Image courtesy of McLaren-Honda.
No one questions the fiscal uncertainty of today’s F1. Sauber is embroiled in litigation with at least two of their former drivers. Force India has expressed their displeasure with Manor’s being allowed into the 2015 championship. Force India claims their concerns are safety-related. Nearly everyone agrees their only concerns are money-related.
Not surprisingly, in this era of ever-shrinking budgets, teams are turning more to “pay drivers” than ever before. While a driver may bring a few million in cash, do these “pay drivers” actually benefit the teams? In other words, over the course of the season, do the “pay drivers” still bring more money to the team than a potentially more-skilled, non “pay driver”?
The easy answer is “yes”. But as is most things in life, the truth doesn’t come easy. Answering “yes” means ignoring the following:
– Opportunity cost of better finishes
– Opportunity cost of championship points
– Opportunity cost of a contract buy-out
– Cost of damage to race cars
– Opportunity cost of improved brand awareness
Without going into an economics discussion, the point is this – value exists in finishing races in a higher position. Take, for instance, Jules Bianchi’s points finish in Monaco last season. This solitary points finish would have entitled Marussia to millions of dollars, maybe even in the tens of millions of dollars of prize money from FOM (no word on if Manor is still entitled to any of these funds). Bianchi was highly rated as a driver who regularly outclassed his “pay driver” teammate Max Chilton. Thus, there is an actual, tangible, monetary return tied to Bianchi’s driving prowess, not to mention the possibility he was to move to another team for 2015 (which likely would have involved a contract buy-out, which would have paid Marussia a cash settlement), and the brand notoriety Marussia received from the positive press from his finish in Monaco. In short, who ended up bringing more money to Marussia? Bianchi or Chilton?
It is difficult to ascribe concrete numbers to a driver’s value. It is very easy to say how much a driver brings when he’s bringing it in the form of a check. Successful teams have a long history of seeking the best drivers. McLaren, for example, are thought to have made Fernando Alonso the highest paid driver in F1 history in order to coax him back to Woking (although the eye-watering salary numbers haven’t been made public yet). By the numbers, Ron Dennis’s accountants must be furious. Alonso has not won a title since 2006 and last challenged for a title in 2012. Yet, Alonso is regarded as one of, if not the, best driver of his generation, and McLaren and certainly Honda value this ability. Honda, as a publicly traded company, routinely must justify their expenses to their shareholders. Therefore, they have ascribed a monetary value to Alonso’s driving ability. Even at making him the highest paid driver in F1 history, Honda believes they will get a positive return on their investment. Only time will tell which strategy leads to championships and which strategy leads to administration.
