Tag Archives: Mercedes

Formula One: Preparing for the budget cap

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The Liberty Media vision for the future of Formula One Teams is clear. The owners expect 12 commercially viable, profitable, franchises all capable of challenging for race victories. In his role as Managing Director of Motorsports, Ross Brawn, has been mandated with the task of delivering a strategy to ensure this vision is achieved.

12 commercially viable & profitable teams, on paper, sounds fantastic. With the variable of available finances removed, the resourceful nature of F1 teams will truly be put to the test. Outwardly it seems as though there is widespread support from the teams for such a move. Afterall, what business wants to spend more money? With representatives from leading teams including Red Bull Racing emploring Liberty Media to ‘ Save F1 Teams from themselves’ the route to implementing a budget cap should, in theory, be straightforward.

However, As with any commercial decision in Formula One nothing is straightforward. The first major hurdle to overcome is the existing structure around payments and the legacy of disparity. In 2017 Joe Saward explained the complexities around the current structure in this article. The existing structure rewards success and longevity, a something which is not overly inviting to a new team, nor geared towards a midfield team ever being in a position to surprise. In an estimated payment fund of $900M per season, the top 3 teams receive approximately 60% of the revenue, leaving the remaining, currently 7, teams to compete for 40% ($360M) between them. It is estimated that the smallest operational budget in F1 today is in the region of $100M, with only $50M coming from the championship, teams have a significant shortfall to cover.

A more appropriate payment structure would be equal distribution amongst all teams, with a proportional bonus for constructors championship position, similar to that seen in the Premier league as detailed here.  Unfortunately, in order to reach this point, the largest teams, with operational budgets believed to be in excess of $400M per season must agree to a cut in support from the system under which their team structure has been developed. What business would agree to lose as much as 50% of its funding without a clear view of how it will cut costs or increase revenue through other ventures.

Convincing; Red Bull Racing, Scuderia Ferrari, and Mercedes Grand Prix to agree to this change will be one of the key tasks ahead of Ross Brawn through 2018 and 2019 if a new system is to be introduced under the new commercial vision for the sport in 2020.

The task is far from simple, the infrastructure of the top teams has been built around a mindset of a limitless budget. If a budget cap of $150m per season were to be introduced in 2020 with no consultation from the teams, it would be almost impossible for the top teams to comply. From a personnel headcount perspective alone a team such a Mercedes Grand Prix, with in excess of 1400 employees, if an average salary of $50,000 is applied, the team commit 46% of its budget to salaries before considering building a car. Without modifying the current team structure, introducing a budget cap within the next 3 seasons, unless Liberty Media expect teams to make more than 50% of their workforce redundant, is not feasible.

On a more positive note, there are indications that the top teams in question are preparing for the change. A budget cap in Formula One will not mean that the likes of operating entity such as Mercedes Grand Prix or Red Bull Racing will be limited to an expenditure of $150M per season, rather their allocation of resources to F1 will see this limit applied.

As a result, it is highly likely that diversification will be a key element to the future of F1 Teams. Over the past decade, McLaren and Williams have established an industry-leading position in the application of engineering solutions developed to improve performance in motorsport being incorporated into manufacturing processes and commercial entities.  For these teams, this third-party business will likely continue to grow. it is, however,  unlikely Ferrari or Red Bull Racing will view this as an appropriate use of resources or brand credibility.

Instead, expect the very top teams to move towards expanding their foothold in other forms of motorsport.

  • Mercedes Grand Prix has already made steps in this direction with the announcement of a commitment to Formula E team from season 6 of the championship. This alongside the development of the Mercedes Project One, which to many is a clear indication of Mercedes ambitions to return to Endurance Racing. A return which with LMP1 regulations under review and the prospect of the reinvigoration of the FIA Global Engine strategy, Mercedes are well positioned to find success.

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Credit to Sean Bull Design for the concept Mercedes Formula E livery 

  • Similarly, Red Bull Racing through their partnership with Aston Martin has acknowledged an interest in taking the Valkyrie racing, and under guidance from Ross Brawn will no doubt be seeking to bring the Toro Rosso team entirely in-house.

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  • McLaren has taken the decision to take control of their GT programme, and have already explored further engagements in championships including Indycar following the positive coverage generated through the one-off partnership with Andretti Autosport at the Indy 500 in 2017.

