F1 makes cutbacks amid fears up to four teams could go bust
Formula 1 has imposed cuts, placing about 200 staff on furlough and reduced the pay of senior executives, while there are concerns within the sport that several teams could go out of business in light of the absence of racing amid the global coronavirus pandemic.
The start of the 2020 season has been delayed, with no races scheduled until at least mid-June, and Zak Brown, the chief executive of the McLaren team, has claimed Formula 1 is “in a very fragile state.”
It emerged today that Formula 1, which is owned by US media giant Liberty Media, has furloughed half of its 400 staff in the UK, using the government scheme which is covering 80 per cent of the wages of employees laid off during the health emergency.
UK-based teams McLaren, Williams and Racing Point are already taking advantage of the system, and have reduced the salaries of their drivers and management.
Meanwhile, leading Formula 1 executives such as chairman and chief executive Chase Carey are taking 20-per-cent pay cuts.
In other developments, the teams are looking into further reducing the budget cap for 2021. This has already been cut from $175 million to $150 million, but some teams are pressing for it to go down to $125 million as a result of the impact of the coronavirus.
With the first eight rounds of 2020 already postponed or cancelled, Formula 1 is missing out on lucrative hosting fees, and if the number of races drops below 15, broadcasters are in line for refunds.
The sport also faces the burden of deferred payments to the teams for the 2019 season, amounting to $101 million, and significant other costs (these totalled $381 million last year).
Carey said recently that Formula 1 was still aiming to stage between 15 and 18 races this year, although this is dependent on how quickly the sport can be back up and running, and restrictions on travel relaxed, once the impact of the pandemic has subsided.
In an interview on Sunday, Brown warned that as many as four teams could go bust in the current climate, as he joined the calls for an even lower budget cap.
He told the BBC: “This is potentially devastating to teams. If [it is devastating] to enough teams, which doesn’t have to mean more than two, then it’s very threatening to F1 as a whole.
“Could I see, through what is going on right now in the world if we don’t tackle this situation head on very aggressively, two teams disappearing? Yeah. I could see four teams disappearing if this isn’t handled the right way.”
On the budget cap, he said: “You have everyone at $150 million, and the strong majority – including one of the big teams – willing to come substantially under $150 million. If we don’t make an aggressive enough budget cap and some people feel they have to top up this year and have no chance of getting it back, then they ask themselves: ‘Why are we in it?’”
The cap was discussed at a video conference meeting between team bosses, Carey and Jean Todt, the president of the FIA, motor racing’s international governing body, on Monday.
It is reported that defending world champions Mercedes are among the big-spending teams in favour a further reduction, but that Ferrari and Red Bull are among those that have issues with the proposal.
As things stand, the first scheduled race of 2020 is the Canadian Grand Prix in Montreal on 12 June though it is thought that races through to the end of July are under threat.