HAAS & how the money works

[J.Clark]

A friend sent me this article.

http://autoweek.com/article/formula-one/haas-f1-team-taking-financial-hit-forming-team-ground?utm_source=RacingDaily20160919&utm_medium=enewsletter&utm_term=headline-center&utm_content=body&utm_campaign=awracingdaily

I kinda-sorta knew how it worked, speaking of how the money gets divvied up among the teams.  There are some details contained in the article that I did not realize.

For instance, and I think this is just plain WRONG, the part about a new team not getting the big pot money for finishing in the top ten until they have performed at that level for 2 of 3 seasons.  That tells me that the big, established teams, are afraid of the new kid on the block jumping right into the mix of the previously successful.

[Jericoke]

A friend sent me this article.

http://autoweek.com/article/formula-one/haas-f1-team-taking-financial-hit-forming-team-ground?utm_source=RacingDaily20160919&utm_medium=enewsletter&utm_term=headline-center&utm_content=body&utm_campaign=awracingdaily

I kinda-sorta knew how it worked, speaking of how the money gets divvied up among the teams.  There are some details contained in the article that I did not realize.

For instance, and I think this is just plain WRONG, the part about a new team not getting the big pot money for finishing in the top ten until they have performed at that level for 2 of 3 seasons.  That tells me that the big, established teams, are afraid of the new kid on the block jumping right into the mix of the previously successful.

'Right' or 'wrong', the teams all agreed, even Haas.

The logic is that a large company, say Apple, can't swoop in, win a championship with their bottomless pockets, quit, and then drain the money out of the sport.  They want to ensure that the winnings are going to people who are committed to the sport.

This keeps a link to the past where the people in the sport were there for the love of the sport.  If you open the spigot of money day 1, you're going to have people there just for the money.  While there are plenty of people in F1 just for the money, I think we can agree that teams that exist solely to make money would ruin the sport.

The unfortunate side of the coin, is that you're going to need to have deep pockets before you make any money in F1.

[John S]

Yeah have to agree with Jeri on this one, Haas chose the path they have taken knowing it would have been cheaper to buy an existing team.

This is not the same situation to the 2010 debacle when the 3 teams were brought onto the grid by the FIA on the false promise of a cost cap being brought in. 

Anyway Haas realises there is inherent value now accumulated in his team, so long as they continue to perform at the level they are achieving this will keep increasing, so it's not yet just a money pit.

The old adage about turning a large fortune into a small one by owning an F1 team still holds.

 

[Alianora La Canta]

For instance, and I think this is just plain WRONG, the part about a new team not getting the big pot money for finishing in the top ten until they have performed at that level for 2 of 3 seasons.  That tells me that the big, established teams, are afraid of the new kid on the block jumping right into the mix of the previously successful.

Not really. The fear is from Bernie and the FIA (especially the latter). For Bernie, it's of some huge company entering for 1-2 seasons with a giant budget, taking all the prize money and running. A deliberate version of what BMW accidentally did to Sauber in the latter part of last decade. It's a problem because it takes money from teams who want to be in the championship for the long term and run long-running entities, gives it to a team that will simply remove the money from F1, attracts sponsors away from long-term teams (who then tend to leave the sport when the short-termer does) and removes any incentive for the departing behemoth to leave the racing team shell in a condition where anyone else could save it (thus forcing hundreds of people to hit the dole queue - assuming only the team inflicted with the short-termish leaders folds).

After all, if the high-8-figure-sum/low-9-figure "golden goodbye" sum (not sure how high but it was cheaper for Honda to fund Brawn for a year in 2009 as a midfield-strength team than to pay the early exit fine) isn't going to put off such an entrant, something else has to - something that will put them off such behaviour. It's also why all the teams that had a short-termish leader involved since 1998 were either sold or visited the administrator offices (except Caterham and Marussia, which did both). Granted, you can still a fly-by-night entrant, but at least they won't be weakening others while showing how incredibly strong they are (or aren't).

