PENNING my Sportz Power column is only getting more interesting as I try and link my past columns with this. We’ve discussed issues related to the hosting fees that FOM charge from the Grand Prix organizers to team’s hiring ‘pay drivers’ to make up their budgets. But is it really that expensive to run a team in Formula1?
Formula1 is a sport associated with millions. Whether it is to do with the 570 million TV viewers across the globe that FOM released sometime last year or it is to do with the millions of dollars that the teams spend to run two cars on 20 circuits around the world in quest of the World Championships. So what is the cost of running an F1 team?
The correct answer is – one will never know! Team operating budgets have always been an interesting topic. Many publications have tried to get as close to the ‘real figures’ as possible, but it is a well known fact that if teams disclose their budgets, they are more often than not – heavily disguised. Ferrari, Mclaren, Mercedes, Renault, Honda, Toyota, BMW and a host of other manufacturers of the past and current are all rumoured to spend between $400-500 million every year on their F1 operations. So what do these teams spend their money on after all?
To start with – there’s a deposit that the team needs to pay the FIA to confirm their participation in the F1 season. The deposit is around $50 million.
While you pay the deposit, a team does need to have its own base that houses a factory to manufacture the racing cars. The factory employs engineers, mechanics, designers, etc. all of whom play a large role in the development of the racing cars. Depending on the level of advancement, F1 factories are expensive to set up. A new team would need to spend around $50-75million alone in setting up a fully fledged factory to run its backend team operations. Hiring F1 personnel alone would cost upwards of $10million. Ace F1 technical guru, Adrian Newey is reportedly paid more than a few F1 drivers on the grid, a cool $10-12million annually.
So now that you’ve got the permission to go racing from the FIA and have your own factory, what else do you need? Well, you’ve to now build your racing car! While rules mean that teams have to manufacture their own chassis, previously teams could buy a rolling chassis from the market. A company like Lola would supply a standard F1 chassis at about $100,000 per chassis. Considering that your team will participate in 20 Grand Prix across the year – you will need to account for chassis that will go racing and of course the ones that will be in spare, to use as replacement when your driver’s shunt causes extensive damage. The costs here can be estimated to be in the range of $2-3 million.
On the chassis, you will need body work, suspension, electronics, engines, gearboxes, brakes and everything that is needed to go racing. Body work these days are aero dependent and need extensive research, development and testing in wind tunnels. Top F1 teams would spend between $30-40 million individually in their R&D programs. Every new wing update that the team brings to a GP usually costs them a few million dollars in development; such is the cost of the pace of Formula1.
Electronics in an F1 car are known to be complex. Infact, the electronics used in F1 cars are capable of taking it into orbit! The cost of these advanced electronics is to the tune of $3-4 million. The steering wheel alone costs around $ 25,000, and you would usually need more than a handful for the entire season. Engines can either be bought from a manufacturer, or be manufactured. The cost of hiring an F1 engine is lower these days, but it will still set you back by about $5-7 million for a pack of engines, gearboxes and KERS systems.
The most important part of an F1 car, its tyres too come at a massive cost. Pirelli is the sole tyre-supplier in Formula1, however, they charge a cool $8 million annually to supply you with numerous compounds for you to go racing.
So with the FIA license, F1 factory and a car the only thing you would need to go racing is a good driver. While drivers are willing to pay their way into the F1 cockpit of your car, hiring a good driver does cost the team management money and these days it is much difficult to do so. Force India made a bold decision to stay away from hiring a pay driver, whereas established teams like Lotus-Renault and WilliamsF1 did do so. With ever increasing costs, I wouldn’t blame them for doing so!
Established teams like Ferrari and Mclaren, who have hired World Champion drivers pay their drivers around $20 million per year to go racing.
The last but not the least of your expenses would be team travel. With about 40-50 of your team crew traveling across all continents to participate in all 20 races would mean more than an umpteen number of flights, hotel stay, transfers, etc. all summing up to around $3 million. Freight is another cost for teams to bear, however, if your team has finished in the points, the FOM does take care of your freight. (The catch here is that there is a cap the tonnage that they carry for you)
Once you travel to the races and the FOM carries equipment for you, the major cost during a GP weekend is fuel. Teams spend about $4-5 million annually on fuel and other consumables alone. This would include petrol, oils, lubricants, etc.
Now if you sit to do the math, you will reach an approximate cost of running an F1 team in this era. Once you’ve done the math, you could either gather your millions and line up on the grid, or sit back with me and join the near 500 odd viewers on television!
(In the forthcoming columns I will try and cover topics related to operating costs in Formula1. F1 teams and FOM are trying hard to bring their costs down and make F1 cheaper. More to follow on their efforts)
