Formula One should model its prize money structure on the English football Premier League according to Force India’s deputy team principal Robert Fernley.
F1’s distribution of funds has been criticised by some teams due to the large bonuses paid to teams such as Ferrari and Red Bull irrespective of their performance. Force India and Sauber has made the matter a subject of a complaint to the European Union.
However the commercial deals which underpin the sport are due to be renewed in 2020, presenting an opportunity for the prize fund to be altered. During today’s FIA press conference Fernley said he “hopes we do things differently” when the time comes.
“The idea of privileged teams going away, negotiating with CVC and deciding how much to skim off the top before distribution to the other teams for me is not acceptable. I would like to think that the commercial rights holder this time does it in a more transparent way.”
Fernley argued for F1 to use a similar structure to the Premier League, where revenues are distributed based on performance and the differences between what each team is paid is much smaller.
“The Premier League is a perfect example of the way you’ve got a performance-related programme that’s very fair and transparent. There’s no need for negotiations. We’ve got a pot of money that needs to be done, split it in a proper manner, make it transparent, teams take it or leave it.”
“The difference between the front teams and the back teams is too big. I do believe the leading teams should get more money. I think the gap is just massive at the moment and it needs to be looked at in a slightly different manner.”
However Red Bull team principal Christian Horner said it was up to Bernie Ecclestone to distribute the money as he sees fit.
“Of course if it was a world like all the journalists live in where I’m sure you’re all paid the same for doing exactly the same job then it’ll be a very easy scenario for distributing the money,” said Horner.
“As with all these things the commercial rights holder holds the financial keys. It’s down to the rights holder to decide how to distribute the revenue and then it’s down to the teams to decide whether they want to compete or not. So it’s still some way away, 2020 we’re talking about which is the end of this agreement. But I would envisage that talks will probably start over the next 12 or 24 months.
“But it’s impossible really to predict. And of course every team is going to do the best for themselves, you can’t blame the teams for the distribution of the revenues. It’s the job and the responsibility of the management within the teams to do the best that they can for their teams. The distribution of it will come down to what the promoter decides to do.”
Haas, which entered F1 at the beginning of the season, does not have a commercial agreement with Formula One Management and cannot receive any prize money. Team principal Guenther Steiner said the team have to accept that arrangement until the new deal is negotiated.
“Next time we will be involved,” he said. “This time we knew what we were getting into so we cannot be happy or unhappy, we took the fact it is what it is because the other people negotiated.”
“But next time we will play a part in it and then we will voice our opinion.”
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Kribana (@krichelle)
10th June 2016, 22:04
Should be easily seen. But, I remember that there was a comment near the end of 2015 that said: Mercedes should just hand 1-2 to other teams since the teams lose money depending on where they finish each race. However, I am guessing, if this sentence is true, it is compensated at the end of the season depending on where they finish right?
MattJ
10th June 2016, 22:13
You’re probably thinking about the FIA entry fee: “the team that wins the constructors’ championship will pay a basic fee of US$500,000 and then $6000 US for every point scored. “
Kribana (@krichelle)
10th June 2016, 22:32
LOL. That means that: Taking the details of last season
Mercedes paid 500 K for winning.
Mercedes paid 6000 X 703= eh… 4.218.000 million usd?
Total: 4.718.000 in total? Just because of winning… but surely it must be compensated…
BJ (@beejis60)
10th June 2016, 23:40
@krichelle There’s a post in this blog that discusses this, but yes, that sounds about right. They make far far far more money than $4M so it’s pretty much chump change for them.
Sonny
11th June 2016, 17:12
The fact is that some guys are ruining the sport by transforming it to a business model.
naz3012 (@naz3012)
10th June 2016, 22:08
This is the problem with F1, countless times the likes of Toto Wolff, Christian Horner etc spout this rubbish in front of national broadcasters in press conferences about wanting to make the sport better and fairer and then you get situations like this, where the question is asked in isolation and all of a sudden, the previously mentioned corporate line disappears and it’s revealed just how selfish these top teams are. The problem exists on the other side too, CVC/FOM and the like take their cut and then couldn’t care less what happens with the rest of the money.
I’d wager none of them actually want to sort this out and it’s going to be left to the small teams to go complaining to the head teacher for anything remotely meaningful to happen.
HK (@me4me)
10th June 2016, 22:08
What, Haas is planning on being in F1 for 4 years without income from FOM? Well they better have very deep pockets.
