In a sport as technologically demanding and highly competitive as Formula One, it is no surprise that money is the key. Every season Formula One withholds a percentage of its annual revenue to give teams an annual payout, which usually amounts to a total of one billion US Dollars. However, it is not as simple as rewarding those who finish highest with the largest cash sum, instead it is rather more complicated...
The first payment is given to any team that finished in the top ten places in the Constructors Championship, in the past three season this has meant all teams are entitled to the same equal payment.
The second payment is based on teams performance throughout the season, the higher they finished, the more money they receive. Therefore, those doing the best job are rewarded as such.
However, the payouts do not stop there, this is where it starts getting complicated...
A Constructors bonus is given out to all teams who have ever won a championship. From the current grid Mercedes, Ferrari, Red Bull, McLaren and Williams receive this payment. This deal was negotiated in Bernie Ecclestone's era, in a bid to get the 'big names' to commit to long term contracts. Alongside these payments, Bernie also agreed to giving Red Bull another annual lump sum having been the first to sign the long term commitment contract.
Furthermore, upon Mercedes' return to Formula One in 2010 they signed an agreement that pledged they would win back-to-back championships, having achieved this in 2014 and 2015, and every year since, they have subsequently been rewarded with further annual bonuses.
Williams also picks up a heritage payment of $10 million, which is the smallest payment made, yet this means it can gain more money than some of its rivals despite being at the back of the grid competitively.
Contrastingly, the biggest payment of all is Ferrari's longstanding team payment which is bigger than whoever wins both Driver and Constructor Championship! This payment is in recognition of Ferrari's rich history in Formula One, having been in every season since its dawn in 1950.
This means that Ferrari, more often than not, take home nearly one fifth of the entire payment. Meaning the team with the smallest payment is roughly 25% of Ferrari's total!
This system is undoubtedly flawed, and is almost definitely the reason behind such a chequered grid in terms of competitiveness. However, this is expected to change as next year a cost cap of $150 million will be implemented to reduce the division throughout the grid within development. This figure was reduced from $175 million due to the current Coronavirus situation. Could this be the step that finally bunches up the grid?
Although, Red Bull and Ferrari are questioning whether the development of the gearbox should be included in the cost cap. A question which could only be asked by such deep pocketed teams...
Meanwhile, McLaren's Zak Brown has expressed fears that Formula One could lose up to four teams throughout this ongoing Coronavirus pandemic due to its economic implications.
Additionally, McLaren, Williams, Haas, Renault and Formula One itself have already had to enter a government scheme of furloughing many of its team members. Whilst a number of other team members and drivers have taken sufficient pay cuts, all in a bid to stay in the game.
Surely in these uncertain times Formula One should unite to ensure all ten teams survive, rather than creating a sport that only caters to the big three: Mercedes, Ferrari and Red Bull.
Comments