One of the hot topics within Formula One at the present time is the suggestion, perhaps even the plan, concerning the introduction of customer cars, also known as franchise cars. This would enable smaller teams to run a car sold to them by, say, McLaren, Ferrari or Williams, the idea being that it will remove a significant overhead and thereby reduce the financial burden from those who currently struggle to raise a competitive budget.
To the uninitiated this might seem like a fine idea until you realise that a key aspect of contemporary Formula One is the requirement for each entrant to design, manufacture and operate its own cars. And that being a Constructor determines how much money you will receive from the central fund of revenues managed by Bernie Ecclestone and awarded according to where you finish in the World Championship for Constructors (not Drivers). The critics point out that if you remove the requirement for teams to produce their own cars, then those teams will not be ‘Constructors’ and as such not qualify for their share of the central revenues.
Furthermore some say this idea is simply a way for the big teams to take more control of the sport by consigning the small teams to a future as mere satellite operations, always at the mercy of the majors and reducing them to the roll of bit-player. To make matters worse, the money charged for the customer cars will be significant, thus having the effect of maintaining the penury of the small teams while augmenting the revenue streams of the large.
So far so bad.
Let’s take the alternative view. If the customer car concept is implemented correctly I would argue that it could be enormously beneficial to Formula One, and particularly to the smaller teams who have struggled for years. Struggled commercially, in terms of raising sponsorship, which is linked directly to their other problem – the inability to achieve much in the way of significant results.
No one likes to back a consistent loser, and under the current set-up the likelihood of the smaller teams attracting significant title sponsors is close to zero in the highly competition sports sponsorship market place.
The immediate response to this point is to say that no customer car will ever be as competitive as the official factory version. It will engineered differently, run a lower specification, and of course not feature anything like the ongoing development which is such a key element to succeeding in Formula One.
That response presupposes that the customers will be offered an inferior product, which may or may not be the case, as much depends on the way in which the commercial agreement is structured and whether indeed the supplier may see some significant benefit in having a highly competitive customer team. At worst it could be a good mechanism to guarantee a wing-man for the works cars, at best it could even provide for additional performance-related revenue for the supplier if the customer team secured great results and more prize money.
There is even the prospect – no matter how outlandish it may seem – that the constructor could nominate any 2 cars to score points in the Constructors World Championship. In the case where a factory team had one strong driver, and one weak one, they could nominate a talented driver in their customer team to score points. It would not be too difficult to calculate a mechanism for shared revenue which would be better for both parties.
In addition, consider the benefits for a small team of stripping away the need to employ a large team of people from the design and manufacturing functions, instead focussing their entire technical efforts on development. It is not impossible to imagine a scenario where a customer team could actually do a better job of developing a specific car, given that development is the only thing they have to worry about. For the major teams the continued spread of resources across design and manufacturing can often damage the development function, and in this regard a customer team may even develop an advantage.
I have worked with a number of senior technical figures in Formula One whose forte in the junior formulae was to take someone else’s car and make it even more competitive. Times have changed, of course, in terms of the complexity of technology and tools used in Formula One, but if a well-led technical team is provided with a strong base-line Ferrari, McLaren or Williams and undertake their own developments, it is by no means guaranteed that it will be uncompetitive.
Furthermore the powertrain regulations in Formula One have been designed to enable constructors to switch between engine suppliers so, although it might be less-than-ideal on paper, it is theoretically possible for a customer team to take someone else’s car and develop a version of it around a different power unit. The difficulties of housing different energy storage units, cooling requirements, control systems, exhausts, engine packaging and so on render this impossible on a purely like-for-like basis – it most certainly not a plug-and-play scenario – but again customer car regulations could go some way towards ameliorating these issues. A Williams-Ferrari versus a Williams-Mercedes? Improbable but not impossible if the will was there.
And then we come to the money.