Jimmy Price
10th June 2016, 22:19
I read the article and understand how you could have viewed it that way but some important points were left out with regards to HAAS.
They aren’t eligible for prize money in the first year, maybe the first 2 years. This system is what they are referring to in the fact they had no say in negotiations: the fact that new teams cannot collect prize money during thier first year. They will be eligible prior to 2020 however.
Patrick (@paeschli)
10th June 2016, 23:09
They still get some money if they finish within the top 10 of the constructor standings. However they don’t get the Ferrari, Red Bull, Mercedes, McLaren and Williams ‘extra’ payment.
Tata
10th June 2016, 23:24
Ok. That makes a lot more sense.
* Your comment went up while I was writing mine below.
HK (@me4me)
11th June 2016, 11:03
@paeschli, That makes sense! Thanks for the info, I didn’t realize that.
Tata
10th June 2016, 23:18
That is quite a shocking surprise to me.
I recall there were some restrictions or agreements that Haas entered into before being allowed to compete but never did it occur to me that they could be frozen out of the prize money for several years. How can one see them surviving til 2020? It doesn’t seem like a wise business decision to me.
Shocking really.
Alex W
10th June 2016, 23:27
They are in it to sell lathes, not get prize money.
fiafail
10th June 2016, 22:13
Premier League system will not work on F1 because F1 does not have a relegation system and also because F1 teams do not play at home or away.
F1 is different type of competition and it would not be fair for a new team like for example HAAS to cash in more money than they do now since F1 was build by a small number of teams.
juan fanger (@juan-fanger)
11th June 2016, 1:24
I think F1 could have a proper promotion/relegation system, to ensure sufficient quality in the top league and provide more incentive for new teams. The bottom team(s) in the “Premiership” would go down and the top team(s) in the “Championship” would get promoted. This could occur at the end of each year or combine the results of 2 or 3 years to determine worst and best and relegate/promote only then, which would really build tension up on the teams in or near the “zone”s.
Of course there are issues. The second tier would absolutely need to run very near-F1 spec cars and use near-F1 spec operations to be viable on promotion, but rules to make their racing much cheaper would be required, such as spec engines and/or aerodynamics (but they couldn’t be quicker or noisier!).
Of course the prizemoney would have to shared more equitably, something along the lines of the EPL/Championship distributions. Of all the problems I can see with the promotion/relegation concept, I think that this is the one that means it will never see the light of day :)
Zantkiller (@)
11th June 2016, 2:35
Just because there is no promotion/relegation and they don’t play home or away does not mean we can’t have a similar prize money structure.
The PL basically just splits the prize pot in two. The first half is distributed evenly to all teams. The second is distributed based on their rank in the table. There is some extra stuff about how many games a team has on live TV which gets them some extra cash but for our purposes we can ignore that.
F1 is pretty much the same. They split a prize pot in two. The first half is distributed evenly to all teams. The second is distributed based on their rank in the championship.
The problem is that there is a whole load of deals and extra arrangements with teams like Ferrari, Red Bull and McLaren.
Those frankly shouldn’t exist and all that money should feed into the prize pot in the beginning.
Another issue is that F1 is pretty fluid in comparison to the PL in terms of how many teams are competing year on year.
By splitting it, it incentives teams to not allow or encourage new teams to enter as the new team takes a cut of their money.
They could get round this by splitting it as if there were 13 teams and save the money not given out to use as a monetary incentive for new starting teams to help them survive till they reach 13 teams. But that is really wishful thinking and hope.
Bleu (@bleu)
11th June 2016, 8:27
The bigger problem is that in F1 the merit payments are bigger than equal share. By the tables on Totalsportek, Mercedes earned 42 million dollars of equal share and then 76,5 million dollars because they won the constructors’ championship. By the way, Marussia earned 14 million for 10th place.
In Premier League, the equal share is 55,5 million pounds and the prize money for Leicester City as champions was 24,7 million pounds. The last-placed team, Aston Villa got 1,236 million pounds.
52,5 million in F1 versus 23,5 million in football. Different currencies of course so it is about 20 million dollar difference here. And the bonus payments in F1 are addition to that – they are much bigger than Premier League facility fee differences.
BNKracing (@bnkracing)
11th June 2016, 1:03
I find it unbelievable that teams struggle to stay afloat given the vast sums of money thrown around to the larger teams. There’s no way force India, sauber and williams (to some extent) should be struggling and not being able to pay vendors. Does Bernie really want to lose 2 or 3 teams just to keep his investors happy? If there’s no one to compete then the sport is dead. There are premier league teams in debt but not because they don’t get enough prize money and you don’t see them struggling to pay the groundsmen or have team kit seized when they travel to away games.
