image of and to protect drivers in side-on colli- Red Bull took control, dominated the conspicuous consumption and move enjoys backing of sions. podium and never looked back. To the in step with automotive trends. FIA’s top man Fans and experts have greeted the discerning viewer, it was a deathly After three years in the planning, nose designs with disdain, which dull procession. the new cars hit the track for the first Page 3 pretty much sums up the mood sur- The sport treads a fine line between time in February for testing, with rounding F1 as the 2014 season comes shiny new technology and Keystone very mixed results. into view. Cops farce. There is the spectacle of Mercedes emerged as the clear Rookies on track A new engine, a new points system, Bernie Ecclestone, F1’s chief execu- favourite for the 2014 season. Its three the return of Ron Dennis to the tive, attempting to combine the busi- customer teams managed to hit target Regulation updates helm of McLaren, a new race at the ness of running the show with his testing mileage with reasonable relia- may help season’s Russian resort of Sochi, and those trial in a Munich court on bribery bility and strong performance. noses – there are plenty of talking charges. Renault ran into problems and left newcomers show points to keep F1’s profile on the up He will fly to Munich for two days a its teams, including world champions their best side and up. week, giving him just enough time to Red Bull, underprepared. Christian Yet the sport is struggling. Viewing get to Grands Prix and fix the latest Page 3 figures are down, not least because on-track problem. Circuit driven: Sebastian Vettel, world champion, on the Bahrain track Getty Images Continued on Page 2 2 ★ FINANCIAL TIMES FRIDAY MARCH 14 2014 The Business of Formula One Timeisrunning out foragreement oncostcontrols Engine change for introduction in January. Cost control may have through “a gentleman’s end of the 2013 season to Christian Horner, Red challenges Red Team budgets Cyril Abiteboul, principal been talked about since agreement”, and was widely rejoin Ferrari. Bull team principal, says: of the Caterham Formula 2008, but teams are split on flouted. The sport is arguing over “The timetable to reach The sport is divided One team, says the docu- the move. Big teams such The shallow economic a proposed £155m budget an agreement is tight over a proposed ment is no more than “a as Ferrari, McLaren, Mer- recovery, particularly in cap per team for the 2015 We think a budget cap Bull dominance holding position”. He says cedes and Red Bull do not Europe, has continued to season. However, this figure would be arbitrary. We £155m spending cap, the wholesale changes the want a cap that would hit the cash-intensive sport has a number of opt-outs. think a better way to cut sport has made to the restrict their inherent and has put a budget cap Drivers’ salaries would costs would be to limit the says Roger Baird engines and aerodynamics financial superiority. Red back on the agenda. not be included to allow number of upgrades of the car have contributed Bull has won four drivers’ One of the smaller teams, teams to compete for the allowed each season.” The contenders Pre­season When F1 teams and the to the lack of “tangible and constructors’ titles Spanish HRT, folded at the best talent. Marketing and However, Graeme Low- sport’s most senior figures progress” on cost control since 2010. end of the 2012 season and hospitality would be don, Marussia president James Allen looks at testing met in Geneva this year since the resolution passed. Smaller teams such as has not been replaced. excluded, because caps and shareholder, is a big how rule changes will they pledged to introduce Cost control has been on Caterham, Lotus and there would hinder a team’s supporter of a budget cap Team Kilometres “healthy and affordable” the F1 agenda since the Marussia say their survival, ability to attract crucial because he says the sport bring back element cost control for teams. financial crisis swept the as well as the growth of the sponsorship cash. needs it. He points to Mercedes 4,973 Yet the sport is divided globe in 2008. The years sport, depends on the intro- Smaller teams say All outfits say publicly F1’s 2013 global TV viewing of surprise to results on the proposal, despite the that followed saw leading duction of controls. their survival and that they support cost con- figures, which fell 10 per Williams 4,893 fact that in the past two carmakers pull out or scale In 2009, the bigger teams trol, but the larger teams cent, or 50m, to 450m over “It’s very difficult, but I’m Ferrari 4,489 years HRT, the Spanish back their involvement in were able to head off a the growth of the are accused of blocking spe- the course of another pre- not calling us favourites for team, has gone bust, while the sport. Companies such budget cap by winning cific proposals in detailed dictable championship. the Australian Grand Prix,” McLaren 4,153 Lotus, owned by Genii Capi- as Honda, Renault, BMW agreement to introduce a sport depends on discussions. He says: “Teams are drop- said Sebastian Vettel, reign- Sauber 4,039 tal, has worked wonders on and Toyota all reassessed Resource Restriction Agree- the new controls And the timing is impor- ping out of F1, and that is ing world champion, at the Force India 3,975 the track but faces debts of their F1 commitments. ment. This watered-down tant. While cost control not a sign of an industry recent conclusion of the more than £100m. This slashed a big chunk cost-control measure lim- can be brought in on a that is growing. The decline pre-season test sessions in Caterham 3,313 The resolution was of the finance that teams ited physical assets that Lotus, another small majority team vote by the in the media figures last Bahrain. Toro Rosso 2,458 passed by the World Motor relied on, leaving them to were supposedly easy to team, has grabbed the head- end of June, any later than year should ring alarm “We haven’t done enough Sport Council, F1’s legisla- fund budgets from their monitor. It restricted ele- lines by finishing fourth in this, because of the close- bells. All teams should wel- laps and the speed is not Red Bull 1,711 tive body, on 23 January. sponsorship programmes ments such as the number the constructor’s title over ness to the start of a new come this proposal for the there compared with some Marussia 1,686 The move charges the and the payments they of people a team could take the past two years. But season, and significant good of the sport.” other teams.” Lotus 1,288 Fédération Internationale received from Bernie Eccle- to a race and cut back on despite this, it ended last changes will have to be If Lowdon is right, this Vettel has been having a de l’Automobile, the stone’s Formula One Man- costly wind tunnel time as season with a £114m black unanimous. leaves the industry effec- torrid time with his new sport’s governing body, agement, which controls well as the type of comput- hole in its accounts.