Is Formula 1 financially sustainable?

There have recently been a lot of calls to make F1, the crown jewel of motorsport racing, environment friendly,and sustainable. The most recent change is of course the introduction of V6 engines, fixed fuel limits and what not’s but that’s not the chief issue that we are going to discuss here.

The main issue now among a lot of different things is sustainability. No most ashamedly I am not talking about the environment. This has more to do with a different type of greenery, mainly the financial sustainability of the sport.

Lets look at some figures before we start. With all the rule changes next year, according to respected motorsport journalist Michael Schmidt, Marrusia need a minimum of $75 Million to complete the whole season next year.

Let us compare this with the budget of 2013 Constructors Champions Red Bull. In the year 2013, Red Bull spent a staggering $378 million. Their development budget alone is a staggering $148 million.

As most people can see, there is a HUGE disparity between the top teams and the midfield/new teams. Although most teams would not admit it publicly, most midfield and new teams are walking a very tight line in terms of finances.

This has led to a few spectacular public fails this year, a few of which were managed very subtly and maturely,while a few led to a lot of sour relationships.

The most famous of which happened when former world champion Kimi Raikkonen revealed that he had not been paid throughout the year by Lotus and threatened to take the team to court citing failure to fulfill contractual terms.

Another scandal which erupted due to finances was when Sauber driver Nico Hulkenberg allegedly broke his contract because he hadn’t been paid. But this case was handled very maturely and subtly by the Sauber team and Nico continued to race for the team with a couple of strong races. What was interesting about this episode is that Nico allegedly was yet to be paid by his previous employers Force India as well.

Such major financial problems have also led to the rise of pay-drivers. Although a few of them are talented, a la Max Chilton who created a record for finishing all the races in his rookie year, but most of the drivers are simply in F1 because of their dollars and deny racing seats to deserving drivers.

All these issues have catapulted the F1 financial scene to the limelight again and not without reason this time.It has also re-raised the topic of budget caps in F1.While most of the midfield and new teams would willingly accept the introduction of a budget cap, the main obstacle in their way are the big teams.

Teams such as Red Bull and Ferrari are strongly against the introduction of budget caps saying it is not practical. Other teams such as McLaren F1 and Mercedes have raised some relevant questions about how exactly a budget cap is going to be enforced as established manufacturers such as Ferrari and McLaren could easily hide extra members and budget of their F1 team as development costs of their road car division which operate under the same company.

Yes there are questions to be answered and certain compromises to be made, but unless these are answered quickly there is a chance that F1 with it’s many shortcomings may no longer remain as the pinnacle of motorsport and indeed disappear as a sport altogether.