Baron
11th June 2016, 9:52
@bnkracing
“Does Bernie really want to lose 2 or 3 teams just to keep his investors happy?”
Yes. He has said if a team can’t pay the required money to compete in F1 that team shouldn’t be in F1.
Just like how he threatens to end contracts between FOM and GP organizers if the GP fee isn’t paid.
And then he blames it on promoters, drivers, fans and whomever else he can think of when there’s too few cars on the grid, too few spectators in the stands and too few people watching the racing via pay per view.
Alianora La Canta (@alianora-la-canta)
11th June 2016, 13:42
Bernie has previously stated he is in favour of third cars – something which requires the number of teams to drop to 9 or fewer in order to happen. He’d rather have a lot of cars from a few teams who are all rich than teams of varied means contributing a few cars each.
faulty (@faulty)
11th June 2016, 3:53
I thought the champions league distribution model was better, IIRC the pot is divided three ways: one third evenly amongst all contenders, another third based on their popularity from the TV ratings of their matches and the rest in performance bonuses.
Alianora La Canta (@alianora-la-canta)
11th June 2016, 13:51
F1 doesn’t yet have a reliable way of determining popularity of F1 teams; while many imperfect metrics exist in F1’s case, it has no way of knowing what portion of TV ratings are caused by which drivers or teams – especially when 70% of people in the 2015 GPDA survey had no particular favourite driver and 80% had no particular favourite team.
Kalun
11th June 2016, 7:02
I have an idea. Why not distribute the money as follow:
We separate the money into two section. 1st pool will be for the engine and the 2nd pool will be for the team.
For the first pool which is the engine, FIA/FOM will be holding this money and will be strictly regulate the cost of the engine. The manufacturers have to send their blueprint to FOM/FIA for specification and also send the total cost of engine per driver. So, basically, teams do not have to pay for the engine. They will have to apply it from FIA/FOM. Manufacturer team such as Ferrari, Mercedes, Renault and McLaren-Honda have to go through this process like the other teams. All teams have to apply their engine and stated which manufacturer they would like to choose with the support from the manufacturer itself.
For the second pool which is for team, money will be distributed to the team. We separate it into team allowance which is fixed for every team per year and prize money. The difference between the 1st place and the last place will be 10%. There will be no heritage payment.
If the team such as Ferrari, Mercedes, Redbull, McLaren or any other top team do not agree to the term, and they are threaten to get out, they have to pay a fine of 5 year of equivalent amount that they have receive in the previous year. That will make it fair for the fan, “The old man”, and the other teams (Sauber, Force india and Manor).
Something additional, inspired by indycar, we can have rookie of the year prize money (check out the rookie of the year format from indycar)
Alianora La Canta (@alianora-la-canta)
11th June 2016, 14:02
First pool is a non-starter; FIA has no way of strictly regulating the cost of the engine and has to rely on gentleman’s honour to enforce the price limit that is being introduced for 2017. Some nations’ laws mean they can’t force those in some nations to reveal the information. Not only could Honda and Sauber’s engine costs not be proven unless the entities themselves chose to reveal them (OK, that example’s not likely to be too tricky), but it would be easy for manufacturers to move their F1 operations (for tax purposes) to nations with sufficiently stringent revelation laws (daft as it sounds, simply requiring the engine contract to be under Dutch law would do – as I understand it, third parties can’t receive taxable information before the tax office does except under limited circumstances, which I’m not convinced a sporting governing body’s request/demand would meet). At that point, it would be impossible for the FIA to enforce the revelation of the information, either directly or via “provide or don’t compete” regulations.
It’s not clear how big the fine is for not agreeing to the terms of a FIA/FOM contract, but as it was set highly enough for Honda to pay for its entire team’s salaries and development costs for 4 months plus a smaller amount of support for another 8 months (we’re talking on or around a couple of hundred million dollars) in preference to breaking that contract, it must already be spectacularly high. However, you can’t fine someone for rejecting a major change to contract terms mid-contract.
Velocityboy (@velocityboy)
11th June 2016, 14:19
I don’t understand why the people in F1 think that continually airing their grievances in public forums is good for the sport. Is it any wonder why sponsors are becoming harder to find?