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  • Ferrari continually talks of a return to Endurance Racing, and could, similar to Red Bull Racing consider a strategy of an in-house B-team with which budget cap compliance could be achieved.

In conclusion, political posturing between the top teams in Formula One, Ross Brawn, and Liberty Media throughout the 2018-19 seasons will likely overshadow on-track performances. Fans of the sport should take any empty threats from top teams to walk away from the sport as just that. Empty threats. The financial implications of such a move make the option unviable. Instead, teams will double down on motorsport, getting involved with more championships, with the eventual winner being the fans.

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Formula One: Missing Sponsors

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As the clock struck midnight on December 31st 2017, many sponsorship relationships throughout the F1 Grid reached their conclusion. In the coming weeks and months, numerous new agreements will be announced at both a team and championship level as attention focuses on the season ahead. For myself as a lifelong fan of the business of Formula One, now aspiring to develop a career in this side of the sport, this period between commercial contract expiry and new contract announcements can be fascinating.

No team will encourage media to make a story out of the end of a partnership, so don’t expect any press releases confirming a departure, instead head to the partner’s section of the website of the team you follow and see if you can spot the brands or names suddenly missing from the list.

A well-publicised partnership expiration is that of the relationship between Santander and Scuderia Ferrari.  A partnership many believe will be replaced by the promotion of long-term team partners Phillip Morris introducing e-cigarettes to Formula One with the brand IQOS. If true, e-cigarettes could represent a high-value sector of sponsors for F1 moving forward, assuming advertising challenges can be overcome, and OEM’s including Mercedes and Renault are comfortable with the association.

Intriguingly, whilst Santander has been removed from the Scuderia Ferrari Website, it remains on the McLaren (no longer McLaren Honda) website. Santander, whilst no longer a brand represented on the McLaren livery have been partnered with the Woking based team since Alonso first joined the team in 2007.

Can you spot any other team websites with mysteriously missing partners? There are some out there which may surprise…

The three P’s of Formula One: Points, Penalties and Prizes – Paddock Magazine

The 2017 Italian Grand Prix served to highlight once again that current Formula 1 regulations around grid penalties for exceeding…

Source: The three P’s of Formula 1: Points, Penalties and Prizes – Paddock Magazine

Formula One: No Mercedes power for McLaren in 2018

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Away from incredible on track performances this season, recent Formula One news has been increasingly fixated by the prospect of ‘divorce’ between Honda and McLaren, with a number of respected outlets and leading pundits suggesting the separation is already all but finalised.

Whilst frustrations around the on track performance of the McLaren Honda partnership are plainly visible for all to see, with senior representatives from McLaren doing little to calm stories, one key factor appears to have been forgotten. The FIA Sporting Regulations.

Within the FIA Formula One World Championship Sporting Regulations, all power unit manufacturers are required to submit a list of teams they will supply in the following season by May 15th.  Under this regulation both Honda and Mercedes have already informed the FIA of the teams which will be using their power units for 2018

No power unit may be used in a given Championship season unless the Power Unit Manufacturer supplying such power unit accepts and adheres to the following conditions.

Each of the Power Unit Manufacturers of an homologated power unit must :

i)  provide the FIA, before 15 May (or such other date as agreed in writing between all the Power Unit Manufacturers and the FIA) of the season preceding that in which such power units are to be supplied, with the list of teams (clearly identifying the appointed “works/factory” team, if any) to which a supply agreement has been concluded for the given Championship season ;

ii)  if called upon to do so by the FIA before 1 June (or such other date as agreed in writing between all the Power Unit Manufacturers and the FIA) of the season preceding that in which such power units were to be supplied:

T = 111-A/B-C

–  A = Total number of teams (including “works/factory” teams) having a supply agreement concluded for the given Championship season with a New Power Unit Manufacturer.

–  B = Total number of manufacturers of homologated Power Units for the given Championship season.

–  C = Total number of New Power Unit Manufacturers for the given Championship season.

provided that if the result contains a fraction then the fraction shall count as a full team (e.g. 11 teams divided by 4 manufacturers = 2.75, each manufacturer must, if called upon to do so by the FIA, supply at least 3 teams).”

