When people discuss the “costs” of racing, an outsider might assume the core of a race team’s ledger may come in the acquisition of the car, or spares, or wildly sophisticated technologies required to keep a team at the cutting edge… and in many ways they’re correct. However, at the base of all this is one massively expensive piece of the puzzle: the staff.
Technology, data, equipment, etc. is only as good as the people who can operate it, and with every nuance that a team invests in, be assured there is always a new requirement on the human element as well.
In the business of racing, there is one wildly varying element to how this is handled: to salary employees vs. hiring people as contractors.
Just days before this year’s United States Grand Prix began its first practice session , the financially troubled Caterham F1 team, who had recently gone in to administration (the U.S. equivalent would be bankruptcy, though it is different in how it works), announced it would not be able to make the journey to Texas. Hours later, the similarly maligned Marussia F1 Team would announce the same.
Thus, the controversy begins…
With two teams officially closing their doors and a number of midfield teams in very serious jeopardy, the controversy of F1 being “too expensive” is at the forefront of the conversation…. again.
The heart of the controversy lies at the distribution of F1 income. The business of Formula One, despite its challenges, is incredibly profitable. Since 2004, the various managing properties have earned over $1 billion in total revenue, and then moving the bar above $1.5 billion since 2011. This is the revenue directly related to the commercial management of the series, run by the Formula One Group, which is technically owned by a consortium of investing and holding companies, the largest of which is CVC Capital. At the helm of this is the legendary Bernie Ecclestone, who has run the commercial rights of Formula One since 1980, spending four decades in to building the most successful form of motorsport in the world.