Let me say that, first and foremost, attracting potential sponsors, drivers and technical partners with a customer Mercedes, Ferrari or Red Bull would be a whole lot easier than selling your own design which has been consistently off the pace for years, and not by the odd tenth or two of second either. When you have never won a race, and are never likely to, it’s hard to see the point unless mere participation is the objective.
The critics say that potential sponsors would know that your customer car would never be as competitive as the works version. But if your home-grown car has been demonstrably even less competitive, and for some years, isn’t it still a step forward?
Commercially a customer car supplied under the terms I have described would enable the sponsors to benefit from a more consistent level of performance from a team which has a well-conceived and developed car to field. As things stand even the most capable midfield team may have a promising car at the start of the season, but as the development budgets of the big teams kick in so the mid-season slide begins. With a well-defined customer agreement, development upgrades could be forthcoming from the supplier which, in addition to the customer’s own in-house steps, ought to achieve a higher overall level of performance across the season.
The question of finance is a primary concern in this debate, and for the smaller operations the prospect of losing out on ‘constructor’ payments from the World Championship is undoubtedly a bigger reason for rejecting customer cars than simply wanting to maintain the purity of the current framework.
A renegotiation of the way in which Formula One’s revenues are distributed ought to make running a customer car attractive, while at the same time rewarding those who choose to design and develop their own cars. If the revenue was split according to three criteria, namely; 1. Entering the championship 2. Scoring points in the Driver’s World Championship, and 3. Scoring points in the Constructor’s World Champion, the customer teams would be receive payments from two of those three categories. The manufacturer teams would of course receive payments from all three categories, but so they should since their costs of design and manufacture will continue to be significant.
Ultimately any customer team could opt to design their own vehicle in the future, but that only becomes attractive if the financial reasons for doing so are compelling. Ultimately you would only build your own car if you were sure to be competitive.
My final point on customer cars involves new entrants. Currently there are several extremely professional teams in lower formulae who would like to compete in Formula One yet cannot do so because the costs of entry and operation as a fully-fledged manufacturer are prohibitive. Not only that, but if you do manage to raise the funding to enter Formula One and build your own car, you know that the complexity of the sport means that you must realistically spend 3-5 years developing your project so the point where it could be competitive. Even Red Bull took that long.
The opportunity to come straight in with a customer car, achieve credibility, a degree of success and a performance only slightly slowly than the large teams would be much more attractive – and affordable. While running Cosworth’s F1 business I watched as Campos/HRT, Manor/Marussia, Team Lotus/Caterham came into Formula one with their hopes high, but their budgets low in comparison to the big boys. Frankly they may as well have poured their cash down the drain; some would say that is precisely what happened.
The complexity of becoming a constructor was simply too big an ask, and when you have cars 4, 5 or 6 seconds per lap off the pace I for one don’t buy the argument that this is all about the purity of the ‘Constructors’ World Championship. For the team owners the current focus is all about money and there is simply no way for small teams to compete technologically with the majors due to the costs.
I have not written this to support the idea that customer cars are the only solution to the economic malaise afflicting the smaller teams, but in the face of withering criticism about the idea it is worth considering that there may well be good reasons for permitting it. Having been part of the Jordan team, which started in 1990 with a 4-man design team, I know how thrilling it was to watch your own design achieve success against the Big 4* but these days the budgets, technology and complexity of the challenge are on an entirely different level.
Change has to come in Formula One, and soon, not only to rebalance the series in terms of creating a more equitable financial arrangement for entrants but also in giving more teams the opportunity to be challengers on track. The customer car idea deserves debate, and those who dismiss it out of hand should pause for a moment.
The sooner the financial issues are solved, the sooner everyone can refocus their efforts on the thing that should be uppermost in everyone’s minds; the quality of the racing, the diversity of technology and sporting interest, and the entertainment value we bring to the most important and yet neglected audience of all – the fans.
* Back then it was McLaren, Ferrari, Williams and Benetton, today the latter pair have been replaced by Mercedes and Red Bull