Appendix 9 – FIA Formula One World Championship Sporting Regulations. 

Earlier today, confirmation was sought from both Mercedes and Honda as to the contents of the lists provided to the FIA in accordance with this regulation.

Honda stated their list submitted to the FIA documents Power Unit supply intentions for both Mclaren and Sauber. Mercedes confirmed their submission to the FIA references three teams, Force India, Williams, and the factory Mercedes team.

No provision is made within the Sporting Regulations around deviation from this commitment. With both Honda and Mercedes having stated intentions around 2018 it seems highly unlikely any change is planned or possible without the consent of all teams participating in the championship.

Formula One: Time for Mercedes to go Aggressive?

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The 2017 Russian Grand Prix looks set to be the race in which Scuderia Ferrari cement their status as the dominant force in the World Championship. Having won two of the first three races of the season, the Scuderia’s pace was unquestionable yet many felt AMG Mercedes Petronas still held an ultimate performance advantage.

However with Ferrari having locked out the front row in qualifying for the first time since 2008 at a circuit which Mercedes have dominated in recent years, it is becoming clear that the boys in red have overtaken the silver arrows in terms of out and out pace. Since the introduction of the current power unit regulations, ignoring a few erroneous races, Mercedes have been the dominant force. The team has adopted an approach in which only an inter team battle is considered as a threat. In so doing, in a bid to ensure equality amongst drivers, race strategies have been safe and mirrored on both sides of the garage.

With a genuine threat from Ferrari for the overall  2017 World Constructors Championship clear, has the time come for this to change? At this point in the season Mercedes and Ferrari are the only team capable of challenging for race wins. Red Bull Racing being the next closest team were 1.8 seconds of the pole lap time in Russia. In this situation the challenging team, in this case Mercedes have two choices; acknowledging the lack overall race pace, they could take adopt the same approach as Ferrari in qualifying and the race, with the hope that driver skill or mistakes will elevate performances, or they could switch to an aggressive strategy, splitting their drivers tyres compound section in the hope of interfering with Ferrari.

For Mercedes to maximise an interference strategy the team should have sent either or both Hamilton and Bottas out into Q2 on Super Soft tyre compounds, with Ferrari qualifying on Ultras softs. This move would have safely taken them through the session and allowed them to run much longer in the first stint of today’s race. In electing not to do this Mercedes opportunity to interfere with Ferrari today will be limited to a strong start, or adopting a two stop approach over the expected one stop norm.

Moving forward, in order for Mercedes to challenge for their 4th successive constructors championship they must adapt to the new norm and consider irregular approaches to race strategy. Simple accepting, ‘the second row was a the best we could expect’ is not good enough from a championship winning team.

Formula One: Are Cosworth the solution to McLaren-Honda’s woes?

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On the eve of the 2017 F1 season McLaren Honda head into the third year of their partnership with little cause for optimism. Despite the FIA’s removal of the Power Unit development token system which previously limited manufacturers ability to modify / redesign technology, Honda solutions seemingly remain at odds with the F1 Hybrid era.

2017 pre-season testing saw Honda introduce an entirely new Power Unit, a fully integrated unit developed around the MCL32. In a bid to improve performance and resolve drivability issues which plagued the 2015 / 16 design, Honda engineers have taken inspiration from the solutions seen with their immediate competitors. This approach, in the short term at least, appears to have failed. McLaren have reported extensive issues with vibrations within the power unit limiting any ability to push for out right performance. Neither team nor engine manufacturer have been able to validate design concepts through pre-season testing and have minimal expectations around the team’s ability to complete a race distance let alone score points in the opening races of the 2017 season.

The situation is unsatisfactory for all parties involved.

In recent days it has emerged McLaren may have made preliminary enquiries towards Mercedes around future power unit supply, some media outlets going as far to suggest a mid season switch could be possible. The reality of this is highly unlikely, both from a commerical and technical perspective the strategy defies logic and any form of long term thinking.

McLaren maintain an ambition to compete for and win world championships. Using Williams Martini Racing as a prime example, despite access to the dominant power unit for the past three seasons, customer status with Mercedes limits their ability to challenge. This should not be the strategy McLaren seek or accept. It may resolve short term frustrations with partners, but it will not deliver world championships.

