Force India goes cap in hand to Ecclestone for cash

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Bernie Ecclestone is not only the F1 ringmaster, but he also is the keeper of the key to the vaults of cash owed to the teams. Whilst the rules are a little complicated, nearly all the teams get a guaranteed equal annual amount which represents about 50% of the revenues paid out to the teams. Presently this is around $42m.

However, when there have been more than ten teams in previous years, the 11 place team gets nothing – unless Bernie decides to make them an ex Gratia payment.

The prize money pot of around $420m is then distributed based upon the constructor’s position in the end of season rankings. Ferrari get $90m for being Ferrari (and a veto) and then there is a constructors’ championship bonus fund of $135m which pays Ferrari, Red Bull, McLaren, Mercedes and Williams previously winning constructor titles.

All in all this adds up to $1.125bn paid to the teams which Bernie believes makes them ‘richer than god’.

The problem is, the teams only receive their share of the monies due from the prize fund the FOLLOWING YEAR. Prize fund and other monies are paid to each team in equal instalments from March to November.

This caused Force India significant difficulties over the last winter period. Following the collapse of Caterham, suppliers refused Force India and other mid-field teams the kind of credit they usually allow. This saw the Force India chassis impounded for weeks and failed to make winter testing. So while the teams are waiting for benevolence fund payments to kick in, they are at the most costly point of the year. Some estimates have suggested up to 70% of a smaller teams annual budget is spent during the winter months.

Force India have again been forced to ask Ecclestone for an ‘advance’ on their monies due, to cover the winter expenses.  Force India’s Bob Fernley explains the difficulties they face: “But this is not necessarily about us, it’s about making our suppliers’ lives a bit easier. They are under a lot of pressure, and can be stretched too far, especially when other teams are struggling as well.

“We’re trying to get ahead of our programme, as opposed to last year when we were slightly behind it. We just have to be pragmatic because if we know now we’re going to have to tighten up a bit then we have to act.”

Ecclestone has informed the other teams of the Force India request, and is claiming he requires unanimous agreement from the other 9 competitors before he can release the funds requested by the Silverstone based outfit. However, last year when asked, Ecclestone unilaterally intervened, so the process by which all the other competitors are polled on the issue – is simply likely to receive more claims for early payment.

It may be beneficial for Ecclestone to act in a supportive manner, given the complaint against him and the FOM group currently before the EU Commission. The Bernie of old would most likely have used this opportunity to kill of Bob and the Silverstone crew, yet with Red Bull Racing’s future still in limbo, Ecclestone can’t afford to be reckless.

One thing is for certain, the once King of good times is either in no position to – or has no interest in – lending his own team any money in the meantime.

So the question to you the TJ13 jury is, should the teams receive their money up front at the start of each year – or is phasing the payments an appropriate way of ensuring the teams don’t blow all their cash at once?

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24 responses to “Force India goes cap in hand to Ecclestone for cash

  1. Maybe a 50% upfront payment and the remainder paid in instalments would make more sense and would give teams cash when they actually need it.

  2. Of course the money should be released up front, it makes sense that teams require funding thru the winter.
    It’s up to teams to manage their budget, they are well capable of it. It’s nonesense to think that (Grand) Daddy Bernie should hold back their pocket money in case they spend it all in a child-like frenzy.
    Sure anyway, if they spend it all they can always sign up a few extra drivers…oh wait 🙂

    • Totally agree. Plus, if a team like FI decide to spend it all, it might be a strategic decision to have a strong start to the year, maybe steal a few podium, a win and hence attract Sponsors.

  3. They should get their prize money the year they win it, the installments are done so CVC can use the bulk of the money to earn interest over the term. Extra millions for the greed club for free.

    • That is the question someone should be asking – when is Bernie paid the money which forms this prize pot? I wouldn’t be surprised if the TV companies and race promoters have to pay up-front or at least ahead of time.

      Also, are there any other sports where teams are expected to wait a significant time before getting their prize?

      It really does seem as if the only motive here is more profit from the interest while I’d guess teams will end up paying interest on money they need to borrow to pay the bills…

    • its not a democracy or a free market.

      why havent they developed their business plan to sustain such timelines? who runs a business like that?

  4. The teams should get their points money at the end of the season so they can better budget and manage it for next season. But Bernie knows what’s he doing: by trickling out the money during the next season, it ensures the teams,especially the small ones, show up to race and not take the money and fold up at season’s end

  5. A bit unrelated, but speaking of Bernie, he alleges Lewis is one of the top 5 best F1 champions. Who he regards no 1?…PROST!