Or at least, that's Bernie's thinking. The FIA isn't even that generous.

The FIA were the most scared, but their biggest fear wasn't of someone pulling a Mercedes 1954-1955, but of someone pulling an Andrea Moda 1992. Really rubbish teams that go bankrupt after only a couple of seasons were managing to attract small amounts of money, that were sometimes enough to drag out their destructions across a winter, or even across the next season. The negative publicity of such poorly-conceived teams made F1 look bad and, by extension, the FIA. Bernie was OK with that as it underlined how tough F1 was and how much the big teams deserved their unequal distributions of monies. But this disregarded exactly how rubbish a few of them (Andrea Moda...) were. The FIA wasn't ready at that point to say "we'll decide who gets in" but was willing to try a system that ensured that new teams knew they couldn't rely on success monies to stay afloat. This meant teams made considerably more effort to have start-up funds enough to at least make a decent attempt at the series. Which makes the FIA happier, because broke teams usually whinged about structural problems in F1 the most back then. (Nowadays, the structural problems are so bad that no amount of prosperity protects from whinging, and the scars of the FIA's false promises are still a factor in this).

Yes, it makes things tougher for honest companies like Haas, but it's a rule that underpins the ability of teams to stay afloat.

Jeri, I agree that (unlike Marussia, Hispania and Caterham), Haas was at least given straight answers on what to expect from F1.

[Scott]

As usual, a brilliant explanation Ali.  I'm still sore about the BMW Sauber episode and am reminded every time I see their stinking logo.  It might be interesting to see if Chase makes big changes to the next Concorde Agreement

[John S]

As usual, a brilliant explanation Ali.  I'm still sore about the BMW Sauber episode and am reminded every time I see their stinking logo.  It might be interesting to see if Chase makes big changes to the next Concorde Agreement

In fairness to BMW and Honda for a while at the time it did look like all car companies around the globe may be fighting for their own survival and existence.

It's hard now to recall just how black things looked for the automotive industry in 'the great recession' of 08/09.  Indeed who'd have guessed Honda would be back investing such huge sums in F1 so soon after that tremendous world crash.

[J.Clark]

Ali, I had not considered some of that, especially the Andre Moda part.  I completely forgot about that.

Sort of off-topic, but not totally.
Didn't that team come from purchasing Coloni?
As I recall they raced (or didn't really I guess) for three or four years, but usually couldn't get either car qualified to race.

[Alianora La Canta]

Ali, I had not considered some of that, especially the Andre Moda part.  I completely forgot about that.

Sort of off-topic, but not totally.
Didn't that team come from purchasing Coloni?
As I recall they raced (or didn't really I guess) for three or four years, but usually couldn't get either car qualified to race.

I can see why you think that. Coloni existed as a F1 team for five years, stepping up from F3000 in 1987 and leaving at the end of 1991 in a heap of debt (which was paid off by becoming successful again in F3000). They managed:

1 8th place (1988 Canadian Grand Prix, Gabriele Tarquini)
1 11th place (1988 Portuguese Grand Prix, ditto)
1 13th place (1988 Hungarian Grand Prix, ditto)
1 14th place (1988 Mexican Grand Prix, ditto)
10 non-finishes
14 non-qualifications, and...
53 non-pre-qualifications.

So not the most impressive team, and hadn't been for some time.

Well, Andrea Sassetti thought he'd bought the team at the end of 1991. He brought his team the first race of the 1992 season, with his shiny new black cars built to the design of that glorious 15-time non-pre-qualifier of 1991... to find a slightly-annoyed FIA bouncer refusing his team access. You see, the paperwork said he'd only bought the rights to the car. He would have had to have paid extra to acquire title to the team's entry. Formula 1 Magazine correctly observed "Dick Turpin would have been proud".

Andrea was lucky that the FIA, taken in by flashy presentation and fast talking, was willing to process the team as a new entity in its own right. It turned up in Brazil, two races later, to have a second attempt at glory (quotation marks optional). We should probably have known even by that point that the team had "failure" written all over it...