What does it cost to go racing nowadays? Even in junior formulae like FIA Formula 4, teams are expected to cough up around €100,000 per car to complete a full season. Far too many young and talented privateer drivers are limited by the excruciating financial demands of car racing, despite efforts to radicalise the costs of participation. The economic hardship of running a motorsport team is most apparent in Formula 1. Caterham F1 Team have been in a financial crisis for much of 2014, and last month their time (and money) ran out. After missing the United States Grand Prix, Caterham resorted to crowd-funding in a Hail-Mary attempt at making the grid for the final race of the year at Abu Dhabi. The appeal is certainly working, and similar strategies have been used in other forms of motorsport to get around the extortionate cost of racing. However, Caterham’s program has triggered criticism from Bernie Ecclestone and Red Bull’s Christian Horner, who believe that if a team cannot afford to race, then they shouldn’t.
Caterham’s crowd-funding project was launched last week and has since raised over £1,175,000 towards the £2,350,000 target that will ensure their place at the Abu Dhabi Grand Prix at the end of the month. This is the only viable option for Caterham to return to Formula 1, after former owner Tony Fernandes walked away from the team during the 2014 season and they swiftly sunk into administration. Many Formula 1 fans expressed disdain at the 18-car grids for the US and Brazilian Grands Prix (this was the lowest amount of starters since the 2005 United States GP), and would therefore happily welcome Caterham back for the final race. With Marussia expected to sit out their third race in a row, Abu Dhabi could pose an opportunity for Caterham to assume 9th place in the Constructors’ standings. The financial benefits of such a result would be monumental for Caterham.
It’s no secret that crowd-funding can be successful. Earlier in the year Sarah Fisher Hartman Racing (SFH) experimented a crowd-funding initiative whereby fans could contribute online in order to pay for Josef Newgarden’s Indianapolis 500 drive. The target was duly met and Newgarden managed to qualify eighth on the grid in what was described as the ‘People’s Car’. Furthermore, Project Brabham has met its first target and proving that fan investment alone can drive a team. David Brabham’s vision of creating an entirely supporter-sourced LMP2 team for the World Endurance Championship has been lauded by the motorsport community, and has already surpassed its initial £250,000 goal with just under a week to spare. Project Brabham aims to take fans on a journey with the team, with the hope that the organisation can grow from its LMP2 roots into something bigger.
This example bodes well for Caterham, who are also offering benefits to those willing to donate. However, the problem with Caterham’s crowd-funding scheme is that it only covers one race. Whether or not the Abu Dhabi Grand Prix will be Caterham’s ‘last hurrah’ is uncertain, but one does question what will happen to the team after the £2.35 million target is reached. If a long-term buyer isn’t found regardless of how successful this specific campaign is, then Caterham will remain in trouble. £2.35 million will get them to one race, but it won’t be enough for them to survive the winter and progress into next season.
Bernie Ecclestone is one of several high profile figures who are against Caterham’s last-ditch attempt at raising money through supporters. At the weekend he said “It’s a disaster. We don’t want begging bowls. If people can’t afford to be in Formula 1 they have to find something else to do” (Press Association). Ecclestone clearly appears worried by the impact that crowd-funding might have on the sport’s popularity, since Formula 1’s image decrees that it should be a sport for only the most affluent teams in the world. In a sense, this affluence is part of what separates Formula 1 from other forms of motorsport.
Although Ecclestone doesn’t believe that crowd-sourcing is an appropriate way of funding a Formula 1 team, he did recently condemn the system by which prize money is distributed to teams, with a direct focus on the financial neglect that is suffered by the smaller constructors. Even so, in Ecclestone’s view crowd-funding cannot support a modern day Formula 1 team. Instead, a complete overhaul of the distribution of profits is required in order to save teams like Caterham and Marussia from collapse.
Red Bull team boss Christian Horner also voiced his concerns at the Brazilian Grand Prix. Horner told Sky Sports that “The fans pay to be entertained by the teams, they shouldn’t be having to pay for a team.” The heavy cost of attending Formula 1 races is something that team bosses have already expressed concern over, and few would want to invest a further £420 to add a fraction to the rolling total and receive a brake calliper as a novelty gift.
In spite of Ecclestone and Horner’s concerns, Caterham is standing firm. The team’s administrator Finbarr O’Connell said in response that the team was willing to do whatever it could for its staff who didn’t receive their wages for October. Even if Caterham can’t sustain a future after the Abu Dhabi Grand Prix, at least it is generating money to help the 200 or so employees that have endured several painfully uncertain months.
Overall, crowd-funding is not the ‘disaster’ that Bernie Ecclestone perceives it to be. For some teams it can be the only way of generating enough money to enter races, and in the case of Project Brabham it has set up the opportunity for fans to integrate and actually be a part of the team’s progress. That’s far from disastrous. However, the key point is that it isn’t sustainable in Formula 1. Caterham might get lucky and find a buyer that can take them into 2015, but the likelihood of them having any form of successful future in the sport is slim. Plenty of teams have become successful without needing to compete in Formula 1, including DAMS, Carlin, Fortec and even the Audi WEC team. All of these teams have become renowned in their respective categories on a fraction of what the top Formula 1 constructors are currently spending, thus exemplifying that there are other more economically viable ways to go racing.
Meanwhile, Caterham are scraping together investments in order to compete in a championship that they will struggle in even if they do make the grid next year. Formula 1 may be the pinnacle of motorsport, but a team doesn’t have to compete there to be successful. Crowd-funding may help to calm the storm, but it is far from a solution to Caterham’s problems.
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