Small F1 teams set to receive a £100 million payment

Small teams set to receive a £100 million payment

It was reported on Tuesday that Bernie Ecclestone is set to hand smaller teams a £100 million payment in an attempt to ward off the sport's financial crisis.

Three cash-strapped teams, Force India, Sauber and Lotus, had threatened to withdraw from Sunday's U.S. GP in protest at the way F1's revenues are divided, with the reports stating that the boycott was only averted after an intervention from CVC Capital Partners.

According to The Times, 'the boycott was only averted after Donald Mackenzie, chairman of CVC Capital Partners, the controlling shareholders, telephoned Gerard Lopez, the Lotus owner, in Austin to offer a compromise. Lopez stated below what the compromise would be:-

'It is thought that CVC may be willing to find as much as £100 million for the three struggling teams to prevent the sport splitting in two.'

CVC and other shareholders take a sizeable chunk of the sport's profits, estimated at £795 million in 2013. Just under £500 million was handed to teams as prize money, but the bigger teams get a much larger share, thanks both to their on-track performance but also separate commercial deals.

For example, Ferrari's longevity in F1 assures them an estimated £38 million alone – about the same Force India receive in total. Ferrari are believed to have received more than any other team last year, even though they finished third in the constructors' standings.

F1's two smallest teams, Caterham and Marussia, have both gone into administration in the past fortnight, although there is hope the latter outfit will return for the Abu Dhabi GP later this month.

In an interview withThe Guardian, Lopez is quoted as saying the following on the subject:-

'I know CVC and Bernie [Ecclestone] have been looking at this. It's going to be a base payment [over and above the money paid for positions in the championship] given to the smaller teams, which is essentially going to make it possible for a normal budget to work.

'To be honest, it's really not a complicated thing to do. It just requires a bit of goodwill. The overall amount we're discussing, once you start dividing it by the number of teams, is not that massive.

'There is a way to build a proposal in the next couple of days. I really think there is a way to solve this in the coming days, probably even to get to a proposal before Brazil [next Sunday]. In which case I don't see the point in doing anything drastic that would damage the sport.'

As Lopez has stated to the media, it is clear that Ecclestone is looking into the matter as quickly and as urgently as he can and resolve the issues that are present in the sport and with the teams involved. It would seem from what Lopez has stated in his interview that the £100 million payment offered to the smaller teams is a base payment which will help them and their budget to compete in the sport better than what they have been recently.

As Lopez says, £100 million payment is a lot of money for anyone to receive fully or partly but when spilt between three teams; it is not massive in comparison but it is to fans like us. But it will ultimately help these teams still compete in the sport with more money under their belt which they will be grateful for and it is a step in the right direction.

But even though this £100 payment is not going to fix things in Formula One that still need to be addressed but this is a start of a long and complicated process of trying to resolve these issues. Lopez believes that a proposal is coming in the next couple of days before the Brazilian Grand Prix and he believes that this situation can be resolved which will be a relief to many pundits and fans but not to the cost of damaging the sport even further than what it has already.

But all we can do is wait and see what happens in the next couple of days with this situation. It is clear that this is the start of a long and complex series of talks and negotiations that is required to sort out the issues surrounding Formula One at the moment and this matter needs to be resolved as quickly as possible before the sport we all know and love is further damaged in the process and potentially more teams leaving the sport which ultimately cannot happen.

Sarah Jones