Instead McLaren may need to seek an alternative solution. It is understood Honda support the team and power unit development to the tune of $100 million per season. On the recommendation of McLaren, Honda could look to redirect this finance to a third party. The third party in question being Cosworth.

When the Hybrid F1 regulations were originally outlined in 2010, Cosworth, similar to Mercedes, dedicated significant resource to develop a new power unit for the sport. The intention had been for Volkswagen to badge the Cosworth power unit, however as the implementation of the new regulations grew nearer VW reneged on their F1 ambitions. This left Cosworth with a concept power unit 4 years in the making but no manufacturer budget to bring the power unit to the grid.

Cosworth have stated in previous years that with budget the power unit they developed could be on the grid within 6 months. They remain confident that the solutions they engineered would be competitive. In theory it would be possible for the Cosworth power unit to become the 2018 Honda F1 Power Unit. It is fair to say there would be a certain amount of pride to overcome between all parties involved, but ensuring future competitiveness may ease the short term pain.

To those who see the suggestion of Honda badged Cosworth Power Unit as the future of the McLaren Honda relationship as far fetched, take a look at the companies house registry for the list of directors at Cosworth. Top of this list you will find Mr Zak Brown, Executive Director of the McLaren Technology Group.

Formula One: Eddie Jordan slams Lewis Hamilton & Mercedes

Ahead of the 2017 F1 season former team owner turned pundit Eddie Jordan has suggested he would his response to Lewis Hamilton’s decision to back up Nico Rosberg in the final race of the 2016 season in a bid to secure his 4th World Championship would not have been as forgiving as that of Toto Wolff and the Daimler management board.

Never one to shy away from a headline, in this 2017 preview for Mobil One’s The Grid, Jordan comments on the departure of his good friend Bernie and the new start of a new era with Liberty Media.

Despite questioning Lewis’ approach to 2016, suggesting his lost focus, Jordan predicts he will be the favourite going into 2017. On Bottas, Jordan suggests 3-4 wins could be possible but questions his ability to push Lewis through the season.

Formula One: Mercedes brand alignment

 

In amongst new driver announcements, car launch dates, eRacing, and calender shuffling, the eagle eyed motorsport fan may have noticed a small but significant change in the name above the door of the current Formula One Constructors Champions over the Christmas period.

Since January 1st 2017, the Mercedes AMG Petronas F1 Team has been re-branded Mercedes AMG Petronas Motorsport. In contacting the team the rationale for the change was explained as a move to harmonise the team with the overall strategic direction of the business. The team went on to explain the change does not necessarily indicate plans for the Brackley based team to expand into other categories, but that the team would not rule out this happening at some point in the future.

With a notice of intent offered to Formula E having been made by the Mercedes Grand Prix in 2016, in effect granting them first refusal on the final team slot in the championship, the harmonisation of Mercedes Motorsport branding could signal team preparations to enter the championship. Another factor to consider could be the rumoured budget cap set to be implemented across Formula One. Mercedes Grand Prix employ over 1200 staff, the salary bill alone could exceed the budget for running a team in future. Diversification of the team into other racing categories would serve to increase Mercedes brand awareness and maintain it’s commitment to the motorsport industry in the UK.

Mercedes’ positions in DTM & GT racing, logically, could also be housed under a single Motorsport entity, possibly located in the UK.

Formula E: The season 5 conundrum

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2016 Nat Twiss / Spacesuit Media

Formula E is in a great place. With Jaguar joining the championship, Audi scaling up their involvement, BMW committing to the category and Mercedes taking up a placeholder position, OEMS are falling over themselves to get their place on the grid. The same can be said for host cities, in only 3 seasons Alejandro Agag has secured events in locations Formula One have spent decades trying to get on their calendar. The Championship is growing beyond anyone’s expectations.

The success of Formula E is due in part to the mentality of cost control placed upon teams and organisers. Through staggering development cycles of components teams are not in a position to throw money at a problem to find a solution, instead they are forced to find creative solutions to move up the grid. The result Is exceptionally close racing in which more than half the grid are genuinely capable of winning races on their day. However, the Formula E development cycle could be about to cause the championship a serious headache.

