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F1 2021 Regulations : What’s at Stake here?

THE BIGGEST DEAL IN MOTORSPORT IN THE 21st CENTURY

CAN ROSS BRAWN MAKE IT HAPPEN?

The upper echelons of F1 are meeting up to address the future of the sport, the meeting on Tuesday was imminent as the future of the sport has been up in the air for quite some time now. No team has been registered to race beyond the 2020 season, and the management has to make the sport more attractive to the Constructors to be more exciting, more competitive and sustainable. Liberty Media has always talked about the large-scale changes that it wanted to make and thus the meeting on Tuesday has piqued interests of all the racing enthusiasts.

The deal that Liberty foresees will not only dictate the sporting and technical parts of the sport but also the contentious point that’s been plaguing the sport, the commercial landscape of the sport. The older deal, known as the Concorde Agreement was struck back in 2012, the main aim of the deal was to keep the bigger names Ferrari, McLaren, Red Bull and Mercedes in their fold. Back then the whole landscape of F1 was different. F1’s owners at the time, CVC Capital were hoping to sell and were preparing for an initial public offering (IPO) on the Singapore stock exchange. And Ecclestone brokered deals to keep the Big 4 with F1, and that were skewed in their favour. This resulted in these Constructors earning big money in basically turning up to race. Ferrari is paid $65 million just for turning up every year, because of this teams like Racing Point, Haas and Renault can only aspire to earn as much if they finish 4th. This has resulted in large spending from the bigger teams, and thus creating a huge gulf between them and the midfield teams, who have not scored a win in over five years now.

Formula One’s motorsport Director is eager to address this issue. He says that no big sporting companies will want to join F1 if the newer deal follows the outline of the older one. These companies will have no incentive in investing in a sport where a midfield team could earn more than a Championship team, solely because of the deal handed over to them based on the deals handed over to them.

He proceeds to say that, “All I would say is we want to have a fairer deal than we have at the moment, and I don’t think it’s fair that someone could come in and win the world championship and be getting half of what someone at the back of the grid is getting because they are not performing. That’s something we have to resolve. There are the grandees of the sport, but there is a balance and I think we’ve got the balance wrong and I think we all know why we have ended up where we have ended up.”

Brawn is spearheading the new deal for the 2021 season, and there couldn’t have been a better man in charge to take the sport in a new direction. As a former technical director at Ferrari and team principal at Mercedes, he will be in a better position to chalk out a deal wherein the top teams will be willing to sign up for less money while giving them fewer guarantees of success.

The 2021 plan is to introduce a cost cap to prevent runaway spending and changes to the technical regulations to include more standard parts, but the subsequent question that arises is that this has been the differentiating factor between the top teams and the mid-tier teams for a long time. Though democratising the sport will increase the competitiveness among the Constructors and will be more fun to watch, but will the top teams yield?

Meanwhile, the Mercedes boss Toto Wolff who was seemingly in the favour of certain large scale changes said, “I feel that there is some momentum in the process and we are all keen on understanding how 2021 looks. Mercedes is certainly interested in having a cost cap implemented at the right levels so that it makes sense for everybody — get the big teams on board in a way that is implementable and cap us to make sure we are not running away with it with higher costs each year. Regulations are another building block that is important to get over the line before June. Let’s see how it goes after next week, but what I hear is making it optimistic.”

Despite the somewhat idealistic stance taken by Wolff, we have already seen pushbacks from the top teams regarding the original plan for the 2021 season. The $150 Million cap that was supposed to be put in place has already faced certain hiccups. The implementation has already been delayed as the bigger Constructors won’t be forced to lay a lot of people off at once. The proposed timeline to reduce the cap is to have the cap set at $200 million in 2021, $175 million in 2022 and $150 million from 2023 onwards. This is supposed to help the bigger teams to adapt, but only time will tell if this will face oppositions from these teams.

 

We come to the mid-tier teams now, teams like McLaren, Williams and Renault have already started to look at the business model of Haas. Haas has operated at a reduced cost as compared to the other mid=tier teams, they have outsourced the manufacturing of its car to Italy-based Dallara and, optimizing the number of the off-the-shelf components as permitted from Ferrari. The teams like McLaren and Renault have spent a lot on the designing and manufacturing their own parts but they have still lagged behind the Ferrari parts used by Haas. This deal also makes sense for Ferrari as they can spend more on R&D due to their increased profits that they make from their deal with Haas. This is beneficial to Ferrari as well as they are aware of the fact that Haas is not going to overtake them, due to the gap that exists between the top teams and the mid-tier teams. We have already seen the deals made by Racing Point and Alfa Romeo with Mercedes and Ferrari respectively. The deal between Honda and Red Bull and its sister team is also an example.

This leads to the main issue that constructors like McLaren, Williams and Renault have and the problem that potential investors might be facing, the bigger teams will team up with a few satellite teams to increase the budget for their R&D. This could lead to a political struggle in an already politically fuelled sport. The independent constructors will want to be protected from these potential team-ups from happening. The regulations will have to be implemented in it’s full to actually reach the objective of being a truly democratic sport, which could have a different winner every year.

The meeting on Tuesday thus is significant in deciding the direction in which the sport is going. The teams were given the basic outline of the rules that will come into play in January. Brawn says that the F1 has had meetings with individual teams regarding the issues that they are facing. The FIA states that the F1 needs to submit the definitive set of rules by June.

 

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