Pay Racers At Haas
The sacking of Romain Grosjean and Kevin Magnussen has lit a new fuse on the Formula One drivers’ market.
The annual ’silly season’ started much earlier than usual in 2020, with news that Fernando Alonso was returning to Renault and various other changes including Daniel Ricciardo to McLaren, Carlos Sainz to Ferrari and Sebastian Vettel to Aston Martin.
Now headline names in the F1 driver market include Sergio Perez, Mick Schumacher, Nico Hulkenberg and George Russell.
The Haas decision to punt both of its drivers is leading to speculation that the team will make the unusual choice of going for two rookies instead.
The names being mentioned most are Mick Schumacher and Nikita Mazepin.
While this makes little sense from a racing point of view, the team admits that the primary motivation is financial.
“It is driven by the financial side,” Haas team principal Günther Steiner explained in Portugal.
“For me, at the moment, we need to invest our finances into the car. Next year’s car will be very similar to this year’s because some of the parts are homologated and frozen and we need to focus on 2022 and to make an investment in the car. We thought it was the right time now because next year it will more difficult because, with the new car coming . . . we don’t want new drivers in 2022.
When a complete new regulation comes in place, with a new car and different tyres and things like this . . . you want to start with somebody you know.
“If you had committed to either of them (Grosjean or K-Mag) longer than this it would be at least for the next two or three years and at some stage we need change as well and we need to put our focus where we want to be in the mid-term.”
Grosjean said he had expected one of the drivers to be changed, but was surprised when he discovered they were both out.
“I knew probably one of us would be out at the end of the year. The situation around the world and COVID has made it very hard financially for a lot of companies.
“So I knew one of us would go and that’s why I said to Günther when he called me: ‘I was expecting one of us’. And he said, ‘No, for financial reasons I need both of you out’. I fully understand.”
To understand the move it is necessary to grasp the seriousness of the current financial situation in F1.
The smaller teams are reliant, to a lesser or greater extent, on money from the Formula 1 group as each team gets at least $US40 million ($56m).
In 2021 there is a new Concorde Agreement, with the percentages being revised and the spread reduced and there will be a budget cap to bring down the top-end spending, but the revenues are based on percentages of the overall revenues of F1 – and these are going to be reduced by about 50 per cent.
The Covid-19 pandemic meant that the most lucrative races were all called off, and the TV companies and sponsors will only be paying for 17 races and not 22 as was planned, which means that their payments will be down by 23 per cent.
The races that have been held to ensure the maximum possible revenues are not paying anything like the normal rate, which is why F1 suddenly embarked on visits to Mugello, Nurburgring, Portimão, Imola and Turkey. They were readily-accessible and had the necessary FIA circuit licence.
Without crowds, races don’t make money and when governments subsidise events they do so to attract revenues. With such a big drop in earnings, teams need to find at least $US20 ($28m) million to balance the books, either by cutting back on spending or generating new revenues.
With sponsorship moribund at the moment this realistically means that teams have a choice of borrowing money or taking on drivers who have money behind them. All F1 drivers still need to qualify for a Superlicence so they are at least competent, but some have a lot more funding behind them.
In Portugal, Steiner said that Haas had no contracts signed for its drivers in 2021 but that does not mean that deals have not been agreed verbally and there is just paperwork to be done.
It is clear that Mick Schumacher has Ferrari support and Haas will be given a significant discount to take him on from the $US40 million ($56m) a year it pays for the drivetrain, gearbox, rear suspension and other auxiliaries.
There may be further money behind Schumacher from sponsor Deutsche Vermögensberatung (DVAG), a German finance company that sponsored his father Michael for 20 years.
The other seat seems to be going to Nikita Mazepin, who races against Schumacher Jnr in Formula 2, and whose father is a Russian chemical industry billionaire who runs the Uralchem business.
He still has to confirm his Superlicence as he is sixth in the standings and needs to finish at least seventh, although that is not really as much as had been hoped for.
Mazepin Snr is also the owner of the Hitech Grand Prix for which his son drives. It is new to Formula 2 this season but has won three races.
Although Mazepin has rather under-performed this year, those who know these things say that he is an exceptionally talented youngster but sometimes has trouble controlling his emotions in the cut-and-thrust of racing.
Mazepin’s father is following the Stroll family route into F1 and has already tried to buy both Force India and Williams but now seems to have decided to fund his son’s drive with Haas and wait to see if opportunities of ownership arise in the future.
With Schumacher and Mazepin, Haas’s financial shortfall will be reduced significantly and, while they may struggle to perform without some experienced guidance, the team could take on a driver coach to help.
Haas is not the only team facing a financial shortfall: Alfa Romeo and Williams also need to find ways to solve the same basic problem and, while McLaren is probably stretched in terms of cash-flow, it has agreed to hire Daniel Ricciardo and he is not cheap. So there must be budget available, presumably from loans that have been arranged by the company’s owners.
Alfa Romeo Racing is an odd story.
The team is owned by Sweden’s Finn Rausing, who inherited a vast amount of money as a result of his grandfather having created the Tetra Laval multi-national packaging company, but he will not be keen to spend his own money to keep the team afloat.
For the moment, Alfa Romeo is paying the bills and has a deal to nominate one of the drivers. The current management want to keep Antonio Giovinazzi because Alfa Romeo will not benefit from dropping the only Italian driver in F1 and he has done a decent job this year against Kimi Raikkonen.
So the line-up could remain the same, although the engine supplier Ferrari would like to put one of its juniors into the team.
The Williams team has a similar problem because it needs to get the costs down and the best way to do that is to take on Sergio Perez, who comes with about $US10 million ($14m) in sponsorship – and is paid a decent salary on top of that by his sponsors.
So the Mexican is not only a great talent but also an obvious choice financially.
George Russell’s place at Williams is based on a deal with Mercedes, presumably for discounted engines, but compared to Perez he is not the best choice. With Perez and Nicholas Latifi the team will have filled most of the budgetary hole that will be created next year but with Russell and Latifi there is still a big gap.
The perfect arrangement in racing terms would be Russell and Perez, but that would leave a hole in the budget.
Some argue that Mercedes could simply do Williams a better deal but the German firm is cutting back in lots of ways at the moment.
However, there is one other element in the driver discussions as Alexander Albon’s place at Red Bull Racing may not be secure unless he starts producing good results.
The team like him and want to keep him but he has been struggling this year and if Perez or Nico Hulkenberg was in the car the results might be better.
“If we had to look at a different solution, then obviously, we would have to look outside of the Red Bull pool of drivers, simply because there’s not one available that we would look to put in,” Christian Horner said in Portugal.
“And there’s some quality drivers, obviously, on the market that could be unemployed for next year.
“We need two cars closer together in order to fight the Mercedes, and that’s what we’ve got to do. That’s our target.”
The team talked to Nico Hulkenberg after Albon had an inconclusive Covid-19 test prior to the Eifel GP, when it was thought that a replacement might be required, so The Hulk is thought to be the favourite if Albon is ousted.