I have followed Formula E since day one of the championship. I have been fortunate enough to attend a number of races and spend time with a variety of people in and around the sport.  I am a huge supporter of the championship and the racing, although I have to be honest until attending racing there was always one element of Formula E that I couldn’t get my head around. That was mid race car swapping. Why would a championship designed to promote electric vehicle (EV) technology build prospective EV buyers greatest anxiety, battery range, into the race? For a time, it seemed that OEMS shared the same concerns and to give credit to Formula E, they had a plan. From Season 5, battery technology will be upgraded and the need for a mid race car change will be removed. It is exactly this evolution of technology that has seen BMW commit to the championship.

However, I’m not convinced this is the best direction for the sport. As mentioned until attending a race I was a sceptic of the mid race car change. Why not have two shorter races? It wasn’t until spending time at the London ePrix last season with a group of lifestyle journalists and corporate management that I saw the value of the car change.  In explaining how the breakdown of a Formula E race, the most thrilling element of the race without any question was the car change. Witnessing drivers jump from one car to another bought the race to life and gave a very human perspective to the spectacle. It became the talking point of the day and the lynch pin of subsequent questions around the championship. The championship had me and many others converted!

So what happens in Season 5? In theory the range of Formula E batteries will be increased to remove the need for each driver to require two cars to complete a race distance. In theory we could see a lights to flag race with no interruptions. Is this the right direction? Speaking to drivers and team managers at the Marrakesh ePrix last month few seem convinced. Formula E races with no concerns over battery life and range and no need for pit stops could become quite mundane and processional. Drivers talk of their enjoyment of having a unique challenge mid race. A new element of their racing to finesse. Do we realy want to loose this?

No doubt Formula E organisers are more than aware of this and have already started to evaluate how they can change the way in which the championship goes racing to maintain the thrill and strategic element to an ePrix. To help them out along the way I’ve mapped out a few options for them to build into the equation:

Tyre change pitstop: A relatively logical and simple way to maintain the strategic element of ePrix in the post car change era would be to introduce mandatory pitstops for tyre changes. However, Michelin (the control Formula E tyre supplier) have commented in the past that their strategy around motorsport engagement is to showcase durability. They would not want to develop degrading tyres to artificially impact the race. Moreover, pitstops require additional equipment and manpower from the teams. Any savings generated through the removal of a second car would be negated. Formula E is an environmentally conscious sport; tyre changes could be seen to promote a message of waste.

Joker Laps: A seen in World Rally Cross (WRX), introducing the concept of a secondary element to a circuit layout which when taken will increase lap times by a number of seconds. Drivers could be mandated to take a certain number of joker laps during a race, introducing a dynamic element of strategy. Recently crowned WRX champion Mattias Ekström has passionately advocated their introduction in other series commenting “In F1, if you see how close many races were and it’s difficult to follow, if you have a joker lap someone has to do at a certain time, you can also time it different to get free air for a couple of laps, and that time you can launch your attack,”

Of course concerns around open wheel single seaters returning to a racing line from another point on track at full speed would have to be addressed, but Joker Laps would certainly add an interesting element to future Formula E events.

Dynamic induction charging: Qualcomm are a founding partner of Formula E. They work with the championship in the development of new technologies fit for the evolving automotive industry, one such technology is the Halo system. Halo is an induction charging plate currently used by the championship BMW i Safety and Medical cars. The charging plate removes the need to plug an EV into a charging point. This technology will be launched on road going cars in the coming 18 months. The next phase of this technology is to replicate the induction charging technology whilst a vehicle is in motion. Formula E, could look to introduce dynamic charging strips of 100-200 metres around elements of a circuit off the racing line in which drivers could pick up a power boost. Qualcomm have the technology to facilitate this kind of development. It would require additional investment and require extended periods of preparation time at ePrix circuits, but such a move would push Formula E further towards the pinnacle of motorsport technology. An accolade I am sure they are keen to achieve!

So where to next? Formula E is riding a crest of success. The Championship will have it’s work cut out in the coming years to balance the growing demands of a number of OEM’s all of whom expect to win, and the expectations of fans and sponsors to be entertained. Formula E should see the removal of mid race car changes as an opportunity to throw another element of change into racing. They’ve convinced the sceptic once; I trust they will do the same again!