Brought to you by TJ13 contributor – Fortis
In life often those with much, simply want more – and why? Mostly just because they can get it.
The recent meeting of Formula One’s strategy group before the British Grand Prix continued with the seemingly never ending discussion on cutting escalating costs which particularly affects the sport’s smaller teams. FIA president Jean Todt, has now said he wants to cap the cost of the current V6 Hybrid Turbo power units and along with FOM, is currently evaluating proposals to deliver this.
Currently a power unit/gearbox combo is estimated to cost in the region of $17-22m and Todt wants to cut this cost this to $12 million for power units and to cap transmission spend at $1.5 million for the start of the 2017 season.
Both Mercedes and Ferrari are said to be willing to negotiate how much they currently charge their customer teams for engines and gearboxes but have made it clear they will not accept an FIA guillotine on the issue.
Mercedes Benz currently supplies three teams along with its works outfit and potentially Ferrari will also have three customers in 2016 when Haas F1 eventually joins the grid.
Both of these manufacturers have invested heavily into the new V6 turbo and ERS technology and so expect a contribution from their customers towards the cost of the R&D along with ongoing manufacturing expenses.
Ferrari’s team principal insists that Maranello is not willing to start subsidising cost for its customers. “Let me know another product somewhere in the world where you have to sell something at a set cost?” asks Maurizo Arrivabene. “We are negotiating to make sure we will offer the engine at the best possible price, but we can’t give a present to anyone.”
Mercedes are believed to be open to negotiations but also are not prepared to tear up the existing business model designed to recover elements of the R&D paid for by Stuttgart.
Toto Wolff adds his thoughts on the matter. “Mr Todt wants to try to reduce the engine prices for the customers and the smaller teams because the engine prices are quite a large chunk of the overall budget.
We take it very seriously, we’ll look into things, but unfortunately the situation is that we have set up a business case with these engines and we have an investment on the line. We acknowledge it’s an important bit, so we are sharpening our pencils and looking at the situation and we promise to come back with an answer as to whether it is feasible or not.
“But it would massively impact the situation because in a large corporation you set up a business case, justify your investment and then you sign contracts. If that needs to be adjusted or changed because the environment is becoming more difficult it is a huge challenge for such an organisation like ours. You need to come up with a solution, have a plan and justify why we are changing things. That’s the tricky bit.”
Behind the scenes at Ferrari, Sergio Marchionne Ferrari’s chairman, is a master of corporate re-engineering and has previously found many a creative way to allocate out to the greater organisation – one off ‘exceptional’ costs – and could do the same with the F1 V6 engine R&D.
This practice will also be common in Dailmer Benz.
Even if the FIA and FOM can enforce the proposed financial caps on engine and transmission costs, the strategy group continues to ignore the elephant in the room and the most significant reason as to why many of the smaller teams are struggling to make ends meet.
When finishing third last year in the F1 constructors’ championship, Ferrari were awarded 1000% more than the team finishing tenth of the F1 revenue set aside for F1’s competitors. Ferrari receives almost $150m a year for just turning up on the grid race to race.
Jean Todt may believe he can do nothing about the commercial arrangements signed between FOM and the teams, but it appears he can’t even force the big players in F1 to stop ripping off their customers for significant contributions to their automotive R&D spend – which will eventually result in technologies developed being applied in their road car division.