"Cato Batista" 01/11/2014 0:34:50 ID #686

Ladies and Gentlemen,

Three races left in the 2014 season, next one coming up this weekend is the U.S. GP.

at the Circuit of the Americas.

We had been hearing about F1’s financial troubles for some time, it has now become a harsh reality and it’s starting to claim victims. After Caterham, Marussia has now been placed in administration, the step before bankruptcy. There will be only 9 teams on the grid for the remaining 3 races and we are well aware that Sauber, Lotus and Force India are facing the same economical problems and are struggling to survive.

About half the $1500 million generated by F1 every year are going to the owners of the commercial rights, which were granted to Bernie since 2001 for a 100 years by the FIA for only $313 million (by his friend Max Mosley in charge at the time). We know the rest of the story: Bernie sold them to an investing company which takes half the revenue, the other half goes to the teams and is distributed in way that the small outfits only get the crumbs.

From the 3 new teams entering F1 in 2011 promoted by Mosley only Marussia ever scored Championship points in the hands of the talented Jules Bianchi in Monaco this year. If Marussia beats Caterham and Sauber for 9th place in the championship (most likely) that will represent $48.1 million in prize money, an amount that might save them from bankruptcy (very unlikely).

An interesting twist to all of this is that the FIA has an obligation to race organizers to field at least 18 cars or they will breach the 100-year deal, in which case Bernie and partners CVC Capital could lose the commercial rights. Bernie’s solution is for the teams to enter 3 cars each but the manufacturers with big pockets-Ferrari, Mercedes, McLaren & Red Bull- are not welcoming the idea, and “they need at least 6 months to prepare”. The small teams dislike the plan even more because this way the big teams will monopolize the top 12 places.

And the musical chairs in the drivers’ market carries on because we still don’t know where ALO is going. Rumors are running wild, from McLaren-Honda (very likely) to Lotus-Mercedes (if his friend Briatore buys the team) to stay at Ferrari or to take a sabbatical (very unlikely) and wait until 2015 for a seat at Mercedes or moving to Audi that it’s said is entering F1 buying one of Red Bull’s teams (Toro Rosso probably). Ferrari is not making official that VET is joining the team because ALO is still under contract, now there’s a possibility that if ALO stays for another season the Italians will have 3 World Champions in their payroll in which case RAI will again take a fat cheque and another holiday to make room for VET. Meanwhile BUT and MAG remain in limbo waiting for McLaren’s decision knowing that one of them will be without a job next year...

I’ll be in touch tomorrow afternoon as soon as arrive in Texas with the latest from the opening day of practice.

Until then

Cheers