  6. Well, since this is prize money, it should clearly be paid after the competition is done. To me this would be after the last race of the season, but before the next season begins. That would fall into the winter break, where some private teams are always cash strapped anyway and would be ideal.

    That FOM, or Bernie who has no doubt been the brain-child of this payment schedule, is able to dictate a delay of up to a year with his payments is only due to his dominating position over the teams.

  7. I have on several occasions written about this. It is inconceivable in the corporate world to imagine a business having to not only up front a significant amount, but then basically work for a year and a half without payment. Imagine after one year of work and earning $40+million, that the business is forced into bankruptcy, because although they are owed enough to stay alive, they cannot collect it for another six months. Then without being able to continue, that money owed is simply not paid?

    This has to be the worst prize money payout structure in sports.
    Bernie is an outright shyster, but the teams allowed this to happen. Of course it doesn’t really affect the big teams, because they are going to show up anyway, but the little teams have their balls in a vice.

    • ” imagine a business having to not only up front a significant amount, but then basically work for a year and a half without payment.”

      you mean like the entire retail industry (1 trillion? 2 trillion?) does while waiting for christmas?

      Try this one out:

      Imagine a world where 1 company funds 2 teams, the most prolific and successful young drivers academy – bringing forward superstar after superstar, rehabilitates an F1 circuit, ACTUALLY BRINGS BACK a race to europe, provides some of the cheapest tickets on the F1 calendar, does more to promote F1 around the globe via demonstration runs in the snow, on top of a mountain, on the beach, etc, etc THAN ALL OTHER F1 teams combined.

      Then imagine all F1 fans crying like petulant children for this company to disappear because they said some naughty things about the worst engine manufacture over the last 2 years.

      Who cares about the poors when you treat the teams that actually invest money they way you do?

      • But aren’t the likes of Red Bull part of the reason teams like Force India are in this position in the first place? Trying to compete with a team to whom your entire budget is loose change down the back of the sofa means you do need to stretch yourself.

        Red Bull also have access to funds when they need them, they don’t have to wait until Bernie decides to cough up.

        It is almost impossible for a team like FI to maintain position and progress – the have a good season but can’t build on it as the money they earn from a good finishing position doesn’t get paid to them for a year. In the meanwhile they can’t develop the car and fall back again so when the money finally comes they have a massive hill to climb.

        I’d even go as far as arguing that money should be divided up on a per-race basis and paid out based on finishing positions of that race. That keeps the funds trickling in and allows teams to stay solvent and build.

        • If force India hasn’t seen the writing on the wall the more investment is the path forward in f1 then I really don’t know what to say.

          Red bull
          Mercedes
          Ferrari
          Mclaren/Honda
          Haas

          It’s a $200m + per-season sport

          They’ve figured it out.

          • @Judge – I think it’s great you can get your foot in the door for under 200m. That’s were it stops though – FI’s B-spec chassis is one of the stories of the season to me. If they haven’t been able to turn that around into major investment from new/existing partners then I have a hard time feeling bad for them.

            They created their own opportunity with the success of the B-spec and hats off to them for that but clearly they arent operating in a sustainable way. We cannot continue to drag the big teams down however with this constant whining from the minnows.

            If I was Ford for instance, why would I want to enter a sport where a team spending 100m can come in and cry for rule changes after I invest say, 300m.

            Why does Lamborghina (via VW) want to compete with Force India? They dont, they want a big boy battle with Ferrari.

          • Following that logic we end up with 8 cars racing.

            RB, Merc and Ferrari can always spend big. Whoever gets a big-name partner (McLaren at the moment) can spend big.

            Anyone else? No chance. Haas might be spending big – I’m not so sure. But he won’t be able to keep it up for years without success.

            There are two sides here. Either we have uncontrolled spending and end up with a few cars always at the top and smaller teams spending themselves in to bankruptcy, or we moderate spending so the point where more teams are able to compete.

  8. I think it’s best the teams receive their money at the end of the season… A week after the last race. That way they can go into the most expensive phase of the year with full pockets and the rest of the year they have to live on sponsor money. That way F1 I’d also far more likely to see all teams in testing and at the start of the first race.

  9. We have an expression in Mexico, “jineteada el dinero” roughly: riding the money, that is, withhold the money as long as possible while using it for gain, in whichever way you want. Perhaps buy some merchandise that sells quickly, keep the profit. Or maybe just earn the bank interest of 800 million or so.

    Pay the teams immediately.

  10. really don’t understand why you need to take a sly dig at mallya all the time, true he seems dirty but let’s be honest,the whole grid is cut from the same cloth, and for once let’s just give the guy credit for being head of a team that has been in essence overachieving with the kind of budget that they have

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