26/10/2014
NEWS STORY
Bernie Ecclestone has revealed that Formula One's teams have signed contracts agreeing to help competitors which get into financial trouble by supplying a third car to them according to an article in the Mail on Sunday by Christian Sylt.
The controversial third car clause has been one of the biggest talking points of the season. It is written into the contracts which commit the teams to staying in F1 until the end of 2020 and it forces them to field a third car if the grid slips below a threshold of 20 cars. It was thought that the teams would have to run the third car themselves but Ecclestone says that in fact it would be supplied to ailing rivals to stop them from going under.
The situation is far from hypothetical as the article also reveals that Marussia notified London's High Court on 7 October that it intends to go into administration. It follows the collapse this week of Caterham. Eleventh hour talks are underway to save it and Ecclestone says another team may have to step in.
"They would supply a third car to someone else so if, for example, Sauber disappeared, a team could do a deal with Sauber. Ferrari could say, 'we will give you a car, all that goes with it, and we want you to put this sponsor on it. You have your own sponsors but we want you to include this one as well and we want you to take this driver'. The team wouldn't have to go under then would they? If Red Bull decided they would give a car to Caterham for example that could solve their problem."
If several teams go under it would trigger the need for the remaining ones to supply third cars to them. Last month Mercedes motorsport boss Toto Wolff said "there's a regulation which says if the grid drops below 20 cars, so 19 cars, then there is a certain mechanism which would trigger certain teams to fill in." The reason for this is contained in the contracts with race promoters which state that F1 "shall use its reasonable endeavours to ensure... that at least sixteen cars participate in the Event ."
If it slips below that F1 could breach its contracts and risk losing the £300m in fees paid by race organisers. Setting the threshold at 20 cars gives Ecclestone a buffer and he may need it.
Annual F1 team budgets are now around £140m on average and although Red Bull has one of the biggest, smaller outfits are struggling to keep up.
Marussia lies in ninth place with just two points and has made combined net losses of £140.6 million since joining F1 in 2010. Ecclestone said on Saturday that he expects Marussia and Caterham will miss next weekend's United States Grand Prix. It will put the grid at 18 cars but Ecclestone added that this won't trigger the third car clause because the teams' F1 contracts allow them to miss two races each year.
"We don't have to introduce a third car at this stage because they can miss a couple of races. They lose any money they would have got for those races but they don't lose their position in the championship. I have no idea if Marussia are going to make it in the long run. It's better if they didn't have to go into administration."
It is too late to prevent that happening to Caterham. Earlier this month bailiffs seized equipment from its factory in Oxfordshire and the team's 220 staff have been locked out of the building by the administrator since Thursday.
It languishes in 11th place, one behind Sauber which has failed to score any points this year despite having backing from sponsors owned by the world's richest man, Mexican tycoon Carlos Slim.
If a team received a rival's car it would not need to spend money on research and development, manufacturing or buying engines. These are the three biggest costs for F1 teams, far exceeding spending on staff and drivers which would continue to be covered by the outfit which receives the third car.
Marussia's latest company accounts are for 2012 and show that it spent £32m on research and development which alone comes to 42% of its total £76.1m costs. Manufacturing and engine expenses are estimated at a further £23m. Wiping out these costs would transform bankrupt outfits into profitable ones which could attract investment and ultimately stand on their own two feet.
"Who knows if it is likely," says Ecclestone adding "they will only run three cars if they haven't got enough teams because three of them stop. I don't check their books so I don't know if it's likely. I think a lot of them cry. I spoke to Carlos Slim and told him about Sauber saying that if they don't get money they won't go to the next race. He said, 'I've been listening to that for the last three years.'"
Talk of third cars was prompted by a Tweet from former Williams chief executive Adam Parr after the Italian Grand Prix in September. He wrote: "This is the last year of F1 as we know it. In 2015 eight teams will contest the championship, with several teams entering three cars."
McLaren racing director Eric Boullier was quick to criticise Parr saying that "the chassis and third car logistics and people around, we would need at least six months' notice." It would not leave enough time to introduce them next year though this seems to stand in conflict with the teams' obligations under their F1 contracts.
If, as was originally thought, some teams were to run third cars themselves, whilst others only had two, it would expose F1 to accusations of obvious bias towards certain teams. The third car could be used to frustrate the race strategies of rivals even if it was handicapped by not being able to score points itself. These problems are avoided by third cars being supplied to other teams although that doesn't mean the regulation has a smooth road ahead.
The use of cars supplied by rival teams seems incredibly close to the concept of customer cars which is barred in F1. Under the teams' commercial agreements with Ecclestone each is required to be a 'constructor'. This involves teams designing and manufacturing their own chassis and it prevents teams from buying it from other outfits.
The teams which aren't owned by multinational corporations tend to be most strongly opposed to customer cars. The most vocal is British outfit Williams and rightly so. Williams is controlled by its co-founder Sir Frank Williams and it is the second most successful team in F1. It prides itself on having achieved success through building up its talent internally which runs counter to the principle of allowing teams to buy in expertise from their rivals. This applies just as much to third cars as it does to customer cars.
"We have always made our position clear on customer cars and three car teams," says Williams' deputy team principal Claire Williams. "Frank has always been really clear on this that we don't believe it to be in the DNA of our sport. I think a more important question is why are we having those conversations and that's because there is talk that teams are in financial difficulty at the moment. I think we need to be addressing the cost issues that we have in Formula One in order to support the teams that we currently have. So therefore I believe those conversations show that we are not doing what we need to be doing from a cost control perspective."
A $200m budget cap was due to be introduced in 2015 but was rejected in March by the Strategy Group, a body comprising Ecclestone, the FIA and six leading teams.
It has contributed to their current predicament which could see the third car clause being invoked. If so it would not actually be a first for F1 as the series had teams with three cars in the 1970s though this was because there was freedom to do so not because the grid had hit a threshold stipulated in contracts. Time will tell whether history repeats itself.